-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, PH4fOeAGtiNW0HZ/qYTnXaSymJFn+TCZyrKi+2VuZxgiz1PRw6/wqsxJb4AgN7yJ kLH972Xvr9tHEoXyCjTaoA== 0000950123-99-005356.txt : 19990604 0000950123-99-005356.hdr.sgml : 19990604 ACCESSION NUMBER: 0000950123-99-005356 CONFORMED SUBMISSION TYPE: S-3/A PUBLIC DOCUMENT COUNT: 16 FILED AS OF DATE: 19990603 FILER: COMPANY DATA: COMPANY CONFORMED NAME: NTL COMMUNICATIONS CORP CENTRAL INDEX KEY: 0000906347 STANDARD INDUSTRIAL CLASSIFICATION: CABLE & OTHER PAY TELEVISION SERVICES [4841] IRS NUMBER: 521822078 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: S-3/A SEC ACT: SEC FILE NUMBER: 333-72335 FILM NUMBER: 99640084 BUSINESS ADDRESS: STREET 1: 110 E 59TH ST STREET 2: 26TH FLOOR CITY: NEW YORK STATE: NY ZIP: 10022 BUSINESS PHONE: 2129068440 MAIL ADDRESS: STREET 1: 110 EAST 59TH STREET STREET 2: 26TH FLOOR CITY: NEW YORK STATE: NY ZIP: 10022 FORMER COMPANY: FORMER CONFORMED NAME: NTL INC /DE/ DATE OF NAME CHANGE: 19970326 FORMER COMPANY: FORMER CONFORMED NAME: INTERNATIONAL CABLETEL INC DATE OF NAME CHANGE: 19930601 FILER: COMPANY DATA: COMPANY CONFORMED NAME: NTL INC/NY/ CENTRAL INDEX KEY: 0001083198 STANDARD INDUSTRIAL CLASSIFICATION: CABLE & OTHER PAY TELEVISION SERVICES [4841] IRS NUMBER: 134051921 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: S-3/A SEC ACT: SEC FILE NUMBER: 333-72335-01 FILM NUMBER: 99640085 BUSINESS ADDRESS: STREET 1: 110 E 59TH ST 26TH FL STREET 2: C/O NTL COMMUNICATIONS CORP CITY: NEW YORK STATE: NY ZIP: 10022 BUSINESS PHONE: 2129068440 MAIL ADDRESS: STREET 1: 110 EAST 59TH STREET 26TH FL STREET 2: C/O NTL COMMUNICATIONS CORP CITY: NEW YORK STATE: NY ZIP: 10022 S-3/A 1 AMENDMENT NO. 2 TO FORM S-3 1 AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JUNE 3, 1999 REGISTRATION NO. 333-72335 - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- SECURITIES AND EXCHANGE COMMISSION WASHINGTON, DC 20549 ------------------------- AMENDMENT NO. 2 TO FORM S-3 REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933 ------------------------- NTL INCORPORATED NTL COMMUNICATIONS CORP. (EXACT NAME OF EACH OF THE REGISTRANTS AS SPECIFIED IN ITS CHARTER) DELAWARE 4899 13-4051921 DELAWARE 4899 52-1822078 (STATE OR OTHER JURISDICTION OF (PRIMARY STANDARD INDUSTRIAL (I.R.S. EMPLOYER INCORPORATION OR ORGANIZATION) CLASSIFICATION CODE NUMBER) IDENTIFICATION NUMBER) 110 EAST 59TH STREET NEW YORK, NEW YORK 10022 (212) 906-8440 (ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE, OF EACH REGISTRANT'S PRINCIPAL EXECUTIVE OFFICE)
RICHARD J. LUBASCH, ESQ. COPY TO: SENIOR VICE PRESIDENT, GENERAL COUNSEL AND SECRETARY THOMAS H. KENNEDY, ESQ. NTL INCORPORATED SKADDEN, ARPS, SLATE, MEAGHER & FLOM LLP 110 EAST 59TH STREET 919 THIRD AVENUE NEW YORK, NEW YORK 10022 NEW YORK, NEW YORK 10022 (212) 906-8440 (212) 735-3000 (NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE, OF AGENT FOR SERVICE)
------------------------- APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: At such time or times on and after which the Registration Statement becomes effective as the Selling Stockholders may determine. If the only securities being registered on this form are being offered pursuant to dividend or interest reinvestment plans, please check the following box. [ ] If any of the securities being registered on this form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, other than securities offered only in connection with dividend or interest reinvestment plans, check the following box. [X] If this form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, please check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. [ ] - --------------- If this form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration number of the earlier effective registration statement for the same offering. [ ] - --------------- If delivery of the prospectus is expected to be made pursuant to Rule 434, please check the following box. [ ] THE REGISTRANTS AMEND THIS REGISTRATION STATEMENT ON SUCH DATE OR DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANTS SHALL FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(a) OF THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(a), MAY DETERMINE. - -------------------------------------------------------------------------------- - -------------------------------------------------------------------------------- 2 The information in this prospectus is not complete and may be changed. The selling securityholders identified in this prospectus may not sell these securities until the registration statement filed with the Securities and Exchange Commission is effective. This prospectus is not an offer to sell these securities and is not soliciting an offer to buy these securities in any state where the offer or sale is not permitted. Subject to completion, dated June 2, 1999 Prospectus [NTL LOGO] NTL COMMUNICATIONS CORP. 7% CONVERTIBLE SUBORDINATED NOTES DUE 2008 NTL INCORPORATED SHARES OF COMMON STOCK - - Selling securityholders who are identified in this prospectus may offer and sell an indeterminate number of: -- 7% Convertible Subordinated Notes Due 2008 of NTL Communications Corp. -- shares of common stock of NTL Incorporated by using this prospectus. - - The offering price for the convertible notes is not set but will be determined according to negotiation between a selling securityholder and the prospective purchaser. The offering price for the common stock will be negotiated or, if sold on the Nasdaq National Market, at prevailing market price. - - NTL Incorporated's common stock is traded on the Nasdaq National Market under the symbol NTLI. On May 28, 1999, the last reported sales price of the common stock was $94 7/16 per share. There is no public market for the convertible notes, and we do not intend to apply to the Nasdaq National Market or any other securities exchange to list the convertible notes. WE URGE YOU TO CAREFULLY READ THE RISK FACTORS SECTION BEGINNING ON PAGE 6, WHERE WE DESCRIBE SPECIFIC RISKS ASSOCIATED WITH THESE SECURITIES, BEFORE YOU MAKE YOUR INVESTMENT DECISION. NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR PASSED UPON THE ADEQUACY OR ACCURACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE. The date of this prospectus is , 1999 3 EXPLANATORY NOTE REGARDING CORPORATE RESTRUCTURING OF NTL On April 1, 1999, NTL Incorporated completed a corporate restructuring to create a new holding company structure. The restructuring was accomplished through a merger under section 251(g) of the Delaware General Corporation Law. At the effective time of the merger, all stockholders of NTL Incorporated became stockholders in the new holding company and NTL became a wholly owned subsidiary of the new holding company. The new holding company took the NTL Incorporated name and the old NTL Incorporated was renamed NTL Communications Corp. The new holding company's stock trades under the same NTLI symbol on the Nasdaq National Market with the same CUSIP number. In the merger, all outstanding shares of old NTL Incorporated were converted into shares of the new holding company with the same voting powers, designations, preferences and rights, and the same qualifications, restrictions, and limitations, as the shares of old NTL Incorporated. At the effective time of the merger, the only material asset of the new holding company was the capital stock of NTL Communications Corp. and it had no material liabilities. ------------------------ You should rely only on the information contained in this prospectus. We have not authorized any other person to provide you with different information. If anyone provides you with different or inconsistent information, you should not rely on it. We are not making an offer of the securities in any jurisdiction where the offer or sale is not permitted. You should assume that the information appearing in this prospectus is accurate as of the date on the front cover of this prospectus only. Our business, financial condition, results of operations and prospects may have changed since that date. ------------------------ In this prospectus, references to "pounds sterling," "L" "pence" or "p" are to the lawful currency of the United Kingdom and references to "U.S. dollars," "dollars," "$" or "c" are to the lawful currency of the United States. For your convenience only we have translated some pound sterling amounts into U.S. dollars and certain U.S. dollar amounts into pounds sterling. We are not making any representation to you regarding those translated amounts. Unless we otherwise clearly indicate, the translations of pounds sterling into U.S. dollars have been made at $1.6595 per L1.00, the noon buying rate in The City of New York for cable transfers in pounds sterling as certified for customers purposes by the Federal Reserve Bank of New York on December 31, 1998. See "Exchange Rates" for information regarding the noon buying rate for the past ten fiscal years. On May 28, 1999, the noon buying rate was 1.602 per L1.00. 4 PROSPECTUS SUMMARY This summary highlights information about us which is contained elsewhere or incorporated by reference in this prospectus. This summary may not contain all the information that is important to you. You should read the entire prospectus, including the financial statements and related notes, before making a decision to exchange your old notes. When we refer to NTL in this prospectus, we mean NTL Incorporated and its consolidated subsidiaries, except where we make it clear that we are only referring to NTL Incorporated. ABOUT NTL We are a leading communications company in the United Kingdom, providing residential, business and wholesale customers with the following services: - residential telecoms and television services, including residential telephony, cable television and Internet access services; - national telecoms services including national business telecoms, national and international carrier telecommunications, Internet services and satellite and radio communications services; and - broadcast services including digital and analog television and radio broadcast transmission services. Our objective is to exploit the convergence of the telecommunications, entertainment and information services industries to become a premier new era communications company in the United Kingdom, which will offer these services to residential, business and wholesale customers on a national scale. We believe that we will be able to deliver our strategy, based on our entrepreneurial approach, innovative marketing and technical excellence. On April 1, 1999, we completed a corporate restructuring to create a holding company structure. The holding company was created to pursue opportunities outside of the United Kingdom and Ireland. RECENT DEVELOPMENTS NTL ENTERS CONTINENTAL EUROPE On May 10, 1999, NTL Incorporated announced its first broadband venture in Continental Europe with an acquisition in France. Following a competitive tendering process, France Telecom and France Telecom Cable have announced that NTL Incorporated is the winning bidder to acquire the "1G Networks" of France Telecom representing over 266,000 franchise homes. NTL Incorporated will acquire the 1G Networks for 350 million French Francs (approximately US$57 million). This will be initially funded from internal sources. The closing of the transaction is expected in the third quarter of 1999, subject to regulatory approvals. 1 5 NTL WINS IRISH CABLELINK BID On May 6, 1999, NTL Incorporated announced its first broadband venture outside the United Kingdom with the acquisition of Cablelink Limited, Ireland's largest cable television provider. Telecom Eireann and Radio Telefis Eireann announced NTL Incorporated as the successful bidder after a competitive tendering process. NTL Incorporated will acquire Cablelink for 535.180 million Irish Pounds (approximately US$730 million). This will be financed in the immediate term from existing resources. In addition, NTL Incorporated has secured a bridge financing commitment for the full purchase price. NTL Incorporated expects to close the acquisition in the second or third quarter of 1999. AUSTRALIAN NATIONAL TRANSMISSION NETWORK On April 30, 1999, NTL Incorporated announced that its wholly-owned subsidiary, NTL Australia, had completed the previously announced acquisition of the Australian Transmission Network ("NTN"). NTN operates from over 560 tower sites and provides exclusive television and radio transmission services to Australia's national TV and radio broadcasters, ABC and SBS. RECENT FINANCING On April 14, 1999, NTL Incorporated, through its subsidiary NTL Communications Corp., raised approximately $340 million gross proceeds from the issuance of 9 3/4% Senior Deferred Coupon Notes due 2009. The use of proceeds of these offerings was principally to refinance existing indebtedness. CORPORATE STRUCTURE DEVELOPMENTS On April 1, 1999, we completed a corporate restructuring to create a holding company structure. The holding company restructuring was accomplished through a merger under Section 251(g) of the Delaware General Corporation Law so that all stockholders of NTL Incorporated at the effective time of the merger became stockholders of the new holding company. Existing NTL became a subsidiary of the new holding company and changed its name to NTL Communications Corp. Through other subsidiaries, the new holding company will pursue activities outside the United Kingdom and Ireland. The first such opportunities are those in Australia and France. The new holding company has taken the NTL Incorporated name and trades under the same NTLI (NASDAQ) and NTLI.ED (EASDAQ) symbols, with the same CUSIP numbers as before. NTL Incorporated also announced that its board had approved the pursuit of alternative corporate financial strategies with regard to its broadcasting and tower related opportunities. These strategies are intended to provide the division with more flexibility to pursue future opportunities and to illuminate the value of those assets, while leaving the cash flow from its UK operations within NTL Communications. 2 6 STRATEGIC ALLIANCE WITH MICROSOFT In January 1999, Microsoft Corp. and NTL Incorporated announced an agreement to jointly develop new, broadband services for delivery to customers in the United Kingdom and Ireland. Microsoft made a $500 million investment to accelerate deployment of high-speed voice, video and data services. The investment is in the form of an NTL Convertible Preferred Stock, convertible at $100 per NTL Incorporated share. In addition, Microsoft received 1.2 million five-year warrants to purchase NTL Incorporated common stock at an exercise price of $84 per share. REDEMPTION OF EXISTING CONVERTIBLE NOTES On May 26, 1999, NTL Communications Corp. announced that it was calling for redemption of all the existing convertible notes. The redemption date is June 25, 1999 and the redemption price is 104.9% of the principal amount, plus accrued and unpaid interest through the date of redemption. 3 7 THE OFFERING Securities offered............ Up to $600,000,000 aggregate principal amount of 7% convertible subordinated notes due 2008 of NTL Communications Corp. and up to 9,795,918 shares of common stock of NTL Incorporated, plus such indeterminate number of additional shares of common stock that may be issued from time to time upon conversion of the convertible notes by reason of adjustment to the conversion price in certain circumstances described herein. Maturity...................... December 15, 2008. Interest payment dates........ June 15 and December 15 of each year, commencing June 15, 1999. Conversion.................... The convertible notes, unless previously redeemed, are convertible at the option of the holder of those notes at any time prior to maturity into shares of common stock of NTL Incorporated at a conversion price of $61.25 per share, subject to adjustment in certain events. See "Description of the convertible notes -- conversion." Optional redemption........... The convertible notes will be redeemable, in whole or from time to time in part, at NTL Communications Corp.'s option, on at least 30 but not more than 60 days' prior notice, at any time on or after December 15, 2001, at the redemption prices set forth in this prospectus together with accrued and unpaid interest and liquidated damages, if any, to the date of redemption. See "Description of the convertible notes -- optional redemption." Subordination................. The convertible notes are general unsecured obligations of NTL Communications Corp. and are subordinate in right of payment to all of NTL Communications Corp.'s existing and future senior debt as we define it in this prospectus. In addition, the convertible notes are effectively subordinated to all existing and future liabilities of our subsidiaries, partnerships and affiliated joint ventures, including trade payables. As of December 31, 1998, NTL Communications Corp. had approximately $3.7 billion of senior debt outstanding and NTL Communications Corp.'s subsidiaries would have had approximately 4 8 $1.1 billion of liabilities that effectively rank senior to the convertible notes. Change of control............. Upon a change of control as we define it in this prospectus, holders of the convertible notes will have the right, subject to some restrictions and conditions, to require NTL Communications Corp. to repurchase all or any part of the convertible notes at a purchase price equal to 101% of the principal amount of those notes together with accrued and unpaid interest and liquidated damages, if any, to the date of repurchase. NTL Communications Corp. may not have sufficient funds or the financial resources necessary to satisfy, or may be precluded by the terms governing its indebtedness from satisfying, our obligations to repurchase the convertible notes and other debt that may become repayable upon a change of control. Use of proceeds............... The selling securityholders will receive all of the net proceeds from the sale of the offered securities sold pursuant to this prospectus. We will not receive any proceeds from sales by the selling securityholders of the offered securities. United States federal tax considerations............. There are various federal income tax considerations associated with purchasing, holding and disposing of the convertible notes. See "United States federal tax considerations." 5 9 RISK FACTORS You should consider carefully all of the information set forth in this prospectus and incorporated by reference in this prospectus. See "Where you can find more information about us." You should particularly evaluate the following risks before deciding to purchase the convertible notes or the common stock issuable on conversion of the convertible notes. OUR SUBSTANTIAL LEVERAGE COULD ADVERSELY AFFECT OUR FINANCIAL HEALTH AND PREVENT US FROM FULFILLING OUR OBLIGATION UNDER THE NOTES We are and, for the foreseeable future will continue to be, highly leveraged. The agreements which govern our existing indebtedness also allow us to assume additional debt. If our substantial indebtedness adversely affects our financial health we may not be able to fulfill our obligations under the notes. On March 31, 1999, our total long-term indebtedness, including our 13% senior redeemable exchangeable preferred stock, was approximately $6.5 billion. Our substantial indebtedness could adversely affect our financial health by, among other things: - increasing our vulnerability to adverse changes in general economic conditions or increases in prevailing interest rates particularly if any of our borrowings are at variable interest rates, - limiting our ability to obtain the additional financing we need to operate, develop and expand our business, and - requiring us to dedicate a substantial portion of our cash flow from operations to service our debt, which reduces the funds available for dividends, operations and future business opportunities. IN SOME CIRCUMSTANCES INVOLVING A CHANGE OF CONTROL OF NTL, NTL COMMUNICATIONS CORP. WILL BE REQUIRED TO REPURCHASE SOME OF ITS INDEBTEDNESS INCLUDING THE CONVERTIBLE NOTES -- IF THIS OCCURS, NTL COMMUNICATIONS CORP. MAY NOT HAVE THE FINANCIAL RESOURCES NECESSARY TO MAKE THOSE REPURCHASES. NTL Communications Corp. may under some circumstances involving a change of control of NTL Communications Corp. be obligated to offer to repurchase outstanding debt securities, including the convertible notes, before maturity. We cannot assure you that NTL Communications Corp. will have available financial resources necessary to repurchase those securities in those circumstances. THE ANTICIPATED CONSTRUCTION COSTS OF OUR NETWORK WILL INCREASE AS A RESULT OF OUR RECENT ACQUISITIONS AND WILL REQUIRE SUBSTANTIAL AMOUNTS OF ADDITIONAL FUNDING Following our recent acquisitions, our capital expenses and cost of operations for the development, construction and operation of our networks will significantly increase. We estimate that significant amounts of additional funding will be necessary to meet these capital expenditure and operational requirements. 6 10 We cannot be certain that: - we will be able to obtain additional financing with acceptable terms, - we will satisfy conditions precedent to advances under future credit facilities, or - we will be able to generate sufficient cash from operations to meet capital requirements, debt service and other obligations when required. We do not have any firm additional financing plans to address the factors enumerated above, except in relation to our new credit facility. WE WILL REQUIRE ADDITIONAL FINANCING BECAUSE WE DO NOT EXPECT TO GENERATE SUFFICIENT CASH FLOW TO REPAY AT MATURITY ALL OF OUR OUTSTANDING INDEBTEDNESS We anticipate that we will not generate sufficient cash flow from operations to repay at maturity all of our outstanding indebtedness, including the notes. As a result, we will have to consider, among other things: - refinancing all or portions of that indebtedness, - seeking modifications to the terms of that indebtedness, - seeking additional debt financing, which may require us to obtain the consent of some of our lenders, and - seeking additional equity financing. We cannot be certain that we will succeed in executing any of these measures. WE CANNOT BE CERTAIN THAT WE WILL BE SUCCESSFUL IN INTEGRATING ACQUIRED BUSINESSES INTO OURS, OR THAT WE WILL REALIZE THE BENEFITS WE ANTICIPATE FROM ANY ACQUISITION We will continue to consider strategic acquisitions and combinations that involve operators or owners of licenses to operate cable, telephone, television or telecommunications systems or services and related businesses that operate principally in the UK. If consummated, some of these transactions would significantly alter our holdings and might require us to incur substantial indebtedness or raise additional equity. We cannot assure you that, with respect to the recent acquisitions of Comcast, ComTel, Eastern and Diamond, as well as future acquisitions, that we: - will realize any anticipated benefits, - will successfully integrate the businesses with our operations, or - will manage such integration without adversely affecting us. NTL INCORPORATED AND NTL COMMUNICATIONS CORP. ARE HOLDING COMPANIES THAT ARE DEPENDENT UPON CASH FLOW FROM THEIR SUBSIDIARIES TO MEET THEIR OBLIGATIONS -- THEIR ABILITY TO ACCESS THAT CASH FLOW MAY BE LIMITED IN SOME CIRCUMSTANCES NTL Incorporated and NTL Communications Corp. are holding companies with no independent operations or significant assets other than their investments in and advances to their subsidiaries and affiliated joint ventures. The terms of existing and future 7 11 indebtedness of their subsidiaries may limit the payment of dividends, loans and other distributions to them by their subsidiaries. NTL Incorporated and NTL Communications Corp. depend upon the receipt of sufficient funds from their subsidiaries and affiliated joint ventures to meet their obligations, including in the case of NTL Communications Corp., its obligations on the convertible notes. Your right to receive payments on the convertible notes could be adversely affected in the event of a bankruptcy of any of NTL Communications Corp.'s subsidiaries. Following the liquidation of a subsidiary or joint venture of NTL Communications Corp., the creditors of that subsidiary or joint venture will generally be entitled to be paid in full before NTL Communications Corp. is entitled to a distribution of any assets in the liquidation. The claims of the lenders under NTL Communications Corp.'s credit facility also rank ahead of any obligations of NTL Communications Corp.'s subsidiaries to NTL Communications Corp. On March 31, 1999, the total liabilities of NTL Communications Corp.'s subsidiaries was approximately $2.5 billion. WE HAVE HISTORICALLY INCURRED LOSSES AND GENERATED NEGATIVE CASH FLOWS AND CANNOT ASSURE YOU THAT WE WILL BE PROFITABLE IN THE FUTURE Construction and operating expenditures have resulted in negative cash flow, which we expect will continue at least until we establish an adequate customer base. We also expect to incur substantial additional losses. We cannot assure you that we will achieve or sustain profitability in the future. Failure to achieve profitability could diminish our ability to sustain our operations and obtain additional required funds. In addition, a failure to achieve or sustain profitability would adversely affect our ability to make required payments on our indebtedness, including, in the case of NTL Communications Corp., the convertible notes. NTL Communications Corp. had net losses for - the three months ended March 31, 1999 of $230.4 million and for the years ended December 31, - 1998: $534.6 million - 1997: $333.1 million - 1996: $254.5 million - 1995: $90.8 million - 1994: $29.6 million As of March 31, 1999, our accumulated deficit was $1.3 billion. NTL COMMUNICATIONS CORP. HAS HISTORICALLY HAD A DEFICIENCY OF EARNINGS TO FIXED CHARGES AND EARNINGS TO COMBINED FIXED CHARGES AND PREFERRED STOCK DIVIDENDS AND OUR EARNINGS IN THE FUTURE MAY NOT BE SUFFICIENT TO COVER THOSE FIXED CHARGES, INCLUDING OUR OBLIGATIONS ON THE CONVERTIBLE NOTES For the three months ended March 31, 1999 and the years ended December 31, 1998, 1997, 1996, 1995 and 1994, NTL Communications Corp.'s earnings were insufficient to cover fixed charges by approximately $240.8 million, $565.7 million, 8 12 $355.4 million, $257.1 million, $105.4 million and $31.8 million, respectively. NTL Communications Corp.'s earnings for the three months ended March 31, 1999 and for the year ended December 31, 1998 and 1997 were insufficient to cover combined fixed charges and preferred stock dividends by approximately $253.9 million, $584.5 million and $367.4 million, respectively. Fixed charges consist of interest expense, including capitalized interest, amortization of fees related to debt financing and rent expense deemed to be interest. NTL Communications Corp.'s earnings in the future may not be sufficient to cover those fixed charges, including its obligations on the convertible notes. NTL COMMUNICATIONS CORP. HAS UTILIZED SOME OF ITS EXISTING FINANCIAL RESOURCES TO DISTRIBUTE FUNDS TO NTL INCORPORATED TO FINANCE AN ACQUISITION BY NTL INCORPORATED -- NTL INCORPORATED IS UNDER NO OBLIGATION TO REPAY THE FUNDS TO NTL COMMUNICATIONS CORP. Under NTL Communications Corp.'s existing indentures including the indenture relating to the convertible notes, NTL Communications Corp. is permitted to dividend or distribute funds to NTL Incorporated, up to limits specified in those indentures. NTL Communications Corp. made a distribution to NTL Incorporated to finance NTL Incorporated's purchase of the Australian National Transmission Network for approximately $407.0 million. NTL Incorporated may, but is not required to, recontribute those funds to NTL Communications Corp. as and if it obtains alternative financing for the purchase price. Dividends and distribution to NTL Incorporated, to the extent permitted, may be made at other times for other purposes. WE ARE SUBJECT TO SIGNIFICANT COMPETITION, WHICH WE EXPECT TO INTENSIFY, IN EACH OF OUR BUSINESS AREAS -- IF WE ARE UNABLE TO COMPETE SUCCESSFULLY OUR FINANCIAL HEALTH COULD BE ADVERSELY AFFECTED We face significant competition from established and new competitors in the areas of residential telephony, business telecoms services and cable television. As existing technology develops and new technologies emerge, we believe that competition will intensify in each of these business areas, particularly business telecommunications and the Internet. Some of our competitors have substantially greater financial and technical resources than we do. If we are unable to compete successfully our financial condition and results of operations could be adversely affected. OUR PRINCIPAL BUSINESSES ARE SUBJECT TO EXTENSIVE GOVERNMENT REGULATION, INCLUDING PRICING REGULATION, WHICH MAY CHANGE ADVERSELY TO US Our principal business activities in the UK are regulated and supervised by various governmental bodies. Changes in laws, regulations or governmental policy or the interpretations of those laws or regulations affecting our activities and those of our competitors, such as licensing requirements, changes in price regulation and deregulation of interconnection arrangements, could have a material adverse effect on us. In addition, we are also subject to regulatory initiatives of the European Commission. Changes in EU Directives may reduce the range of programing and 9 13 increase the costs of purchasing television programming or require us to provide access to our cable network infrastructure to other service providers, which could have a material adverse effect on us. OUR BROADCAST SERVICES BUSINESS IS DEPENDENT UPON SITE SHARING ARRANGEMENTS WITH OUR PRINCIPAL COMPETITOR As a result of, among other factors, a natural shortage of potential transmission sites and the difficulties in obtaining planning permission for erection of further masts, the Castle Tower Corporation Consortium and NTL have made arrangements to share a large number of sites. We cannot assure you that the site sharing arrangements will not be terminated. Termination of the site sharing arrangements would have a material adverse effect on us. Under the present arrangements, one of the parties is the owner, lessor or licensor of each site and the other party is entitled to request a license to use specified facilities at that site. Each site license granted pursuant to the site sharing agreement is for an initial period expiring on December 31, 2005, subject to title to the site and to the continuation in force of the site sharing agreement. Each site sharing agreement provides that, if requested by the sharing party, it will be extended for further periods. Either party may terminate the agreement by 5 years' notice in writing to the other expiring on December 31, 2005 or at any date which is a date 10 years or a multiple of 10 years after December 31, 2005. FAILURE TO MANAGE OUR GROWTH AND EXPANSION COULD HAVE A MATERIAL ADVERSE EFFECT ON US We have experienced rapid growth and development in a relatively short period, and we plan to meet our strategic objectives and regulatory milestones. Management of that growth will require, among other things: - stringent control of construction and other costs, - continued development of our financial and management controls, - increased marketing activities, and - the training of new personnel. Failure to manage our rapid growth and development successfully could have a material adverse effect on us. WE ARE DEPENDENT UPON A SMALL NUMBER OF KEY PERSONNEL A small number of key executive officers manage our businesses, and the loss of one or more of them could have a material adverse effect on us. We believe that our future success will depend in large part on our continued ability to attract and retain highly skilled and qualified personnel. We have not entered into written employment contracts or non-compete agreements with, nor have we obtained life insurance policies covering, those key executive officers. Some of our senior managers also serve as members of 10 14 senior management of other companies in the telecommunications business which may reduce the amount of time they are able to dedicate to our businesses. THE TELECOMMUNICATIONS INDUSTRY IS SUBJECT TO RAPID TECHNOLOGICAL CHANGES AND WE CANNOT PREDICT THE EFFECT OF ANY CHANGES ON OUR BUSINESSES The telecommunications industry is subject to rapid and significant changes in technology and we cannot predict the effect of technological changes on our businesses. However, the cost of implementation for emerging and future technologies could be significant, and our ability to fund such implementation may depend on our ability to obtain additional financing. WE ARE SUBJECT TO CURRENCY RISK BECAUSE WE OBTAIN A SUBSTANTIAL AMOUNT OF FINANCING IN US DOLLARS BUT GENERALLY GENERATE REVENUES AND INCUR EXPENSES IN POUNDS STERLING We will encounter currency exchange rate risks because we generate revenues and incur construction and operating expenses primarily in British pounds sterling while we pay interest and principal obligations with respect to most of our existing indebtedness in United States dollars. We cannot assure you that any hedging transaction we might enter into will be successful and that shifts in the currency exchange rates will not have a material adverse effect on us. WE DO NOT INSURE THE UNDERGROUND PORTION OF OUR CABLE NETWORK We obtain insurance of the type and in the amounts that we believe are customary in the UK for similar companies. Consistent with this practice, we do not insure the underground portion of our cable network. Substantially all of our cable network is constructed underground. Any catastrophe that affects a significant portion of one of our system's underground cable network would result in substantial uninsured losses and may have a material adverse effect on us. SOME PROVISIONS OF NTL COMMUNICATIONS CORP.'S INDENTURES MAY DELAY OR PREVENT TRANSACTIONS INVOLVING A CHANGE OF CONTROL Some provisions of the indenture and the indentures governing the senior notes and NTL Communications Corp.'s outstanding 7% convertible subordinated notes due 2008, may have the effect of delaying or preventing transactions involving a change of control of NTL, including transactions in which stockholders might otherwise receive a possible substantial premium for their shares over then current market prices, and may limit the ability of stockholders to approve transactions that they may deem to be in their best interest. NTL Incorporated's restated certificate of incorporation, as amended and presently in effect, contains various provisions which may have the effect, alone or in combination with each other or with the existence of authorized but unissued common stock and any series of preferred stock, of precluding or rendering more difficult a hostile takeover, making it more difficult to remove or change the composition of our incumbent board of directors and our officers, being adverse to stockholders who desire to participate in a 11 15 tender offer and depriving stockholders of possible opportunities to sell their shares at temporarily higher prices. See "Description of capital stock -- Certain special provisions." As a result of the provisions of NTL Incorporated's restated certificate of incorporation and the ownership of NTL, no change of control requiring stockholder approval is possible without the consent of the owners of its rights preferred stock. THE INSTRUMENTS GOVERNING SOME OF OUR INDEBTEDNESS MAY INDIRECTLY LIMIT NTL INCORPORATED'S ABILITY TO PAY DIVIDENDS The indentures governing NTL Communications Corp.'s senior notes impose limitations on the payment of dividends to NTL Incorporated and consequently restrict NTL Incorporated's ability to pay dividends on its common stock. Further, the terms of the new credit facility restrict, and the terms of other future indebtedness of our subsidiaries may, subject to the terms of the indentures governing the senior notes, restrict, the ability of some of our subsidiaries to distribute earnings to NTL Communications Corp. or make other payments to NTL Communications Corp. Before our recent corporate restructuring, NTL Communications Corp. never paid cash dividends on its common stock and NTL Incorporated has never paid cash dividends on its common stock. In addition, the payment of any dividends by NTL Incorporated in the future will be at the discretion of its board of directors and will depend upon, among other things, future earnings, operations, capital requirements, its general financial condition and the general financial condition of our subsidiaries and general business conditions. THE MARKET PRICE OF THE COMMON STOCK AND THE CONVERTIBLE NOTES IS SUBJECT TO VOLATILITY The market price of the common stock has been subject to volatility and, in the future, the market price of the common stock and the convertible notes could be subject to wide fluctuations in response to numerous factors, many of which are beyond our control. These factors include, among other things, actual or anticipated variations in our operating results, our earnings releases and our competitors' earnings releases, announcements of technological innovations, changes in financial estimates by securities analysts, market conditions in the industry and the general state of the securities markets, governmental legislation or regulation, currency and exchange rate fluctuations, as well as general economic and market conditions, such as recessions. LACK OF PUBLIC MARKET FOR THE CONVERTIBLE NOTES There has been no public market for the convertible notes prior to the offering of the convertible notes in December 1998. The registration rights agreement does not obligate us to keep the registration statement of which this prospectus forms a part effective beyond the second anniversary of the date of issuance of the convertible notes. Although the initial purchasers have advised us that they currently intend to make a market in the convertible notes, they are not obligated to do so and any such market making may be discontinued at any time without notice. Accordingly, there can be no 12 16 assurance as to the ongoing development or liquidity of any market that may develop for the convertible notes. YOU SHOULD BE AWARE THAT ACTUAL RESULTS OR OUTCOMES MAY TURN OUT TO BE MATERIALLY DIFFERENT FROM THOSE CONTAINED IN ANY FORWARD-LOOKING STATEMENTS INCLUDED OR INCORPORATED BY REFERENCE IN THIS PROSPECTUS This prospectus includes or incorporates by reference projections of broadcast transmission revenues, build-out results and other forward-looking statements, including those using words such as "believe," "anticipate," "should," "intend," "plan," "will," "expects," "estimates," "projects," "positioned," "strategy," and similar expressions. In reviewing that forward-looking information you should keep in mind that actual results may differ materially from those expressed or implied in those forward-looking statements. Important assumptions and factors that could cause actual results to differ materially from those contemplated or projected, forecast, estimated or budgeted in or expressed or implied by such projections and forward-looking statements include those specified in this risk factors section, as well as - industry trends, - our ability to -- continue to design network routes and install facilities, -- obtain and maintain any required government licenses or approvals, -- finance construction and development, all in a timely manner, at reasonable costs and on satisfactory terms and conditions, - assumptions about -- customer acceptance, -- churn rates, -- overall market penetration and competition from providers of alternative services, and -- availability, terms and deployment of capital. We assume no obligation to update projections or other forward-looking statements to reflect actual funding requirements, capital expenditures and results, changes in assumptions or in the factors affecting such projections or other forward-looking statements. We cannot assure you that: - any financings will be obtained when required, on acceptable terms or at all; - actual amounts required to complete our planned build out will not exceed the amount we estimate or that additional financing substantially in excess of that amount will not be required; (see -- "The anticipated construction costs of our 13 17 network will increase as a result of our recent acquisitions and will require substantial amounts of additional funding"); - we will not acquire franchises, licenses or other new businesses that would require additional capital; - operating cash flow will meet expectations or that we will be able to access such cash from our subsidiaries' operations to meet any unfunded portion of our capital requirements when required or to satisfy the terms of the notes, or our other debt instruments and agreements for the incurrence of additional debt financing (see "-- NTL Incorporated and NTL Communications Corp. are holding companies that are dependent upon cash flow from their subsidiaries to meet their obligations -- their ability to access that cash flow may be limited in some circumstances and your right to receive payments on the notes could be adversely affected in the event of a bankruptcy of any of their subsidiaries"); - our subsidiaries will not incur losses from their exposure to exchange rate fluctuations or be adversely affected by interest rate fluctuations (see "-- We are subject to currency risk because we obtain a substantial amount of financing in US dollars but generally generate revenues and incur expenses in pounds sterling"); - there will not be adverse changes in applicable United States, United Kingdom or Bermuda tax laws; or - the effects of monetary union in Europe will not be materially adverse to us. All forward-looking statements included or incorporated by reference in this prospectus are expressly qualified by the foregoing. 14 18 USE OF PROCEEDS The selling securityholders will receive all of the proceeds from the sale of the securities sold pursuant to this prospectus. We will not receive any of the proceeds from sales by the selling securityholders of the offered securities. EXCHANGE RATES The following table sets forth, for the periods indicated, the noon buying rate for pounds sterling expressed in U.S. dollars per Ll.00.
YEAR ENDED DECEMBER 31, PERIOD END AVERAGE(1) HIGH LOW - ----------------------- ---------- ---------- ----- ----- 1988.......................................... $1.81 $1.78 $1.91 $1.66 1989.......................................... 1.61 1.63 1.82 1.51 1990.......................................... 1.93 1.79 1.98 1.59 1991.......................................... 1.87 1.76 2.00 1.60 1992.......................................... 1.51 1.76 2.00 1.51 1993.......................................... 1.48 1.50 1.59 1.42 1994.......................................... 1.57 1.53 1.64 1.46 1995.......................................... 1.55 1.58 1.64 1.53 1996.......................................... 1.71 1.56 1.72 1.49 1997.......................................... 1.65 1.64 1.71 1.56 1998.......................................... 1.66 1.66 1.72 1.61 1999 (through May 28)......................... 1.60 1.62 1.66 1.59
- --------------- (1) The average of the noon buying rates on the last day of each month during the relevant period. 15 19 PRICE RANGE OF COMMON STOCK NTL Incorporated's common stock is quoted and traded on the Nasdaq National Market System under the symbol "NTLI." From October 14, 1993 through March 26, 1997, NTL Incorporated's common stock was quoted and traded on the Nasdaq National Market System under the symbol "ICTL." The following table sets forth, for the periods indicated, the high and low reported sales prices per share of common stock as reported on the Nasdaq National Market System. Until April 1, 1999, the common stock quoted was common stock of NTL Communications Corp. (formerly NTL Incorporated). From April 1, 1999, the common stock quoted is common stock of the new holding company NTL Incorporated formed in the corporate restructuring of NTL.
NTL -------------- COMMON STOCK -------------- HIGH LOW ---- ---- 1996 First Quarter............................................. $ 30 1/8 $ 21 5/8 Second Quarter............................................ 34 1/8 27 3/4 Third Quarter............................................. 30 22 5/8 Fourth Quarter............................................ 28 1/4 22 5/8 1997 First Quarter............................................. $ 26 3/4 $ 18 1/8 Second Quarter............................................ 27 1/4 19 Third Quarter............................................. 27 7/8 20 1/8 Fourth Quarter............................................ 29 3/8 25 1/4 1998 First Quarter............................................. $ 45 3/4 $ 26 3/4 Second Quarter............................................ 54 35 3/4 Third Quarter............................................. 65 35 1/2 Fourth Quarter............................................ 59 1/2 32 1999 First Quarter............................................. $ 83 1/8 $ 53 3/4 Second Quarter (through May 28, 1999)..................... 100 1/8 73 1/2
The market price of shares of NTL Incorporated's common stock is subject to fluctuation. As a result, you are urged to obtain current market quotations. On May 28, 1999, the last reported sales price per share of common stock, as reported on the Nasdaq National Market System, was $94 7/16. As of May 28, 1999 there were approximately 599 recordholders of common stock. This figure does not reflect beneficial ownership of shares held in nominee name. DIVIDEND POLICY Since NTL Incorporated's inception, NTL Incorporated has not declared or paid any cash dividends on its common stock. Prior to our recent corporate restructuring, NTL Communications Corp. had not declared or paid any dividends on its common stock. We currently intend to retain our earnings for future growth and, therefore, do not anticipate paying cash dividends in the foreseeable future. 16 20 DESCRIPTION OF THE CONVERTIBLE NOTES GENERAL The convertible notes were issued under an indenture dated as of December 16, 1998, by and between NTL Communications Corp. and The Chase Manhattan Bank, as trustee. The indenture and the registration rights agreement are filed as exhibits to the registration statement of which this prospectus forms a part. The following summary of selected provisions of the convertible notes, the indenture and the registration rights agreement is not complete and is qualified in its entirety by reference to the provisions of the convertible notes, the indenture and the registration rights agreement, including the definitions in the indenture of some of the terms used below. The definitions of some terms used in the following summary are set forth below under "-- Selected definitions." The convertible notes are general unsecured obligations of NTL Communications Corp., subordinated in right of payment to all existing and future senior debt of NTL Communications Corp. as described under "-- Subordination of convertible notes" and convertible into common stock of NTL Incorporated as described under "-- Conversion." The convertible notes rank equal in right of payment to the existing convertible notes of NTL Communications Corp. The indenture does not contain any financial covenants or restrictions on the payment of dividends, the incurrence of senior debt or issuance or repurchase of securities of NTL Communications Corp. The indenture contains no covenants or other provisions to afford protection to holders of the convertible notes in the event of a highly leveraged transaction or a change in control of NTL Communications Corp. except to the extent described under "-- Repurchase at the option of holders." The operations of NTL Communications Corp. are conducted through its subsidiaries, partnerships and joint ventures and, therefore, NTL Communications Corp. is dependent upon the cash flow of its subsidiaries, partnerships and affiliated joint ventures to meet its obligations, including its obligations under the convertible notes. As a result, the convertible notes are effectively subordinated to all existing and future liabilities of NTL Communications Corp.'s subsidiaries, partnerships and affiliated joint ventures, including trade payables. In this section of the prospectus "Description of the Convertible Notes," references to NTL are to NTL Communications Corp. only and not to any of its subsidiaries. PRINCIPAL, MATURITY AND INTEREST The convertible notes are limited to $600,000,000 aggregate principal amount. The convertible notes bear interest from the date of original issuance, at the rate per annum set forth on the cover page of this prospectus and mature on December 15, 2008. Interest on the convertible notes is payable semiannually on June 15 and December 15 of each year (each an "Interest Payment Date"), commencing on June 15, 1999, to holders of record at the close of business on June 1 or December 1 (each a 17 21 "Regular Record Date") immediately preceding such Interest Payment Date. Interest is computed on the basis of a 360-day year comprised of twelve 30-day months. Interest on the convertible notes accrues from the most recent date to which interest has been paid or, if no interest has been paid, from the date of original issuance. The convertible notes are payable both as to principal interest and Liquidated Damages, if any, at the office or agency of NTL maintained for such purpose within the City and State of New York or, at the option of NTL, payment of interest may be made by check mailed to the holders of the convertible notes at their respective addresses set forth in the register of holders of convertible notes. However, a holder of convertible notes with an aggregate principal amount in excess of $5,000,000 will be paid by wire transfer in immediately available funds at the election of such holder if such holder previously specified in writing to NTL and the paying agent wire transfer instructions. Until otherwise designated by NTL, NTL's office or agency in New York will be the office of the Trustee maintained for such purpose. The convertible notes were issued in registered form, without coupons, and in denominations of $1,000 and integral multiples thereof. OPTIONAL REDEMPTION Except as referred to in this prospectus under "-- Optional tax redemption," the convertible notes are redeemable, in whole or from time to time in part, in any integral multiple of $1,000, at the option of NTL at any time on or after December 15, 2001, at the following redemption prices, expressed as percentages of the principal amount set forth below, upon not less than 30 nor more than 60 days' prior notice, if redeemed during the 12-month period beginning December 15 of the years indicated:
REDEMPTION YEAR PRICE - ---- ---------- 2001...................................................... 104.375% 2002...................................................... 103.500 2003...................................................... 102.625 2004...................................................... 101.750 2005...................................................... 100.875 2006 and thereafter....................................... 100.000%
In the case of a redemption of any convertible notes referred to under "-- Optional tax redemption," redemption of such convertible notes shall be made at the principal amount thereof together with accrued and unpaid interest and Liquidated Damages, if any, to the applicable redemption date. OPTIONAL TAX REDEMPTION The convertible notes may be redeemed at the option of NTL, in whole but not in part, upon not less than 30 nor more than 60 days' prior notice, at any time at a redemption price equal to the principal amount of those notes together with accrued and unpaid interest to the date fixed for redemption if after the date on which the provisions described under "-- Additional amounts" become applicable (the "Relevant Date") there has occurred any change in or amendment to the laws (or any regulations or 18 22 official rulings promulgated thereunder) of the United Kingdom, the Netherlands, Netherlands Antilles, Bermuda or the Cayman Islands, (or any political subdivision or taxing authority thereof or therein), or any change in or amendment to the official application or interpretation of such laws, regulations or rulings (a "Change in Tax Law") which becomes effective after the Relevant Date, as a result of which NTL is or would be so required on the next succeeding Interest Payment Date to pay Additional Amounts with respect to the convertible notes with respect to withholding taxes imposed by the United Kingdom, the Netherlands, Netherlands Antilles, Bermuda or the Cayman Islands, (or any political subdivision or taxing authority thereof or therein)(a "Withholding Tax") and such Withholding Tax is imposed at a rate that exceeds the rate (if any) at which Withholding Tax was imposed on the Relevant Date; provided, however, that (1) this paragraph shall not apply to the extent that, at the Relevant Date it was known or would have been known had professional advice of a nationally recognized accounting firm in the United Kingdom, the Netherlands, Netherlands Antilles, Bermuda or the Cayman Islands, as the case may be, been sought, that a Change in Tax Law in the United Kingdom, the Netherlands, Netherlands Antilles, Bermuda or the Cayman Islands, was to occur after the Relevant Date, (2) no such notice of redemption may be given earlier than 90 days prior to the earliest date on which NTL would be obliged to pay such Additional Amounts were a payment in respect of the Convertible Notes then due, (3) at the time such notice of redemption is given, such obligation to pay such Additional Amounts remains in effect and (4) the payment of such Additional Amounts cannot be avoided by the use of any reasonable measures available to NTL. The convertible notes may also be redeemed, in whole but not in part, at any time at a redemption price equal to the principal amount thereof plus accrued and unpaid interest and Liquidated Damages, if any, to the date fixed for redemption if the person formed after the Relevant Date by a consolidation, amalgamation, reorganization or reconstruction (or other similar arrangement) of NTL or the person into which NTL is merged after the Relevant Date or to which NTL conveys, transfers or leases its properties and assets after the Relevant Date substantially as an entirety (collectively, a "Subsequent Consolidation") is required, as a consequence of such Subsequent Consolidation and as a consequence of a Change in Tax Law in the United Kingdom, the Netherlands, the Netherlands Antilles, Bermuda or the Cayman Islands occurring after the date of such Subsequent Consolidation to pay Additional Amounts with respect to Withholding Tax on the Convertible Notes and such Withholding Tax is imposed at a rate that exceeds the rate (if any) at which Withholding Tax was or would have been imposed on the date of such Subsequent Consolidation; provided, however, that this paragraph shall not apply to the extent that, at the date of such Subsequent Consolidation it was known or would have been known had professional advice of a nationally recognized accounting firm in the United Kingdom been sought, that a Change in Tax Law in the United Kingdom, the Netherlands, the Netherlands Antilles, 19 23 Bermuda or the Cayman Islands was to occur after such date. NTL will also pay, or make available for payment, to holders on the redemption date any Additional Amounts (as described, but subject to the exceptions referred to, under "Additional Amounts") resulting from the payment of such redemption price. MANDATORY REDEMPTION Except as set forth below under "Repurchase at the option of holders," NTL is not required to make mandatory redemption or sinking fund payments with respect to the convertible notes. REPURCHASE AT THE OPTION OF HOLDERS Upon the occurrence of a Change of Control, each holder of convertible notes shall have the right to require NTL to repurchase all or any part (equal to $1,000 or an integral multiple thereof) of such holder's Convertible Notes pursuant to the offer described below (the "Change of Control Offer") at a purchase price equal to 101% of the principal amount thereof, plus accrued and unpaid interest and Liquidated Damages, if any, thereon to the Change of Control Payment Date (the "Change of Control Payment"). Within 40 days following any Change of Control, NTL shall mail a notice to each holder stating: (1) that the Change of Control Offer is being made pursuant to the covenant entitled "Change of Control" and that all Convertible Notes tendered will be accepted for payment; (2) the purchase price and the purchase date, which shall be no earlier than 30 days nor later than 40 days from the date such notice is mailed (the "Change of Control Payment Date"); (3) that any convertible notes not tendered will continue to accrue interest; (4) that, unless NTL defaults in the payment of the Change of Control Payment, all convertible notes accepted for payment pursuant to the Change of Control Offer shall cease to accrue interest after the Change of Control Payment Date; (5) that holders electing to have any convertible notes purchased pursuant to a Change of Control Offer will be required to surrender the convertible notes, with the form entitled "Option of Holder to Elect Purchase" on the reverse of the convertible notes completed, to the Paying Agent at the address specified in the notice prior to the close of business on the third Business Day preceding the Change of Control Payment Date; (6) that holders will be entitled to withdraw their election if the Paying Agent receives, not later than the close of business on the second Business Day preceding the Change of Control Payment Date, a telegram, telex, facsimile transmission or letter setting forth the name of the holder, the principal amount of convertible notes delivered for purchase, and a statement that such holder is withdrawing his election to have such convertible notes purchased; and 20 24 (7) that holders whose convertible notes are being purchased only in part will be issued new convertible notes equal in principal amount to the unpurchased portion of the convertible notes surrendered, which unpurchased portion must be equal to $1,000 in principal amount or an integral multiple thereof. NTL will comply with the requirements of Rules 13e-4 and 14e-1 under the Securities Exchange Act of 1934, as amended, and any other securities laws and regulations thereunder to the extent such laws and regulations are applicable in connection with the repurchase of the convertible notes in connection with a Change of Control. On the Change of Control Payment Date, NTL will, to the extent lawful, (1) accept for payment convertible notes or portions thereof tendered pursuant to the Change of Control Offer, (2) deposit with the paying agent an amount equal to the Change of Control Payment in respect of all convertible notes or portions thereof so tendered and (3) deliver or cause to be delivered to the Trustee the convertible notes so accepted together with an officers' certificate stating the convertible notes or portions thereof tendered to NTL. The paying agent shall promptly mail to each holder of convertible notes so accepted for payment (or, if such holder of convertible notes holds an aggregate principal amount in excess of $5,000,000 will be paid by wire transfer in immediately available funds at the election of such holder if such holder previously specified in writing to NTL and the paying agent) an amount equal to the purchase price for such convertible notes, and the trustee shall promptly authenticate and mail to each holder a new convertible note equal in principal amount to any unpurchased portion of the convertible notes surrendered, if any; provided that each such new convertible note shall be in a principal amount of $1,000 or an integral multiple thereof. NTL will publicly announce the results of the Change of Control Offer on or as soon as practicable after the Change of Control Payment Date. Except as described above with respect to a Change of Control, the indenture does not contain any other provisions that permit the holders of the convertible notes to require that NTL repurchase or redeem the convertible notes in the event of a takeover, recapitalization or similar restructuring. Although the indenture contains several covenants, including the provision described under "-- Merger, Consolidation or Sale of Assets" below, the provisions of the indenture may not necessarily afford holders of the convertible notes protection in the event of a highly leveraged transaction, reorganization, restructuring, merger or similar transaction involving NTL that may adversely affect the holders of the convertible notes. The Change of Control Offer requirement of the convertible notes may in certain circumstances make more difficult or discourage a takeover of NTL, and, thus, the removal of incumbent management. The Change of Control Offer requirement, however, is not the result of management's knowledge of any specific effort to accumulate NTL's stock or to obtain control of NTL by means of a merger, tender offer, solicitation or 21 25 otherwise, or part of a plan by management to adopt a series of antitakeover provisions. Instead, the Change of Control Offer requirement is a result of negotiations between NTL and the initial purchasers. Management has no present intention to engage in a transaction involving a Change of Control, although it is possible that NTL would decide to do so in the future. Subject to the limitations discussed below, NTL could, in the future, enter into certain transactions, including acquisitions, refinancings or other recapitalizations, that would not constitute a Change of Control under the indenture, but that could increase the amount of indebtedness outstanding at such time or otherwise affect NTL's capital structure or credit ratings. Change of control provisions are contained in each of the indentures for NTL's 11 1/2% notes, in an aggregate principal amount of $625 million, NTL's 12 3/8% notes, in an aggregate principal amount at maturity of $450 million, NTL's 9 1/2% Senior Notes Due 2008 (the "9 1/2% Notes"), in an aggregate principal amount of L125 million ($207 million), NTL's 10 3/4% Senior Deferred Coupon Notes Due 2008 (the "10 3/4% Notes"), in an aggregate principal amount at maturity of L300 million ($498 million), NTL's 9 3/4% Senior Deferred Coupon Notes Due 2008 (the "9 3/4% Notes"), in an aggregate principal amount at maturity of $1.3 billion, NTL's 10% Senior Notes Due 2007 (the "10% Notes"), in an aggregate principal amount of $400 million, NTL's 12 3/4% Senior Deferred Coupon Notes Due 2005 (the "12 3/4% Notes"), in an aggregate principal amount at maturity of $277,803,500, and NTL's 11 1/2% Deferred Coupon Notes Due 2006 (the "11 1/2% Deferred Coupon Notes" and, together with the 11 1/2% Notes, the 12 3/8% Notes, the 9 1/2% Notes, the 10 3/4% Notes, the 9 3/4% Notes, the 10% Notes and the 12 3/4% Notes, the "Senior Notes"), in an aggregate principal amount at maturity of $1.05 billion and NTL's 9 3/4% Senior Deferred Coupon Notes Due 2009 in an aggregate principal amount at maturity of L330 million ($548 million), which rank senior to the Convertible Notes. The indentures for the Existing Convertible Notes, for the outstanding indebtedness of Diamond and for the Partners 11.20% Debentures also contain change of control provisions. NTL's ability to pay cash to the holders of Convertible Notes pursuant to a Change of Control Offer may be limited by NTL's then existing financial resources. See "Risk Factors -- Our substantial leverage could adversely affect our financial health and prevent us from fulfilling our obligation under the notes" and "-- NTL Incorporated and NTL Communications Corp. are holding companies that are dependent upon cash flow from their subsidiaries to meet their obligations -- their ability to access that cash flow may be limited in some circumstances." NTL's credit facility does, and any future credit agreements or other agreements relating to indebtedness of NTL may, contain prohibitions or restrictions on NTL's ability to effect a Change of Control Payment. In the event a Change of Control occurs at a time when such prohibitions or restrictions are in effect, NTL could seek the consent of its lenders to the purchase of the convertible notes and other indebtedness containing change of control provisions or could attempt to refinance the borrowings that contain such prohibition. If NTL does not obtain such a consent or repay such borrowings, NTL will be effectively prohibited from purchasing the convertible notes. In such case, NTL's failure to purchase tendered convertible notes would constitute an Event of Default under the indenture. Moreover, the events that 22 26 constitute a Change of Control under the indenture constitute events of default under NTL's credit facility and may also constitute events of default under future debt instruments or credit agreements of NTL or NTL's subsidiaries. Such events of default may permit the lenders under such debt instruments or credit agreements to accelerate the debt and, if such debt is not paid or repurchased, to enforce their security interests in what may be all or substantially all of the assets of NTL's subsidiaries. Any such enforcement may limit NTL's ability to raise cash to repay or repurchase the convertible notes. For the reasons described in the three immediately preceding paragraphs, there can be no assurance that NTL will be able to repurchase the convertible notes upon a Change of Control. The Board of Directors of NTL may not, by itself, waive or modify the Change of Control provisions of the indenture. All the provisions of the indenture, including the Change of Control provision, may only be waived or modified pursuant to the provisions described under "-- Amendment, supplement and waiver" below. SELECTION AND NOTICE If less than all of the convertible notes are to be redeemed at any time, selection of convertible notes for redemption will be made by the trustee in compliance with the requirements of the principal national securities exchange, if any, on which the convertible notes are listed, or, if the convertible notes are not so listed, on a pro rata basis, by lot or by such method as the trustee shall deem fair and appropriate, provided that no convertible notes of $1,000 or less shall be redeemed in part. Notice of redemption shall be mailed by first class mail at least 30 but not more than 60 days, prior to the redemption date to each holder of convertible notes to be redeemed at its registered address. If any convertible note is to be redeemed in part only, the notice of redemption that relates to such convertible note shall state the portion of the principal amount thereof to be redeemed. A new convertible note in principal amount equal to the unredeemed portion thereof will be issued in the name of the holder thereof upon cancellation of the original convertible note. On and after the redemption date, interest ceases to accrue on convertible notes or portions of them called for redemption. CONVERSION The holder of any convertible note has the right, exercisable at any time after 90 days following the date of original issuance thereof and prior to maturity, to convert the principal amount thereof (or any portion thereof that is an integral multiple of $1,000) into shares of common stock of NTL Incorporated at the conversion price of $61.25, subject to adjustment as described below (the "Conversion Price"), except that if a convertible note is called for redemption, the conversion right will terminate at the close of business on the business day immediately preceding the date fixed for redemption. As a result of the adjustments described above, after the recent corporate restructuring, the convertible notes became convertible into shares of NTL Incorporated common stock instead of shares of NTL Communications Corp. common stock and, as a 23 27 consequence, the adjustments described below relate to NTL Incorporated instead of NTL Communications Corp. Upon conversion, no adjustment or payment will be made for interest, but if any holder surrenders a convertible note for conversion after the close of business on the record date for the payment of an installment of interest and prior to the opening of business on the next interest payment date, then, notwithstanding such conversion, the interest payable on such interest payment date will be paid to the registered holder of such convertible note on such record date. In such event, such convertible note, when surrendered for conversion, need not be accompanied by payment of an amount equal to the interest payable on such interest payment date on the portion so converted. No fractional shares will be issued upon conversion but a cash adjustment will be made for any fractional interest. The indenture provides that the Conversion Price is subject to adjustment upon the occurrence of certain events, including: (1) the issuance of shares of common stock as a dividend or distribution on the common stock; (2) the subdivision or combination of the outstanding common stock; (3) the issuance to substantially all holders of common stock of rights or warrants to subscribe for or purchase common stock (or securities convertible into common stock) at a price per share less than the then current market price per share, as defined; (4) the distribution of shares of capital stock of NTL Incorporated (other than common stock), evidences of indebtedness or other assets (excluding dividends in cash, except as described in clause (5) below) to all holders of common stock; (5) the distribution, by dividend or otherwise, of cash to all holders of common stock in an aggregate amount that, together with the aggregate of any other distributions of cash that did not trigger a Conversion Price adjustment to all holders of its common stock within the 12 months preceding the date fixed for determining the stockholders entitled to such distribution and all Excess Payments in respect of each tender offer or other negotiated transaction by NTL Incorporated or any of its Subsidiaries for common stock concluded within the preceding 12 months not triggering a conversion price adjustment, exceeds 10% of the product of the current market price per share (determined as set forth below) on the date fixed for the determination of stockholders entitled to receive such distribution times the number of shares of common stock outstanding on such date; (6) payment of an Excess Payment in respect of a tender offer or other negotiated transaction by NTL Incorporated or any of its subsidiaries for common stock, if the aggregate amount of such Excess Payment, together with the aggregate amount of cash distributions made within the preceding 12 months not triggering a conversion price adjustment and all Excess Payments in respect of each tender offer or other negotiated transaction by NTL Incorporated or any of its subsidiaries for common stock concluded within the preceding 12 months not triggering a conversion price adjustment, exceeds 10% of the product of the current market price 24 28 per share on the expiration of such tender offer times the number of shares of common stock outstanding on such date; and (7) the distribution to substantially all holders of common stock of rights or warrants to subscribe for securities (other than those referred to in clause (3) above). In the event of a distribution to substantially all holders of common stock of rights to subscribe for additional shares of Incorporated's capital stock (other than those referred to in clause (3) above), NTL may, instead of making any adjustment in the Conversion Price, make proper provision so that each holder of a convertible note who converts such convertible note after the record date for such distribution and prior to the expiration or redemption of such rights shall be entitled to receive upon such conversion, in addition to shares of common stock, an appropriate number of such rights. No adjustment of the Conversion Price will be made until cumulative adjustments amount to one percent or more of the Conversion Price as last adjusted. If NTL Incorporated reclassifies or changes its outstanding common stock, or consolidates with or merges into or transfers or leases all or substantially all of its assets to any person, or is a party to a merger that reclassifies or changes its outstanding common stock, the convertible notes will become convertible into the kind and amount of securities, cash or other assets which the holders of the convertible notes would have owned immediately after the transaction if the holders had converted the convertible notes immediately before the effective date of the transaction. The indenture also provides that if rights, warrants or options expire unexercised the Conversion Price shall be readjusted to take into account the actual number of such warrants, rights or options which were exercised. In the indenture, the "current market price" per share of common stock on any date shall be deemed to be the average of the Daily Market Prices for the shorter of (1) 30 consecutive business days ending on the last full trading day on the exchange or market referred to in determining such Daily Market Prices prior to the time of determination (as defined in the indenture) or (2) the period commencing on the date next succeeding the first public announcement of the issuance of such rights or warrants or such distribution through such last full trading day prior to the time of determination. NTL is permitted to make such reductions in the Conversion Price as it, in its discretion, determines to be advisable in order that any stock dividend, subdivision of shares, distribution or rights to purchase stock or securities or distribution of securities convertible into or exchangeable for stock made by NTL Incorporated to its stockholders will not be taxable to the recipients. 25 29 SUBORDINATION OF CONVERTIBLE NOTES The convertible notes are subordinate in right of payment to all existing and future Senior Debt. The indenture does not restrict the amount of Senior Debt or other Indebtedness of NTL or any Subsidiary of NTL. The payment of the principal of, interest on or any other amounts due on the convertible notes is subordinated in right of payment to the prior payment in full of all Senior Debt of NTL. No payment on account of principal of, redemption of, interest on or any other amounts due on the convertible notes, including, without limitation, any payments on the Change of Control Offer, and no redemption, purchase or other acquisition of the convertible notes may be made unless (1) full payment of amounts then due on all Senior Debt have been made or duly provided for pursuant to the terms of the instrument governing such Senior Debt, and (2) at the time for, or immediately after giving effect to, any such payment, redemption, purchase or other acquisition, there shall not exist under any Senior Debt or any agreement pursuant to which any Senior Debt has been issued, any default which shall not have been cured or waived and which shall have resulted in the full amount of such Senior Debt being declared due and payable. In addition, the indenture provides that if any of the holders of any issue of Senior Debt notify (the "Payment Blockage Notice") NTL and the trustee that a default has occurred giving the holders of such Senior Debt the right to accelerate the maturity thereof, no payment on account of principal, redemption, interest, Liquidated Damages, if any, or any other amounts due on the convertible notes and no purchase, redemption or other acquisition of the convertible notes will be made for the period (the "Payment Blockage Period") commencing on the date notice is received and ending on the earlier of (A) the date on which such event of default shall have been cured or waived or (B) 180 days from the date notice is received. Notwithstanding the foregoing, only one Payment Blockage Notice with respect to the same event of default or any other events of default existing and known to the person giving such notice at the time of such notice on the same issue of Senior Debt may be given during any period of 360 consecutive days unless such event of default or such other events of default have been cured or waived for a period of not less than 90 consecutive days. No new Payment Blockage Period may be commenced by the holders of Senior Debt during any period of 360 consecutive days unless all events of default which triggered the preceding Payment Blockage Period have been cured or waived. Upon any distribution of its assets in connection with any dissolution, winding-up, liquidation or reorganization of NTL or acceleration of the principal amount due on the convertible notes because of an Event of Default, all Senior Debt must be paid in full before the holders of the convertible notes are entitled to any payments whatsoever. 26 30 As a result of these subordination provisions, in the event of NTL's insolvency, holders of the convertible notes may recover ratably less than general creditors of NTL. If payment of the convertible notes is accelerated because of an Event of Default, NTL or the Trustee shall promptly notify the holders of Senior Debt or the trustee(s) for such Senior Debt of the acceleration. NTL may not pay the convertible notes until five days after such holders or trustee(s) of Senior Debt receive notice of such acceleration and, thereafter, may pay the convertible notes only if the subordination provisions of the Indenture otherwise permit payment at that time. The convertible notes are obligations exclusively of NTL. Since the operations of NTL are conducted through its Subsidiaries, the cash flow and the consequent ability to service debt, including the convertible notes, of NTL, are dependent upon the earnings of its Subsidiaries and the distribution of those earnings to, or upon loans or other payments of funds by those Subsidiaries to, NTL. The payment of dividends and the making of loans and advances to NTL by its Subsidiaries may be subject to statutory or contractual restrictions, are dependent upon the earnings of those Subsidiaries and are subject to various business considerations. Any right of NTL to receive assets of any of its Subsidiaries upon their liquidation or reorganization (and the consequent right of the holders of the convertible notes to participate in those assets) will be effectively subordinated to the claims of that Subsidiary's creditors (including trade creditors), except to the extent that NTL is itself recognized as a creditor of such Subsidiary, in which case the claims of NTL would still be subordinate to any security interests in the assets of such Subsidiary and any indebtedness of such Subsidiary senior to that held by NTL. On March 31, 1999, NTL had approximately $5.6 billion of indebtedness outstanding that would have constituted Senior Debt (excluding liabilities of a type not required to be reflected as a liability on the balance sheet of NTL in accordance with GAAP) and approximately $2.5 billion of indebtedness outstanding and other obligations of Subsidiaries of NTL (excluding intercompany liabilities and liabilities of a type not required to be reflected as a liability on the balance sheet of such subsidiaries in accordance with GAAP) as to which the convertible notes would have been structurally subordinated. The indenture will not limit the amount of additional indebtedness, including Senior Debt, which NTL can create, incur, assume or guarantee, nor will the indenture limit the amount of indebtedness and other liabilities which any Subsidiary can create, incur, assume or guarantee. In the event that, notwithstanding the foregoing, the trustee or any holder of convertible notes receives any payment or distribution of assets of NTL of any kind in contravention of any of the terms of the Indenture, whether in cash, property or securities, including, without limitation by way of set-off or otherwise, in respect of the convertible notes before all Senior Debt is paid in full, then such payment or distribution will be held by the recipient in trust for the benefit of holders of Senior Debt, and will be immediately paid over or delivered to the holders of Senior Debt or their representative or representatives to the extent necessary to make payment in full of all 27 31 Senior Debt remaining unpaid, after giving effect to any concurrent payment or distribution, or provision therefor, to or for the holders of Senior Debt. MERGER, CONSOLIDATION OR SALE OF ASSETS The indenture provides that NTL may not consolidate or merge with or into (whether or not NTL is the surviving corporation), or sell, assign, transfer, lease, convey or otherwise dispose of all or substantially all of its properties or assets in one or more related transactions to another corporation, person or entity unless (1) NTL is the surviving corporation or the entity or the person formed by or surviving any such consolidation or merger (if other than NTL) or to which such sale, assignment, transfer, lease, conveyance or other disposition shall have been made is a corporation organized or existing under the laws of the United Kingdom, the Netherlands, the Netherlands Antilles, Bermuda, the Cayman Islands or of the United States, any state thereof or the District of Columbia; (2) the entity or person formed by or surviving any such consolidation or merger (if other than NTL) or the entity or person to which such sale, assignment, transfer, lease, conveyance or other disposition will have been made assumes all the Obligations (including the due and punctual payment of Additional Amounts if the surviving corporation is a corporation organized or existing under the laws of the United Kingdom, the Netherlands, the Netherlands Antilles, Bermuda or the Cayman Islands) of NTL under the convertible notes and the indenture, pursuant to a supplemental indenture in a form reasonably satisfactory to the Trustee; (3) immediately after such transaction no Default or Event of Default exists; (4) NTL or any entity or person formed by or surviving any such consolidation or merger or to which such sale, assignment, transfer, lease, conveyance or other disposition will have been made will have a ratio of Indebtedness to Annualized Pro Forma EBITDA equal to or less than the ratio of Indebtedness to Annualized Pro Forma EBITDA of NTL immediately preceding the transaction; provided, however, that, if the ratio of Indebtedness to Annualized Pro Forma EBITDA of NTL immediately preceding such transaction is 6:1 or less, then the ratio of Indebtedness to Annualized Pro Forma EBITDA of NTL may be 0.5 greater than such ratio immediately preceding such transaction; and (5) such transaction would not result in the loss of any material authorization or Material License of NTL or its Subsidiaries. ADDITIONAL AMOUNTS The following provisions of this paragraph will apply only in the event that NTL becomes, or a successor to NTL is, a corporation organized or existing under the laws of the United Kingdom, the Netherlands, the Netherlands Antilles, Bermuda or the Cayman Islands. All payments made by NTL on the convertible notes will be made without deduction or withholding, for or on account of, any and all present or future taxes, duties, assessments, or governmental charges of whatever nature unless the 28 32 deduction or withholding of such taxes, duties, assessments or governmental charges is then required by law. If any deduction or withholding for or on account of any present or future taxes, assessments or other governmental charges of the United Kingdom, the Netherlands, the Netherlands Antilles, Bermuda or the Cayman Islands (or any political subdivision or taxing authority thereof or therein) shall at any time be required in respect of any amounts to be paid by NTL under the convertible notes, NTL will pay or cause to be paid such additional amounts ("Additional Amounts") as may be necessary in order that the net amounts received by a holder of a convertible note after such deduction or withholding shall be not less than the amounts specified in such convertible note to which such holder is entitled; provided, however, that NTL shall not be required to make any payment of Additional Amounts for or on account of: (1) any tax, assessment or other governmental charge to the extent such tax, assessment or other governmental charge would not have been imposed but for (a) the existence of any present or former connection between such holder (or between a fiduciary, settlor, beneficiary, member or shareholder of, or possessor of a power over, such holder, if such holder is an estate, nominee, trust, partnership or corporation), other than the holding of a convertible note or the receipt of amounts payable in respect of a convertible note and the United Kingdom, the Netherlands, the Netherlands Antilles, Bermuda or the Cayman Islands or any political subdivision or taxing authority thereof or therein, including, without limitation, such holder (or such fiduciary, settlor, beneficiary, member, shareholder or possessor) being or having been a citizen or resident thereof or being or having been present or engaged in trade or business therein or having or having had a permanent establishment therein or (b) the presentation of a convertible note (where presentation is required) for payment on a date more than 30 days after the date on which such payment became due and payable or the date on which payment thereof is duly provided for, whichever occurs later, except to the extent that the holder would have been entitled to Additional Amounts had the convertible note been presented on the last day of such period of 30 days; (2) any tax, assessment or other governmental charge that is imposed or withheld by reason of the failure to comply by the holder of a convertible note, or, if different, the beneficial owner of the interest payable on a convertible note, with a timely request of NTL addressed to such holder or beneficial owner to provide information, documents or other evidence concerning the nationality, residence, identity or connection with the taxing jurisdiction of such holder or beneficial owner which is required or imposed by a statute, regulation or administrative practice of the taxing jurisdiction a precondition to exemption from all or part of such tax, assessment or governmental charge; (3) any estate, inheritance, gift, sales, transfer, personal property or similar tax, assessment or other governmental charge; 29 33 (4) any tax, assessment or other governmental charge which is collectible otherwise than by withholding from payments of principal amount at maturity, redemption amount, Change of Control Payment, interest with respect to a convertible note or withholding from the proceeds of a sale or exchange of a convertible note; (5) any tax, assessment or other governmental charge required to be withheld by any Paying Agent from any payment of principal amount at maturity, redemption amount, Change of Control Payment or interest with respect to a convertible note, if such payment can be made, and is in fact made, without such withholding by any other Paying Agent located inside the United States; (6) any tax, assessment or other governmental charge imposed on a holder that is not the beneficial owner of a convertible note to the extent that the beneficial owner would not have been entitled to the payment of any such Additional Amounts had the beneficial owner directly held such convertible note; (7) any combination of items (1), (2), (3), (4), (5) and (6) above; nor shall Additional Amounts be paid with respect to any payment of the principal of, or any interest on, any convertible note to any holder who is a fiduciary or partnership or other than the sole beneficial owner of such payment to the extent that a beneficiary or settlor would not have been entitled to any Additional Amounts had such beneficiary or settlor been the holder of such convertible note. All references to interest on the convertible notes in the indenture or the convertible notes shall include any Additional Amounts payable to NTL pursuant to this paragraph. REPORTS Whether or not required by the rules and regulations of the Commission, so long as any convertible notes are outstanding, NTL will file with the Commission and furnish to the holders of the convertible notes all quarterly and annual financial information required to be contained in a filing with the Commission on Forms 10-Q and 10-K (or the equivalent thereof under the Securities Exchange Act of 1934, as amended (the "Exchange Act") for foreign private issuers in the event NTL becomes a corporation organized under the laws of the United Kingdom, the Netherlands, the Netherlands Antilles, Bermuda or the Cayman Islands), including a "Management's Discussion and Analysis of Results of Operations and Financial Condition" and with respect to the annual information only, a report thereon by NTL's certified independent accountants, in each case, as required by the rules and regulations of the Commission as in effect on the Issuance Date. EVENTS OF DEFAULTS AND REMEDIES The indenture provides that each of the following constitutes an Event of Default: (1) default for 30 days in the payment when due of interest (and Additional Amounts, if applicable) on the convertible notes; (2) default in payment when due of principal on the convertible notes; 30 34 (3) failure by NTL to comply with the provisions described under "-- Repurchase at the option of the holders"; (4) failure by NTL for 60 days after notice to comply with certain other covenants and agreements contained in the indenture or the convertible notes; (5) default under any mortgage, indenture or instrument under which there may be issued or by which there may be secured or evidenced any indebtedness for money borrowed by NTL or any of its Restricted Subsidiaries (or the payment of which is guaranteed by NTL or any of its Restricted Subsidiaries), whether such Indebtedness or guarantee now exists, or is created after the Issuance Date, which default (a) is caused by a failure to pay when due principal or interest on such Indebtedness within the grace period provided in such Indebtedness (which failure continues beyond any applicable grace period) (a "Payment Default") or (b) results in the acceleration of such Indebtedness prior to its express maturity and in each case, the principal amount of any such Indebtedness, together with the principal amount of any other such Indebtedness under which there has been a Payment Default or the maturity of which has been so accelerated, aggregates $10 million or more; (6) failure by NTL or any Restricted Subsidiary of NTL to pay final judgements (other than any judgment as to which a reputable insurance company has accepted full liability) aggregating in excess of $5 million, which judgments are not stayed within 60 days after their entry; (7) certain events of bankruptcy or insolvency with respect to NTL or any of its Material Subsidiaries; and (8) the revocation of a Material License. If any Event of Default occurs and is continuing, the trustee or the holders of at least 25% in principal amount of the then outstanding convertible notes may declare all the convertible notes to be due and payable immediately, subject to the provisions limiting payment described in "-- Subordination of convertible notes." Notwithstanding the foregoing, in the case of an Event of Default arising from certain events of bankruptcy or insolvency, with respect to NTL or any Material Subsidiary, all outstanding convertible notes will become due and payable without further action or notice. Holders of the convertible notes may not enforce the indenture or the convertible notes except as provided in the indenture. Subject to certain limitations, holders of a majority in principal amount of the then outstanding convertible notes may direct the trustee in its exercise of any trust or power. The trustee may withhold from holders of the convertible notes notice of any continuing Default or Event of Default (except a Default or Event of Default relating to the payment of principal or interest or Liquidated Damages, if any) if it determines that withholding notice is in their interest. The holders of a majority in aggregate principal amount of the convertible notes then outstanding by notice to the trustee may on behalf of the holders of all of the convertible notes waive any existing Default or Event of Default and its consequences 31 35 under the indenture except a continuing Default or Event of Default in the payment of interest on, or the principal of, the convertible notes. NTL is required to deliver to the trustee annually a statement regarding compliance with the indenture, and NTL is required, upon becoming aware of any Default or Event of Default, to deliver to the trustee a statement specifying such Default or Event of Default. NO PERSONAL LIABILITY OF DIRECTORS, OFFICERS, EMPLOYEES AND SHAREHOLDERS No director, officer, employee, incorporator or shareholder of NTL, as such, shall have any liability for any Obligations of NTL under the convertible notes or the indenture or for any claim based on, in respect of, or by reason of, such Obligations or their creation. Each holder of the convertible notes by accepting a convertible note waives and releases all such liability. The waiver and release are part of the consideration for issuance of the convertible notes. Such waiver may not be effective to waive liabilities under the federal securities laws and it is the view of the Commission that such a waiver is against public policy. BOOK-ENTRY, DELIVERY AND FORM The convertible notes sold within the United States to qualified institutional buyers were issued in the form of one or more global notes. The global notes were deposited with, or on behalf of, DTC and registered in the name of DTC or its nominee. Except as set forth below, the global notes may be transferred, in whole and not in part, only to DTC or another nominee of DTC. Investors may hold their beneficial interests in the global notes directly through DTC if they are Participants in such system or indirectly through organizations that are Participants in such system. DTC is a limited-purpose trust company that was created to hold securities for its participating organizations (collectively, the "Participants" or "DTC's Participants") and to facilitate the clearance and settlement of transactions in such securities between Participants through electronic book-entry changes in accounts of its Participants. DTC's Participants include securities brokers and dealers (including the Initial Purchasers), banks and trust companies, clearing corporations and certain other organizations. Access to the Depositary's system is also available to other entities such as banks, brokers, dealers and trust companies (collectively, the "Indirect Participants" or "DTC's Indirect Participants") that clear through or maintain a custodial relationship with a Participant, either directly or indirectly. Persons who are not Participants may beneficially own securities held by or on behalf of DTC only through DTC's Participants or DTC's Indirect Participants. NTL expects that pursuant to procedures established by DTC ownership of the convertible notes evidenced by the global notes will be shown on, and the transfer of ownership thereof will be effected only through, records maintained by DTC (with respect to the interests of the Depositary's Participants), DTC's Participants and DTC's Indirect Participants. Prospective purchasers are advised that the laws of some states require that certain persons take physical delivery in definitive form of securities that 32 36 they own. Consequently, the ability to transfer convertible notes evidenced by the global notes will be limited to such extent. So long as the global note holder is the registered owner of any convertible notes, the global note holder will be considered the sole holder under the indenture of any convertible notes evidenced by the global notes. Beneficial owners of convertible notes evidenced by the global notes will not be considered the owners or holders thereof under the indenture for any purpose, including with respect to the giving of any directions, instructions or approvals to the trustee thereunder. Neither NTL nor the trustee will have any responsibility or liability for any aspect of the records of DTC or for maintaining, supervising or reviewing any records of DTC relating to the convertible notes. Payments in respect of the principal of, interest and Liquidated Damages, if any, on any convertible notes registered in the name of the global note holder on the applicable record date will be payable by the Trustee to or at the direction of the global note holder in its capacity as the registered holder under the Indenture. Under the terms of the indenture, NTL and the trustee may treat the persons in whose names convertible notes, including the global notes, are registered as the owners thereof for the purpose of receiving such payments. Consequently, neither NTL nor the trustee has or will have any responsibility or liability for the payment of such amounts to beneficial owners of convertible notes (including principal, interest and Liquidated Damages, if any). NTL believes, however, that it is currently the policy of DTC to immediately credit the accounts of the relevant Participants with such payments, in amounts proportionate to their respective holdings of beneficial interests in the relevant security as shown on the records of DTC. Payments by DTC's Participants and DTC's Indirect Participants to the beneficial owners of Convertible Notes will be governed by standing instructions and customary practice and will be the responsibility of DTC's Participants or DTC's Indirect Participants. CERTIFICATED NOTES The convertible notes sold to a limited number of "accredited investors" (as defined in Rule 501(a)(1), (2), (3), (4) or (7) under the Securities Act) were issued in the form of registered definitive certificates. Furthermore, subject to certain conditions, any person having a beneficial interest in the global notes may, upon request to the trustee, exchange such beneficial interest for convertible notes evidenced by certificated securities. Upon any such issuance, the trustee is required to register such certificated securities in the name of, and cause the same to be delivered to, such person or persons (or the nominee of any thereof). In addition, if (1) NTL notifies the trustee in writing that DTC is no longer willing or able to act as a depositary and NTL is unable to locate a qualified successor within 90 days or (2) NTL, at its option, notifies the trustee in writing that it elects to cause the issuance of convertible notes in the form of certificated securities under the Indenture, then, upon surrender by the global note holder of its global notes, 33 37 convertible notes in such form will be issued to each person that the global note holder and DTC identify as being the beneficial owner of the related convertible notes. Neither NTL nor the trustee will be liable for any delay by the global note holder or DTC in identifying the beneficial owners of convertible notes and NTL and the trustee may conclusively rely on, and will be protected in relying on, instructions from the Global Note Holder or DTC for all purposes. TRANSFER AND EXCHANGE A holder may transfer or exchange convertible notes in accordance with the indenture. The registrar and the trustee may require a holder, among other things, to furnish appropriate endorsements and transfer documents and NTL may require a holder to pay any taxes and fees required by law or permitted by the indenture. NTL is not required to transfer or exchange any convertible note selected for redemption. Also, NTL is not required to transfer or exchange any convertible note for a period of 15 days before a selection of convertible notes to be redeemed. The registered holder of a convertible note will be treated as the owner of it for all purposes. AMENDMENT, SUPPLEMENT AND WAIVER Except as provided in the next two succeeding paragraphs, the indenture or the convertible notes may be amended or supplemented with the consent of the holders of at least a majority in principal amount of the then outstanding convertible notes (including consents obtained in connection with a tender offer or exchange offer for convertible notes), and any existing default or compliance with any provision of the indenture or the convertible notes may be waived with the consent of the holders of a majority in principal amount of the then outstanding convertible notes (including consents obtained in connection with a tender offer or exchange offer for convertible notes). Without the consent of each holder affected, an amendment or waiver may not (with respect to any convertible notes held by a nonconsenting holder of convertible notes) (1) reduce the principal amount of convertible notes whose holders must consent to an amendment, supplement or waiver, (2) reduce the principal of or change the fixed maturity of any convertible note or alter the provisions with respect to the redemption of the convertible notes, (3) reduce the rate of or change the time for payment of interest on any Convertible Note, (4) waive a default in the payment of principal of or interest or Liquidated Damages, if any, on any convertible notes (except a rescission of acceleration of the convertible notes by the holders of at least a majority in aggregate principal amount of the convertible notes and a waiver of the payment default that resulted from such acceleration), 34 38 (5) make any convertible note payable in money other than that stated in the convertible notes, (6) make any change in the provisions of the indenture relating to waivers of past Defaults or the rights of holders of convertible notes to receive payments of principal of or interest or Liquidated Damages, if any, on the convertible notes, (7) waive a redemption payment with respect to any convertible note, (8) impair the right to convert the convertible notes into common stock, (9) modify the conversion or subordination provisions of the indenture in a manner adverse to the holders of the convertible notes or (10) make any change in the foregoing amendment and waiver provisions. Notwithstanding the foregoing, without the consent of any holder of convertible notes, NTL and the trustee may amend or supplement the indenture or the convertible notes to cure any ambiguity, defect or inconsistency, to provide for uncertificated convertible notes in addition to or in place of certificated convertible notes, to provide for the assumption of NTL's obligations to holders of the convertible notes in the case of a merger or consolidation, to make any change that would provide any additional rights or benefits to the holders of the convertible notes or that does not adversely affect the legal rights under the Indenture of any such holder, or to comply with requirements of the Commission in order to maintain the qualification of the indenture under the Trust Indenture Act. CONCERNING THE TRUSTEE The indenture contains certain limitations on the rights of the trustee, should it become a creditor of NTL, to obtain payment of claims in certain cases, or to realize on certain property received in respect of any such claim as security or otherwise. The trustee will be permitted to engage in other transactions; however, if it acquires any conflicting interest it must eliminate such conflict within 90 days, apply to the Commission for permission to continue or resign. The holders of a majority in principal amount of the then outstanding convertible notes will have the right to direct the time, method and place of conducting any proceeding for exercising any remedy available to the trustee, subject to certain exceptions. The indenture provides that, in case an Event of Default shall occur (which shall not have been cured), the trustee will be required, in the exercise of its power, to use the degree of care of a prudent man in the conduct of his own affairs. Subject to such provisions, the trustee will be under no obligation to exercise any of its rights or powers under the indenture at the request of any holder of convertible notes, unless such holder shall have offered to the trustee security and indemnity satisfactory to it against any loss, liability or expense. ADDITIONAL INFORMATION Anyone who receives this prospectus may obtain a copy of the indenture and the Registration Rights Agreement without charge by writing to NTL, 110 East 59th Street, 35 39 New York, New York 10022, Attention: Richard J. Lubasch, Esq., Senior Vice President, General Counsel and Secretary. DEFINITIONS Set forth below are selected defined terms used in the indenture. Reference is made to the indenture for a full disclosure of all such terms, as well as any other capitalized terms used in this "Description of the Convertible Notes" section of the prospectus for which no definition is provided. "Annualized Pro Forma EBITDA" means, with respect to any person, such person's Pro Forma EBITDA for the latest fiscal quarter multiplied by four. "Capital Stock" means any and all shares, interests, participations, rights or other equivalents (however designated) of corporate stock, including, without limitation, partnership interests. "Change of Control" means (1) the sale, lease or transfer of all or substantially all of the assets of NTL to any "Person" or "group" (within the meaning of Sections 13(d)(3) and 14(d)(2) of the Exchange Act or any successor provision to either of the foregoing, including any group acting for the purpose of acquiring, holding or disposing of securities within the meaning of Rule 13d-5(b)(1) under the Exchange Act) (other than any Permitted Holder), (2) the approval by the requisite stockholders of NTL of a plan of liquidation or dissolution of NTL, (3) any "Person" or "group" (within the meaning of Sections 13(d) and 14(d)(2) of the Exchange Act or any successor provision to either of the foregoing, including any group acting for the purpose of acquiring, holding or disposing of securities within the meaning of Rule 13d-5(b)(1) under the Exchange Act), other than any Permitted Holder, becomes the "beneficial owner" (as defined in Rule 13d-3 under the Exchange Act) of more than 50% of the total voting power of all classes of the voting stock of NTL and/or warrants or options to acquire such voting stock, calculated on a fully diluted basis, unless, as a result of such transaction, the ultimate direct or indirect ownership of NTL is substantially the same immediately after such transaction as it was immediately prior to such transaction, or (4) during any period of two consecutive years, individuals who at the beginning of such period constituted NTL's Board of Directors (together with any new directors whose election or appointment by such board or whose nomination for election by the shareholders of NTL was approved by a vote of a majority of the directors then still in office who were either directors at the beginning of such period or whose election or nomination for election was previously so approved) cease for any reason to constitute a majority of NTL's Board of Directors then in office. 36 40 "Consolidated Interest Expense" means, for any person, for any period, the amount of interest in respect of Indebtedness (including amortization of original issue discount, amortization of debt issuance costs, and noncash interest payments on any Indebtedness and the interest portion of any deferred payment obligation and after taking into account the effect of elections made under any Interest Rate Agreement, however denominated, with respect to such Indebtedness), the amount of Redeemable Dividends, Restricted Subsidiary Preferred Stock Dividends and the interest component of rentals in respect of any capital lease obligation paid, in each case whether accrued or scheduled to be paid or accrued by such person and its Subsidiaries (other than Non-Restricted Subsidiaries) during such period to the extent such amounts were deducted in computing Consolidated Net Income, determined on a consolidated basis in accordance with GAAP. For purposes of this definition, interest on a capital lease obligation shall be deemed to accrue at an interest rate reasonably determined by such person to be the rate of interest implicit in such capital lease obligation in accordance with GAAP consistently applied. "Consolidated Net Income" means, with respect to any person for any period, the aggregate of the Net Income of such person and its Subsidiaries (other than Non-Restricted Subsidiaries) for such period, on a consolidated basis, determined in accordance with GAAP; provided that (1) the Net Income of any person that is not a Subsidiary or that is accounted for by the equity method of accounting shall be included only to the extent of the amount of dividends or distributions paid to the referent person or a Wholly Owned Subsidiary, (2) the Net Income of any person that is a Subsidiary (other than a Subsidiary of which at least 80% of the Capital Stock having ordinary voting power for the election of directors or other governing body of such Subsidiary is owned by the referent person directly or indirectly through one or more Subsidiaries) shall be included only to the extent of the amount of dividends or distributions paid to the referent person or a Wholly Owned Subsidiary, (3) the Net Income of any person acquired in a pooling of interests transaction for any period prior to the date of such acquisition shall be excluded and (4) the cumulative effect of a change in accounting principles shall be excluded. "Default" means any event that is or, with the passage of time or the giving of notice or both, would be an Event of Default. "Disqualified Stock" means any Capital Stock which, by its terms (or by the terms of any security into which it is convertible or for which it is exchangeable), or upon the happening of any event, matures or is mandatorily redeemable, pursuant to a sinking fund obligation or otherwise, or redeemable at the option of the holder thereof, in whole or in part, on or prior to the date on which the Convertible Notes mature. "EBITDA" means, for any person, for any period, an amount equal to (1) the sum of 37 41 (a) Consolidated Net Income for such period (exclusive of any gain or loss realized in such period upon an Asset Sale), plus (b) the provision for taxes for such period based on income or profits to the extent such income or profits were included in computing Consolidated Net Income and any provision for taxes utilized in computing net loss under clause (i) hereof, plus (c) Consolidated Interest Expense for such period, plus (d) depreciation for such period on a consolidated basis, plus (e) amortization of intangibles for such period on a consolidated basis, plus (f) any other noncash item reducing Consolidated Net Income for such period, minus (2) all noncash items increasing Consolidated Net Income for such period, all for such person and its Subsidiaries determined in accordance with GAAP consistently applied. "Excess Payment" means the excess of (A) the aggregate of the cash and value of other consideration paid by the Company or any of its Subsidiaries with respect to shares acquired in a tender offer or other negotiated transaction over (B) the market value of such acquired shares after giving effect to the completion of a tender offer or other negotiated transaction. "Exchange Rate Contract" means, with respect to any person, any currency swap agreements, forward exchange rate agreements, foreign currency futures or options, exchange rate collar agreements, exchange rate insurance and other agreements or arrangements, or combination thereof, designed to provide protection against fluctuations in currency exchange rates. An Exchange Rate Contract may also include an Interest Rate Agreement. "Existing Convertible Notes" means NTL's 7% Convertible Subordinated Notes Due 2008. "GAAP" means generally accepted accounting principles set forth in the opinions and pronouncements of the Accounting Principles Board of the American Institute of Certified Public Accountants and statements and pronouncements of the Financial Accounting Standards Board or in such other statements by such other entity as approved by a significant segment of the accounting profession, which are in effect on the Issuance Date. "Global Notes" means the Rule 144A Global Notes. "Guarantee" means a guarantee (other than by endorsement of negotiable instruments for collection in the ordinary course of business), direct or indirect, in any 38 42 manner (including, without limitation, letters of credit and reimbursement agreements in respect thereof), of all or any part of any Indebtedness. "Indebtedness" means, with respect to any person, any indebtedness of such person, whether or not contingent, in respect of borrowed money or evidenced by bonds, notes, debentures or similar instruments or letters of credit (or reimbursement agreements in respect thereof) or representing the balance deferred and unpaid of the purchase price of any property (including pursuant to capital leases and sale-and-leaseback transactions) or representing any hedging obligations under an Exchange Rate Contract or an Interest Rate Agreement, except any such balance that constitutes an accrued expense or trade payable if and to the extent any of the foregoing indebtedness (other than obligations under an Exchange Rate Contract or an Interest Rate Agreement) would appear as a liability upon a balance sheet of such person prepared in accordance with GAAP, and also include to the extent not otherwise included, the Guarantee of items which would be included within this definition. "Interest Rate Agreement" means, for any person, any interest rate swap agreement, interest rate cap agreement, interest rate collar agreement or other similar agreement designed to protect the party indicated therein against fluctuations in interest rates. "Issuance Date" means the date on which the convertible notes are first authenticated and issued. "Material License" means a license to operate a cable or telephone system held by NTL or any its Subsidiaries which system at the time of determination covers a number of Net Households which equals exceeds 5% of the aggregate number of Net Households covered by all of the licenses to operate cable telephone systems held by NTL and its Subsidiaries at such time. "Material Subsidiary" means (1) NTL UK Group, Inc. (formerly known as OCOM Sub II, Inc.), NTL Group Limited, CableTel Surrey, CableTel Cardiff Limited, CableTel Glasgow, CableTel Newport and CableTel Kirklees and (2) any other Subsidiary of the Company which is a "significant subsidiary" as defined in Rule 1-02(w) of Regulation S-X under the Securities Act and the Exchange Act (as such Regulation is in effect on the date of the Indenture). "Net Income" means, with respect to any person for a specific period, the net income (loss) of such person during such period, determined in accordance with GAAP, excluding, however, any gain (but not loss) during such period, together with any related provision for taxes on such gain (but not loss), realized during such period in connection with any Asset Sale (as defined in the Indenture) (including, without limitation, dispositions pursuant to sale-and-leaseback transactions), and excluding any extraordinary gain (but not loss) during such period, together with any related provision for taxes on such extraordinary gain (but not loss). "10% Notes" means NTL's 10% Series B Senior Notes Due 2007 outstanding at any given time. 39 43 "12 3/4% Notes" means NTL's 12 3/4% Series A Senior Deferred Coupon Notes Due 2005 outstanding at any given time. "11 1/2% Deferred Coupon Notes" means NTL's 11 1/2% Series B Senior Deferred Coupon Notes Due 2006 outstanding at any given time. "10 3/4% Notes" means NTL's 10 3/4% Senior Deferred Coupon Notes Due 2008 and NTL's 10 3/4% Series B Senior Deferred Coupon Notes due 2008 outstanding at any given time. "9 3/4% Notes" means NTL's 9 3/4% Senior Deferred Coupon Notes Due 2008 and NTL's 9 3/4% Series B Deferred Coupon Notes Due 2008 outstanding at any given time. "9 1/2% Notes" means NTL's 9 1/2% Senior Notes Due 2008 and NTL's 9 1/2% Series B Deferred Coupon Notes Due 2008 outstanding at any given time. "11 1/2% Notes" means NTL's 11 1/2% Senior Notes Due 2008 and NTL's 11 1/2% Series B Senior Notes Due 2008 outstanding at any given time. "12 3/8% Notes" means NTL's 12 3/8% Senior Deferred Coupon Notes Due 2008 and NTL's 12 3/8% Series B Senior Deferred Coupon Notes Due 2008 outstanding at any given time. "Obligations" means any principal, interest, penalties, fees, indemnifications, reimbursements, damages and other liabilities payable under the documentation governing any Indebtedness. "Permitted Designee" means (1) a spouse or a child of a Permitted Holder, (2) trusts for the benefit of a Permitted Holder or a spouse or child of a Permitted Holder, (3) in the event of the death or incompetence of a Permitted Holder, his estate, heirs, executor, administrator, committee or other personal representative or (4) any person so long as a Permitted Holder owns at least 50% of the voting power of all classes of the voting stock of such person. "Permitted Holders" means George S. Blumenthal, J. Barclay Knapp and their Permitted Designees. "Pro Forma EBITDA" means for any Person, for any period, the EBITDA of such Person as determined on a consolidated basis in accordance with GAAP consistently applied after giving effect to the following: (1) if, during or after such period, such Person or any of its Subsidiaries shall have made any Asset Sale (as defined in the Indenture), Pro Forma EBITDA of such Person and its Subsidiaries for such period shall be reduced by an amount equal to the Pro Forma EBITDA (if positive) directly attributable to the assets which are the subject of such Asset Sale for the period or increased by an amount 40 44 equal to the Pro Forma EBITDA (if negative) directly attributable thereto for such period and (2) if, during or after such period, such Person or any of its Subsidiaries completes an acquisition of any Person or business which immediately after such acquisition is a Subsidiary of such Person or whose assets are held directly by such Person or a Subsidiary of such Person, Pro Forma EBITDA shall be computed so as to give pro forma effect to the acquisition of such Person or business; and provided further that, with respect to NTL, all of the foregoing references to "Subsidiary" or "Subsidiaries" shall be deemed to refer only to a "Restricted Subsidiary" or "Restricted Subsidiaries" of NTL. "Redeemable Dividend" means, for any dividend with regard to Disqualified Stock, the quotient of the dividend divided by the difference between one and the maximum statutory federal income tax rate (expressed as a decimal number between 1 and 0) then applicable to the issuer of such Disqualified Stock. "Restricted Subsidiary" means any Subsidiary of NTL which is not a Non- Restricted Subsidiary. "Restricted Subsidiary Preferred Stock Dividend" means, for any dividend with regard to preferred stock of a Restricted Subsidiary, the quotient of the dividend divided by the difference between one and the maximum statutory federal income tax rate (expressed as a decimal number between 1 and 0) then applicable to the issuer of such preferred stock. "Senior Debt" means the principal of, interest on and other amounts due on (1) Indebtedness of NTL, whether outstanding on the date of the Indenture or thereafter created, incurred, assumed or guaranteed by NTL, for money borrowed from banks or other financial institutions; (2) Indebtedness of NTL, whether outstanding on the date of the Indenture or thereafter created, incurred, assumed or guaranteed by NTL in compliance with the Indenture, including, without limitation, the Senior Notes; and (3) Indebtedness of NTL under interest rate swaps, caps or similar hedging agreements and foreign exchange contracts, currency swaps or similar agreements: unless, in the instrument creating or evidencing or pursuant to which Indebtedness under (1) or (2) is outstanding, it is expressly provided that such Indebtedness is not senior in right of payment to the Convertible Notes. Senior Debt includes, with respect to the obligations described in clauses (1) and (2) above, interest accruing, pursuant to the terms of such Senior Debt, on or after the filing of any petition in bankruptcy or for reorganization relating to NTL, whether or not post-filing interest is allowed in such 41 45 proceeding, at the rate specified in the instrument governing the relevant obligation. Notwithstanding anything to the contrary in the foregoing, Senior Debt shall not include: (a) Indebtedness of or amounts owed by NTL for compensation to employees, or for goods or materials purchased in the ordinary course of business, or for services; (b) Indebtedness of NTL to a Subsidiary of NTL; or (c) the Existing Convertible Notes. "Senior Notes" means the 10% Notes, the 12 3/4% Notes, the 11 1/2% Deferred Coupon Notes, the 10 3/4% Notes, the 9 3/4% Notes, the 9 1/2% Notes, the 11 1/2% Notes and the 12 3/8% Notes. "Subsidiary" means any corporation, association or other business entity of which more than 50% of the total voting power of shares of Capital Stock entitled (without regard to the occurrence of any contingency) to vote in the election of directors, managers or trustees thereof is at the time owned or controlled, directly or indirectly, by any person or one or more of the other Subsidiaries of that person or a combination thereof. "Wholly Owned Subsidiary" means, at any time, a Restricted Subsidiary all of the Capital Stock of which (except directors' qualifying shares) is at the time owned directly or indirectly by NTL. 42 46 REGISTRATION RIGHTS The following summary of selected provisions of the registration rights agreement is not complete and is subject to, and is qualified in its entirety by reference to, all the provisions of the registration rights agreement, which is incorporated by reference into the registration statement of which this prospectus forms a part. NTL Communications Corp. entered into the registration rights agreement pursuant to which it agreed, at its expense, for the benefit of the holders of the offered securities to file with the Commission the registration statement covering resale of the offered securities, by March 16, 1999. NTL Communications Corp. will use its best efforts to cause the registration statement to become effective as promptly as is practicable, but in any event by June 14, 1999, and to keep the registration statement effective until the earlier of (1) the sale pursuant to the registration statement of all the offered securities registered thereunder and (2) the expiration of the holding period applicable to such offered securities held by persons that are not affiliates of NTL under Rule 144(k) under the Securities Act, or any successor provision, subject to certain permitted exceptions. NTL Communications Corp. will be permitted to suspend the use of this prospectus under certain circumstances relating to pending corporate developments, public filings with the Commission and similar events. NTL Communications Corp. agreed to pay predetermined liquidated damages as described herein ("Liquidated Damages") to holders of offered securities if the Registration Statement is not timely filed or made effective or if this Prospectus is unavailable for periods in excess of those permitted above. Such Liquidated Damages shall accrue until such failure to file or become effective or unavailability is cured (1) in respect of any convertible note, at a rate per annum equal to 0.25% for the first 90 day period after the occurrence of such event and 0.5% thereafter on an amount equal to the sum of the Issue Price of the convertible note and (2) in respect of each share of common stock, at a rate per annum equal to 0.25% for the first 90 day period and 0.5% thereafter on the then applicable conversion price for a share of common stock which equals the Issue Price of $1,000 principal amount of convertible note divided by the Conversion Rate in effect. Selling securityholders must complete and deliver to us a notice and questionnaire the form of which was sent to all holders of record known to us, at least three business days prior to any intended distribution of offered securities pursuant to the registration statement. Holders of offered securities are required to complete and deliver the questionnaire prior to the effectiveness of the registration statement so that such holders may be named as selling securityholders in this prospectus at the time of effectiveness. Upon receipt of such a completed questionnaire, together with such other information as may be reasonably requested by us, from a selling securityholder following the 43 47 effectiveness of the registration statement, we will, as promptly as practicable but in any event within five business days of such receipt, file such amendments to the registration statement or supplements to this prospectus as are necessary to permit such selling securityholder to deliver this prospectus, including any supplements hereto, to purchasers of offered securities (subject to our right to suspend the use of this prospectus as described above). We have agreed to pay Liquidated Damages in the amount set forth above to holders of offered securities if we fail to make such filing in the time required or, if such filing is a post-effective amendment to the registration statement required to be declared effective under the Securities Act, if such amendment is not declared effective within 45 days of the filing thereof. 44 48 DESCRIPTION OF CAPITAL STOCK GENERAL The authorized capital stock of NTL Incorporated consists of 400,000,000 shares of common stock, par value $.01 per share, and 10,000,000 shares of preferred stock, par value $.01 per share. In this section of the prospectus entitled "Description of Capital Stock", references to NTL are to NTL Incorporated and not to any of its subsidiaries. References in this section "Description of Capital Stock" to NTL, "we" or "us" are to NTL Incorporated. At the close of business on May 28, 1999: (1) approximately 60,470,000 shares of common stock were issued and outstanding; (2) no shares of common stock were held by NTL in its treasury; (3) approximately 125,000 shares of the 13% preferred stock were issued and outstanding; (4) 1,000,000 shares of series A junior participating preferred stock, the "rights preferred stock", were reserved for issuance pursuant to the rights agreement; (5) approximately 17,057,000 shares of common stock were reserved for issuance pursuant to the conversion of the 7% convertible notes; (6) approximately 2,880,000 shares of common stock were reserved for issuance upon the exercise of certain warrants; (7) approximately 16,144,000 shares of common stock were reserved for issuance pursuant to various NTL employee and director stock options; (8) 125,280 shares of 9.9% non-voting mandatorily redeemable preferred stock, series A, the "9.9% preferred stock, series A", were issued and outstanding; (9) 52,217 shares of 9.9% non-voting mandatorily redeemable preferred stock, series B, the "9.9% preferred stock, series B", were issued and outstanding; (10) 500,000 shares of 5 1/4% convertible preferred stock, series A, the "5 1/4% preferred stock", were issued and outstanding; and (11) 4,447.92 shares of 5 1/4% convertible preferred stock, series B, the "5 1/4% preferred stock, series B" and, together with the 5 1/4% preferred stock, series A, the "5 1/4% preferred stock", were issued and outstanding. COMMON STOCK The holders of common stock are entitled to one vote for each share held of record on all matters submitted to a vote of the stockholders of NTL and do not have cumulative voting rights in the election of directors. Holders of common stock are entitled to receive ratably such dividends as may from time to time be declared by our board of directors out of funds legally available therefor. In the event of a liquidation, dissolution or winding up of NTL, holders of common stock would be entitled to share ratably in all of our assets available for distribution to holders of common stock remaining after payment of liabilities and liquidation preference of any outstanding 45 49 preferred stock. Holders of common stock have no preemptive rights and have no rights to convert their common stock into any other securities, and there are no redemption provisions with respect to such shares. All of the outstanding shares of common stock are fully paid and nonassessable. PREFERRED STOCK Our board of directors has the authority to issue preferred stock in one or more series and to fix as to any such series the designation, title, voting powers and any other preferences, and relative, participating, optional or other special rights and qualifications, limitations or restrictions, without any further vote or action by our stockholders. 13% Preferred Stock. The 13% preferred stock ranks prior to the common stock, rights preferred stock and 9.9% preferred stock with respect to dividend rights and rights on liquidation, winding up and dissolution, and each share of 13% preferred stock has a liquidation preference of $1,000. Holders of shares of 13% preferred stock are entitled to receive, when, as and if declared by our board of directors, quarterly dividends per share at a rate of 13% per annum. Dividends accruing on or prior to February 15, 2004, may, at our option, be paid in cash, by issuing additional shares of 13% preferred stock having an aggregate liquidation preference equal to the amount of such dividends, or in any combination of the foregoing. Dividends accruing after February 15, 2004 must be paid in cash. We may redeem any or all of the 13% preferred stock on or after February 15, 2002 at declining redemption prices as set forth in the certificate of designation with respect to the 13% preferred stock, plus accrued and unpaid dividends to the date of redemption. We must redeem all outstanding shares of 13% preferred stock on February 15, 2009 at a price equal to 100% of the liquidation preference thereof, plus accrued and unpaid dividends to the date of redemption. Holders of 13% preferred stock have no general voting rights, except as otherwise required under the DGCL and except in certain circumstances as set forth in the certificate of designation with respect to the 13% preferred stock including (1) amending certain rights of the holders of the 13% preferred stock and (2) the issuance of any class of equity securities that ranks on a parity with or senior to the 13% preferred stock, other than additional shares of the 13% preferred stock issued in lieu of cash dividends or parity securities issued to finance the redemption by us of the 13% preferred stock. In addition, if (1) dividends are in arrears for six quarterly periods (whether or not consecutive) or (2) we fail to make a mandatory redemption or an offer to purchase all of the outstanding shares of 13% preferred stock following an 13% preferred stock Change of Control Triggering Event, as defined in the certificate of designation with respect to the 13% preferred stock, as required or fail to pay pursuant to such redemption or offer, holders of a majority of the outstanding shares of 13% preferred stock, voting 46 50 as a class, will be entitled to elect two directors to our board of directors. In the event of an 13% preferred stock Change of Control Triggering Event, we will, subject to certain conditions, offer to purchase all outstanding shares of 13% preferred stock at a purchase price equal to 101% of the liquidation preference thereof, plus accrued and unpaid dividends to the date of purchase. Moreover, in the event of an 13% preferred stock Change of Control Call Event, as defined in the certificate of designation with respect to the 13% preferred stock, we will have the option to redeem all of the outstanding shares of 13% preferred stock at a redemption price equal to 100% of the liquidation preference thereof plus the applicable premium and accrued and unpaid dividends to the date of repurchase. On any scheduled dividend payment date, we may, at our option, exchange all, but not less than all, of the shares of 13% preferred stock then outstanding into our 13% series B subordinated exchange debentures due 2009. 9.9% preferred stock, series A. The 9.9% preferred stock, series A ranks prior to the common stock and rights preferred stock with respect to dividend rights and rights on liquidation, winding up and dissolution, and each share of 9.9% preferred stock, series A has a liquidation preference of $1,000 per share. Holders of shares of 9.9% preferred stock, series A are entitled to receive, when, as and if declared by our board of directors cumulative dividends at a rate of 9.9% per annum of the Stated Value of $1,000. Dividends are payable on the 9.9% preferred stock, series A on the date that the 9.9% preferred stock, series A is redeemed. Dividends may, at our option, be paid in cash, by issuing shares of common stock or by issuing shares of convertible preferred stock, or in any combination of the foregoing. We may redeem any or all of the 9.9% preferred stock, series A at any time at a redemption price equal to $1,000 per share, plus accrued and unpaid dividends to the date of redemption. We must redeem all outstanding shares of 9.9% preferred stock, series A on September 21, 2008 at a redemption price equal to $1,000 per share, plus accrued and unpaid dividends to the date of redemption. If we have not exercised our right to optionally redeem the 9.9% preferred stock, series A by December 22, 1998, we shall mandatorily redeem all of the outstanding shares of 9.9% preferred stock, series A at a redemption price equal to $1,000 per share plus accrued and unpaid dividends to the date of redemption. We, at our option, may effect the mandatory redemption of the 9.9% preferred stock, series A, in cash, in exchange for shares of common stock, in exchange for shares of convertible preferred stock or in any combination of the foregoing. Holders of 9.9% preferred stock, series A have no general voting rights, except as otherwise required under the DGCL and except in certain circumstances as set forth in the certificate of designation with respect to the 9.9% preferred stock, series A including amending certain rights of the holders of the 9.9% preferred stock, series A. No approval is required of the holders of the 9.9% preferred stock, series A for the issuance of any other class of equity securities. Convertible preferred stock. The convertible preferred stock, par value $.01 per share, the "convertible preferred stock", may be issued, at our option, in redemption of the 9.9% preferred stock. The convertible preferred stock, if issued, will rank prior to the 47 51 common stock, the rights preferred stock and any other class of capital stock or series of preferred stock that by its terms ranks junior to the convertible preferred stock, collectively "junior stock", with respect to dividend rights and rights on liquidation, winding up and dissolution. Each share of convertible preferred stock will have a liquidation preference of $1,000. Holders of convertible preferred shares will be entitled to receive, when as and if declared by our board of directors, cumulative dividends from the date that the convertible preferred stock is issued in accordance to the following terms (1) dividends will be declared in preference to dividends on any junior stock; (2) dividends will be paid at a rate determined at the time of issuance of the convertible preferred stock, and (3) dividends may be paid, in our sole discretion, in cash, by issuing shares of common stock or by issuing additional shares of convertible preferred stock or any combination of the foregoing. Dividends will accrue semi-annually from the second anniversary of the issuance of the convertible preferred stock. The convertible preferred shares will be redeemable at any time, in whole or in part, at our option, for $1,000 in cash per share. After the third anniversary of their issuance, the convertible preferred stock may be redeemed, at our option, for shares of common stock. The convertible preferred stock is mandatorily redeemable on the tenth anniversary of its issuance at a redemption price of $1,000 per share in cash or for shares of common stock. The convertible preferred stock will be convertible at the option of the holders thereof at any time into an amount of shares of common stock determined in accordance with a formula set forth in the certificate of designation relating thereto, subject to adjustment in certain circumstances. The holders of convertible preferred stock will have no voting rights, except as required by law and as provided in the certificate of designations relating thereto. convertible preferred stock holders may elect two new members of our board of directors if the accumulation of accrued and unpaid dividends on the outstanding convertible preferred stock constitutes an amount equal to three semi-annual dividends. 9.9% preferred stock, series B. The 9.9% preferred stock, series B ranks prior to the common stock and the rights preferred stock with respect to dividend rights and rights on liquidation, winding up and dissolution, and each share of 9.9% preferred stock, series B has a liquidation preference of $1,000 per share. Holders of shares of 9.9% preferred stock, series B are entitled to receive, when, as and if declared by our board of directors dividends at a rate of 9.9% per annum of the Stated Value of $1,000. Dividends are payable on the 9.9% preferred stock, series B on the date that the 9.9% preferred stock, series B is redeemed. Dividends may, at our option, be paid in cash, by issuing shares of common stock, or in any combination of the foregoing. We may redeem any or all of the 9.9% preferred stock, series B at any time at a redemption price equal to $1,000 per share, plus accrued and unpaid dividends to the date of redemption. We must redeem all outstanding shares of 9.9% preferred stock, series B on December 21, 2008 at a redemption price equal to $1,000 per share, plus accrued and unpaid dividends to the 48 52 date of redemption. If we have not exercised our right to optionally redeem the 9.9% preferred stock, series B by June 15, 2000, we shall mandatorily redeem all of the outstanding shares of 9.9% preferred stock, series B at a redemption price equal to $1,000 per share plus accrued and unpaid dividends to the date of redemption. We must also redeem all outstanding shares of 9.9% preferred stock, series B in the event of a Reorganization, as defined in the certificate of designation with respect to the 9.9% preferred stock, series B, subject to certain exceptions. We, at our option, may effect the mandatory redemption of the 9.9% preferred stock, series B in cash, in exchange for shares of common stock, or in any combination of the foregoing. Holders of the 9.9% preferred stock, series B have no general voting rights, except as otherwise required under the DGCL and except in certain circumstances as set forth in the certificate of designation with respect to the 9.9% preferred stock, series B, including amending certain rights to the holders of the 9.9% preferred stock, series B. 5 1/4% convertible preferred stock, series A. The 5 1/4% preferred stock, series A, ranks prior to the common stock, the rights preferred stock, the 9.9% preferred stock, series A, and the 9.9% preferred stock, series B, and junior only to the 13% preferred stock, with respect to dividend rights and rights on liquidation, winding up and dissolution, and each share of 5 1/4% preferred stock, series A, has a liquidation preference of $1,000, plus any accrued and unpaid dividends. Holders of shares of 5 1/4% preferred stock, series A, are entitled to receive, when, as and if declared by our board of directors quarterly dividends per share at a rate of 5 1/4% per annum. Dividends may be paid, at our option, either in (1) cash, (2) common stock or (3) additional shares of preferred stock having terms substantially similar to the 5 1/4% preferred stock, series A, "additional preferred", except that the conversion rate and value of the shares of such additional preferred shall be increased for each dividend payment date after the first dividend payment date by a compounding factor set forth in the certificate of designations with respect to the 5 1/4% preferred stock, series A. We may redeem any or all of the 5 1/4% preferred stock, series A, on the earlier of (1) seven years from the issue date and (2) that date when the common stock has for a period of over 25 trading days traded at a value over $120 per share, at our option, for either (A) cash in an amount of $1,000 per share of 5 1/4% preferred stock, series A, plus accrued and unpaid dividends, (B) common stock valued at $1,025 per share of 5 1/4% preferred stock, series A, plus accrued and unpaid dividends, in the case of a redemption occurring at least seven years from the issue date, 49 53 (C) common stock valued at $1,000 per share of 5 1/4% preferred stock, series A, plus accrued and unpaid dividends, in the case of a redemption due to the trading value of the common stock over a 25-day period, or (D) any combination of cash and common stock at a redemption price based on the respective combination of the consideration. Holders of shares of 5 1/4% preferred stock have the option to require us to redeem all outstanding shares of 5 1/4% preferred stock on and after January 28, 2009, at a price equal to 100% of the liquidation preference thereof, payable in cash, common stock, or any combination thereof. We must redeem all shares of 5 1/4% preferred stock, series A, that remain outstanding on the twentieth anniversary of the issue date at a redemption price equal to $1,000 per share, payable at our option in cash, common stock or any combination thereof, plus accrued and unpaid dividends. Holders of shares of 5 1/4% preferred stock, series A, have no general voting rights, except as otherwise required by law and except in certain circumstances as set forth in the certificate of designations with respect to the 5 1/4% preferred stock, series A, including (1) if dividends are in arrears for six quarterly periods (whether or not consecutive), (2) for purposes of amending certain rights of the holders of shares of the 5 1/4% preferred stock or (3) to approve the issuance of any equity securities that rank on a parity with or senior to the 5 1/4% preferred stock, series A, or the increase of the authorized amounts of any such other class or series, other than shares of additional preferred or shares of securities that rank on a parity with or senior to the 5 1/4% preferred stock, series A, issued in order to refinance, redeem or refund the 13% preferred stock, provided the maximum accrual value of such securities may not exceed the maximum accrual value of the 13% preferred stock. Holders of shares of 5 1/4% preferred stock, series A, have the right, at any time and from time to time, to convert any or all outstanding shares of 5 1/4% preferred stock, series A, held by them (but not any fractional shares) into common stock, such that each share of the 5 1/4% preferred stock, series A, is convertible into 10 shares of common stock, subject to adjustment in accordance with the certificate of designations; provided, that the number of shares of common stock deliverable upon conversion of the 5 1/4% preferred stock, series A, (together with the conversion of any shares of additional preferred) shall not exceed 7,590,994, subject to adjustment in accordance with the certificate of designations. 5 1/4% convertible preferred stock, series B. The 5 1/4% preferred stock, series B, ranks prior to the common stock, the rights preferred stock, the 9.9% preferred stock, series A, and the 9.9% preferred stock, series B, and junior only to the 13% preferred stock, with respect to dividend rights and rights on liquidation, winding up and dissolution, and each 50 54 share of 5 1/4% preferred stock, series B, has a liquidation preference of $1,000, plus any accrued and unpaid dividends. Holders of shares of 5 1/4% preferred stock, series B, are entitled to receive, when, as and if declared by our board of directors quarterly dividends per share at a rate of 5 1/4% per annum. Dividends may be paid, at our option, either in (1) cash, (2) common stock or (3) additional shares of preferred stock having terms substantially similar to the 5 1/4% preferred stock, series B, "additional preferred", except that the conversion rate and value of the shares of such additional preferred shall be increased for each dividend payment date after the first dividend payment date by a compounding factor set forth in the certificate of designations with respect to the 5 1/4% preferred stock. We may redeem any or all of the 5 1/4% preferred stock, series B, on the earlier of (1) January 28, 2006 and (2) that date when the common stock has for a period of over 25 trading days traded at a value over $120 per share, at our option, for either (A) cash in an amount of $1,000 per share of 5 1/4% preferred stock, series B, plus accrued and unpaid dividends, (B) common stock valued at $1,025 per share of 5 1/4% preferred stock, series B, plus accrued and unpaid dividends, in the case of a redemption occurring on or after January 28, 2006, (C) common stock valued at $1,000 per share of 5 1/4% preferred stock, series B, plus accrued and unpaid dividends, in the case of a redemption due to the trading value of the common stock over a 25-day period, or (D) any combination of cash and common stock at a redemption price based on the respective combination of the consideration. Holders of shares of 5 1/4% preferred stock, series B, have the option to require us to redeem all outstanding shares of 5 1/4% preferred stock, series B, on and after January 28, 2009, at a price equal to 100% of the liquidation preference thereof, payable in cash, common stock, or any combination thereof. We must redeem all shares of 5 1/4% preferred stock, series B, that remain outstanding on January 28, 2019 at a redemption price equal to $1,000 per share, payable at our option in cash, common stock or any combination thereof, plus accrued and unpaid dividends. Holders of shares of 5 1/4% preferred stock, series B, have no general voting rights, except as otherwise required by law and except in certain circumstances as set forth in the certificate of designations with respect to the 5 1/4% preferred stock, series B, including (1) if dividends are in arrears for six quarterly periods (whether or not consecutive), 51 55 (2) for purposes of amending certain rights of the holders of shares of the 5 1/4% preferred stock, series B, or (3) to approve the issuance of any equity securities that rank on a parity with or senior to the 5 1/4% preferred stock, series B, or the increase of the authorized amounts of any such other class or series, other than shares of additional preferred or shares of securities that rank on a parity with or senior to the 5 1/4% preferred stock, series B, issued in order to refinance, redeem or refund the 13% preferred stock, provided the maximum accrual value of such securities may not exceed the maximum accrual value of the 13% preferred stock. Holders of shares of 5 1/4% preferred stock, series B, have the right, at any time and from time to time, to convert any or all outstanding shares of 5 1/4% preferred stock, series B, held by them (but not any fractional shares) into common stock, such that each share of the 5 1/4% preferred stock is convertible into a number of shares of common stock specified in the certificate of designations as adjusted by the Relevant Compounding Factor, as defined in the certificate of designations relating to the 5 1/4% preferred stock, series B, subject to adjustment in accordance with the certificate of designations; provided, that the number of shares of common stock deliverable upon conversion of the 5 1/4% preferred stock, series B, (together with the conversion of any shares of additional preferred) shall not exceed 7,590,994, subject to adjustment in accordance with the certificate of designations. CERTAIN SPECIAL CHARTER PROVISIONS Our restated certificate of incorporation, as amended, the "charter", contains the provisions described below. Such charter provisions may have the effect, alone or in combination with each other or with the existence of authorized but unissued common stock and any series of preferred stock, of precluding or rendering more difficult a hostile takeover making it more difficult to remove or change the composition of our incumbent board of directors and its officers, being adverse to stockholders who desire to participate in a tender offer and depriving stockholders of possible opportunities to sell their shares at temporarily higher prices. Classified board and filling of vacancies on the board of directors. The charter provides that the directors shall be divided into three classes, each of which shall serve a staggered three-year term, and that vacancies on our board of directors that may occur between annual meetings may be filled by our board of directors. In addition, this provision specifies that any director elected to fill a vacancy on our board of directors will serve for the balance of the term of the replaced director. Removal of directors. The charter provides that directors can be removed only by the stockholders for cause and then only by the affirmative vote of the holders of not less than two-thirds of the combined voting power of NTL. Voting requirement for certain business combinations. The charter also provides that, in addition to any affirmative vote required by law, the affirmative vote of holders of two-thirds of the voting power of NTL shall be necessary to approve any "business 52 56 combination", as hereinafter defined, proposed by an "interested stockholder", as hereinafter defined. The additional voting requirements will not apply, however, if: (1) the business combination was approved by not less than a majority of the continuing directors or (2) a series of conditions are satisfied requiring, in summary, the following: (A) that the consideration to be paid to our stockholders in the business combination must be at least equal to the higher of (x) the highest per-share price paid by the interested stockholder in acquiring any shares of common stock during the two years prior to the announcement date of the business combination or in the transaction in which it became an interested stockholder, such date is referred to herein as the "determination date", whichever is higher or (y) the fair market value per share of common stock on the announcement date or determination date, whichever is higher, in either case appropriately adjusted for any stock dividend, stock split, combination of shares or similar event (non-cash consideration is treated similarly) and (B) certain "procedural" requirements are complied with, such as the Consent Solicitation of proxies pursuant to the rules of the Commission and no decrease in regular dividends (if any) after the interested stockholder became an interested stockholder (except as approved by a majority of the continuing directors). An "interested stockholder" is defined as anyone who is the beneficial owner of more than 15% of the voting power of the voting stock, other than us and any employee stock plans sponsored by us, and includes any person who is an assignee of or has succeeded to any shares of voting stock in a transaction not involving a public offering that were at any time within the prior two-year period beneficially owned by an interested stockholder. The term "beneficial owner" includes persons directly and indirectly owning or having the right to acquire or vote the stock. Interested stockholders participate fully in all stockholder voting. A "business combination" includes the following transactions: (1) merger or consolidation of us or any subsidiary of ours with an interested stockholder or with any other corporation or entity which is, or after such merger or consolidation would be, an affiliate of an interested stockholder; (2) the sale or other disposition by us or a subsidiary of ours of assets having a fair market value of $5,000,000 or more if an interested stockholder (or an affiliate thereof) is a party to the transaction; (3) the adoption of any plan or proposal for the liquidation or dissolution of NTL proposed by or on behalf of an interested stockholder (or an affiliate thereof); or (4) any reclassification of securities, recapitalization, merger with a subsidiary, or other transaction which has the effect, directly or indirectly, of increasing the 53 57 proportionate share of any class of the outstanding stock (or securities convertible into stock) of NTL or a subsidiary owned by an interested stockholder (or an affiliate thereof). Determinations of the fair market value of non-cash consideration are made by a majority of the continuing directors. The term "continuing directors" means any member of our board of directors, while such person is a member of our board of directors, who is not an Affiliate or Associate or representative of the interested stockholder and was a member of our board of directors prior to the time that the interested stockholder became an interested stockholder, and any successor of a continuing director while such successor is a member of the our board of directors, who is not an Affiliate or Associate or representative of the interested stockholder and is recommended or elected to succeed the continuing director by a majority of continuing directors. Voting requirements for certain amendments to the charter. The charter provides that the provisions set forth in this section under the heading "Certain special charter provisions" may not be repealed or amended in any respect, unless such action is approved by the affirmative vote of the holders or not less than two-thirds of the voting power of NTL. The requirement of an increased stockholder vote is designed to prevent a stockholder who controls a majority of the voting power of NTL from avoiding the requirements of the provisions discussed above by simply amending or repealing such provisions. SECTION 203 OF THE DGCL Generally, Section 203 of the DGCL prohibits a publicly held Delaware corporation from engaging in any business combination with an interested stockholder for a period of three years following the time that such stockholder becomes an interested stockholder, unless (1) prior to such time either the business combination or the transaction which resulted in the stockholder becoming an interested stockholder is approved by the board of directors of the corporation, (2) upon consummation of the transaction which resulted in the stockholder becoming an interested stockholder, the interested stockholder owned at least 85% of the voting stock of the corporation outstanding at the time the transaction commenced, excluding, for purposes of determining the number of shares outstanding, those shares held by persons who are both directors and officers and certain employee stock plans or (3) at or after such time the business combination is approved by the board and authorized at an annual or special meeting of stockholders, and not by written consent, by the affirmative vote of at least two-thirds of the outstanding voting stock which is not owned by the interested stockholder. A business combination includes certain mergers, consolidations, asset sales, transfers and other transactions resulting in a financial benefit to the interested stockholder. An interested stockholder is 54 58 a person who, together with affiliates and associates, owns (or within the preceding three years, did own) 15% or more of the corporation's voting stock. TRANSFER AGENT AND REGISTRAR The transfer agent and registrar for the common stock is Continental Stock Transfer & Trust Company. NTL RIGHTS AGREEMENT On August 27, 1993, our board of directors adopted the rights agreement. The rights agreement provides that one right will be issued with each share of common stock issued (whether originally issued or from our treasury) on or after October 13, 1993 and prior to the rights distribution date, as defined herein. The rights are not exercisable until the rights distribution date and will expire at the close of business on October 13, 2003 unless previously redeemed by us as described below. When exercisable, each right entitles the owner to purchase from us one one-hundredth of a share of rights preferred stock at a purchase price of $100.00. A holder of convertible notes will not be entitled to receive rights unless such holder converts such convertible notes into shares of common stock prior to the rights distribution date. Except as described below, the rights will be evidenced by the common stock certificates. The rights will separate from the common stock and a "rights distribution date" will occur upon the earlier of (1) 10 days following a public announcement that a person or group of affiliated or associated persons, an "acquiring person", has acquired, or obtained the right to acquire, beneficial ownership of 15% or more of the outstanding shares of the common stock, the "stock acquisition date", and (2) 10 business days following the commencement of a tender offer or exchange offer that would result in a person or group becoming an acquiring person. After the rights distribution date, rights certificates will be mailed to holders of record of the common stock as of the rights distribution date and thereafter the separate rights certificates alone will represent the rights. The rights preferred stock issuable upon exercise of the rights will be entitled to a minimum preferential quarterly dividend payment of $0.01 per share and will be entitled to an aggregate dividend of 100 times the dividend, if any, declared per share of common stock other than one payable in common stock. In the event of liquidation, the holders of the rights preferred stock will be entitled to a minimum preferential liquidation payment of $1.00 per share plus accrued and unpaid dividends and will be entitled to an aggregate payment of 100 times the payment made per share of the common stock. Each share of rights preferred stock will have 100 votes and will vote together with the common stock. In the event of any merger, consolidation or other transaction in which shares of the common stock are changed or exchanged, each share of rights preferred stock will be entitled to receive 100 times the amount received per share of the common stock. These rights are protected by customary antidilution provisions. Because of the nature of the 55 59 rights preferred stock's dividend, liquidation and voting rights, the value of one one-hundredth of a share of rights preferred stock purchasable upon exercise of each Right should approximate the value of one share of the common stock. In the event that a person becomes an acquiring person (except pursuant to a tender offer or an exchange offer for all outstanding shares of common stock at a price and on terms determined by at least a majority of the members of our board of directors who are not officers of NTL and who are not representatives, nominees, affiliates or associates of an acquiring person, to be fair to our stockholders and otherwise in our best interests and the best interests of our stockholders, a "qualifying offer"), each holder of a right will thereafter have the right to receive, upon the exercise thereof at the then current exercise price, the common stock (or, in certain circumstances, cash, property or other of our securities) having a value equal to two times the exercise price of the right. Notwithstanding any of the foregoing, following the occurrence of any such event, all rights that are or (under certain circumstances specified in the rights agreement) were beneficially owned by any acquiring person (or certain related parties) will be null and void. However, rights are not exercisable following the occurrence of the event set forth above until such time as the rights are no longer redeemable by us as set forth below. In the event that, at any time following the stock acquisition date, (1) we are acquired in a merger or other business combination transaction in which we are not the surviving corporation or the common stock is changed or exchanged (other than a merger which follows a qualifying offer and satisfies certain other requirements) or (2) 50% or more of our assets, cash flow or earning power is sold or transferred, each holder of a right (except rights which previously have been voided as set forth above) shall thereafter have the right to receive, upon the exercise thereof at the then current exercise price, common stock of the acquiring company having a value equal to two times the exercise price of the right. At any time until 10 days following the stock acquisition date, we may redeem the right in whole, but not in part, at a price of $0.01 per right. Immediately upon the action of our board of directors ordering redemption of the rights, the rights will terminate and the only right of the holders of the rights will be to receive the $0.01 redemption price. Until a right is exercised, the holder thereof, as such, shall have no rights as a stockholder of NTL, including without limitation, the right to vote or to receive dividends. While the distribution of the rights will not be taxable to stockholders or to us, stockholders may, depending upon the circumstances, recognize taxable income in the event that the rights become exercisable for the common stock (or other consideration) or for common stock of the acquiring company as set forth above. Other than those provisions relating to the principal terms of the rights, any of the provisions of the rights agreement may be amended by our board of directors prior to the rights distribution date. After the rights distribution date, the provisions of the rights agreement may be amended by our board of directors in order to cure any ambiguity, to make changes which do not adversely affect the interests of holders of rights (excluding 56 60 the interests of any acquiring person) or to shorten or lengthen any time period under the rights agreement, provided that no amendment to adjust the time period governing redemption shall be made at such time as the rights are not redeemable. The rights have certain anti-takeover effects as they will cause substantial dilution to a person or group that acquires a substantial interest in us without the prior approval of our board of directors. The effect of the rights may be to inhibit a change in control of NTL (including through a third party tender offer at a price which reflects a premium to then prevailing trading prices) that may be beneficial to our stockholders. 57 61 DESCRIPTION OF OTHER INDEBTEDNESS Each of the following are summaries of NTL Communications Corp.'s or its subsidiaries existing debt instruments. You should refer to the relevant agreements for a full description of the terms of those debt instruments. See "Where you can find more information about us." Capitalized terms used and not defined below have the meanings set forth in such debt instruments. THE 12 3/4% NOTES In April 1995, NTL Communications Corp. issued $277,803,500 aggregate principal amount at maturity of its 12 3/4% senior deferred coupon notes due 2005, the "old 12 3/4% notes", at a discount to their aggregate principal amount to generate gross proceeds to NTL Communications Corp. of approximately $150 million. The old 12 3/4% notes were issued and sold in a transaction exempt from the registration requirement of the Securities Act pursuant to Rule 144A under the Securities Act or in transactions complying with Regulation S under the Securities Act. On August 18, 1995 NTL Communications Corp. issued $277,803,500 aggregate principal amount at maturity of the 12 3/4% series A senior deferred coupon notes due 2005, the "12 3/4% notes", in exchange for the old 12 3/4% notes pursuant to the indenture relating thereto, the "12 3/4% notes indenture". The terms of the 12 3/4% notes are identical in all material respects to the old 12 3/4% notes except for certain transfer restrictions and registration rights applicable to the old 12 3/4% notes. The old 12 3/4% notes were cancelled on August 18, 1995 on consummation of the exchange offer which was made pursuant to our prospectus dated July 18, 1995, forming part of the registration statement on Form S-4 (File No. 33-92794) filed with the Commission on May 26, 1995. The 12 3/4% notes accrete at a rate of 12 3/4% computed on a semiannual bond equivalent basis to an aggregate principal amount at maturity of $277,803,500. Cash interest on the 12 3/4% notes does not accrue until prior to April 15, 2000. Thereafter, the 12 3/4% notes accrue interest in cash at the rate of 12 3/4% per annum on the principal amount payable semiannually on April 15 and October 15 of each year, commencing October 15, 2000 to holders of record on the immediately preceding April 1, and October 1. The 12 3/4% notes mature on April 15, 2005. The 12 3/4% notes are redeemable, at NTL Communications Corp.'s option at any time, in whole or in part, on or after April 15, 2000 at the redemption prices set forth in the 12 3/4% notes indenture, plus any unpaid interest, if any, to the date of redemption. The 12 3/4% notes may also be redeemed at NTL Communications Corp.'s option in whole but not in part in some circumstances where additional amounts, as defined in the 12 3/4% notes indenture, are payable under the 12 3/4% notes. In those circumstances the 12 3/4% notes to be repurchased must be repurchased at 100% of Accreted Value, or, as the case may be, principal amount thereof. Upon a Change of Control Triggering Event, as defined in the 12 3/4% notes indenture, holders of the 12 3/4% notes have the right to require NTL Communications Corp. to repurchase all or any part of the 12 3/4% notes at a repurchase price equal to 101% of the Accreted Value thereof plus accrued and unpaid interest, if any. Subject to various conditions, NTL Communications Corp. is obligated to offer to purchase the 12 3/4% notes and other Qualified Senior Notes, as defined in the 12 3/4% 58 62 notes indenture, with the Excess Proceeds of some Asset Sales at a redemption price of 100% of the Accreted Value or, as the case may be, principal amount thereof plus accrued and unpaid interest. The 12 3/4% notes indenture contains restrictions with respect to, among other things, the payment of dividends, the repurchase of stock and the making of certain other Restricted Payments, the incurrence of additional Indebtedness, the creation of certain Liens, certain Asset Sales, transactions with Subsidiaries and other Affiliates and mergers and consolidations. The 12 3/4% notes are senior unsecured obligations of NTL Communications Corp. ranking equal in right of payment of principal and interest with all of NTL Communications Corp.'s other existing and future senior unsecured obligations and rank senior to all of NTL Communications Corp.'s other existing and future subordinated debts, including, without limitation, the convertible notes and the existing convertible notes. In January 1996, NTL Communications Corp. obtained the necessary consents of the registered holders of the 12 3/4% notes to certain proposed amendments to the 12 3/4% notes indenture. On January 22, 1996, NTL Communications Corp. and Chemical Bank, now known as The Chase Manhattan Bank, as trustee, executed a first supplemental indenture to effect those amendments. In general, the amendments modified the 12 3/4% notes indenture by amending the covenant entitled "Limitations on Dividend and Other Payment Restrictions Affecting Subsidiaries" and other provisions to facilitate the arrangement of our then proposed credit facilities and other financings and make certain conforming and other changes to the 12 3/4% notes indenture. In October 1998, NTL Communications Corp. received the necessary consents of registered holders of the 12 3/4% notes to amend the 12 3/4% notes indenture so as to allow NTL Communications Corp and its subsidiaries to take certain actions that were previously prohibited under the 12 3/4% notes indenture, particularly regarding the financing of NTL Communications Corp.'s and its subsidiaries' business and pending and future acquisitions, including NTL Communications Corp.'s acquisition of Partners. In addition, the amendment eliminated some, but not all, of certain differences between the covenants in the 12 3/4% notes indenture and the existing 10 3/4% notes, 9 3/4% notes and 9 1/2% notes indentures. On October 14, 1998, we and The Chase Manhattan Bank, as trustee, executed a second supplemental indenture to effect such amendment. THE 11 1/2% DEFERRED COUPON NOTES In January 1996, NTL Communications Corp. issued $1,050 million aggregate principal amount at maturity of its 11 1/2% series A senior deferred coupon notes due 2006, the "old 11 1/2% deferred coupon notes", at a discount to their aggregate principal amount to generate gross proceeds to us of approximately $600,127,500. The old 11 1/2% deferred coupon notes were issued and sold in a transaction exempt from the registration requirement of the Securities Act pursuant to Rule 144A under the Securities Act. On May 23, 1996, we issued $1,050 million aggregate principal amount at maturity of the 11 1/2% series B senior deferred coupon notes due 2006, the "11 1/2% deferred coupon notes", in exchange for the old 11 1/2% deferred coupon notes pursuant to the indenture relating thereto, the "11 1/2% deferred coupon notes indenture". The terms of the 11 1/2% 59 63 deferred coupon notes are identical in all material respects to the old 11 1/2% deferred coupon notes except for certain transfer restrictions and registration rights applicable to the old 11 1/2% deferred coupon notes. The old 11 1/2% deferred coupon notes tendered for exchange were cancelled on May 23, 1996 on consummation of the exchange offer made pursuant to NTL Communications Corp.'s prospectus dated April 22, 1996, forming part of NTL Communications Corp.'s registration statement on Form S-4 (File No. 333-1010) filed with the Commission on April 16, 1996. The 11 1/2% deferred coupon notes accrete at a rate of 11 1/2% computed on a semiannual bond equivalent basis to an aggregate principal amount at maturity of $1,050 million. Cash interest on the 11 1/2% deferred coupon notes does not accrue until February 1, 2001. Thereafter, the 11 1/2% deferred coupon notes accrue interest in cash at the rate of 11 1/2% per annum on the principal amount payable semiannually on February 1 and August 1 of each year, commencing August 1, 2001, to holders of record on the immediately preceding January 15, and July 15. The 11 1/2% deferred coupon notes mature on February 1, 2006. The 11 1/2% deferred coupon notes are redeemable, at NTL Communications Corp.'s option at any time, in whole or in part, on or after February 1, 2001 at the redemption prices set forth in the 11 1/2% deferred coupon notes indenture plus any accrued unpaid interest to the date of redemption. The 11 1/2% deferred coupon notes may also be redeemed at NTL Communications Corp.'s option in whole but not in part in some circumstances where "Additional Amounts", as defined in the 11 1/2% deferred coupon notes indenture, are payable under the 11 1/2% notes. In those circumstances, the 11 1/2% deferred coupon notes to be repurchased must be repurchased at 100% of accreted value or, as the case may be, principal amount thereof plus accrued and unpaid interest. Upon a Change of Control Triggering Event, as defined in the 11 1/2% deferred coupon notes indenture, holders of the 11 1/2% deferred coupon notes have the right to require NTL Communications Corp. to repurchase all or any part of the 11 1/2% deferred coupon notes at a repurchase price equal to 101% of the accreted value or, as the case may be, principal amount thereof plus accrued and unpaid interest, if any. Subject to various conditions, NTL Communications Corp. is obligated to offer to purchase the 11 1/2% deferred coupon notes and other Qualified Senior Notes, as defined in the 11 1/2% deferred coupon notes indenture, with the Excess Proceeds of certain Asset Sales at a redemption price of 100% of the accreted value or, as the case may be, principal amount thereof plus accrued and unpaid interest, if any. The 11 1/2% deferred coupon notes indenture contains restrictions with respect to, among other things, the payment of dividends, the repurchase of stock and the making of some other Restricted Payments, the incurrence of additional Indebtedness, the creation of some Liens, some sales of assets, transactions with Subsidiaries and other Affiliates and mergers and consolidations. In October 1998, NTL Communications Corp. received the necessary consents of registered holders of the 11 1/2% deferred coupon notes to amend the 11 1/2% deferred coupon notes indenture so as to allow NTL Communications Corp. and its subsidiaries to take certain actions that were previously prohibited under the 11 1/2% deferred coupon notes indenture, particularly regarding the financing of NTL Communications Corp.'s and its subsidiaries' business and pending and future acquisitions, including NTL 60 64 Communications Corp.'s acquisition of Partners. In addition, the amendment eliminated some, but not all, of certain differences between the covenants in the 11 1/2% deferred coupon notes indenture and the existing 10 3/4% notes, 9 3/4% notes and 9 1/2% notes indentures. On October 14, 1998, NTL Communications Corp. and The Chase Manhattan Bank, as trustee, executed a first supplemental indenture to effect such amendment. The 11 1/2% deferred coupon notes are senior unsecured obligations of NTL Communications Corp. ranking equal in right of payment of principal and interest with all of NTL Communications Corp.'s other existing and future senior unsecured obligations and rank senior to all of NTL Communications Corp.'s other existing and future subordinated debt, including, without limitation, the convertible notes and the existing convertible notes. THE 10% NOTES In February 1997, NTL Communications Corp. issued $400 million aggregate principal amount of its 10% series A senior notes due 2007, the "old 10% notes". The old 10% notes were issued and sold in a transaction exempt from the registration requirement of the Securities Act pursuant to Rule 144A under the Securities Act. On June 27, 1997 NTL Communications Corp. issued $400 million aggregate principal amount at maturity of its 10% series B senior notes due 2007, the "10% notes", in exchange for the old 10% notes pursuant to the indenture relating thereto, the "10% notes indenture". The terms of the 10% notes are identical in all material respects to the old 10% notes except for certain transfer restrictions and registration rights applicable to the old 10% notes. The old 10% notes tendered for exchange were cancelled on June 27, 1997 on consummation of the exchange offer made pursuant to our prospectus dated May 27, 1997, forming part of our registration statement on Form S-4 (File No. 333- 25577) filed with the Commission on April 21, 1997. The 10% notes accrue interest in cash at the rate of 10% per annum on the principal amount payable semiannually on February 15 and August 15 of each year, to holders of record on the immediately preceding February 1, and August 1. The 10% notes mature on February 15, 2007. The 10% notes are redeemable, at NTL Communications Corp.'s option at any time, in whole or in part, on or after February 15, 2002 at redemption prices set forth in the 10% notes indenture, plus any accrued unpaid interest to the date of redemption. The 10% notes may also be redeemed at NTL Communications Corp.'s option in whole but not in part in some circumstances where "Additional Amounts", as defined in the 10% notes indenture, are payable under the 10% notes. In those circumstances, the 10% notes to be repurchased must be repurchased at 100% of the principal amount thereof plus accrued and unpaid interest. Upon a Change of Control Triggering Event, as defined in the 10% notes indenture, holders of the 10% notes have the right to require NTL Communications Corp. to repurchase all or any part of the 10% notes at a repurchase price equal to 101% of the principal amount thereof plus accrued and unpaid interest, if any. Subject to various conditions, NTL Communications Corp. is obligated to offer to purchase the 10% notes and other Qualified Senior Notes, as defined in the 10% notes indenture, with the Excess 61 65 Proceeds of some Asset Sales at a redemption price of 100% of the principal amount thereof plus accrued and unpaid interest, if any. The 10% notes indenture contains restrictions with respect to, among other things, the payment of dividends, the repurchase of stock and the making of some other Restricted Payments, the incurrence of additional Indebtedness, the creation of some Liens, some sales of assets, transactions with Subsidiaries and other Affiliates and mergers and consolidations. In October 1998, NTL Communications Corp. received the necessary consents of registered holders of the 10% notes to amend the 10% notes indenture so as to allow NTL Communications Corp. and its subsidiaries to take certain actions that were previously prohibited under the 10% notes indenture, particularly regarding the financing of NTL Communications Corp.'s and its subsidiaries' business and pending and future acquisitions, including NTL Communications Corp.'s acquisition of Partners. In addition, the amendment eliminated some, but not all, differences between the covenants in the 10% notes indenture and the existing 10 3/4% notes, the 9 3/4% notes and the 9 1/2% notes indentures. On October 14, 1998, NTL Communications Corp. and The Chase Manhattan Bank, as trustee, executed a first supplemental indenture to effect such amendment. The 10% notes are senior unsecured obligations of NTL Communications Corp. ranking equal in right of payment of principal and interest with all of its other existing and future senior unsecured obligations and rank senior to all of its other existing and future subordinated debt, including, without limitation, the convertible notes and the existing convertible notes. THE 10 3/4% NOTES In March 1998, NTL Communications Corp. issued L300 million ($497,850,000) aggregate principal amount of maturity of its 10 3/4% senior deferred coupon notes due 2008, the "old 10 3/4% notes", at a discount to their aggregate principal amount to generate gross proceeds to NTL Communications Corp. of approximately L124,587,000. The old 10 3/4% notes were issued and sold in a transaction exempt from the registration requirement of the Securities Act pursuant to Rule 144A under the Securities Act. On December 24, 1998 NTL Communications Corp. closed an exchange offer exchanging L300 million principal amount at maturity of the 10 3/4% series B senior deferred coupon notes due 2008, the "new 10 3/4% notes" and, together with the old 10 3/4% notes, the "10 3/4% notes", registered under the Securities Act for a like principal amount at maturity of the old 10 3/4% notes. The terms of the new 10 3/4% notes are identical in all material respects to the old 10 3/4% notes except for some transfer restrictions and registration rights applicable to the old 10 3/4% notes. The 10 3/4% notes accrete at a rate of 10 3/4% computed on a semiannual bond equivalent basis to an aggregate principal amount at maturity of L300 million ($497,850,000). Cash interest on the 10 3/4% notes does not accrue until April 1, 2003. Thereafter, the 10 3/4% notes accrue interest in cash at the rate of 10 3/4% per annum on the principal amount payable semiannually on April 1 and October 1 of each year, commencing April 1, 2003, to holders of record on the immediately preceding March 15, and September 15. The 10 3/4% notes mature on April 1, 2008. The 10 3/4% notes are 62 66 redeemable, at NTL Communications Corp.'s option at any time, in whole or in part, on or after April 1, 2003 at the redemption prices set forth in the 10 3/4% notes indenture plus any accrued unpaid interest to the date of redemption. The 10 3/4% notes may also be redeemed at NTL Communications Corp.'s option in whole but not in some circumstances where "Additional Amounts", as defined in the 10 3/4% notes indenture, are payable under the 10 3/4% notes. In those circumstances, the 10 3/4% notes to be repurchased must be repurchased at 100% of accreted value or, as the case may be, principal amount thereof plus accrued and unpaid interest. Upon a Change of Control Triggering Event, as defined in the 10 3/4% notes indenture, holders of the 10 3/4% notes have the right to require NTL Communications Corp. to repurchase all or any part of the 10 3/4% notes at a repurchase price equal to 101% of the accreted value or, as the case may be, principal amount thereof plus accrued and unpaid interest, if any. Subject to various conditions, NTL Communications Corp. is obligated to offer to purchase the 10 3/4% notes and other Qualified Senior Notes, as defined in the 10 3/4% notes indenture, with the Excess Proceeds of some Asset Sales at a redemption price of 100% of the accreted value or, as the case may be, principal amount thereof plus accrued and unpaid interest, if any. The 10 3/4% notes indenture contains restrictions with respect to, among other things, the payment of dividends, the repurchase of stock and the making of some other Restricted Payments, the incurrence of additional Indebtedness, the creation of some Liens, some sales of assets, transactions with Subsidiaries and other Affiliates and mergers and consolidations. The 10 3/4% notes are senior unsecured obligations of NTL ranking equal in right of payment of principal and interest with all of NTL Communications Corp.'s other existing and future senior unsecured obligations and rank senior to all of NTL Communications Corp.'s other existing and future subordinated debt, including, without limitation, the convertible notes and the existing convertible notes. THE 9 3/4% NOTES In March 1998, NTL Communications Corp. issued $1.3 billion aggregate principal amount at maturity of its 9 3/4% senior deferred coupon notes due 2008, the "old 9 3/4% notes", at a discount to their aggregate principal amount to generate gross proceeds to NTL Communications Corp. of approximately $802,412,000. The old 9 3/4% notes were issued and sold in a transaction exempt from the registration requirement of the Securities Act pursuant to Rule 144A under the Securities Act. On December 24, 1998 NTL Communications Corp. closed an exchange offer exchanging $1,248,970,000 principal amount at maturity of the 9 3/4% series B senior deferred coupon notes due 2006, the "new 9 3/4% notes" and, together with the old 9 3/4% notes, the "9 3/4% notes," registered under the securities act for a like principal amount at maturity of the old 9 3/4% notes. The terms of the new 9 3/4% notes are identical in all material respects to the old 9 3/4% notes except for some transfer restrictions and registration rights applicable to the old 9 3/4% notes. The 9 3/4% notes accrete at a rate of 9 3/4% computed on a semiannual bond equivalent basis to an aggregate principal amount at maturity of $1,300,000,000. Cash interest on the 9 3/4% notes does not accrue until April 1, 2003. Thereafter, the 9 3/4% notes accrue 63 67 interest in cash at the rate of 9 3/4% per annum on the principal amount payable semiannually on April 1 and October 1 of each year, commencing April 1, 2003, to holders of record on the immediately preceding March 15, and September 15. The 9 3/4% notes mature on April 1, 2008. The 9 3/4% notes are redeemable, at NTL Communications Corp.'s option at any time, in whole or in part, on or after April 1, 2003 at the redemption prices set forth in the 9 3/4% notes indenture plus any accrued unpaid interest to the date of redemption. The 9 3/4% notes may also be redeemed at NTL Communications Corp.'s option in whole but not in part in certain circumstances where "Additional Amounts", as defined in the 9 3/4% notes indenture, are payable under the 9 3/4% notes. In those circumstances, the 9 3/4% notes to be repurchased must be repurchased at 100% of the accreted value or, as the case may be, principal amount thereof plus accrued and unpaid interest. Upon a Change of Control Triggering Event, as defined in the 9 3/4% notes indenture, holders of the 9 3/4% notes have the right to require NTL Communications Corp. to repurchase all or any part of the 9 3/4% notes at a repurchase price equal to 101% of the accreted value or, as the case may be, principal amount thereof plus accrued and unpaid interest, if any. Subject to various conditions, NTL Communications Corp. is obligated to offer to purchase the 9 3/4% notes and other Qualified Senior Notes, as defined in the 9 3/4% notes indenture, with the Excess Proceeds of some Asset Sales at a redemption price of 100% of the accreted value or, as the case may be, principal amount thereof plus accrued and unpaid interest, if any. The 9 3/4% notes indenture contains restrictions with respect to, among other things, the payment of dividends, the repurchase of stock and the making of some other Restricted Payments, the incurrence of additional Indebtedness, the creation of some Liens, some sales of assets, transactions with Subsidiaries and other Affiliates and mergers and consolidations. The 9 3/4% notes are senior unsecured obligations of NTL Communications Corp. ranking equal in right of payment of principal and interest with all of its other existing and future senior unsecured obligations and rank senior to all of its other existing and future subordinated debt, including, without limitation, the convertible notes and the existing convertible notes. THE 9 1/2% NOTES In March 1998 NTL Communications Corp. issued L125 million ($207,437,500) aggregate principal amount of its 9 1/2% senior notes due 2008, the "old 9 1/2% notes". The old 9 1/2% notes were issued and sold in a transaction exempt from the registration requirement of the Securities Act pursuant to Rule 144A under the Securities Act. On December 24, 1998 NTL Communications Corp. closed an exchange offer exchanging L123,686,000 principal amount of the 9 1/2% series B senior notes due 2008, the "new 9 1/2% notes" and, together with the old 9 1/2% notes, the "9 1/2% notes", registered under the Securities Act for a like principal amount of the old 9 1/2% notes. The terms of the new 9 1/2% notes are identical in all material respects to the old 9 1/2% notes except for some transfer restrictions and registration rights applicable to the old 9 1/2% notes. The 9 1/2% notes accrue interest in cash at the rate of 9 1/2% per annum on the principal amount payable semiannually on April 1, and October 1 of each year, to holders of record on the immediately preceding March 15 and September 15. The 9 1/2% 64 68 notes mature on April 1, 2008. The 9 1/2% notes are redeemable at NTL Communications Corp.'s option at any time, in whole or in part, on or after April 1, 2003 at redemption prices set forth in the 9 1/2% notes indenture, plus any accrued unpaid interest to the date of redemption. The 9 1/2% notes may also be redeemed at NTL Communications Corp.'s option in whole but not in part in some circumstances where "Additional Amounts", as defined in the 9 1/2% notes indenture, are payable under the 9 1/2% notes. In those circumstances, the 9 1/2% notes to be repurchased must be repurchased at 100% of the principal amount thereof plus accrued and unpaid interest. Upon a Change of Control Triggering Event, as defined in the 9 1/2% notes indenture, holders of the 9 1/2% notes have the right to require NTL Communications Corp. to repurchase all or any part of the 10% notes at a repurchase price equal to 101% of the principal amount thereof plus accrued and unpaid interest, if any. Subject to various conditions, NTL Communications Corp. is obligated to offer to purchase the 9 1/2% notes and other Qualified Senior Notes, as defined in the 9 1/2% notes indenture, with the Excess Proceeds of certain Asset Sales at a redemption price of 100% of the principal amount thereof plus accrued and unpaid interest, if any. The 9 1/2% notes indenture contains restrictions with respect to, among other things, the payment of dividends, the repurchase of stock and the making of some other Restricted Payments, the incurrence of additional Indebtedness, the creation of some Liens, some sales of assets, transactions with Subsidiaries and other Affiliates and mergers and consolidations. The 9 1/2% notes are senior unsecured obligations of NTL Communications Corp. ranking equal in right of payment of principal and interest with all of its other existing and future senior unsecured obligations and rank senior to all of its other existing and future subordinated debt, including, without limitation, the convertible notes and the existing convertible notes. THE 11 1/2% NOTES On November 2, 1998, NTL Communications Corp. issued $625 million aggregate principal amount of its 11 1/2% senior notes due 2008, the "11 1/2% old notes". The 11 1/2% old notes were offered and sold in transactions exempt from the registration requirement of the Securities Act pursuant to Rule 144A under the Securities Act and Regulation S under the Securities Act. On May 6, 1999, NTL Communications Corp. commenced an exchange offer to exchange all outstanding 11 1/2% old notes for a like principal amount of 11 1/2% series B senior notes due 2008, the "11 1/2% new notes" and, together with the 11 1/2% old notes, the "11 1/2% notes." The terms of the 11 1/2% new notes are identical in all material respects to the 11 1/2% old notes except for certain transfer restrictions and registration rights applicable to the 11 1/2% old notes. The 11 1/2% notes accrue interest in cash at the rate of 11 1/2% per annum on the principal amount payable semiannually on April 1, and October 1 of each year, to holders of record on the immediately preceding March 15 and September 15. The 11 1/2% notes mature on October 1, 2008. The 11 1/2% notes are redeemable at NTL Communications Corp.'s option at any time, in whole or in part, on or after October 1, 2003 at redemption prices set forth in the 11 1/2% notes indenture, plus any accrued unpaid interest to the date of redemption. The 11 1/2% notes may also be redeemed at 65 69 NTL Communications Corp.'s option in whole but not in part in some circumstances where "Additional Amounts", as defined in the 11 1/2% notes indenture, are payable under the 11 1/2% notes. In those circumstances, the 11 1/2% notes to be repurchased must be repurchased at 100% of the principal amount thereof plus accrued and unpaid interest. Upon a Change of Control Triggering Event, as defined in the 11 1/2% notes indenture, holders of the 11 1/2% notes have the right to require NTL Communications Corp. to repurchase all or any part of the 11 1/2% notes at a repurchase price equal to 101% of the principal amount thereof plus accrued and unpaid interest, if any. Subject to various conditions, NTL Communications Corp. is obligated to offer to purchase the 11 1/2% notes and other Qualified Senior Notes, as defined in the 11 1/2% notes indenture, with the Excess Proceeds of some Asset Sales at a redemption price of 100% of the principal amount thereof plus accrued and unpaid interest, if any. The 11 1/2% notes indenture contains restrictions with respect to, among other things, the payment of dividends, the repurchase of stock and the making of some other Restricted Payments, the incurrence of additional Indebtedness, the creation of some Liens, some sales of assets, transactions with Subsidiaries and other Affiliates and mergers and consolidations. The 11 1/2% notes are senior unsecured obligations of NTL Communications Corp. ranking equal in right of payment of principal and interest with all its other existing and future senior unsecured obligations and rank senior to all of its other existing and future subordinated debt, including, without limitation, the convertible notes and the existing convertible notes. THE 12 3/8% NOTES On November 6, 1998, NTL Communications Corp. issued $450 million aggregate principal amount at maturity of its 12 3/8% senior deferred coupon notes due 2008, the "12 3/8% old notes". The 12 3/8% old notes were offered and sold in transactions exempt from the registration requirements of the Securities Act pursuant to Rule 144A under 144A under the Securities Act and Regulation S under the Securities Act. On May 6, 1999, NTL Communications Corp. commenced an exchange offer to exchange all outstanding 12 3/8% old notes for a like principal amount of 12 3/8% series B senior deferred coupon notes due 2008, the "12 3/8% new notes" and, together with the 12 3/8% old notes, the "12 3/8% notes." The terms of the 12 3/8% new notes are identical in all material respects to the 12 3/8% old notes except for certain transfer restrictions and registration rights applicable to the 12 3/8% old notes. The 12 3/8% notes accrete at a rate of 12 3/8% computed on a semiannual bond equivalent basis to an aggregate principal amount at maturity of $450 million. Cash interest on the 12 3/8% notes does not accrue until April 1, 2003. Thereafter, the 12 3/8% notes accrue interest in cash at the rate of 12 3/8% per annum on the principal amount payable semiannually on April 1 and October 1 of each year, commencing October 1, 2003, to holders of record on the immediately preceding March 15, and September 15. The 12 3/8% notes mature on October 1, 2008. The 12 3/8% notes are redeemable, at NTL Communications Corp.'s option at any time, in whole or in part, on or after October 1, 2003 at the redemption prices set forth in the 12 3/8% notes indenture plus any accrued unpaid interest to the date of redemption. The 12 3/8% notes may also be redeemed at 66 70 NTL Communications Corp.'s option in whole but not in part in some circumstances where "Additional Amounts", as defined in the 12 3/4% notes indenture, are payable under the 12 3/8% notes. In those circumstances, the 12 3/8% notes to be repurchased must be repurchased at 100% of accreted value or, as the case may be, principal amount thereof plus accrued and unpaid interest. Upon a Change of Control Triggering Event, as defined in the 12 3/8% notes indenture, holders of the 12 3/8% notes have the right to require NTL Communications Corp. to repurchase all or any part of the 12 3/8% notes at a repurchase price equal to 101% of the accreted value or, as the case may be, principal amount thereof plus accrued and unpaid interest, if any. Subject to various conditions, NTL Communications Corp. is obligated to offer to purchase the 12 3/8% notes and other Qualified Senior Notes, as defined in the 12 3/8% notes indenture, with the Excess Proceeds of some Asset Sales at a redemption price of 100% of the accreted value or, as the case may be, principal amount thereof plus accrued and unpaid interest, if any. The 12 3/8% notes indenture contains restrictions with respect to, among other things, the payment of dividends, the repurchase of stock and the making of some other Restricted Payments, the incurrence of additional Indebtedness, the creation of some Liens, some sales of assets, transactions with Subsidiaries and other Affiliates and mergers and consolidations. The 12 3/8% notes are senior unsecured obligations of NTL Communications Corp. ranking equal in right of payment of principal and interest with all of its other existing and future senior unsecured obligations and rank senior to all of its other existing and future subordinated debt, including, without limitation, the convertible notes and the existing convertible notes. THE 9 3/4% NOTES On April 7, 1999, NTL Communications Corp. issued L330 million ($547,635,000) aggregate principal amount at maturity of its 9 3/4% senior deferred coupon notes due 2009, the "1999 9 3/4% notes". The 1999 9 3/4% notes were offered and sold in transactions exempt from the registration requirements of the Securities Act pursuant to Rule 144A under 144A under the Securities Act and Regulation S under the Securities Act. The 1999 9 3/4% notes accrete at a rate of 9 3/4% computed on a semiannual bond equivalent basis to an aggregate principal amount at maturity of L330 million. Cash interest on the 1999 9 3/4% notes does not accrue until April 15, 2004. Thereafter, the 1999 9 3/4% notes accrue interest in cash at the rate of 9 3/4% per annum on the principal amount payable semiannually on April 15 and October 15 of each year, commencing October 15, 2004, to holders of record on the immediately preceding April 1 and October 1. The 1999 9 3/4% notes mature on April 15, 2009. The 9 3/4% notes are redeemable, at NTL Communications Corp.'s option at any time, in whole or in part, on or after April 15, 2004 at the redemption prices set forth in the 1999 9 3/4% notes indenture plus any accrued unpaid interest to the date of redemption. The 1999 9 3/4% notes may also be redeemed at NTL Communications Corp.'s option in whole but not in part in some circumstances where "Additional Amounts", as defined in the 1999 9 3/4% notes indenture, are payable under the 1999 9 3/4% notes. In those circumstances, the 1999 9 3/4% notes to be repurchased must be repurchased at 100% of accreted value or, as 67 71 the case may be, principal amount thereof plus accrued and unpaid interest. Upon a Change of Control Triggering Event, as defined in the 1999 9 3/4% notes indenture, holders of the 1999 9 3/4% notes have the right to require NTL Communications Corp. to repurchase all or any part of the 1999 9 3/4% notes at a repurchase price equal to 101% of the accreted value or, as the case may be, principal amount thereof plus accrued and unpaid interest, if any. Subject to various conditions, NTL Communications Corp. is obligated to offer to purchase the 1999 9 3/4% notes and Other Qualified Notes, as defined in the 1999 9 3/4% notes indenture, with the Excess Proceeds of some Asset Sales at a redemption price of 100% of the accreted value or, as the case may be, principal amount thereof plus accrued and unpaid interest, if any. The 1999 9 3/4% notes indenture contains restrictions with respect to, among other things, the payment of dividends, the repurchase of stock and the making of some other Restricted Payments, the incurrence of additional Indebtedness, the creation of some Liens, some sales of assets, transactions with Subsidiaries and other Affiliates and mergers and consolidations. The 1999 9 3/4% notes are senior unsecured obligations of NTL Communications Corp. ranking equal in right of payment of principal and interest with all of its other existing and future senior unsecured obligations and rank senior to all of its other existing and future subordinated debt, including, without limitation, the convertible notes and the existing convertible notes. PARTNER'S 11.20% DISCOUNT DEBENTURES DUE 2007 On November 15, 1995, Partners issued $517,321,000 aggregate principal amount at maturity of its 11.20% senior discount debentures due 2007, the "Partners 11.20% debentures", at a discount to their aggregate principal amount to generate gross proceeds to Partners of approximately $299,999,621. The Partners 11.20% debentures were registered with the Commission on Partners' registration statement on Form S-1 (File No. 33-96932). The Partners 11.20% debentures accrete at the rate of 11.20% per annum, compounded semiannually to an aggregate principal amount at maturity of $517,321,000. Cash interest on the Partners 11.20% debentures does not accrue until November 15, 2000. Thereafter, the Partners 11.20% debentures accrue interest at the rate of 11.20% per annum on the principal amount payable semiannually on May 15 and November 15 of each year, commencing May 15, 2001. The Partners 11.20% debentures mature on November 15, 2007. The Partners 11.20% debentures are redeemable, at the option of Partners at any time, in whole or in part, on or after November 15, 2000 at the redemption prices set forth in the Partners 11.20% debentures indenture plus accrued and unpaid interest to the date of redemption. The Partners 11.20% debentures may also be redeemed by Partners in whole but not in part in certain circumstances where "Additional Amounts", as defined in the Partners 11.20% debentures indenture, are payable on the Partners 11.20% debentures after November 15, 2001. In such circumstances, the Partners 11.20% debentures may be redeemed at 100% of their principal amount plus accrued and unpaid interest to the date of redemption. Upon a Change of Control Triggering Event, as defined in the Partners 11.20% debentures indenture, holders of the Partners 11.20% debentures have the right to require NTL 68 72 Communications Corp. to repurchase all or any part of the Partners 11.20% debentures at a repurchase price equal to 101% of the accreted value or, as the case may be, principal amount thereof plus accrued and unpaid interest, if any. Subject to various conditions, NTL Communications Corp. is obligated to offer to purchase the Partners 11.20% debentures with the Excess Proceeds of some Asset Sales at a redemption price of 100% of the accreted value or, as the case may be, principal amount thereof plus accrued and unpaid interest, if any. The Partners 11.20% debentures indenture contains restrictions with respect to, among other things, the payment of dividends, the repurchase of stock and the making of some other Restricted Payments, the incurrence of additional Indebtedness, the creation of some Liens, some sales of assets, transactions with Affiliates and mergers and consolidations. The Partners 11.20% debentures are senior unsecured obligations of Partners ranking equal in right of payment of principal and interest with all other existing and future senior unsecured obligations of Partners. THE DIAMOND 10% NOTES In February 1998 Diamond issued L135,000,000 aggregate principal amount at maturity of its 10% senior notes due February 1, 2008 (the "Diamond 10% notes"). Interest on the Diamond 10% Notes is payable semi-annually in arrears on August 1 and February 1 of each year at a rate of 10% per annum. The Diamond 10% notes will be redeemable, in whole or in part, at the option of Diamond at any time on or after February 1, 2003. The 10% notes are also redeemable in whole, but not in part, at the option of Diamond at any time at 100% of the principal amount thereof, plus accrued and unpaid interest and any other amounts payable thereon to the date of redemption in the event of certain tax law changes requiring the payment of additional amounts. Upon the occurrence of a Change of Control, as defined in the indenture governing the Diamond 10% notes, Diamond is required to offer to repurchase all outstanding 10% Notes at 101% of their principal amount plus accrued and unpaid interest and any other amounts payable thereon to the date of repurchase. THE DIAMOND 9 1/8% NOTES In February 1998, Diamond issued $110,000,000 aggregate principal amount at maturity of its 9 1/8% senior notes due February 1, 2008 (the "Diamond 9 1/8% notes"). Interest on the Diamond 9 1/8% Notes is payable semi-annually in arrears on August 1 and February 1 of each year, commencing August 1, 1998 at a rate of 9 1/8% per annum. The Diamond 9 1/8% notes will be redeemable, in whole or in part, at the option of Diamond at any time on or after February 1, 2003. The Diamond 9 1/8% notes are also redeemable in whole, but not in part at the option of Diamond at any time at 100% of the principal amount thereof, plus accrued and unpaid interest and any other amounts payable thereon to the date of redemption in the event of certain tax law changes requiring the payment of additional amounts. Upon the occurrence of a Change of Control, as defined in the indenture governing the 9 1/8% notes, Diamond is required to offer to repurchase all outstanding 9 1/8% notes at 101% of their principal amount plus 69 73 accrued and unpaid interest and any other amounts payable thereon to the date of repurchase. THE DIAMOND 13 1/4% NOTES In September 1994, Diamond issued its 13 1/4% senior discount notes due September 30, 2004 (the "Diamond 13 1/4% notes"). Interest on the Diamond 13 1/4% notes will be payable on March 31 and September 30 of each year, commencing March 31, 2000, at a rate of 13 1/4% per annum. The Diamond 13 1/4% Notes are redeemable, in whole or in part, at the option of Diamond at any time on or after September 30, 1999. The Diamond 13 1/4% Notes are also redeemable in whole, but not in part, at the option of Diamond at any time at 100% of the principal amount thereof plus accrued interest to the date of redemption (or, prior to September 30, 1999, at 100% of Accreted Value, as defined in the indenture governing the Diamond 13 1/4% notes) in the event of certain tax law changes requiring the payment of additional amounts. Diamond is required to offer to repurchase all outstanding Diamond 13 1/4% notes at 101% of the principal amount thereof plus accrued interest to the date of repurchase (or, prior to September 30, 1999, at 101% of Accreted Value on the date of repurchase) after the occurrence of a Change of Control, as defined in the indenture governing the Diamond 13 1/4% notes. In addition, upon the occurrence of an Asset Disposition, as defined in the indenture governing the Diamond 13 1/4% notes, Diamond may be obligated to make an offer to purchase all or a portion of the outstanding Diamond 13 1/4% notes at 100% of the principal amount thereof plus accrued interest to the date of repurchase (or, prior to December 15, 2000, at 100% of Accreted Value on the date of repurchase). THE DIAMOND 11 3/4% NOTES In December 1995, Diamond issued its 11 3/4% senior discount notes due December 15, 2005 (the 11 3/4% Diamond notes). Interest on the Diamond 11 3/4% notes will be payable on June 15 and December 15 of each year, commencing June 15, 2001, at a rate of 11 3/4% per annum. The Diamond 11 3/4% notes are redeemable, in whole or in part, at the option of Diamond at any time on or after December 15, 2000. The Diamond 11 3/4% notes are also redeemable in whole, but not in part, at the option of Diamond at any time at 100% of the principal amount thereof plus accrued interest to the date of redemption (or, prior to December 15, 2000, at 100% of the Accreted Value thereof, as defined in the indenture governing the Diamond 11 3/4% notes) in the event of certain tax law changes requiring the payment of additional amounts. Diamond is required to offer to repurchase all outstanding Diamond 11 3/4% notes at 101% of principal amount thereof plus accrued interest to the date of repurchase (or, prior to December 15, 2000, at 101% of Accreted Value on the date of repurchase) after the occurrence of a Change of Control, as defined in the indenture governing the Diamond 11 3/4% Notes. In addition, upon the occurrence of an Asset Disposition, as defined in the indenture governing the Diamond 11 3/4% notes, NTL Communications Corp. may be obligated to make an offer to purchase all or a portion of the outstanding Diamond 11 3/4% notes at 100% of the principal amount thereof 70 74 plus accrued interest to the date of repurchase (or, prior to December 15, 2000, at 100% of Accreted Value on the date of repurchase). THE DIAMOND 10 3/4% NOTES In February 1997, Diamond issued its 10 3/4% Senior Discount Notes due February 15, 2007 (the Diamond 10 3/4% notes). Interest on the Diamond 10 3/4% notes will be payable on February 15 and August 15 of each year, commencing August 15, 2002, at a rate of 10 3/4% per annum. The Diamond 10 3/4% notes are redeemable, in whole or in part, at the option of Diamond at any time on or after February 15, 2002. The Diamond 10 3/4% notes are also redeemable in whole, but not in part, at the option of Diamond at any time at 100% of the principal amount thereof plus accrued interest to the date of redemption (or, prior to February 15, 2002, at 100% of Accreted Value, as defined in the indenture governing the Diamond 10 3/4% notes) in the event of certain tax law changes requiring the payment of additional amounts. Diamond is required to offer to repurchase all outstanding Diamond 10 3/4% notes at 101% of the principal amount thereof plus accrued interest to the date of repurchase (or, prior to February 15, 2002, at 101% of Accreted Value on the date of repurchase) after the occurrence of a Change of Control, as defined in the indenture governing the Diamond 10 3/4% Notes. In addition, upon the occurrence of an Asset Disposition, as defined in the indenture governing the Diamond 10 3/4% notes, Diamond may be obligated to make an offer to purchase all or a portion of the outstanding Diamond 10 3/4% notes at 100% of the principal amount thereof plus accrued interest to the date of repurchase (or, prior to February 15, 2002, at 100% of Accreted Value on the date of repurchase). EXISTING CONVERTIBLE NOTES In June 1996, NTL Communications Corp. issued and sold an aggregate principal amount of $275 million of its 7% convertible subordinated notes due 2008, the "existing convertible notes", in transactions exempt from, or not subject to, the registration requirements of the Securities Act. Cash interest on the existing convertible notes is payable semiannually on June 15 and December 15 of each year, commencing December 16, 1996. The existing convertible notes mature on June 15, 2008. The existing convertible notes are convertible at the option of the holder thereof at any time prior to maturity, unless previously redeemed, into shares of our common stock, at a conversion price of $37.875 per share subject to further adjustment in some events. The existing convertible notes are redeemable, in whole or in part, at NTL Communications Corp.'s option, at any time on or after June 5, 1999, at the redemption prices set forth in the indenture pursuant to which the existing convertible notes were issued, the "existing convertible notes indenture". Upon a Change of Control Triggering Event, as defined in the existing convertible notes indenture, holders of the existing convertible notes have the right to require NTL Communications Corp. to purchase all or any part of the existing convertible notes at a purchase price equal to 101% of the principal amount thereof and any accrued and unpaid interest to the date of purchase. The existing convertible notes indenture contains restrictions with respect to, among other things, some Asset Sales, payment of Additional Amounts and mergers and consolidations. 71 75 The existing convertible notes are unsecured obligations of NTL Communications Corp., subordinated in right of payment to all of its existing and future senior debt, as defined in the existing convertible notes indenture, including, without limitation, the senior notes. On September 13, 1996, the Commission declared effective NTL Communications Corp.'s shelf registration statement relating to the resale of the existing convertible notes and the common stock issuable upon conversion thereof by the holders thereof. On May 26, 1999, NTL Communications Corp. announced that it was calling for redemption of all the existing convertible notes. The redemption date is June 25, 1999 and the redemption price is 104.9% of the principal amount, plus accrued and unpaid interest through the date of redemption. 72 76 UNITED STATES FEDERAL TAX CONSIDERATIONS The following is a discussion of selected anticipated U.S. federal income tax consequences of the purchase, ownership and disposition of the convertible notes as of the date hereof. It deals only with convertible notes held as capital assets by initial holders, and does not deal with special situations including those that may apply to a particular holder such as exempt organizations, dealers in securities, financial institutions, insurance companies, persons who are not U.S. holders, and holders whose "functional currency" is not the U.S. dollar, or special rules with respect to straddle or "hedging transactions." The federal income tax considerations set forth below are based upon the Internal Revenue Code of 1986, as amended and regulations, rulings and judicial decisions thereunder as of the date hereof, and such authorities may be repealed, revoked or modified (possibly retroactively) so as to result in federal income tax consequences different from those discussed below. As used herein, the term "U.S. holder" means a beneficial owner of a convertible note that is for United States federal income tax purposes (1) a citizen or resident of the United States, (2) a corporation, partnership or other entity created or organized in or under the laws of the United States or of any political subdivision thereof, (3) an estate or trust, described in Section 7701(a)(30) of the Internal Revenue Code, or (4) a person whose worldwide income or gain is otherwise subject to United States federal income taxation on a net income basis. Prospective investors are urged to consult their tax advisors regarding the particular tax consequences of purchasing, holding and disposing of the convertible notes or our common stock, including the tax consequences arising under any state, local or foreign laws. Payments of interest on convertible notes generally will be taxable to U.S. Holders as ordinary interest income at the time such payments are accrued or received (in accordance with the U.S. holder's method of accounting for federal income tax purposes). A U.S. holder will not recognize gain or loss upon conversion of the convertible notes solely into our common stock (except with respect to cash received in lieu of fractional shares, or any amounts attributable to accrued and unpaid interest on the convertible notes, which will be treated as interest for federal income tax purposes). The U.S. holder's basis in the common stock received on conversion will be the same as such holder's adjusted tax basis in the convertible notes at the time of conversion, and the holding period for the common stock received on conversion will include the holding period of the convertible notes that were converted. 73 77 A U.S. holder will recognize gain or loss upon the sale, redemption or other taxable disposition of the convertible notes in an amount equal to the difference between such holder's adjusted tax basis in the convertible note and the amount received therefor (other than amounts attributable to accrued and unpaid interest on the convertible notes, which will be treated as interest for federal income tax purposes). Such gain or loss generally will be long-term capital gain or loss if the convertible notes were held for more than one year. The conversion price of the convertible notes is subject to adjustment under certain circumstances. Under Section 305 of the Internal Revenue Code and the Treasury Regulations issued thereunder, adjustments or the failure to make such adjustments to the conversion price of the convertible notes may result in a taxable constructive distribution to U.S. holders of convertible notes, resulting in ordinary income (subject to a possible dividends received deduction in the case of corporate holders) to the extent of our current and accumulated earnings and profits if, and to the extent that, certain adjustments in the conversion price that may occur in limited circumstances (particularly an adjustment to reflect a taxable dividend to holders of our common stock) increase the proportionate interest of a U.S. holder of a convertible note convertible into fully diluted common stock, whether or not the holders ever convert the convertible notes. Generally, a U.S. holder's tax basis in a convertible note will be increased by the amount of any such constructive dividend. We intend to take the position that the likelihood of paying Liquidated Damages described under "Description of convertible notes -- registration rights" is remote and that Liquidated Damages, if paid, would be taxable to a U.S. holder of convertible notes as ordinary interest income in accordance with such holder's method of accounting for income tax purposes. The Internal Revenue Service may take a different position, however, which could affect the timing to the U.S. holder's income with respect to Liquidated Damages. The preceding discussion of certain United States federal income tax consequences is for general information only and is not tax advice. Accordingly, each investor should consult its own tax adviser as to particular tax consequences to it of purchasing, holding, and disposing of the convertible notes and our common stock, including the applicability and effect of any state, local or foreign tax laws, and of any proposed changes in applicable laws. 74 78 SELLING SECURITYHOLDERS The following table sets forth, as of June 2, 1999, the respective principal amount of convertible notes beneficially owned and offered hereby by each selling securityholder, the common stock owned by each selling securityholder and the common stock issuable upon conversion of such convertible notes, which may be sold from time to time by such selling securityholder pursuant to this prospectus. Such information has been obtained from the selling securityholders.
PRINCIPAL AMOUNT AT MATURITY OF DEBENTURES COMMON STOCK BENEFICIALLY PERCENT OF TOTAL COMMON STOCK TO BE OWNED AND OUTSTANDING OWNED PRIOR TO REGISTERED HEREBY SELLING SECURITY HOLDERS OFFERED HEREBY DEBENTURES ORIGINAL OFFERING (1) - ------------------------ ---------------- ---------------- ------------------ ----------------- Aim High Yield Fund $ 5,000,000 * none 81,632 Aim High Yield II Fund 30,000 * none 489,795 Albert Luce, Jr. 140,000 * 40,000 2,285 Alexandra Global Investment Fund I LTD 2,000,000 * none 32,653 Allegheny Teledyne Inc. Pension Plan 700,000 * none 11,428 Alpine Associates 4,750,000 * none 77,550 Alpine Partners, L.P. 500,000 * none 8,163 Alsam Foundation 150,000 * 5613 2,448 Alscott Investments, LLC 2,200,000 * none 35,918 American Stores 900,000 * 16,954 14,693 Argent Convertible Arbitrage Fund Ltd. 2,500,000 * none 40,816 Argent Classic Convertible Arbitrage Fund L.P. 5,650,000 * none 92,244 Argent Classic Convertible Arbitrage Fund (Bermuda) L.P. 15,350,000 2.55 none 250,611 Aristeia International Ltd. 1,749,000 * none 28,555 Aristeia Trading, LLC 1,251,000 * none 20,424 Arkansas Teachers Retirement 1,757,000 * none 28,685 Aspen Partner's 300,000 * 3,300 4,897 Associated Jewish Charities of Baltimore 250,000 * 10,490 4,081 Bankers Trust Trustee For Chrysler Corp. Emp #1 Pension Plan dated 4/1/89 1,630,000 * none 26,612 Bankroft Convertible Fund, Inc. 1,750,000 * none 28,571 Baptist Health of South Florida 160,000 * none 2,612 Bear Stearns & co Inc. 1,410,000 * none 23,020 Bill W. Mintz TTEE Revocable Trust 200,000 * none 3,265 Blue Cross Blue Shield of Michigan Retirement Income 1,110,000 * 43,229 18,122 BNP Arbitrage SNC 2,500,000 * 16,300 40,816 Boston Museum of Fine Arts 113,000 * none 1,844 Brown Family Trust A 100,000 * 3661 1,632 Brown University 1,500,000 * 62,836 24,489 BTC Partners LLP 130,000 * 40,000 2,122 The California Endowment 1,250,000 * 33,000 20,408 California Healthcare Foundation 600,000 * 22783 9,795 Caregroup Pension Plan 45,000 * 12,000 734
75 79
PRINCIPAL AMOUNT AT MATURITY OF DEBENTURES COMMON STOCK BENEFICIALLY PERCENT OF TOTAL COMMON STOCK TO BE OWNED AND OUTSTANDING OWNED PRIOR TO REGISTERED HEREBY SELLING SECURITY HOLDERS OFFERED HEREBY DEBENTURES ORIGINAL OFFERING (1) - ------------------------ ---------------- ---------------- ------------------ ----------------- Catholic Healthcare West Funded Depreciation 335,000 * 30,800 5,469 Catholic Healthcare West Retirement 335,000 * 9600 5,469 Catholic Healthcare West Self Insurance 125,000 * 3300 2,040 Catholic Healthcare West Workers Compensation 90,000 * 2400 1,469 CBBB Cotenancy 220,000 * 7939 3,591 Chase Manhattan NA Trustee For IBM Retirement Plan dated 12/18/45 2,772,000 * none 45,257 Cheyne Walk Trust 725,000 * 18,406 11,836 Christine Russell Revocable Trust 500,000 * 12,562 8,163 CIBC Wood Grundy International Equity Arbitrage Corp. 3,500,000 * none 57,142 Citibank, et al Employees Retirement Plan 2,070,000 * 507,000 33,795 Clorox Co. Employee Benefits 400,000 * 16,550 6,530 Colgate-Palmolive Company Retirement Trust 800,000 * none 1,306 Conseco Direct Life 700,000 * none 11,428 Corlon Associates I 400,000 * 10,923 6,530 Corlon Co. Foundation 110,000 * 2,879 1,795 Cowles Investment Partnership 180,000 * 6,726 2,938 CPR (USA) Inc. 275,000 * none 4,489 Deeprock & Co. 1,000,000 * none 16,326 Discovery Group of Funds 190,000 * 6,837 3,102 Donald G. Linber & Joyce Linber, jnt 27,000 * 986 440 Donaldson, Lufkin & Jenrette Securities Corp. 1,700,000 * 1,450,000 27,755 Duckbill & Co. 1,000,000 * none 16,326 Duke University Employees Retirement Plan 160,000 * 45,000 2,612 Duke University Long Term Pool 780,000 * 210,000 12,734 East Bay Community Foundation 230,000 * 3,755 East Oakland Youth Development Fund 160,000 * 5,069 2,612 Elsworth Convertible Growth and Income Fund, Inc. 1,250,000 * none 20,408 Engineers Joint Pension Fund 303,000 * none 4,946 Erin Partners Two 65,000 * 2,329 1,061 Fidelity Fixed-Income Trust: Fidelity High Income Fund 17,020,000 2.84 none 277,877 Fidelity Summer Street Trust: Fidelity Capital & Income Fund 3,000,000 * none 48,979 Fidelity Management Trust Company on behalf of accounts managed by it 2,980,000 * none 48,652 Forest Performance Fund LP 165,000 * none 2,693 Forest Alternative Strategies Fund II LP Series A-5M 240,000 * none 3,918
76 80
PRINCIPAL AMOUNT AT MATURITY OF DEBENTURES COMMON STOCK BENEFICIALLY PERCENT OF TOTAL COMMON STOCK TO BE OWNED AND OUTSTANDING OWNED PRIOR TO REGISTERED HEREBY SELLING SECURITY HOLDERS OFFERED HEREBY DEBENTURES ORIGINAL OFFERING (1) - ------------------------ ---------------- ---------------- ------------------ ----------------- Forest Alternative Strategies Fund II LP Series A-5T 780,000 * none 12,734 Forest Fulcrum Fund LP 7,700,00 * none 125,714 Forest Global Convertible Fund Series A-5 9,700,000 1.6166 none 158,367 Forest Global Convertible Fund Series B-1 65,000 * none 1,061 Franklin & Marshall College 127,000 * none 2,073 General Electric Pension Trust 1,000,000 * 875,000 16,326 General Motors Welfare Benefit Trust 1,000,000 * none 16,326 Geo-Volor Ltd. 500,000 * 22,451 8,163 The Georgia International Fund Ltd. 200,000 * 63,637 3,265 Georgia Partners 20,000,000 3.33 543,238 326,530 Glaxo Wellcome Benefits Plan 450,000 * 252,000 7,346 Glaxo Wellcome Cash Balance Plan 450,000 * 20,800 7,346 Golden Rule Insurance Company 1,600,000 * none 26,122 Goldman, Sachs & Co. 1,000,000 * none 16,326 GranGem 23 41 LLC 250,000 * none 4,081 Greyhound Lines 50,000 * none 816 Greyhound Lines Inc. Amalgamated CNCL Retirement & Disability TR Imperial TR c/o Forest Investment Management LLC 70,000 * none 1,142 Guide Dogs for the Blind 500,000 * 11,595 8,163 HBK Cayman L.P. 4,944,000 * none 80,718 HBK Offshore Fund Ltd. 9,356,000 1.55933 4,875,000 152,750 Henry J. Kaiser Family Foundation 550,000 * 13,236 8,979 Hign Bridge Capital Corporation 10,000,000 1.66 none 163,265 Horowitz Limited Partnership I 150,000 * 5409 2,448 H&S Partners I, L.P. 20,000,000 3.33 none 326,530 The Income Fund of America, Inc. 50,000,000 8.3333 none 816,325 Indiana University Foundation 650,000 * 309,000 10,612 Jackson Investment Fund Ltd. 975,000 * none 15,918 James Irvine Foundation 900,000 * 35,448 14,693 JanusCapital Corporation 19,378,000 3.229666 none 316,374 Janus Growth and Income 2,340,000 * none 38,204 Janus Balance Fund 8,550,000 1.425 none 139,591 Janus Aspen Balanced 3,249,000 * none 53,044 Janus High Yield 1,000,000 * none 16,326 Janus Aspen High Yield 35,000 * none 571 Janus Equity Income Fund 3,874,000 * none 63,248 Janus Aspen Growth and Income 10,000 * none 163 JWF Balanced Fund 285,000 * none 4,653 JWF High Yield Bond Fund 35,000 * none 571 Janus Capital Corporation IDEX Balanced Fund 387,000 * none 6,318
77 81
PRINCIPAL AMOUNT AT MATURITY OF DEBENTURES COMMON STOCK BENEFICIALLY PERCENT OF TOTAL COMMON STOCK TO BE OWNED AND OUTSTANDING OWNED PRIOR TO REGISTERED HEREBY SELLING SECURITY HOLDERS OFFERED HEREBY DEBENTURES ORIGINAL OFFERING (1) - ------------------------ ---------------- ---------------- ------------------ ----------------- Jeffrey Rymer 35,000 * 1,090 571 Jicarilla Apache Tribe 2,100,000 * 16,957 34,285 JMB Children's Holding Co. 600,000 * 165,000 9,795 JMG Convertible Investments L.P. 6,000,000 1 none 97,959 John Robert 110,000 * 4,258 1,795 J.P.Morgan & Co. Inc. 12,000,000 2 37,466 195,918 Julius Baer Securities 700,000 * none 11,428 Lazard Freres & CIE Paris 700,000 * none 11,428 LDG Limited 250,000 * none 4,081 Libertyview Plus Fund 225,000 * none 3,673 Loomis Sayles & Company, L.P. for Benefit of New England High Income Bond Fund 1,000,000 * none 16,326 LLT Limited 880,000 * none 14,367 Mainstay Convertible Fund 4,000,000 * none 65,306 McMahon Securities Company, L.P. 910,000 * none 14,857 Melinda Marfield Trust 35,000 * 1,254 571 Metropolitan Museum of Art 750,000 * 215,000 12,244 MGBA Investments 100,000 * 4,102 1,632 Michigan State University 400,000 * 12,233 6,530 Milton L. Schwartz Revocable Family Trust 110,000 * 4,209 1,795 Monumental Life Insurance Company -- (teamsters-camden non-enhanced) 7,000,000 1.17 none 114,285 Morgan Stanley Dean Witter 5,500,000 * none 89,795 Morgan Stanley Dean Witter Convertible Securities Trust 2,500,000 * none 40,816 Mount Sinai School of Medicine 800,000 * none 13,061 National Bank of Canada 900,000 * none 14,693 NationsBanc Montgomery Securities LLC 1,500,000 * none 24,489 N.B. Giustina Trust 150,000 * 6,762 2,448 New York Life Insurance Company 10,750,000 1.79 none 175,509 Nicholas Applegate Convertible Fund 3,010,000 * none 49,142 NMS Services Inc. .................. 10,000,000 1.67 none 163,265 Oak Foundation USA, Inc. 200,000 * 297,800 3,265 Oppenheimer Champion Income Fund 11,700,000 1.95 none 191,020 Oppenheimer Strategic Income Fund 10,250,000 1.71 none 167,346 Oppenheimer High Yield Fund 2,000,000 * none 32,653 Oppenheimer Strategic Bond Fund 400,000 * none 6,530 Oppenheimer High Income Fund 3,550,000 * none 57,959 Oppenheimer Convertible Securities Fund 4,000,000 * none 65,306 OZ Master Fund, Ltd. 3,000,000 * none 48,979 OS Ventures 120,000 * 3,607 1,959 Pace Setter 1, L.P. 1,000,000 * none 16,326 Pacific Life Insurance Company 500,000 * none 8,163
78 82
PRINCIPAL AMOUNT AT MATURITY OF DEBENTURES COMMON STOCK BENEFICIALLY PERCENT OF TOTAL COMMON STOCK TO BE OWNED AND OUTSTANDING OWNED PRIOR TO REGISTERED HEREBY SELLING SECURITY HOLDERS OFFERED HEREBY DEBENTURES ORIGINAL OFFERING (1) - ------------------------ ---------------- ---------------- ------------------ ----------------- Palladin Securities, LLC 700,000 * none 11,428 Pell Rudman Trsu Co, NA 1,400,000 * 82,334 22,857 Penn Treaty Network America Insurance Company 110,000 * none 1,795 Peoples Benefit Life Insurance Company 6,000,000 1 none 97,959 Peyton Anderson Foundation 260,000 * 65,000 4,244 PGEP III LLC 700,000 * none 11,428 Pitney Bowes Retirement Fund 6,540,000 1.09 none 106,775 Prime 66 Partners, Inc. 50,000,000 8.33 4,384,871 816,325 Quattro Offshore Fund Ltd. 250,000 * none 4,081 R2 Investments, LDC 8,500,000 1.42 5,240,000 138,775 Radiology Associates Employee Benefit 250,000 * 9,759 4,081 Radiology Group Profit Sharing Plan 80,000 * 2,759 1,306 Radiology Medical Group Pension Plan 75,000 * 2,602 1,224 Radiology Medical Group P/S San Diego 40,000 * 13,000 653 Ralco Inc. 200,000 * 8,451 3,265 Ramius, L.P. 1,583,000 * none 25,844 Ramius Fund, Ltd. 2,375,000 * none 38,775 RCG Baldwin L.P. 792,000 * none 12,930 RCM Financial Services LP 350,000 * 115,000 5,714 Ridgeway/Floum Profit Sharing Plan 100,000 * 2,930 1,632 Riverside Church 450,000 * 17,140 7,346 Ronald Family Trust A 850,000 * 26,221 13,877 S&J Partners 120,000 * 4,134 1,959 Salomon Brothers Asset Management, Inc. 29,050,000 4.84 none 474,284 San Diego City Retirement 839,000 * none 13,697 Sbaggs Family Foundation 110,000 * 2,966 1,795 S.C. Johnson Retirement Plan 240,000 * 8,999 3,918 South Fork Partners 4,000,000 * 108,448 65,306 Southern Methodist University 240,000 * 7,751 3,918 Southport Management Partners, L.P. 1,050,000 * none 17,142 Southport Partners International, Ltd. 1,950,000 * none 31,836 Southwest Franciscan Missions Inc. 150,000 * 5,295 2,448 Starvest Combined Portfolio 375,000 * none 6,122 State of Maryland Retirement Plan 3,500,000 * none 57,142 State Street Bank Custodian For GE Pension Trust 861,000 * none 14,057 Sterling Partners 1,943,000 * 27,142 31,722 Stoel Rives LLP 370,000 * 14,104 6,040 Susquehanna Capital Group 2,545,00* * none 41,550 Tribeca Investments LLC 4,000,000 * none 65,306 Triton Capital Investments, LTD 6,000,000 1 none 97,959 Trustees of Hamilton College 700,000 * 190,000 11,428 TQA Vantage Plus Fund, Ltd. 300,000 * 300,000 4,897
79 83
PRINCIPAL AMOUNT AT MATURITY OF DEBENTURES COMMON STOCK BENEFICIALLY PERCENT OF TOTAL COMMON STOCK TO BE OWNED AND OUTSTANDING OWNED PRIOR TO REGISTERED HEREBY SELLING SECURITY HOLDERS OFFERED HEREBY DEBENTURES ORIGINAL OFFERING (1) - ------------------------ ---------------- ---------------- ------------------ ----------------- TQA Vantage Fund, Ltd. 3,540,000 * 3,540,000 57,795 TQA Leverage Fund, L.P. 1,610,000 * none 26,285 Union Bancaire Privee 6,500,000 1.08 none 106,122 University of Oregon 265,000 * 8,544 4,326 University of Washington Endowment Fund 370,000 * 100,000 6,040 Van Kampen Harbor Fund 4,300,000 * none 70,203 Van Kampen Convertible Securities Fund 700,000 * none 11,428 Wake Forest University 598,000 * none 9,763 Warburg Dillon Read LLC 9,400,000 1.57 none 153,469 Western Cancer Center Medical Group P/S 35,000 * 11,000 571 Zellerbach Family Fund 200,000 * 6,424 3,265
- --------------- * Less than one percent. (1) The shares of common stock to be registered hereby are calculated on an "as converted" basis using the conversion rate described on the front cover page of this Prospectus. None of the selling securityholders listed above has, or within the past three years has had, any position, office or other material relationship with us or any of our predecessors or affiliates. Because the selling securityholders may offer all or some portion of the above referenced securities pursuant to this prospectus or otherwise, no estimate can be given as to the amount or percentage of such securities that will be held by the selling securityholders upon termination of any such sale. In addition, the selling securityholders identified above may have sold, transferred or otherwise disposed of all or a portion of such securities since May 12, 1999 in transactions exempt from the registration requirements of the Securities Act. The selling securityholders may sell all, part or none of the securities listed above. Generally, only selling securityholders identified in the foregoing table who beneficially own the offered securities set forth opposite their respective names may sell such offered securities pursuant to the registration statement, of which this prospectus forms a part. We may from time to time include additional selling securityholders in supplements to this prospectus. 80 84 PLAN OF DISTRIBUTION The offered securities are being registered to permit public secondary trading of such securities by the holders thereof from time to time after the date of this prospectus. Neither NTL Incorporated nor NTL Communications Corp. will receive any of the proceeds from the sale by the selling securityholders of the offered securities. NTL Communications Corp. will bear all fees and expenses incident to its obligation to register the offered securities. The selling securityholders may sell all or a portion of the offered securities beneficially owned by them and offered hereby from time to time directly through one or more underwriters, broker-dealers or agents. If the offered securities are sold through underwriters or broker-dealers, the selling securityholder will be responsible for underwriting discounts or commissions or agent's commissions. Such offered securities may be sold in one or more transactions at fixed prices, at prevailing market prices at the time of the sale, at varying prices determined at the time of sale, or at negotiated prices. Such sales may be effected in transactions (which may involve crosses or block transactions) (1) on any national securities exchange or quotation service on which the offered securities may be listed or quoted at the time of sale (including the Nasdaq National Market for the common stock), (2) in the over-the-counter market, or (3) through the writing of options (whether such options are listed on an options exchange or otherwise). In connection with sales of the offered securities or otherwise, the selling securityholder may enter into hedging transactions with broker-dealers, which may in turn engage in short sales of the offered securities in the course of hedging in positions they assume. The selling securityholder may also sell offered securities short and deliver offered securities to close out short positions, or loan or pledge offered securities to broker-dealers that in turn may sell such offered securities. If the selling securityholders effect such transactions by selling offered securities to or through underwriters, broker- dealers or agents, such underwriters, brokers, dealers or agents may receive commissions in the form of discounts, concessions or commissions from the selling securityholders or commissions from purchasers of offered securities for whom they may act as agent or to whom they may sell as principal (which discounts, concessions or commissions as to particular underwriters, brokers-dealers or agents may be in excess of those customary in the types of transactions involved). The outstanding common stock of NTL Incorporated is listed for trading on the Nasdaq National Market under the symbol "NTLI." We do not intend to apply for listing of the convertible notes on any securities exchange or for quotation through the National Association of Securities Dealers Automated Quotation System. Accordingly, no assurance can be given as to the development of liquidity or any trading market for the convertible notes. See "Risk Factors--Lack of public market for the convertible notes." 81 85 The selling securityholders and any broker-dealer participating in the distribution of the offered securities may be deemed to be "underwriters" within the meaning of the Securities Act, and any commissions paid, or any discounts or concessions allowed to any such broker-dealer may be deemed to be underwriting commissions or discounts under the Securities Act. Under the securities laws of certain states, the offered securities may be sold in such states only through registered or licensed brokers or dealers. In addition, in certain states the offered securities may not be sold unless the offered securities have been registered or qualified for sale in such state or an exemption from registration or qualification is available and is complied with. There can be no assurance that any selling securityholder will sell any or all of the convertible notes or offered securities registered pursuant to the shelf registration statement, or which this Prospectus forms a part. In addition, any securities covered by this Prospectus that qualify for sale pursuant to Rule 144 or Rule 144A of the Securities Act may be sold under Rule 144 or Rule 144A rather than pursuant to this Prospectus. The selling securityholders and any other person participating in such distribution will be subject to applicable provisions of the Exchange Act and the rules and regulations thereunder, including, without limitation, Regulation M of the Exchange Act, which may limit the timing of purchases and sales of any of the offered securities by the selling securityholders and any other such person. Furthermore, Regulation M may restrict the ability of any person engaged in the distribution of the offered securities to engage in market-making activities with respect to the particular offered securities being distributed. All of the foregoing may affect the marketability of the offered securities and the ability of any person or entity to engage in market-making activities with respect to the offered securities. All expenses of the registration of the convertible notes and common stock pursuant to the registration rights agreement will be paid by NTL Communications Corp., including, without limitation, Commission filing fees and expenses of compliance with state securities or "blue sky" laws; provided, however, that the selling securityholders will pay all underwriting discounts and selling commissions, if any. The selling securityholders will be indemnified by NTL Communications Corp. against certain civil liabilities, including certain liabilities under the Securities Act, or will be entitled to contribution in connection therewith. The company will be indemnified by the selling securityholders against certain civil liabilities, including certain liabilities under the Securities Act, or will be entitled to contribution in connection therewith. Upon sale pursuant to the shelf registration statement, of which this prospectus forms a part, the offered securities will be freely tradable in the hands of persons other than affiliates of NTL Communications Corp. 82 86 LEGAL MATTERS The validity of the issuance of the convertible notes and the common stock issuable upon conversion of the convertible notes will be passed upon for NTL Communications Corp. and NTL Incorporated by Skadden, Arps, Slate, Meagher & Flom LLP, New York, New York, special counsel for NTL Incorporated and NTL Communications Corp. EXPERTS The consolidated financial statements and schedules of NTL Incorporated appearing in NTL Incorporated's Annual Report (Form 10-K) for the year ended December 31, 1998 have been audited by Ernst & Young LLP, independent auditors, as set forth in their report thereon included therein and incorporated herein by reference. Such consolidated financial statements are incorporated herein by reference in reliance upon such report given on the authority of such firm as experts in accounting and auditing. The consolidated financial statements as of December 31, 1997 and 1996 and for each of the three years in the period ended December 31, 1997 of Comcast UK Cable Partners Limited and subsidiaries incorporated by reference in this prospectus have been audited by Deloitte & Touche LLP, independent auditors, as stated in their report, which is also incorporated by reference in this prospectus and have been so incorporated by reference in reliance upon the report of that firm given upon their authority as experts in accounting and auditing. The consolidated financial statements as of December 31, 1997 and 1996 and for each of the three years in the period ended December 31, 1997 of Birmingham Cable Corporation Limited and Cable London PLC incorporated by reference in this prospectus have been audited by Deloitte & Touche, independent auditors, as stated in their reports, which are also incorporated by reference in this prospectus and have been so incorporated by reference in reliance upon the reports of that firm given upon their authority as experts in accounting and auditing. The combined financial statements of ComTel UK Finance, B.V. and its subsidiaries as of and for the year ended December 31, 1997, and the combined financial statements of Telecential as of and for the 16 months ended December 31, 1996, incorporated by reference in this prospectus have been audited by Deloitte & Touche, independent auditors, as stated in their reports, which are also incorporated by reference in this prospectus. The combined financial statements as of and for the year ended December 31, 1996 of ComTel UK Finance B.V. incorporated by reference in this prospectus have been incorporated by reference in reliance on the report of Coopers & Lybrand, independent Chartered Accountants. The consolidated financial statements of Diamond Cable Communications Plc as of December 31, 1997 and 1998 and for each of the years in the three-year period ended December 31, 1998 incorporated by reference herein have been audited by KPMG, independent auditors, to the extent and for the periods indicated in their reports on those financial statements. Those financial statements have been incorporated by reference in 83 87 reliance upon the reports of KPMG given on their authority as experts in accounting and auditing. ENFORCEABILITY OF CIVIL LIABILITIES A substantial majority of our assets are located outside the United States. As a result, it may not be possible for you to realize in the United States upon judgments of courts of the United States predicated upon the civil liability under the federal securities laws of the United States. The United States and England do not currently have a treaty providing for the reciprocal recognition and enforcement of judgments, other than arbitration awards, in civil and commercial matters. Therefore, a final judgment for the payment of a fixed debt or sum of money rendered by any United States court based on civil liability, whether or not predicated solely upon the United States federal securities laws, would not automatically be enforceable in England. In order to enforce in England a United States judgment, proceedings must be initiated by way of common law action before a court of competent jurisdiction in England. An English court will, subject to what is said below, normally order summary judgment on the basis that there is no defense to the claim for payment and will not reinvestigate the merits of the original dispute. In such an action, an English court will treat the United States judgment as creating a valid debt upon which the judgment creditor could bring an action for payment, as long as (1) the United States court had jurisdiction over the original proceeding, (2) the judgment is final and conclusive on the merits, (3) the judgment does not contravene English public policy, (4) the judgment must not be for a tax, penalty or a judgment arrived at by doubling, trebling or otherwise multiplying a sum assessed as compensation for the loss or damage sustained and (5) the judgment has not been obtained by fraud or in breach of the principles of natural justice. Based on the foregoing, there can be no assurance that you will be able to enforce in England judgments in civil and commercial matters obtained in any United States court. There is doubt as to whether an English court would impose civil liability in an original action predicated solely upon the United States federal securities laws brought in a court of competent jurisdiction in England. WHERE YOU CAN FIND MORE INFORMATION ABOUT US NTL Incorporated and NTL Communications Corp. are each currently subject to the informational requirements of the Securities Exchange Act of 1934, as amended. We each file reports, proxy statements, information statements and other information with the Commission under the Exchange Act. You can inspect and copy any reports, proxy 84 88 statements, information statements and other information we file with the Commission at the public reference facilities the Commission maintains at: Room 1024, Judiciary Plaza, 450 Fifth Street, N.W., Washington, D.C. 20549, and at the Commission's Regional Offices located at: Suite 1400, Northwestern Atrium Center, 500 West Madison Street, Chicago, Illinois 60661 and 13th Floor, Seven World Trade Center, New York, New York 10048, and you may also obtain copies of such material by mail from the Public Reference Section of the Commission at: 450 Fifth Street, N.W., Washington, D.C. 20549, at prescribed rates. The Commission also maintains a site on the World Wide Web, the address of which is http://www.sec.gov. That site also contains our reports, proxy and information statements and other information. Reports, proxy statements and other information concerning the Company may also be inspected at the offices of the Nasdaq Stock Market, Reports Section, at: 1735 K Street, N.W., Washington, D.C. 20006. This prospectus is part of a registration statement filed by us with the Commission. It does not contain all the information included or incorporated in the registration statement. The full registration statement can be obtained from the Commission as indicated above or from us. The Commission allows us to incorporate by reference some information about NTL Incorporated and NTL Communications Corp. that we file with the Commission. This allows us to disclose important information to you by referencing those filed documents. Any information that we reference this way is considered part of this prospectus. The following documents filed by us with the Commission are incorporated by reference into this prospectus: (a) NTL Communications Corp.'s Quarterly Report on Form 10-Q for the quarter ended March 31, 1999, dated May 17, 1999; (b) NTL Communications Corp.'s Annual Report on Form 10-K for the year ended December 31, 1998, dated March 31, 1999; 85 89 (c) NTL Communications Corp.'s Current Reports on Form 8-K dated January 25, 1999 (filed on January 25, 1999), March 8, 1999 (filed on March 11, 1999), March 18, 1999 (filed on March 23, 1999), April 1, 1999 (filed April 1, 1999), April 8, 1999 (filed on April 12, 1999), April 8, 1999 (filed on April 13, 1999) and June 3, 1999 (filed June 3, 1999); (d) NTL Communications Corp.'s Proxy Statement on Schedule 14A dated January 29, 1999; (e) the financial statements included under Item 14 to the Annual Report on Form 10-K for the year ended December 31, 1998 of Diamond Cable Communications Plc, dated March 30, 1999; (f) NTL Incorporated's Quarterly Report on Form 10-Q for the quarter ended March 31, 1999 dated May 17, 1999; (g) NTL Incorporated's Proxy Statement on Schedule 14A dated April 28, 1999; and (h) NTL Incorporated's Current Reports on Form 8-K dated April 1, 1999 (filed April 1, 1999), April 8, 1999 (filed April 12, 1999) and April 30, 1999 (filed May 12, 1999). We are incorporating by reference the documents listed above and any current reports and proxy statements we file with the commission until the end of the exchange offer. Any information incorporated by reference this way will automatically be deemed to update and supersede this information. We will provide you without charge on your request, a copy of any or all documents which are incorporated by reference to this prospectus, except for exhibits which are specifically incorporated by reference into those documents. You should make your request in writing or by telephone to: NTL Incorporated 110 East 59th Street 26th Floor New York NY 10022 Attention: Richard J. Lubasch Tel: (212) 906-8440 86 90 - ------------------------------------------------------ - ------------------------------------------------------ YOU SHOULD RELY ONLY ON THE INFORMATION CONTAINED IN THIS DOCUMENT OR THAT WE HAVE REFERRED YOU TO. WE HAVE NOT AUTHORIZED ANYONE TO PROVIDE YOU WITH ANY OTHER INFORMATION. THIS PROSPECTUS MAY BE DELIVERED TO YOU AFTER THE DATE OF THIS PROSPECTUS. HOWEVER, YOU SHOULD REALIZE THAT THE AFFAIRS OF NTL INCORPORATED AND NTL COMMUNICATIONS CORP. MAY HAVE CHANGED SINCE THE DATE OF THIS PROSPECTUS. THIS PROSPECTUS WILL NOT REFLECT SUCH CHANGES. YOU SHOULD NOT CONSIDER THIS PROSPECTUS TO BE AN OFFER OR SOLICITATION RELATING TO THE SECURITIES IN ANY JURISDICTION IN WHICH SUCH AN OFFER OR SOLICITATION IS NOT AUTHORIZED. FURTHERMORE, YOU SHOULD NOT CONSIDER THIS PROSPECTUS TO BE AN OFFER OR SOLICITATION RELATING TO THE SECURITIES IF THE PERSON MAKING THE OFFER OR SOLICITATION IS NOT QUALIFIED TO DO SO, OR IF IT IS UNLAWFUL FOR YOU TO RECEIVE SUCH AN OFFER OR SOLICITATION. ------------------------ TABLE OF CONTENTS
PAGE ---- Prospectus Summary.................... 1 Risk Factors.......................... 6 Use of Proceeds....................... 15 Exchange Rates........................ 15 Price Range of Common Stock........... 16 Dividend Policy....................... 16 Description of the Convertible Notes............................... 17 Registration Rights................... 43 Description of Capital Stock.......... 45 Description of Other Indebtedness..... 58 United States Federal Tax Considerations...................... 73 Selling Securityholders............... 75 Plan of Distribution.................. 81 Legal Matters......................... 83 Experts............................... 83 Enforceability of Civil Liabilities... 84 Where You Can Find More Information About Us............................ 84
- ------------------------------------------------------ - ------------------------------------------------------ - ------------------------------------------------------ - ------------------------------------------------------ [NTL LOGO] NTL Communications Corp. 7% Convertible Subordinated Notes Due 2008 NTL Incorporated Common Stock ------------------------ PROSPECTUS ------------------------ , 1999 - ------------------------------------------------------ - ------------------------------------------------------ 91 PART II INFORMATION NOT REQUIRED IN PROSPECTUS ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION The following is an itemization of all expenses (subject to future contingencies) incurred or expected to be incurred by the Company in connection with the Offering. SEC registration fee....................................... $166,800.00 Legal fees and expenses.................................... 100,000.00 Accounting fees and expenses............................... 60,000.00 Printing and engraving fees................................ 85,000.00 Miscellaneous expenses..................................... 8,200.00 ----------- Total............................................ $420,000.00 ===========
- ------------------------- (*) To be completed by amendment. ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS As permitted by Section 102 of the Delaware General Corporation Law (the "DGCL"), each of the Registrants' Amended and Restated Certificates of Incorporation eliminate a director's personal liability for monetary damages to the Company and its stockholders arising from a breach or alleged breach of a director's fiduciary duty except for liability under Section 174 of the DGCL or liability for a breach of the director's duty of loyalty to the Company or its stockholders, for acts or omissions not in good faith or which involve intentional misconduct or a knowing violation of law or for any transaction in which the director derived an improper personal benefit. The effect of these provisions in the certificates of incorporation is to eliminate the rights of the Registrants and their stockholders (through stockholders, derivative suits on behalf of the Registrants) to recover monetary damages against a director for breach of fiduciary duty as a director (including breaches resulting from negligent or grossly negligent behavior) except in the situations described above. NTL Incorporated's By-laws and NTL Communications Corp.'s Restated By-laws provide that directors and officers of the Registrants shall be indemnified against liabilities arising from their service as directors and officers to the full extent permitted by law. Section 145 of the DGCL empowers a corporation to indemnify any person who was or is a party or is threatened to be made a party to any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or investigative (other than an action by or in the right of the corporation) by reason of the fact that he is or was a director, officer, employee or agent of the corporation or is or was serving at the request of the corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise, against expenses (including attorney's fees), judgments, fines and amounts paid in settlement actually and reasonably incurred by him in connection with such action, suit or proceeding if he acted II-1 92 in good faith and in a manner he reasonably believed to be in, or not opposed to, the best interests of the corporation, and, with respect to any criminal action or proceeding, had no reasonable cause to believe his conduct was unlawful. Section 145 also empowers a corporation to indemnify any person who was or is a party or is threatened to be made a party to any threatened, pending or completed action or suit by or in the fight of the corporation to procure a judgment in its favor by reason of the fact that such person acted in any of the capacities set forth above, against expenses (including attorney's fees) actually and reasonably incurred by him in connection with the defense or settlement of such action or suit if he acted under similar standards, except that no indemnification may be made in respect of any claim, issue or matter as to which such person shall have been adjudged to be liable to the corporation unless, and only to the extent that, the Court of Chancery or the court in which such action was brought shall determine that despite the adjudication of liability such person is fairly and reasonably entitled to indemnify for such expenses which the court shall deem proper. Section 145 further provides that to the extent that a director or officer of a corporation has been successful in the defense of any action, suit or proceeding referred to above or in the defense of any claim, issue or matter therein, he shall be indemnified against expenses (including attorneys' fees) actually and reasonably incurred by him in connection therewith; that indemnification provided for by Section 145 shall not be deemed exclusive of any other rights to which the indemnified party may be entitled; and that the corporation is empowered to purchase and maintain insurance on behalf of a director or officer of the corporation against any liability asserted against him and incurred by him in any such capacity, or arising out of his status as such, whether or not the corporation would have the power to indemnify him against such liabilities under Section 145. The Registrants have entered into director and officer indemnity agreements ("Indemnity Agreements") with each officer and director of the Registrants (an "Indemnitee"). Under the bylaws and these Indemnity Agreements, the Registrants must indemnify an Indemnitee to the fullest extent permitted by the DGCL for losses and expenses incurred in connection with actions in which the indemnitee is involved by reason of having been a director or officer of either of the Registrants. The Registrants are also obligated to advance expenses an indemnitee may incur in connection with such actions before any resolution of the action. II-2 93 ITEM 16. EXHIBITS The following exhibits are filed as part of this Registration Statement:
EXHIBIT NO. DESCRIPTION - ------- ----------- 2.1 Agreement and Plan of Merger, dated as of March 26, 1999, by and among NTL Incorporated, NTL Communications Corp. and NTL Mergerco, Inc. 3.1 Restated Certificate of Incorporation of NTL Communications Corp.(15) 3.1(a) Agreement and Plan of Merger, dated as of March 26, 1999, by and among NTL Incorporated, NTL Communications Corp. and NTL Mergerco, Inc. (Included as Exhibit 2.1) 3.2 Restated By-laws of NTL Communications Corp.(1) 3.3 Certificate of Incorporation of NTL Incorporated 3.4 By-laws of NTL Incorporated 4.1 Indenture, dated as of April 14, 1999, by and between the Company and The Chase Manhattan Bank, as Trustee, with respect to the 1999 9 3/4% Notes.(14) 4.2 Registration Rights Agreement dated as of April 14, 1999, with respect to the 1999 9 3/4% Notes.(14) 4.3 Indenture, dated as of December 16, 1998, by and between the Company and The Chase Manhattan Bank, as Trustee, with respect to the Convertible Notes.(15) 4.4 First Supplemental Indenture, dated as of March 31, 1999, between NTL Incorporated, NTL Communications Corp. and The Chase Manhattan Bank, as Trustee, with respect to the Convertible Notes. 4.5 Registration Rights Agreement, dated as of December 16, with respect to Convertible Notes.(15) 4.6 Indenture, dated as of November 2, 1998, by and between the Company and The Chase Manhattan Bank, as Trustee, with respect to the 11 1/2% Notes(12) 4.7 Indenture, dated as of November 6, 1998, by and between the Company and The Chase Manhattan Bank, as Trustee, with respect to the 12 3/8% Notes(12) 4.8 Registration Rights Agreement, dated as of November 2, 1998, by and among the Company and Morgan Stanley & Co. Incorporated, Chase Securities Inc., Donaldson, Lufkin & Jenrette Securities Corporation and Goldman, Sachs & Co. with respect to the 11 1/2% Notes(12) 4.9 Registration Rights Agreement, dated as of November 6, 1998, by and among the Company and Morgan Stanley & Co. Incorporated, Chase Securities Inc., Donaldson, Lufkin & Jenrette Securities Corporation and Goldman, Sachs & Co. with respect to the 12 3/8% Notes(12) 4.10 Indenture, dated as of February 12, 1997, by and between the Company and The Chase Manhattan Bank, as Trustee, with respect to the 10% Notes(10) 4.11 Certificate of Designation, dated February 12, 1997, with respect to the Redeemable Preferred Stock(10)
II-3 94
EXHIBIT NO. DESCRIPTION - ------- ----------- 4.12 Registration Rights Agreement, dated February 12, 1997, by and among the Company and Donaldson, Lufkin & Jenrette Securities Corporation, Chase Securities Inc. and Merrill Lynch, Pierce, Fenner & Smith Incorporated with respect to the 10% Notes(10) 4.13 Registration Rights Agreement, dated February 12, 1997, by and among the Company and Donaldson, Lufkin & Jenrette Securities Corporation, Chase Securities Inc. and Merrill Lynch, Pierce, Fenner & Smith Incorporated with respect to the Redeemable Preferred Stock(10) 4.14 Form of Convertible Notes (included in Exhibit 4.3) 4.15 Indenture, dated as of June 12, 1996, by and between the Company and Chemical Bank, as Trustee, with respect to the 7% Convertible Notes(8) 4.16 First Supplemental Indenture, dated as of March 31, 1999, between NTL Incorporated, NTL Communications Corp. and The Chase Manhattan Bank, as Trustee, with respect to the 7% Convertible Notes. 4.17 Registration Rights Agreement, dated June 12, 1996, by and among the Company and Donaldson, Lufkin & Jenrette Securities Corporation and Salomon Brothers Inc, with respect to the 7% Convertible Notes(8) 4.18 Indenture, dated as of January 30, 1996, by and among the Company and Chemical Bank, as Trustee, with respect to the 11 1/2% Notes(7) 4.19 Registration Rights Agreement, dated January 30, 1996, by and among the Company and Donaldson, Lufkin & Jenrette Securities Corporation, Salomon Brothers Inc and Chase Securities, Inc., with respect to the 11 1/2% Notes(7) 4.20 Indenture, dated as of April 20, 1995, by and among the Company and Chemical Bank, as Trustee, with respect to the 12 3/4% Notes(2) 4.21 First Supplemental Indenture, dated as of January 22, 1996, by and among the Company and Chemical Bank, as Trustee with respect to the Indenture included as Exhibit 4.19(7) 4.22 Registration Agreement, dated April 13, 1995 by and among the Company and Salomon Brothers Inc, Donaldson, Lufkin & Jenrette Securities Corporation and Goldman, Sachs & Co., with respect to the 12 3/4% Notes(2) 4.23 Indenture, dated as of April 20, 1995, by and among the Company and Chemical Bank, as Trustee, with respect to the 7 1/4% Convertible Notes(3) 4.24 Registration Agreement, dated April 12, 1995, by and among the Company and Salomon Brothers Inc, Donaldson, Lufkin & Jenrette Securities Corporation and Goldman Sachs & Co., with respect to the 7 1/4% Convertible Notes(3) 4.25 Indenture, dated as of October 1, 1993, by and among the Company and Chemical Bank, as Trustee with respect to the 10 7/8% Senior Notes(4) 4.26 First Supplemental Indenture, dated January 23, 1996, by and among the Company and Chemical Bank, as Trustee, with respect to the Indenture included as Exhibit 4.24(7) 4.27 Rights Agreement, dated as of October 1, 1993, between the Company and Continental Transfer & Trust Company, as Rights Agent(1)
II-4 95
EXHIBIT NO. DESCRIPTION - ------- ----------- 4.28 Indenture, dated as of November 15, 1995, between Comcast U.K. Cable Partners Limited and Bank of Montreal Trust Company, as Trustee, with respect to the 11.20% Senior Discount Debentures Due 2007 of Comcast U.K. Cable Partners Limited.(13) 5.1 Opinion of Skadden, Arps, Slate, Meagher & Flom LLP as to the legality of the notes being registered hereby 10.1 Compensation Plan Agreements, as amended and restated effective June 3, 1997(11) 10.2 Form of Director and Officer Indemnity Agreement (together with a schedule of executed Indemnity Agreements)(2) 11.1 Statement of computation of per share earnings(11) 12.1 Computation of Ratio of Earnings to Fixed Charges and Combined Fixed Charges and Preferred Stock Dividends 21.1 Subsidiaries of the Company(11) 23.1 Consent of Ernst & Young, LLP 23.2 Consent of Deloitte & Touche LLP 23.3 Consent of Deloitte & Touche -- Birmingham 23.4 Consent of Deloitte & Touche -- London 23.5 Consent of Deloitte & Touche -- Comtel 23.6 Consent of Coopers & Lybrand -- ComTel 23.7 Consent of KPMG -- Diamond 23.8 Consent of Skadden, Arps, Slate, Meagher & Flom LLP (included in Exhibit 5.1) 24.1 Powers of Attorney* 25.1 Form T-1 Statement of Eligibility of Trustee with respect to Indenture included as Exhibit 4.3 99.1 Prescribed Diffusion Service License, dated July 21, 1987, issued to British Cable Services Limited (now held by CableTel Surrey and Hampshire Limited) for the area of West Surrey and East Hampshire, England(5) 99.2 Prescribed Diffusion Service License, dated December 3, 1990, issued to Clyde Cablevision (renamed CableTel Glasgow) for the area of Inverclyde, Scotland(5) 99.3 Prescribed Diffusion Service License, dated December 3, 1990, issued to Clyde Cablevision (renamed CableTel Glasgow) for the area of Bearsden and Milngavie, Scotland(5) 99.4 Prescribed Diffusion Service License, dated December 3, 1990, issued to Newport Cablevision Limited (renamed CableTel Newport) for the area of Newport, Wales(5) 99.5 Prescribed Diffusion Service License, dated July 10, 1984, issued to Clyde Cablevision (renamed CableTel Glasgow) for the area of North Glasgow and Clydebank, Strathclyde, Scotland(5)
II-5 96
EXHIBIT NO. DESCRIPTION - ------- ----------- 99.6 Prescribed Diffusion Service License, dated December 3, 1990, issued to Clyde Cablevision (renamed CableTel Glasgow) for the area of Greater Glasgow, Scotland(5) 99.7 Prescribed Diffusion Service License, dated December 3, 1990, issued to Clyde Cablevision (renamed CableTel Glasgow) for the area of Paisley and Renfrew, Scotland(5) 99.8 Prescribed Diffusion Service License, dated December 3, 1990, issued to Cable and Satellite Television Holdings Ltd (renamed CableTel West Glamorgan Limited) for the area of West Glamorgan, Wales(5) 99.9 Prescribed Diffusion Service License, dated December 3, 1990, issued to British Cable Services Limited for the area of Cardiff and Penarth, Wales (now held by CableTel Cardiff Limited)(5) 99.10 Prescribed Diffusion Service License, dated December 3, 1990, issued to Kirklees Cable (renamed CableTel Kirklees) for the area of Huddersfield and Dewsbury, West Yorkshire, England(5) 99.11 Prescribed Diffusion Service License, dated December 3, 1990, issued to CableVision Communications Company of Hertfordshire Ltd (renamed CableTel Hertfordshire Limited) for the area of Broxbourne and East Hertfordshire, England(5) 99.12 Prescribed Diffusion Service License, dated December 3, 1990, issued to CableVision Communications Company Ltd (renamed CableTel Central Hertfordshire Limited) for the area of Central Hertfordshire, England(5) 99.13 Prescribed Diffusion Service License, dated March 26, 1990, issued to CableVision Bedfordshire Limited (renamed CableTel Bedfordshire Ltd.) for the area of Luton and South Bedfordshire(5) 99.14 Prescribed Diffusion Service License, dated December 3, 1990, issued to CableVision North Bedfordshire Ltd (renamed CableTel North Bedfordshire Ltd.) for the area of North Bedfordshire, England(5) 99.15 Local Delivery Service License, dated October 2, 1995, issued to CableTel Northern Ireland Limited for Northern Ireland(5) 99.16 Local Delivery Service License, dated December 6, 1995, issued to CableTel South Wales Limited for Glamorgan and Gwent, Wales(5) 99.17 Local Delivery Service License, dated March 13, 1991, issued to Maxwell Cable TV Limited for Pembroke Dock, Dyfed, Wales (now held by Metro South Wales Limited)(5) 99.18 Local Delivery Service License, dated March 15, 1991, issued to Maxwell Cable TV Limited for Camarthen, Wales (now held by Metro South Wales Limited)(5) 99.19 Local Delivery Service License, dated March 15, 1991, issued to Maxwell Cable TV Limited for Milford Haven, Wales (now held by Metro South Wales Limited)(5)
II-6 97
EXHIBIT NO. DESCRIPTION - ------- ----------- 99.20 Local Delivery Service License, dated March 15, 1991, issued to Maxwell Cable TV Limited for Cwmgors (Amman Valley), West Glamorgan, Wales(5) 99.21 Local Delivery Service License, dated March 15, 1991, issued to Maxwell Cable TV Limited for Ammanford, West Glamorgan, Wales(5) 99.22 Local Delivery Service License, dated March 15, 1991, issued to Maxwell Cable TV Limited for Brecon, Gwent, Wales(5) 99.23 Local Delivery Service License, dated March 15, 1991, issued to Maxwell Cable TV Limited for Haverfordwest, Preseli, Wales(5) 99.24 Local Delivery Service License, dated March 15, 1991, issued to Maxwell Cable TV Limited for Neyland, Preseli, Wales (now held by Metro South Wales Limited)(5) 99.25 License, dated January 11, 1991, issued to Cablevision Communications Company of Hertfordshire Ltd (renamed CableTel Hertfordshire Limited) for the Hertford, Cheshunt and Ware (Lea Valley) cable franchise, England(5) 99.26 License, dated December 8, 1990, issued to Cablevision Communications Company Limited for Central Hertfordshire (renamed CableTel Central Hertfordshire Limited), England(5) 99.27 License, dated August 23, 1989, issued to Cablevision Bedfordshire Limited for Bedford and surrounding areas, England(5) 99.28 License, dated January 9, 1991, issued to Cablevision North Bedfordshire Ltd for North Bedfordshire, England(5) 99.29 License, dated January 29, 1991, issued to Clyde Cablevision (renamed CableTel Glasgow) for the Inverclyde Cable Franchise, Scotland(5) 99.30 License, dated January 29, 1991, issued to Clyde Cablevision (renamed CableTel Glasgow) for the Bearsden and Milngavie Cable Franchise, Scotland(5) 99.31 License, dated January 29, 1991, issued to Clyde Cablevision (renamed CableTel Glasgow) for the Paisley and Renfrew Cable Franchise, Scotland(5) 99.32 License, dated June 7, 1985, issued to Clyde Cablevision Ltd (renamed CableTel Glasgow) for North West Glasgow and Clydebank, Scotland(5) 99.33 License, dated January 29, 1991, issued to Clyde Cablevision (renamed CableTel Glasgow) for the Greater Glasgow cable franchise, Scotland(5) 99.34 License, dated October 13, 1993, issued to Insight Communications Cardiff Limited (renamed CableTel Cardiff Limited) for Cardiff, Wales(5) 99.35 License, dated January 22, 1991, issued to Newport Cablevision Limited (renamed CableTel Newport), for Newport Cable franchise Wales(5) 99.36 License, dated May 18, 1990, issued to Cable and Satellite Television Holdings Limited (renamed CableTel West Glamorgan) for West Glamorgan, Wales(5)
II-7 98
EXHIBIT NO. DESCRIPTION - ------- ----------- 99.37 License, dated December 20, 1990, issued to Kirklees Cable (renamed CableTel Kirklees) for the Huddersfield and Dewsbury cable franchise, England(5) 99.38 License, dated October 13, 1993, issued to Insight Communications Guildford Limited (renamed CableTel Surrey and Hampshire Limited) for the West Surrey/East Hampshire (Guildford) Cable Franchise, England(5) 99.39 License, dated January 20, 1995, issued to CableTel Bedfordshire Ltd. for the area of South Bedfordshire, England(5) 99.40 License, dated January 20, 1995, issued to CableTel North Bedfordshire Ltd. for the area of Bedford, England(5) 99.41 License, dated January 20, 1992, issued to Cable and Satellite Television Holdings Limited (renamed CableTel West Glamorgan Limited) for the area of Swansea, Neath and Port Talbot, Wales(5) 99.42 License, dated January 20, 1995, issued to Cabletel Hertfordshire Ltd. for the area of Hertford, Cheshunt and Ware (Lea Valley), England(5) 99.43 License, dated January 20, 1995, issued to Cabletel Central Hertfordshire Ltd. for the area of Central Hertfordshire, England(5) 99.44 License, dated July 21, 1995, issued to CableTel Kirklees(5) 99.45 License, dated June 8, 1995, issued to CableTel Bedfordshire Ltd.(5) 99.46 License, dated October 27, 1995, issued to Metro South Wales Limited for the area of Neyland, Wales(5) 99.47 License, dated October 27, 1995, issued to Metro South Wales Limited for the area of Cwmgors, Wales(5) 99.48 License, dated October 27, 1995, issued to Metro South Wales Limited for the area of Ammanford, Wales(5) 99.49 License, dated October 27, 1995, issued to Metro South Wales Limited for the area of Carmarthen, Wales(5) 99.50 License, dated October 27, 1995, issued to Metro South Wales Limited for the area of Haverfordwest, Wales(5) 99.51 License, dated October 27, 1995, issued to Metro South Wales Limited for the area of Pembroke Dock, Wales(5) 99.52 License, dated October 27, 1995, issued to Metro South Wales Limited for the area of Milford Haven, Wales(5) 99.53 License, dated October 27, 1995, issued to CableTel South Wales Limited for the area of Glamorgan and Gwent, Wales(5) 99.54 License, dated January 26, 1996, issued to Cabletel South Wales Limited, for part of the Glamorgan area(5) 99.55 License, dated November 3, 1997, issued to NTL (UK) Group, Inc. for the Provision of Radio Fixed Access Operator Services(10) 99.56 Agreement and Plan of Amalgamation; Undertaking of Comcast Corporation; Undertaking of Warburg, Pincus Investors, L.P.(11)
II-8 99 - --------------- * Previously filed. (1) Incorporated by reference from the Company's Registration Statement on Form S-1, File No. 33-63570. (2) Incorporated by reference from the Company's Registration Statement on Form S-4, File No. 33-92794. (3) Incorporated by reference from the Company's Registration Statement on Form S-3, File No. 33-92792. (4) Incorporated by reference from the Company's Registration Statement on Form S-1, File No. 33-63572. (5) Incorporated by reference from the Company's Form 8-K, filed with the Commission on March 20, 1996. (6) Incorporated by reference from the Company's Form 8-K, filed with the Commission on March 26, 1997. (7) Incorporated by reference to the Company's Registration Statement on Form S-4, File No. 333-1010. (8) Incorporated by reference to the Company's Registration Statement on Form S-3, File No. 333-07879. (9) Incorporated by reference to the Company's Registration Statement on Form S-3, File No. 333-16751. (10) Incorporated by reference to the Company's Annual Report on Form 10-K, filed on March 28, 1997. (11) Incorporated by reference to the Company's Annual Report on Form 10-K, filed with the Commission on March 30, 1998. (12) Incorporated by reference to the Company's Registration Statement on Form S-4, File No. 333-71279. (13) Incorporated by reference to the Registration Statement on Form S-3, File No. 33-96932, of Comcast U.K. Cable Partners Limited. (14) Incorporated by reference to NTL Communications Corp.'s Registration Statement on Form S-4, File No. 333-78405. (15) Incorporated by reference to NTL Communications Corp.'s Annual Report on Form 10-K for the year ended December 31, 1998. ITEM 17. UNDERTAKINGS (A) The undersigned Registrants hereby undertake that, for purposes of determining any liability under the Securities Act, each filing of each of the Registrants' annual reports pursuant to section 13(a) or section 15(d) of the Securities Exchange Act (and, where applicable, each filing of an employee benefit plan's annual report pursuant to section 15(d) of the Securities Exchange Act) that is incorporated by reference in the Registration Statement shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof. (B) Insofar as indemnification for liabilities arising under the Securities Act may be permitted to directors, officers and controlling persons of the registrants II-9 100 pursuant to the foregoing provisions, or otherwise, the registrants have been advised that in the opinion of the Commission such indemnification is against public policy as expressed in the Securities Act and is, therefore, unenforceable. In the event that a claim for indemnification against such liabilities (other than the payment by either of the Registrants of expenses incurred or paid by a director, officer or controlling person of either of the Registrants in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the Registrants will, unless in the opinion of their counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Securities Act and will be governed by the final adjudication of such issue. (C) The undersigned registrants hereby undertake that: (1) For purposes of determining any liability under the Securities Act, the information omitted from the form of prospectus filed as part of this Registration Statement in reliance upon Rule 430A and contained in a form of prospectus filed by the registrant pursuant to Rule 424(b)(1) or (4) or 497(h) under the Securities Act shall be deemed to be part of this Registration Statement as of the time it was declared effective. (2) For the purposes of determining any liability under the Securities Act, each post-effective amendment that contains a form of prospectus shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof. (D) The undersigned Registrants hereby undertake: (1) To file, during any period in which offers or sales are being made, a post-effective amendment to this Registration Statement to include any material information with respect to the plan of distribution not previously disclosed in the Registration Statement or any material change to such information in the Registration Statement; (2) That, for the purpose of determining any liability under the Securities Act, each such post-effective amendment shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof. (3) To remove from registration by means of a post-effective amendment any of the securities being registered which remain unsold at the termination of the offering. II-10 101 SIGNATURES Pursuant to the requirements of the Securities Act of 1933, as amended, the Registrant certifies that it has reasonable grounds to believe that it meets all of the requirements for filing on Form S-3 and has duly caused this Registration Statement to be signed on its behalf by the undersigned, thereunto duly authorized in the City of New York, State of New York, on the 3rd day of June, 1999. NTL Incorporated By /s/ RICHARD J. LUBASCH ------------------------------------ Richard J. Lubasch Senior Vice President -- General Counsel and Secretary II-11 102 Pursuant to the requirements of the Securities Act of 1933, this Registration Statement has been signed by the following persons in the capacities and on the dates indicated.
SIGNATURE TITLE DATE --------- ----- ---- * Chairman of the Board, Treasurer June 3, 1999 - ----------------------------------- and Director George S. Blumenthal * President, Chief Executive and June 3, 1999 - ----------------------------------- Financial Officer and Director J. Barclay Knapp * Director June 3, 1999 - ----------------------------------- Robert T. Goad * Vice President -- Controller June 3, 1999 - ----------------------------------- Gregg Gorelick * Director June 3, 1999 - ----------------------------------- Sidney R. Knafel * Director June 3, 1999 - ----------------------------------- Ted H. McCourtney * Director June 3, 1999 - ----------------------------------- Del Mintz * Director June 3, 1999 - ----------------------------------- Alan J. Patricof * Director June 3, 1999 - ----------------------------------- Warren Potash * Director June 3, 1999 - ----------------------------------- Michael S. Willner
* Richard J. Lubasch, by signing his name hereto, does hereby execute this registration statement on behalf of the officers and directors of the registrant indicated above by asterisks, pursuant to powers of attorney duly executed by the officers and directors and filed as exhibits to the registration statement. By: /s/ RICHARD J. LUBASCH -------------------------------------- Richard J. Lubasch Attorney-in-fact II-12 103 SIGNATURES Pursuant to the requirements of the Securities Act of 1933, as amended, the Registrant certifies that it has reasonable grounds to believe that it meets all of the requirements for filing on Form S-3 and has duly caused this Registration Statement to be signed on its behalf by the undersigned, thereunto duly authorized in the City of New York, State of New York, on the 3rd day of June, 1999. NTL Communications Corp. By /s/ RICHARD J. LUBASCH ------------------------------------ Richard J. Lubasch Senior Vice President -- General Counsel and Secretary II-13 104 Pursuant to the requirements of the Securities Act of 1933, this Registration Statement has been signed by the following persons in the capacities and on the dates indicated.
SIGNATURE TITLE DATE --------- ----- ---- * Chairman of the Board, Treasurer June 3, 1999 - ----------------------------------- and Director George S. Blumenthal * President, Chief Executive and June 3, 1999 - ----------------------------------- Financial Officer and Director J. Barclay Knapp * Director June 3, 1999 - ----------------------------------- Robert T. Goad * Vice President -- Controller June 3, 1999 - ----------------------------------- Gregg Gorelick * Director June 3, 1999 - ----------------------------------- Sidney R. Knafel * Director June 3, 1999 - ----------------------------------- Ted H. McCourtney * Director June 3, 1999 - ----------------------------------- Del Mintz * Director June 3, 1999 - ----------------------------------- Alan J. Patricof * Director June 3, 1999 - ----------------------------------- Warren Potash * Director June 3, 1999 - ----------------------------------- Michael S. Willner
* Richard J. Lubasch, by signing his name hereto, does hereby execute this registration statement on behalf of the officers and directors of the registrant indicated above by asterisks, pursuant to powers of attorney duly executed by the officers and directors and filed as exhibits to the registration statement. By: /s/ RICHARD J. LUBASCH -------------------------------------- Richard J. Lubasch Attorney-in-fact II-14 105 EXHIBIT INDEX
EXHIBIT NO. DESCRIPTION - ------- ----------- 2.1 Agreement and Plan of Merger, dated as of March 26, 1999, by and among NTL Incorporated, NTL Communications Corp. and MTL Mergerco, Inc. 3.1 Restated Certificate of Incorporation of NTL Communications Corp.(15) 3.1(a) Agreement and Plan of Merger, dated as of March 26, 1999, by and among NTL Incorporated, NTL Communications Corp. and MTL Mergerco, Inc. (Included as Exhibit 2.1) 3.2 Restated By-laws of NTL Communications Corp.(1) 3.3 Certificate of Incorporation of NTL Incorporated 3.4 By-laws of NTL Incorporated 4.1 Indenture, dated as of April 14, 1999, by and between the Company and The Chase Manhattan Bank, as Trustee, with respect to the 1999 9 3/4% Notes.(14) 4.2 Registration Rights Agreement dated as of April 14, 1999, with respect to the 1999 9 3/4% Notes.(14) 4.3 Indenture, dated as of December 16, 1998, by and between the Company and The Chase Manhattan Bank, as Trustee, with respect to the Convertible Notes.(15) 4.4 First Supplemental Indenture, dated as of March 31, 1999, between NTL Incorporated, NTL Communications Corp. and The Chase Manhattan Bank, as Trustee, with respect to the Convertible Notes. 4.5 Registration Rights Agreement, dated as of December 16, with respect to Convertible Notes.(15) 4.6 Indenture, dated as of November 2, 1998, by and between the Company and The Chase Manhattan Bank, as Trustee, with respect to the 11 1/2% Notes(12) 4.7 Indenture, dated as of November 6, 1998, by and between the Company and The Chase Manhattan Bank, as Trustee, with respect to the 12 3/8% Notes(12) 4.8 Registration Rights Agreement, dated as of November 2, 1998, by and among the Company and Morgan Stanley & Co. Incorporated, Chase Securities Inc., Donaldson, Lufkin & Jenrette Securities Corporation and Goldman, Sachs & Co. with respect to the 11 1/2% Notes(12) 4.9 Registration Rights Agreement, dated as of November 6, 1998, by and among the Company and Morgan Stanley & Co. Incorporated, Chase Securities Inc., Donaldson, Lufkin & Jenrette Securities Corporation and Goldman, Sachs & Co. with respect to the 12 3/8% Notes(12) 4.10 Indenture, dated as of February 12, 1997, by and between the Company and The Chase Manhattan Bank, as Trustee, with respect to the 10% Notes(10) 4.11 Certificate of Designation, dated February 12, 1997, with respect to the Redeemable Preferred Stock(10)
106
EXHIBIT NO. DESCRIPTION - ------- ----------- 4.12 Registration Rights Agreement, dated February 12, 1997, by and among the Company and Donaldson, Lufkin & Jenrette Securities Corporation, Chase Securities Inc. and Merrill Lynch, Pierce, Fenner & Smith Incorporated with respect to the 10% Notes(10) 4.13 Registration Rights Agreement, dated February 12, 1997, by and among the Company and Donaldson, Lufkin & Jenrette Securities Corporation, Chase Securities Inc. and Merrill Lynch, Pierce, Fenner & Smith Incorporated with respect to the Redeemable Preferred Stock(10) 4.14 Form of Convertible Notes (included in Exhibit 4.3) 4.15 Indenture, dated as of June 12, 1996, by and between the Company and Chemical Bank, as Trustee, with respect to the 7% Convertible Notes(8) 4.16 First Supplemental Indenture, dated as of March 31, 1999, between NTL Incorporated, NTL Communications Corp. and the Chase Manhattan Bank, as Trustee, with respect to the 7% Convertible Notes 4.17 Registration Rights Agreement, dated June 12, 1996, by and among the Company and Donaldson, Lufkin & Jenrette Securities Corporation and Salomon Brothers Inc, with respect to the 7% Convertible Notes(8) 4.18 Indenture, dated as of January 30, 1996, by and among the Company and Chemical Bank, as Trustee, with respect to the 11 1/2% Notes(7) 4.19 Registration Rights Agreement, dated January 30, 1996, by and among the Company and Donaldson, Lufkin & Jenrette Securities Corporation, Salomon Brothers Inc and Chase Securities, Inc., with respect to the 11 1/2% Notes(7) 4.20 Indenture, dated as of April 20, 1995, by and among the Company and Chemical Bank, as Trustee, with respect to the 12 3/4% Notes(2) 4.21 First Supplemental Indenture, dated as of January 22, 1996, by and among the Company and Chemical Bank, as Trustee with respect to the Indenture included as Exhibit 4.19(7) 4.22 Registration Agreement, dated April 13, 1995 by and among the Company and Salomon Brothers Inc, Donaldson, Lufkin & Jenrette Securities Corporation and Goldman, Sachs & Co., with respect to the 12 3/4% Notes(2) 4.23 Indenture, dated as of April 20, 1995, by and among the Company and Chemical Bank, as Trustee, with respect to the 7 1/4% Convertible Notes(3) 4.24 Registration Agreement, dated April 12, 1995, by and among the Company and Salomon Brothers Inc, Donaldson, Lufkin & Jenrette Securities Corporation and Goldman Sachs & Co., with respect to the 7 1/4% Convertible Notes(3) 4.25 Indenture, dated as of October 1, 1993, by and among the Company and Chemical Bank, as Trustee with respect to the 10 7/8% Senior Notes(4) 4.26 First Supplemental Indenture, dated January 23, 1996, by and among the Company and Chemical Bank, as Trustee, with respect to the Indenture included as Exhibit 4.24(7)
107
EXHIBIT NO. DESCRIPTION - ------- ----------- 4.27 Rights Agreement, dated as of October 1, 1993, between the Company and Continental Transfer & Trust Company, as Rights Agent(1) 4.28 Indenture, dated as of November 15, 1995, between Comcast U.K. Cable Partners Limited and Bank of Montreal Trust Company, as Trustee, with respect to the 11.20% Senior Discount Debentures Due 2007 of Comcast U.K. Cable Partners Limited.(13) 5.1 Opinion of Skadden, Arps, Slate, Meagher & Flom LLP as to the legality of the notes being registered hereby 10.1 Compensation Plan Agreements, as amended and restated effective June 3, 1997(11) 10.2 Form of Director and Officer Indemnity Agreement (together with a schedule of executed Indemnity Agreements)(2) 11.1 Statement of computation of per share earnings(11) 12.1 Computation of Ratio of Earnings to Fixed Charges and Combined Fixed Charges and Preferred Stock Dividends 21.1 Subsidiaries of the Company(11) 23.1 Consent of Ernst & Young, LLP 23.2 Consent of Deloitte & Touche LLP 23.3 Consent of Deloitte & Touche -- Birmingham 23.4 Consent of Deloitte & Touche -- London 23.5 Consent of Deloitte & Touche -- Comtel 23.6 Consent of Coopers & Lybrand -- ComTel 23.7 Consent of KPMG -- Diamond 24.1 Powers of Attorney* 23.8 Consent of Skadden, Arps, Slate, Meagher & Flom LLP (included in Exhibit 5.1) 25.1 Form T-1 Statement of Eligibility of Trustee with respect to Indenture included as Exhibit 4.3 99.1 Prescribed Diffusion Service License, dated July 21, 1987, issued to British Cable Services Limited (now held by CableTel Surrey and Hampshire Limited) for the area of West Surrey and East Hampshire, England(5) 99.2 Prescribed Diffusion Service License, dated December 3, 1990, issued to Clyde Cablevision (renamed CableTel Glasgow) for the area of Inverclyde, Scotland(5) 99.3 Prescribed Diffusion Service License, dated December 3, 1990, issued to Clyde Cablevision (renamed CableTel Glasgow) for the area of Bearsden and Milngavie, Scotland(5)
108
EXHIBIT NO. DESCRIPTION - ------- ----------- 99.4 Prescribed Diffusion Service License, dated December 3, 1990, issued to Newport Cablevision Limited (renamed CableTel Newport) for the area of Newport, Wales(5) 99.5 Prescribed Diffusion Service License, dated July 10, 1984, issued to Clyde Cablevision (renamed CableTel Glasgow) for the area of North Glasgow and Clydebank, Strathclyde, Scotland(5) 99.6 Prescribed Diffusion Service License, dated December 3, 1990, issued to Clyde Cablevision (renamed CableTel Glasgow) for the area of Greater Glasgow, Scotland(5) 99.7 Prescribed Diffusion Service License, dated December 3, 1990, issued to Clyde Cablevision (renamed CableTel Glasgow) for the area of Paisley and Renfrew, Scotland(5) 99.8 Prescribed Diffusion Service License, dated December 3, 1990, issued to Cable and Satellite Television Holdings Ltd (renamed CableTel West Glamorgan Limited) for the area of West Glamorgan, Wales(5) 99.9 Prescribed Diffusion Service License, dated December 3, 1990, issued to British Cable Services Limited for the area of Cardiff and Penarth, Wales (now held by CableTel Cardiff Limited)(5) 99.10 Prescribed Diffusion Service License, dated December 3, 1990, issued to Kirklees Cable (renamed CableTel Kirklees) for the area of Huddersfield and Dewsbury, West Yorkshire, England(5) 99.11 Prescribed Diffusion Service License, dated December 3, 1990, issued to CableVision Communications Company of Hertfordshire Ltd (renamed CableTel Hertfordshire Limited) for the area of Broxbourne and East Hertfordshire, England(5) 99.12 Prescribed Diffusion Service License, dated December 3, 1990, issued to CableVision Communications Company Ltd (renamed CableTel Central Hertfordshire Limited) for the area of Central Hertfordshire, England(5) 99.13 Prescribed Diffusion Service License, dated March 26, 1990, issued to CableVision Bedfordshire Limited (renamed CableTel Bedfordshire Ltd.) for the area of Luton and South Bedfordshire(5) 99.14 Prescribed Diffusion Service License, dated December 3, 1990, issued to CableVision North Bedfordshire Ltd (renamed CableTel North Bedfordshire Ltd.) for the area of North Bedfordshire, England(5) 99.15 Local Delivery Service License, dated October 2, 1995, issued to CableTel Northern Ireland Limited for Northern Ireland(5) 99.16 Local Delivery Service License, dated December 6, 1995, issued to CableTel South Wales Limited for Glamorgan and Gwent, Wales(5) 99.17 Local Delivery Service License, dated March 13, 1991, issued to Maxwell Cable TV Limited for Pembroke Dock, Dyfed, Wales (now held by Metro South Wales Limited)(5)
109
EXHIBIT NO. DESCRIPTION - ------- ----------- 99.18 Local Delivery Service License, dated March 15, 1991, issued to Maxwell Cable TV Limited for Camarthen, Wales (now held by Metro South Wales Limited)(5) 99.19 Local Delivery Service License, dated March 15, 1991, issued to Maxwell Cable TV Limited for Milford Haven, Wales (now held by Metro South Wales Limited)(5) 99.20 Local Delivery Service License, dated March 15, 1991, issued to Maxwell Cable TV Limited for Cwmgors (Amman Valley), West Glamorgan, Wales(5) 99.21 Local Delivery Service License, dated March 15, 1991, issued to Maxwell Cable TV Limited for Ammanford, West Glamorgan, Wales(5) 99.22 Local Delivery Service License, dated March 15, 1991, issued to Maxwell Cable TV Limited for Brecon, Gwent, Wales(5) 99.23 Local Delivery Service License, dated March 15, 1991, issued to Maxwell Cable TV Limited for Haverfordwest, Preseli, Wales(5) 99.24 Local Delivery Service License, dated March 15, 1991, issued to Maxwell Cable TV Limited for Neyland, Preseli, Wales (now held by Metro South Wales Limited)(5) 99.25 License, dated January 11, 1991, issued to Cablevision Communications Company of Hertfordshire Ltd (renamed CableTel Hertfordshire Limited) for the Hertford, Cheshunt and Ware (Lea Valley) cable franchise, England(5) 99.26 License, dated December 8, 1990, issued to Cablevision Communications Company Limited for Central Hertfordshire (renamed CableTel Central Hertfordshire Limited), England(5) 99.27 License, dated August 23, 1989, issued to Cablevision Bedfordshire Limited for Bedford and surrounding areas, England(5) 99.28 License, dated January 9, 1991, issued to Cablevision North Bedfordshire Ltd for North Bedfordshire, England(5) 99.29 License, dated January 29, 1991, issued to Clyde Cablevision (renamed CableTel Glasgow) for the Inverclyde Cable Franchise, Scotland(5) 99.30 License, dated January 29, 1991, issued to Clyde Cablevision (renamed CableTel Glasgow) for the Bearsden and Milngavie Cable Franchise, Scotland(5) 99.31 License, dated January 29, 1991, issued to Clyde Cablevision (renamed CableTel Glasgow) for the Paisley and Renfrew Cable Franchise, Scotland(5) 99.32 License, dated June 7, 1985, issued to Clyde Cablevision Ltd (renamed CableTel Glasgow) for North West Glasgow and Clydebank, Scotland(5) 99.33 License, dated January 29, 1991, issued to Clyde Cablevision (renamed CableTel Glasgow) for the Greater Glasgow cable franchise, Scotland(5)
110
EXHIBIT NO. DESCRIPTION - ------- ----------- 99.34 License, dated October 13, 1993, issued to Insight Communications Cardiff Limited (renamed CableTel Cardiff Limited) for Cardiff, Wales(5) 99.35 License, dated January 22, 1991, issued to Newport Cablevision Limited (renamed CableTel Newport), for Newport Cable franchise Wales(5) 99.36 License, dated May 18, 1990, issued to Cable and Satellite Television Holdings Limited (renamed CableTel West Glamorgan) for West Glamorgan, Wales(5) 99.37 License, dated December 20, 1990, issued to Kirklees Cable (renamed CableTel Kirklees) for the Huddersfield and Dewsbury cable franchise, England(5) 99.38 License, dated October 13, 1993, issued to Insight Communications Guildford Limited (renamed CableTel Surrey and Hampshire Limited) for the West Surrey/East Hampshire (Guildford) Cable Franchise, England(5) 99.39 License, dated January 20, 1995, issued to CableTel Bedfordshire Ltd. for the area of South Bedfordshire, England(5) 99.40 License, dated January 20, 1995, issued to CableTel North Bedfordshire Ltd. for the area of Bedford, England(5) 99.41 License, dated January 20, 1992, issued to Cable and Satellite Television Holdings Limited (renamed CableTel West Glamorgan Limited) for the area of Swansea, Neath and Port Talbot, Wales(5) 99.42 License, dated January 20, 1995, issued to Cabletel Hertfordshire Ltd. for the area of Hertford, Cheshunt and Ware (Lea Valley), England(5) 99.43 License, dated January 20, 1995, issued to Cabletel Central Hertfordshire Ltd. for the area of Central Hertfordshire, England(5) 99.44 License, dated July 21, 1995, issued to CableTel Kirklees(5) 99.45 License, dated June 8, 1995, issued to CableTel Bedfordshire Ltd.(5) 99.46 License, dated October 27, 1995, issued to Metro South Wales Limited for the area of Neyland, Wales(5) 99.47 License, dated October 27, 1995, issued to Metro South Wales Limited for the area of Cwmgors, Wales(5) 99.48 License, dated October 27, 1995, issued to Metro South Wales Limited for the area of Ammanford, Wales(5) 99.49 License, dated October 27, 1995, issued to Metro South Wales Limited for the area of Carmarthen, Wales(5) 99.50 License, dated October 27, 1995, issued to Metro South Wales Limited for the area of Haverfordwest, Wales(5) 99.51 License, dated October 27, 1995, issued to Metro South Wales Limited for the area of Pembroke Dock, Wales(5) 99.52 License, dated October 27, 1995, issued to Metro South Wales Limited for the area of Milford Haven, Wales(5)
111
EXHIBIT NO. DESCRIPTION - ------- ----------- 99.53 License, dated October 27, 1995, issued to CableTel South Wales Limited for the area of Glamorgan and Gwent, Wales(5) 99.54 License, dated January 26, 1996, issued to Cabletel South Wales Limited, for part of the Glamorgan area(5) 99.55 License, dated November 3, 1997, issued to NTL (UK) Group, Inc. for the Provision of Radio Fixed Access Operator Services(10) 99.56 Agreement and Plan of Amalgamation; Undertaking of Comcast Corporation; Undertaking of Warburg, Pincus Investors, L.P.(11)
- --------------- * Previously filed. (1) Incorporated by reference from the Company's Registration Statement on Form S-1, File No. 33-63570. (2) Incorporated by reference from the Company's Registration Statement on Form S-4, File No. 33-92794. (3) Incorporated by reference from the Company's Registration Statement on Form S-3, File No. 33-92792. (4) Incorporated by reference from the Company's Registration Statement on Form S-1, File No. 33-63572. (5) Incorporated by reference from the Company's Form 8-K, filed with the Commission on March 20, 1996. (6) Incorporated by reference from the Company's Form 8-K, filed with the Commission on March 26, 1997. (7) Incorporated by reference to the Company's Registration Statement on Form S-4, File No. 333-1010. (8) Incorporated by reference to the Company's Registration Statement on Form S-3, File No. 333-07879. (9) Incorporated by reference to the Company's Registration Statement on Form S-3, File No. 333-16751. (10) Incorporated by reference to the Company's Annual Report on Form 10-K, filed on March 28, 1997. (11) Incorporated by reference to the Company's Annual Report on Form 10-K, filed with the Commission on March 30, 1998. (12) Incorporated by reference to the Company's Registration Statement on Form S-4, File No. 333-71279. (13) Incorporated by reference to the Registration Statement on Form S-3, File No. 33-96932, of Comcast U.K. Cable Partners Limited. (14) Incorporated by reference to NTL Communications Corp.'s Registration Statement on Form S-4, File No. 333-78405. (15) Incorporated by reference to NTL Communications Corp.'s Annual Report on Form 10-K for the year ended December 31, 1998. EX-2.1 2 AGREEMENT AND PLAN OF MERGER 1 Exhibit 2.1 - -------------------------------------------------------------------------------- AGREEMENT AND PLAN OF MERGER by and among NTL INCORPORATED (a Delaware corporation) and NTL COMMUNICATIONS CORP. (a Delaware corporation) and NTL MERGERCO, INC. (a Delaware corporation) ----------------------- Dated as of March 26, 1999 ----------------------- - -------------------------------------------------------------------------------- 2 AGREEMENT AND PLAN OF MERGER AGREEMENT AND PLAN OF MERGER, dated as of March 26, 1999 (the "Agreement"), by and among NTL INCORPORATED, a Delaware corporation ("NTL" or, with regard to the period upon and after the Effective Time (as hereinafter defined), the "Surviving Corporation"), NTL COMMUNICATIONS CORP., a Delaware corporation ("Holdco"), which is a direct wholly-owned subsidiary of NTL, and NTL MERGERCO, INC., a Delaware corporation ("Holdco Sub"), which is a direct wholly-owned subsidiary of Holdco and an indirect wholly-owned subsidiary of NTL (NTL and Holdco Sub, collectively, the "Constituent Corporations" and each, a "Constituent Corporation".) W I T N E S S E T H: WHEREAS, NTL is a corporation organized and existing under the General Corporation Law of the State of Delaware (the "DGCL") and is authorized to issue a total of 410,000,000 shares, consisting of: (i) 400,000,000 shares of common stock, par value $.01 per share ("NTL Common Stock"); (ii) 10,000,000 shares of preferred stock, par value $.01 per share ("NTL Preferred Stock"), of which (A) 250,000 shares have been designated 13% Senior Redeemable Exchangeable Preferred Stock, par value $.01 per share ("NTL 13% Series A Preferred Stock"), (B) 250,000 shares have been designated 13% Series B Senior Redeemable Exchangeable Preferred Stock, par value $.01 per share ("NTL 13% Series B Preferred Stock"), (C) 125,280 shares have been designated 9.90% Nonvoting Mandatorily Redeemable Preferred Stock, Series A, par value $.01 per share ("NTL 9.90% Series A Preferred Stock"), (D) 52,217 shares have been designated 9.90% Non-voting Mandatorily Redeemable Preferred Stock, Series B, par value $.01 per share ("NTL 9.90% Series B Preferred Stock"), (E) 500,000 shares have been designated 5 1/4% Convertible Preferred Stock, Series A, par value $.01 per share ("NTL 5 1/4% Series A Preferred Stock"), (F) 4,447.92 shares have been designated 5 1/4% Convertible Preferred Stock, Series B, par value $.01 per share ("NTL 5 1/4% Series B Preferred Stock") and (G) 1,000,000 shares have been designated Series A Junior Participating Preferred Stock, par value $.01 per share ("NTL Junior Participating Preferred Stock") (all classes of preferred stock, collectively, "NTL Preferred Stock"). As of the close of business on March 23, 1999, there were (i) 73,303,103 shares of NTL Common Stock issued and out standing, each including an associated right to purchase NTL Junior Participating Preferred Stock, (the "Outstanding NTL Common Shares"); (ii) (A) 6.06 shares of NTL 13% Series A Preferred Stock issued and outstanding (the "Outstanding NTL 1 3 13% Series A Shares"), (B) 125,219.22 shares of NTL 13% Series B Preferred Stock issued and outstanding (the "Outstanding NTL 13% Series B Shares"), (C) 125,280 shares of NTL 9.90% Series A Preferred Stock issued and outstanding (the "Outstanding NTL 9.90% Series A Shares"), (D) 52,217 shares of NTL 9.90% Series B Preferred Stock issued and outstanding (the "Outstanding NTL 9.90% Series B Shares"), (E) 500,000 shares of NTL 5 1/4% Series A Preferred Stock issued and outstanding (the "Outstanding NTL 5 1/4% Series A Shares"), (F) no shares of NTL 5 1/4% Series B Preferred Stock issued and outstanding but 4,447.92 shares thereof are expected to be issued and outstanding as of the Closing Date (the "Outstanding 5 1/4% Series B Shares") and (G) no shares of NTL Junior Participating Preferred Stock issued and outstanding; (iii) 24,237,000 shares of NTL Common Stock reserved for issuance upon exercise of stock options of NTL outstanding or which may be granted pursuant to employee stock option and similar plans; (iv) 8,139,800 shares of NTL Common Stock reserved for issuance upon the conversion of NTL Preferred Stock; (v) 2,869,574 shares of NTL Common Stock reserved for issuance upon the exercise NTL Warrants (as herein after defined) outstanding; and (vi) 17,055,588 shares of NTL Common Stock reserved for issuance upon conversion of certain NTL 7% Convertible Notes (as hereinafter defined) outstanding; WHEREAS, Holdco Sub is a corporation organized and existing under the DGCL and is authorized to issue a total of 100 shares, in a single class of common stock, $.01 par value per share ("Holdco Sub Common Stock"), of which, as of the date hereof, 100 shares are issued and outstanding (the "Outstanding Holdco Sub Common Shares"); WHEREAS, as of the date hereof, Holdco holds of record all of the Outstanding Holdco Sub Common Shares and no shares of Holco Sub Common Stock are issued but not outstanding; WHEREAS, Holdco is a corporation organized and existing under the DGCL and is authorized to issue a total of 100 shares of common stock, par value $.01 per share ("Holdco Common Stock"), and prior to the Effective Time will be authorized to issue a total of 410,000,000 shares, consisting of: (i) 400,000,000 shares of Holdco Common Stock; (ii) 10,000,000 shares of preferred stock, par value $.01 per share ("Holdco Preferred Stock"), of which (A) 250,000 shares will constitute, prior to the Effective Time, a series of Holdco Preferred Stock identical to NTL 13% Series A Preferred Stock, having the designation "13% Senior Redeemable Exchangeable Preferred Stock" ("Holdco 13% Series A 2 4 Preferred Stock"), (B) 250,000 shares will constitute, prior to the Effective Time, a series of Holdco Preferred Stock identical to NTL 13% Series B Preferred Stock, having the designation "13% Series B Senior Redeemable Exchangeable Preferred Stock" ("Holdco 13% Series B Preferred Stock"), (C) 125,280 shares will constitute, prior to the Effective Time, a series of Holdco Preferred Stock identical to NTL 9.90% Series A Preferred Stock, having the designation "9.90% Non-Voting Mandatorily Redeemable Preferred Stock, Series A" ("Holdco 9.90% Series A Preferred Stock"), (D) 52,217 shares will constitute, prior to the Effective Time, a series of Holdco Preferred Stock identical to NTL 9.90% Series B Preferred Stock, having the designation "9.90% Non-voting Mandatorily Redeemable Preferred Stock, Series B" ("Holdco 9.90% Series B Preferred Stock"), (E) 500,000 shares will constitute, prior to the Effective Time, a series of Holdco Preferred Stock identical to NTL 5 1/4% Series A Preferred Stock, having the designation "5 1/4% Convertible Preferred Stock, Series A" ("Holdco 5 1/4% Series A Preferred Stock"), (F) 4,447.92 shares will constitute, prior to the Effective Time, a series of Holdco Preferred Stock identical to NTL 5 1/4% Series B Preferred Stock, having the designation "5 1/4% Convertible Preferred Stock, Series B" ("Holdco 5 1/4% Series B Preferred Stock") and (G) 1,000,000 shares will constitute prior to the Effective Time a series of Holdco Preferred Stock, identical to NTL Junior Participating Preferred Stock, having the designation "Series A Junior Participating Preferred Stock" ("Holdco Junior Participating Preferred Stock"). As of the date hereof, there are 100 shares issued and outstanding of Holdco Common Stock (the "Outstanding Holdco Common Shares"); WHEREAS, as of the date hereof, NTL holds of record all of the Outstanding Holdco Common Shares and no shares of Holdco Common Stock are issued but not outstanding; WHEREAS, the respective Boards of Directors of NTL, Holdco Sub and Holdco have determined that it is advisable and in the best interests of each of NTL, Holdco Sub and Holdco and their respective stockholders that Holdco Sub be merged with and into NTL, with NTL continuing as the Surviving Corporation, in accordance with the terms and conditions of this Agreement (the "Merger"), and accordingly the Boards of Directors of each of NTL, Holdco Sub and Holdco have approved and authorized this Agreement and the transactions contemplated hereby, including the Merger; 3 5 WHEREAS, it is contemplated that the Merger will be effected in accordance with Section 251(g) of the DGCL, and that the Merger and the ex change of shares of capital stock of NTL for shares of capital stock of Holdco shall be a transaction described in Section 351(a) and/or Section 368(a) of the Internal Revenue Code of 1986, as amended (the "Code"), and that no income or gain will be recognized by NTL or Holdco or their respective stockholders as a result of the Merger; and NOW, THEREFORE, in consideration of the premises, the mutual agreements, promises, covenants, representations, warranties, acknowledgments and other terms, conditions, and provisions set forth herein, and other good and valuable consideration, the sufficiency and receipt of which are hereby acknowledged, the parties agree as follows: ARTICLE I THE MERGER 1. The Merger. 1.1 The Merger; Filing and Effective Time. Subject to and in accordance with the terms and conditions of this Agreement and the DGCL, this Agreement and the certificates of the respective secretaries of NTL and Holdco Sub attached hereto as Exhibits A and B, duly executed, shall be filed with the Secretary of State of the State of Delaware (the "Delaware Secretary of State") by the Surviving Corporation at or as soon as practicable after the Closing (as defined below). The Merger shall become effective at the time when this Agreement is so filed with the Delaware Secretary of State (the "Effective Time"). 1.2 Closing. Subject to and in accordance with the terms and conditions of this Agreement, the closing of the Merger (the "Closing") shall take place as soon as practicable after satisfaction of the latest to occur of the conditions set forth in Article IV hereof (the "Closing Date"), at the office of Skadden, Arps, Slate, Meagher & Flom LLP, 919 Third Avenue, New York, NY 10022, unless another date or place is agreed to in writing by the parties hereto. 4 6 1.3 Effects of the Merger. The Merger shall have the effects set forth in Section 259 of the DGCL. 1.4 Certificate of Incorporation of the Surviving Corporation. The Restated Certificate of Incorporation of NTL, as in effect immediately prior to the Effective Time (the "NTL Charter"), shall be the certificate of incorporation of the Surviving Corporation (the "Surviving Corporation Charter"), except that the following amendments thereto are to be effected by the Merger upon the Effective Time: A. The Surviving Corporation Charter shall be amended by deleting Article FIRST thereof in its entirety and inserting in lieu thereof the following: "FIRST: The name of the Corporation is NTL Communications Corp. (hereinafter called, the "Corporation")."; B. The Surviving Corporation Charter shall be amended by deleting Article FOURTH thereof in its entirety and inserting in lieu thereof the following: "FOURTH: The total number of shares of stock which the Corporation has authority to issue is 100 shares of Common Stock, par value $0.01 per share (the "Common Stock")."; and C. The Surviving Corporation Charter shall be amended by adding and inserting, immediately following Article THIRTEENTH thereof, a new Article FOURTEENTH thereof, to read in its entirety as follows: FOURTEENTH: Any act or transaction by or involving the Corporation that requires for its adoption under the GCL or this Restated Certificate of Incorporation the approval of stockholders of the Corporation shall, pursuant to subsection (g) of Section 251 of the GCL, require, in addition, the approval of the stockholders of NTL Incorporated, a Delaware corporation, or any successor thereto by merger, by the same vote as if required by the GCL and/or this Restated Certificate of Incorporation. 1.5 Bylaws of the Surviving Corporation. The Bylaws of NTL as in effect immediately prior to the Effective Time (the "NTL Bylaws"), shall be and continue in full force and effect as the bylaws of the Surviving Corporation upon and after the Effective Time, unless and until duly amended, altered, 5 7 changed, repealed, and/or supplemented in accordance with the DGCL (which power and right to amend, alter, change, repeal, and/or supplement, at any time and from time to time after the Effective Time, are hereby expressly reserved). 1.6 Directors and Officers of the Surviving Corporation. A. The respective members constituting the whole Board of Directors of NTL (the "NTL Board") immediately prior to the Effective Time shall be and continue as the respective members constituting the whole Board of Directors of the Surviving Corporation upon and after the Effective Time, until such members' respective successors are duly elected and qualified or until such members' earlier death, resignation, disqualification or removal and unless and until the number of members of such Board of Directors shall be duly increased or decreased in accordance with the DGCL (which power and right to increase and decrease, at any time and from time to time after the Effective Time, are hereby expressly reserved). B. Each person serving as an officer of NTL immediately prior to the Effective Time shall be and continue as an officer of the Surviving Corporation, holding the same office or offices, upon and after the Effective Time, until such person's successor is chosen and qualified or until such person's earlier death, resignation, disqualification, or removal (which power and right to remove are hereby expressly reserved). 1.7 Further Assurances. At any time and from time to time upon and after the Effective Time, as and when required or deemed desirable by the Surviving Corporation or its successors or assigns, there shall be executed, acknowledged, certified, sealed, delivered, filed, and/or recorded, in the name and on behalf of any and each Constituent Corporation, such deeds, contracts, consents, certificates, notices, and other documents and instruments, and there shall be done or taken or caused to be done or taken, in the name and on behalf of any and each Constituent Corporation, such further and other things and actions as shall be appropriate, necessary, or convenient to acknowledge, vest, effect, perfect, conform of record, or otherwise confirm the Surviving Corporation's (or its successors' or assigns') right, title, and interest in kind to, and possession of, all the property, interests, assets, rights, privileges, immunities, powers, franchises, and authority of each Constituent Corporation held immediately prior to the Effective Time, and otherwise to carry out and effect the intent and purposes of this Agreement and the Merger. The officers and directors of the Surviving Corporation (or its successors or assigns), and each of them, upon and after the 6 8 Effective Time, are and shall be fully authorized, in the name and on behalf of each Constituent Corporation, to do and take and cause to be done and taken any and all such things and actions, and to execute, acknowledge, certify, seal, deliver, file, and/or record any and all such deeds, contracts, consents, certificates, notices, and other documents and instruments. ARTICLE II EFFECT OF THE MERGER ON THE CAPITAL STOCK OF THE CONSTITUENT CORPORATIONS 2. Effect on Capital Stock. Upon and as of the Effective Time, by virtue of the Merger and without any action on the part of the holders of the respective shares: 2.1 Conversion of Holdco Sub Shares. Each Outstanding Holdco Sub Common Share shall be converted into one validly issued, fully paid and nonassessable share of common stock, par value $0.01 per share (the "Surviving Corporation Common Stock"), of the Surviving Corporation, to be issued and deemed to have been issued by the Surviving Corporation automatically and immediately upon and as of the Effective Time; the capital of the Surviving Corporation in respect of each share of Surviving Corporation Common Stock to be an amount equal to the par value thereof as permitted under the DGCL and such Outstanding Holdco Sub Common Shares shall be canceled and cease to exist. 2.2 Conversion of NTL Shares. A. Each of the Outstanding NTL Common Shares shall be converted into the right to receive one validly issued, fully paid and nonassessable share of Holdco Common Stock, including an associated right to purchase Holdco Junior Participating Preferred Stock, which right shall be governed by the Holdco Stockholder Rights Plan assumed by Holdco pursuant to Section 3.9 hereof; and the Outstanding NTL Common Shares shall be canceled and cease to exist. 7 9 B. Each of the Outstanding NTL 13% Series A Preferred Shares shall be converted into the right to receive one validly issued, fully paid and nonassessable share of Holdco 13% Series A Preferred Stock (with rights to accrued, accumulated and unpaid dividends on each Outstanding NTL 13% Series A Preferred Share (the "13% Series A Accumulated Dividends") being preserved, unimpaired, unchanged, and unaffected by such conversion in the Merger, such 13% Series A Accumulated Dividends carrying over and pertaining to and being accrued, accumulated, and unpaid dividends on each such share of Holdco 13% Series A Preferred Stock, and each such share of Holdco 13% Series A Preferred Stock carrying and having such 13% Series A Accumulated Dividends as accrued, accumulated, and unpaid dividends thereon, notwithstanding that such dividends shall have accrued and accumulated from a date prior to the issuance of such shares of Holdco 13% Series A Preferred Stock) and such Outstanding NTL 13% Series A Preferred Shares shall no longer be outstanding and automatically shall be canceled and cease to exist. C. Each of the Outstanding NTL 13% Series B Preferred Shares shall be converted into the right to receive one validly issued, fully paid and nonassessable share of Holdco 13% Series B Preferred Stock (with rights to accrued, accumulated and unpaid dividends on each Outstanding NTL 13% Series B Preferred Share (the "13% Series B Accumulated Dividends") being preserved, unimpaired, unchanged, and unaffected by such conversion in the Merger, such 13% Series B Accumulated Dividends carrying over and pertaining to and being accrued, accumulated, and unpaid dividends on each such share of Holdco 13% Series B Preferred Stock, and each such share of Holdco 13% Series B Preferred Stock carrying and having such 13% Series B Accumulated Dividends as accrued, accumulated, and unpaid dividends thereon, notwithstanding that such dividends shall have accrued and accumulated from a date prior to the issuance of such shares of Holdco 13% Series B Preferred Stock) and such Outstanding NTL 13% Series B Preferred Shares shall no longer be outstanding and automatically shall be canceled and cease to exist. D. Each of the Outstanding NTL 9.90% Series A Preferred Shares shall be converted into the right to receive one validly issued, fully paid and nonassessable share of Holdco 9.90% Series A Preferred Stock (with rights to accrued, accumulated and unpaid dividends on each Out- 8 10 standing NTL 9.90% Series A Preferred Share (the "9.90% Series A Accumulated Dividends") being preserved, unimpaired, unchanged, and unaffected by such conversion in the Merger, such 9.90% Series A Accumulated Dividends carrying over and pertaining to and being accrued, accumulated, and unpaid dividends on each such share of Holdco Series C Preferred Stock, and each such share of Holdco 9.90% Series A Preferred Stock carrying and having such Series C Accumulated Dividends as accrued, accumulated, and unpaid dividends thereon, notwithstanding that such dividends shall have accrued and accumulated from a date prior to the issuance of such shares of Holdco 9.90% Series A Preferred Stock) and such Outstanding NTL 9.90% Series A Preferred Shares shall no longer be outstanding and automatically shall be canceled and cease to exist. E. Each of the Outstanding NTL 9.90% Series B Preferred Shares shall be converted into the right to receive one validly issued, fully paid and nonassessable share of Holdco 9.90% Series B Preferred Stock (with rights to accrued, accumulated and unpaid dividends on each Outstanding NTL 9.90% Series B Preferred Share (the "9.90% Series B Accumulated Dividends") being preserved, unimpaired, unchanged, and unaffected by such conversion in the Merger, such 9.90% Series B Accumulated Dividends carrying over and pertaining to and being accrued, accumulated, and unpaid dividends on each such share of Holdco 9.90% Series B Preferred Stock, and each such share of Holdco 9.90% Series B Preferred Stock carrying and having such 9.90% Series B Accumulated Dividends as accrued, accumulated, and unpaid dividends thereon, notwithstanding that such dividends shall have accrued and accumulated from a date prior to the issuance of such shares of Holdco 9.90% Series B Preferred Stock) and such Outstanding NTL 9.90% Series B Preferred Shares shall no longer be outstanding and automatically shall be canceled and cease to exist. F. Each of the Outstanding NTL 5 1/4% Series A Preferred Shares shall be converted into the right to receive one validly issued, fully paid and nonassessable share of Holdco 5 1/4% Series A Preferred Stock (with rights to accrued, accumulated and unpaid dividends on each Out standing NTL 5 1/4% Series A Preferred Share (the "5 1/4% Series A Accumulated Dividends") being preserved, unimpaired, unchanged, and unaffected by such conversion in the Merger, such 5 1/4% Series A Accumulated Dividends carrying over and pertaining to and being accrued, accumulated, 9 11 and unpaid dividends on each such share of Holdco 5 1/4% Series A Preferred Stock, and each such share of Holdco 5 1/4% Series A Preferred Stock carrying and having such 5 1/4% Series A Accumulated Dividends as accrued, accumulated, and unpaid dividends thereon, notwithstanding that such dividends shall have accrued and accumulated from a date prior to the issuance of such shares of Holdco 5 1/4% Series A Preferred Stock) and such Outstanding NTL 5 1/4% Series A Preferred Shares shall no longer be outstanding and automatically shall be canceled and cease to exist. G. Each of the Outstanding NTL 5 1/4% Series B Preferred Shares shall be converted into the right to receive one validly issued, fully paid and nonassessable share of Holdco 5 1/4% Series B Preferred Stock (with rights to accrued, accumulated and unpaid dividends on each Outstanding NTL 5 1/4% Series B Preferred Share (the "5 1/4% Series B Accumulated Dividends") being preserved, unimpaired, unchanged, and unaffected by such conversion in the Merger, such 5 1/4% Series B Accumulated Dividends carrying over and pertaining to and being accrued, accumulated, and unpaid dividends on each such share of Holdco 5 1/4% Series B Preferred Stock, and each such share of Holdco 5 1/4% Series B Preferred Stock carrying and having such 5 1/4% Series B Accumulated Dividends as accrued, accumulated, and unpaid dividends thereon, notwithstanding that such dividends shall have accrued and accumulated from a date prior to the issuance of such shares of Holdco 5 1/4% Series B Preferred Stock) and such Outstanding NTL 5 1/4% Series B Preferred Shares shall no longer be outstanding and automatically shall be canceled and cease to exist. 2.3 Notification of Transfer Agent. Prior to the Closing Date, Holdco Sub and NTL shall notify their respective transfer agents of the conversions of shares of NTL stock and of shares of Holdco Sub stock and the cancellation of shares of NTL stock pursuant to Section 2.2 hereof. 2.4 Stock Certificates. Upon and as of the Effective Time, by virtue of the Merger and without any action on the part of either of the Constituent Corporations or Holdco, the holders of the respective shares, or any other person: 10 12 A. Holdco. The shares of Holdco Common Stock and the shares of Holdco Preferred Stock into which the Outstanding NTL Common Shares, the Outstanding NTL 13% Series A Shares, the Outstanding NTL 13% Series B Shares, the Outstanding NTL 9.90% Series A Shares, the Out standing NTL 9.90% Series B Shares, the Outstanding NTL 5 1/4% Series A Shares and the Outstanding 5 1/4% Series B Shares shall have been converted pursuant to Section 2.2 hereof shall be represented and evidenced by the same stock certificates that previously represented and evidenced such Outstanding NTL Common Shares, such Outstanding NTL 13% Series A Shares, such Outstanding NTL 13% Series B Shares, such Outstanding NTL 9.90% Series A Shares, such Outstanding NTL 9.90% Series B Shares, such Outstanding NTL 5 1/4% Series A Shares, and such Outstanding 5 1/4% Series B Shares; and B. NTL. Holdco, as the holder of the certificate (the "Holdco Sub Common Stock Certificate") that immediately prior to the Effective Time evidences the Outstanding Holdco Sub Common Shares may, at Holdco's option, surrender the same to the Surviving Corporation for cancellation, and Holdco shall be entitled to receive from the Surviving Corporation in exchange therefor a certificate representing and evidencing the shares of Surviving Corporation Common Stock into which Holdco's Outstanding Holdco Sub Common Shares shall have been converted; until surrendered, the Holdco Sub Common Stock Certificate shall represent and evidence the shares of Surviving Corporation Common Stock into which the Outstanding Holdco Sub Common Shares theretofore represented and evidenced thereby shall have been converted pursuant to Section 2.2 hereof. ARTICLE III ADDITIONAL AGREEMENTS 3.1 Directors and Officers of Holdco Upon the Effective Time. A. Directors. As of the Effective Time: (i) the number of members constituting the whole Board of Directors of Holdco (the "Holdco Board") shall be equal to the number of members constituting the whole NTL Board immediately prior to the Effective Time; and (ii) the Holdco Board shall consist of all the persons serving as members of the NTL Board immediately prior to the Effective Time. 11 13 B. Officers. As of the Effective Time, the officers of Holdco shall be the persons serving as officers of NTL immediately prior to the Effective Time. 3.2 Holdco Certificate of Incorporation. As of the Effective Time, the certificate of incorporation of Holdco shall contain provisions identical to the NTL Charter immediately prior to the Effective Time, which provisions shall, among other things, reflect the change of Holdco's name to "NTL Incorporated" (the "Holdco Charter"). 3.3 Holdco Bylaws. As of the Effective Time, the bylaws of Holdco shall contain provisions identical to the NTL Bylaws immediately prior to the Effective Time (the "Holdco Bylaws"). To that end, prior to the Effective Time, to the extent necessary to give effect to the intent of the preceding sentence, Holdco shall take all requisite action to cause the Holdco Bylaws, as the same theretofore may have been amended, altered, changed and/or supplemented, to be duly amended and restated in accordance with the DGCL to contain provisions identical to the NTL Bylaws immediately prior to the Effective Time, and as so amended and restated such Holdco Bylaws shall be and remain the Holdco Bylaws upon and after the Effective Time, unless and until thereafter duly amended, altered, changed, repealed and/or supplemented in accordance with the DGCL (which power and right to amend, alter, change, repeal, and/or supplement, at any time and from time to time after the Effective Time, are hereby expressly reserved). 3.4 No NTL Stockholder Meeting; Holdco Sub Stockholder Written Consent. The parties understand and acknowledge that it is contemplated that the Merger will be effected in accordance with Section 251(g) of the DGCL and that no vote of NTL's stockholders adopting, approving or authorizing this Agreement and the transactions contemplated hereby, including the Merger, will be required under the DGCL. Holdco, in its capacity as the sole stockholder of Holdco Sub, as promptly as practicable on or after the date hereof, shall execute and deliver to Holdco Sub a written consent in lieu of a stockholder meeting adopting, approving and authorizing this Agreement and the transactions contemplated hereby, including the Merger, in accordance with Section 228 of the DGCL. 3.5 Employee and Director NTL Stock Options. Upon and as of the Effective Time, to the fullest extent permitted by applicable law, Holdco shall assume all of NTL's obligations, and NTL shall have no further obligations, with respect to any then-outstanding option (each, if any, an "NTL Option") to acquire 12 14 shares of NTL Common Stock issued under any employee or non-employee director stock option plan, agreement or similar arrangement of NTL and the due exercise of rights under any such NTL Option shall entitle the holder thereof to acquire, upon the same terms and conditions that were applicable under the corresponding NTL Option, a number of shares of Holdco Common Stock identical to the class and number of shares of NTL Common Stock that were subject to such corresponding NTL Option (a "Holdco Option"). NTL and Holdco agree to take all corporate and other action as shall be necessary to effectuate the foregoing, and NTL shall use its best efforts to obtain, if required, prior to the Closing Date, such consent of each holder of an NTL Option as shall be necessary to effectuate the foregoing. Holdco shall take all corporate and other action necessary to reserve and make available for issuance upon the due exercise of rights under the Holdco Options a sufficient number of shares of Holdco Common Stock, and as soon as practicable following the Effective Time, shall provide to the record holders of the Holdco Options appropriate notice of such holder's rights thereunder. 3.6 NTL Warrants. Upon and as of the Effective Time and in connection with the Merger, Holdco shall assume NTL's obligations to issue securities deliverable upon the exercise of any then-outstanding warrants to acquire shares of NTL Common Stock (each, an "NTL Warrant") that were issued by NTL pursuant to Warrant Agreements dated as of October 14, 1993, February 14, 1996, October 14, 1998 and January 28, 1999, respectively, and accordingly, the due exercise of rights under any such NTL Warrant shall entitle the holder thereof to acquire, upon the same terms and conditions that were applicable under the corresponding NTL Warrant, a number of shares of Holdco Common Stock identical to the class and number of shares of NTL Common Stock that were subject to such corresponding NTL Warrant. NTL and Holdco agree to take all corporate and other action as shall be necessary to effectuate the foregoing, including the execution of supplemental warrant agreements as required. Holdco shall take all corporate and other action necessary to reserve and make available for issuance upon the due exercise of rights under the NTL Warrants a sufficient number of shares of Holdco Common Stock, and as soon as practicable following the Effective Time, shall provide to the record holders of the NTL Warrants appropriate notice of such holder's rights thereunder. 3.7 NTL Convertible Notes. Upon and as of the Effective Time and in connection with the Merger, Holdco shall assume NTL's obligations with respect to the rights of holders of any then-outstanding 7% Convertible Subordi- 13 15 nated Notes due 2008 (each, if any, an "NTL 7% Convertible Note") to convert such NTL 7% Convertible Notes into NTL Common Stock under the terms of either the Indenture, dated June 12, 1996, between NTL (formerly known as International CableTel Incorporated) and The Chase Manhattan Bank (formerly known as Chemical Bank), as Trustee or the Indenture, dated December 16, 1998, between NTL and The Chase Manhattan Bank, as Trustee (collectively, the "Indentures"); and, upon and as of the Effective Time, the due exercise of the conversion privileges of any holder under any such NTL 7% Convertible Note shall entitle the holder thereof to acquire, upon the same terms and conditions that were applicable under the corresponding NTL 7% Convertible Note, a number of shares of Holdco Common Stock identical to the class and number of shares of NTL Common Stock that were subject to such corresponding NTL 7% Convertible Note. NTL and Holdco agree to take all corporate and other action as shall be necessary to effectuate the foregoing, including entering into supplemental indentures as required and delivering certain officers' certificates as required under the Indentures. Holdco shall take all corporate and other action necessary to reserve and make available for issuance upon the due exercise of conversion rights under the NTL 7% Convertible Notes a sufficient number of shares of Holdco Common Stock, and as soon as practicable following the Effective Time, shall provide to the record holders of the NTL 7% Convertible Notes appropriate notice of such holder's rights thereunder. 3.8 Outstanding Holdco Common Shares. Upon and as of the Effective Time, NTL shall surrender to Holdco the certificate representing the Outstanding Holdco Common Shares, and the Outstanding Holdco Common Shares shall be retired as permitted under the DGCL and resume the status of authorized and unissued shares of Holdco Common Stock. 3.9 Holdco Stockholder Rights Plan. Upon and as of the Effective Time, Holdco shall assume the rights and obligations of NTL under the Rights Agreement, dated as of October 13, 1993, between NTL and Continental Stock Transfer & Trust Company, as Rights Agent (the "Holdco Stockholder Rights Plan"), and as a result of the share-for-share conversion of NTL Common Stock for Holdco Common Stock pursuant to the Merger, each right to purchase NTL Junior Participating Preferred Stock will be converted into an identical right to purchase Holdco Junior Participating Preferred Stock. 3.10 Other Agreements. At the Effective Time, Holdco shall assume any obligation of NTL to deliver or make available shares of NTL Com- 14 16 mon Stock under any instrument, agreement or employee benefit plan not referred to in this Section 3 to which NTL or any of its subsidiaries is a party. Any reference to NTL Common Stock under any such instrument, agreement or employee benefit plan shall be deemed to be a reference to Holdco Common Stock and one share of Holdco Common Stock shall be issuable in lieu of each share of NTL Common Stock required to be issued by any such instrument, agreement or employee benefit plan, subject to subsequent adjustment as provided in any such instrument, agreement or employee benefit plan. 3.11 Holdco as Successor Registrant to NTL. It is the intent of the parties hereto that Holdco, as of the Effective Time, be deemed a "successor issuer" for purposes rule 12g - 3(a) under the Securities Exchange Act of 1934, as amended (the "Exchange Act"), so that Holdco Common Stock shall be deemed registered under Section 12 of the Exchange Act. 3.12 Listing of Holdco Common Stock. The Holdco Common Stock to be issued and initially reserved for issuance pursuant to the transactions contemplated herein shall have been approved for quotation, upon official notice of issuance, by The Nasdaq Stock Market, Inc. and The Easdaq Stock Market, Inc. 3.13 Filings. At the Effective Time, the Surviving Corporation shall cause a certified copy of this Agreement to be executed and filed with the Delaware Secretary of State. At the Effective Time, to the extent necessary to effectuate the amendments to the Surviving Corporation Charter and the Holdco Charter contemplated by this Agreement, each of the Surviving Corporation and Holdco shall cause to be filed with the Delaware Secretary of State such certificates or documents required to give effect thereto. 15 17 ARTICLE IV CONDITIONS PRECEDENT 4.1 Conditions to Each Party's Obligation to Effect the Merger. The respective obligations of each party under this Agreement shall be subject to the satisfaction at or prior to the Closing of the following conditions: A. Stockholder Approval. This Agreement shall have been approved by the written consent of the holder of the Outstanding Holdco Sub Shares. B. Legal Action. No judgment, order, decree, statute, law, ordinance, rule or regulation, entered, enacted, promulgated, enforced or issued by any foreign, United States, state or local governmental entity or municipality or subdivision thereof or court, tribunal, commission, board, bureau, agency or legislative, executive, governmental or regulatory authority or agency ( a "Governmental Entity") of competent jurisdiction or other legal restraint or prohibition shall be in effect preventing the consummation of the Closing. C. Statutes. No statute, rule or regulation shall have been enacted by any Governmental Entity that would make the consummation of the Merger illegal. D. NTL Board Determination. The NTL Board shall not have altered or rescinded its determination that the NTL stockholders shall not recognize gain or loss for United States Federal income tax purposes as a result of the transactions contemplated hereby and that the Merger and the exchange of shares of capital stock of NTL for shares of capital stock of Holdco shall be deemed a transaction described in Section 351(a) and/or 368(a) of the Code. 4.2 Conditions to the Obligations of NTL and Holdco Sub to Effect the Merger. The obligations of NTL and Holdco Sub to effect the Merger shall be subject to the satisfaction of the condition that immediately prior to the Effective Time, Holdco shall have fully performed its obligations under Article III hereof. 16 18 ARTICLE V TERMINATION AND AMENDMENT 5.1 Amendment. At any time prior to the Effective Time, this Agreement may be supplemented, amended or modified by the mutual consent of the Boards of Directors of the parties hereto. 5.2 Termination. This Agreement may be terminated and the Merger contemplated hereby abandoned at any time prior to the Effective Time by action of either the NTL Board, the Holdco Board or the Board of Directors of Holdco Sub, if such Board of Directors shall determined that for any reason the completion of the transactions provided for herein would be inadvisable or not in the best interest of such corporation and its stockholders. In the event of such termination and abandonment, this Agreement shall become void and neither NTL, Holdco, or Holdco Sub nor their respective stockholders, directors or officers shall have any liability with respect to such termination and abandonment. ARTICLE VI MISCELLANEOUS PROVISIONS 6.1 Severability. If any term or other provision of this Agreement is invalid, illegal, or incapable of being enforced by any rule of law or public policy, all other terms, conditions, and provisions of this Agreement shall nevertheless remain in full force and effect so long as the economic or legal substance of the transactions contemplated hereby is not affected in any manner adverse to any party. Upon such determination that any term or other provision is invalid, illegal, or incapable of being enforced, the parties hereto shall negotiate in good faith to modify this Agreement so as to effect the original intent of the parties as closely as possible in an acceptable manner to the end that the transactions contemplated hereby are fulfilled to the extent possible. 6.2 Entire Agreement. This Agreement, including the Exhibits attached hereto, constitutes the entire agreement among the parties regarding the subject matter hereof, and supercedes all prior agreements and undertakings, both written and oral, among the parties or of any of them regarding such subject matter. 17 19 6.3 Governing Law. This Agreement shall be governed by and construed and enforced in accordance with the laws of the State of Delaware. 6.4 Headings. The headings set forth herein are for convenience only and shall not be used in interpreting the text of the section in which they appear. 6.5 Counterparts. This Agreement may be executed in one or more counterparts which together shall constitute a single agreement. 6.6 Certificates of Secretaries. The certificates of the respective secretaries of NTL and Holdco Sub to be attached hereto are hereby incorporated by reference and shall be deemed on and part of this Agreement. 18 20 IN WITNESS WHEREOF, NTL, Holdco and Holdco Sub, pursuant to the approval and authority duly given by resolutions adopted by their respective Boards of Directors, have caused this Agreement to be executed as of the date first above written by their respective officers thereunto duly authorized. NTL INCORPORATED By: /s/Richard J. Lubasch -------------------------------------- Richard J. Lubasch Senior Vice President, General Counsel and Secretary NTL COMMUNICATIONS CORP. By: /s/Richard J. Lubasch -------------------------------------- Richard J. Lubasch Senior Vice President, General Counsel and Secretary NTL MERGERCO, INC. By: /s/Richard J. Lubasch -------------------------------------- Richard J. Lubasch Senior Vice President, General Counsel and Secretary 21 Exhibit A CERTIFICATE OF THE SECRETARY OF NTL INCORPORATED The undersigned, Assistant Secretary of NTL, a corporation organized and existing under the laws of the State of Delaware (the "Corporation"), hereby certifies that the Agreement and Plan of Merger (the "Agreement") to which this Certificate is attached has been executed on behalf of the Corporation by the Senior Vice President-General Counsel and Secretary, on behalf of NTL Mergerco, Inc., a Delaware corporation, by the Senior Vice President-General Counsel and Secretary, and on behalf of NTL Communications Corp., a Delaware corporation, by the Senior Vice President-General Counsel and Secretary. The Agreement has been adopted by the Board of Directors of the Corporation pursuant to Section 251(g) of the Delaware General Corporation Law and the conditions specified in the first sentence of such subsection have been satisfied. IN WITNESS WHEREOF, the undersigned has executed this Certificate as of this 26th day of March, 1999. /s/ Sandra Barnett ---------------------------- Name: Sandra Barnett Title: Assistant Secretary 22 Exhibit B CERTIFICATE OF THE SECRETARY OF NTL MERGERCO, INC. The undersigned, Assistant Secretary of NTL Mergerco, Inc., a Delaware Corporation (the "Corporation"), hereby certifies that the Agreement and Plan of Merger (the "Agreement") to which this Certificate is attached has been executed on behalf of the Corporation by the Senior Vice President-General Counsel and Secretary, on behalf of NTL Incorporated, Inc., a Delaware corporation, by the Senior Vice President-General Counsel and Secretary, and on behalf of NTL Communications Corp., a Delaware corporation, by the Senior Vice President-General Counsel and Secretary. The Agreement was duly adopted by the Board of Directors of the Corporation in accordance with Section 251 of the Delaware Corporation Law and by the written consent of the sole stockholder of the Corporation in accordance with Section 228 of the Delaware General Corporation Law. IN WITNESS WHEREOF, the undersigned has executed this Certificate as of this 26th day of March, 1999. /s/ Sandra Barnett ---------------------------- Name: Sandra Barnett Title: Assistant Secretary EX-3.3 3 CERTIFICATE OF INCORPORATION OF NTL INCORPORATED 1 Exhibit 3.3 RESTATED CERTIFICATE OF INCORPORATION OF NTL COMMUNICATIONS CORP. The undersigned, Richard J. Lubasch, certifies that he is the Senior Vice President, General Counsel and Secretary of NTL Communications Corp., a corporation organized and existing under the laws of the State of Delaware (the "Corporation"), and does hereby further certify as follows: (1) The name of the Corporation is NTL Communications Corp. (2) The name under which the Corporation was originally incorporated was NTL Communications Corp. and the original Certificate of Incorporation of the Corporation was filed with the Secretary of State of the State of Delaware on February 25, 1999. (3) This Restated Certificate of Incorporation was duly adopted by in accordance with the provisions of Sections 242 and 245 of the General Corporation Law of the State of Delaware. (4) The text of the Restated Certificate of Incorporation of the Corporation as amended hereby is restated to read in its entirety, as follows: FIRST: The name of the Corporation is NTL Incorporated (hereinafter the "Corporation"). SECOND: The address of the registered office of the Corporation in the State of Delaware is 9 Loockerman Street, City of Dover 19901, County of Kent. The name of its registered agent at that address is National Registered Agents, Inc. THIRD: The purpose of the Corporation is to engage in any lawful act or activity for which a corporation may be organized under the General Corporation Law of the State of Delaware as set forth in Title 8 of the Delaware Code (the "GCL"). 2 FOURTH: A. Authorized Capital. The total number of shares of stock which the Corporation shall have the authority to issue is 410,000,000 shares, consisting of 400,000,000 shares of common stock, par value $0.01 per share (the "Common Stock"), and 10,000,000 shares of preferred stock, par value $0.01 per share (the "Preferred Stock"). B. Designation of Series. Shares of the Preferred Stock of the Corporation may be issued from time to time in one or more classes or series, each of which class or series shall have such distinctive designation or title as shall be fixed by the Board of Directors of the Corporation (the "Board of Directors") prior to the issuance of any shares thereof. Each such class or series of Preferred Stock shall have such voting powers, full or limited, or no voting powers, and such preferences and relative, participating, optional or other special rights and such qualifications, limitations or restrictions thereof, as shall be stated in such resolution or resolutions providing for the issue of such class or series of Preferred Stock as may be adopted from time to time by the Board of Directors prior to the issuance of any shares thereof pursuant to the authority hereby expressly vested in it, all in accordance with the laws of the State of Delaware. C. Series A Junior Participating Preferred Stock. Section 1. Designation and Amount. The shares of this series shall be designated as "Series A Junior Participating Preferred Stock" and the number of shares constituting such series shall be 1,000,000. Section 2. Dividends and Distributions. (A) Subject to the prior and superior rights of the holders of any shares of any series of Preferred Stock ranking prior and superior to the shares of Series A Junior Participating Preferred Stock with respect to dividends, the holders of shares of Series A Junior Participating Preferred Stock shall be entitled to receive, when, as and if declared by the Board of Directors out of funds legally available for the purpose, quarterly dividends payable in cash on the fifteenth day of March, June, September and December in each year (each such date being referred to herein as a "Quarterly Dividend Payment Date"), commencing on the first Quarterly Dividend Payment Date after the first issuance of a share or fraction of a share of Series A Junior Participating Preferred Stock, in an amount per share (rounded to the nearest cent) equal to the greater of (a) $.01 or (b) subject to the provision for adjustment hereinafter set forth, 100 times the aggregate per share amount of all cash dividends, and 100 times the aggregate per share amount (payable in kind) of all non-cash dividends or other distributions other than a 2 3 dividend payable in shares of Common Stock or a subdivision of the outstanding shares of Common Stock (by reclassification or otherwise), declared on the Common Stock since the immediately preceding Quarterly Dividend Payment Date, or, with respect to the first Quarterly Dividend Payment Date, since the first issuance of any share or fraction of a share of Series A Junior Participating Preferred Stock. In the event the Corporation shall at any time after September 1, 1993 (the "Rights Declaration Date") (i) declare any dividend on Common Stock payable in shares of Common Stock, (ii) subdivide the outstanding Common Stock, or (iii) combine the outstanding Common Stock into a smaller number of shares, then in each such case, the amount to which holders of shares of Series A Junior Participating Preferred Stock were entitled immediately prior to such event under clause (b) of the preceding sentence shall be adjusted by multiplying such amount by a fraction the numerator of which is the number of shares of Common Stock outstanding immediately after such event and the denominator of which is the number of shares of Common Stock that were outstanding immediately prior to such event. (B) The Corporation shall declare a dividend or distribution on the Series A Junior Participating Preferred Stock as provided in paragraph (A) above immediately after it declares a dividend or distribution on the Common Stock (other than a dividend payable in shares of Common Stock); provided that, in the event no dividend or distribution shall have been declared on the Common Stock during the period between any Quarterly Dividend Payment Date and the next subsequent Quarterly Dividend Payment Date, a dividend of $.01 per share on the Series A Junior Participating Preferred Stock shall nevertheless be payable on such subsequent Quarterly Dividend Payment Date. (C) Dividends shall begin to accrue and be cumulative on outstanding shares of Series A Junior Participating Preferred Stock from the Quarterly Dividend Payment Date next preceding the date of issue of such shares of Series A Junior Participating Preferred Stock, unless the date of issue of such shares is prior to the record date for the first Quarterly Dividend Payment Date, in which case dividends on such shares shall begin to accrue from the date of issue of such shares, or unless the date of issue is a Quarterly Dividend Payment Date or is a date after the record date for the determination of holders of shares of Series A Junior Participating Preferred Stock entitled to receive a quarterly dividend and before such Quarterly Dividend Payment Date, in either of which events such dividends shall begin to accrue and be cumulative from such Quarterly Dividend Payment Date. Accrued but unpaid dividends shall not bear interest. Dividends paid on the shares of Series A Junior Participating Preferred Stock in an amount less than the total amount of such dividends at the time accrued and 3 4 payable on such shares shall be allocated pro rata on a share-by-share basis among all such shares at the time outstanding. The Board of Directors may fix a record date for the determination of holders of shares of Series A Junior Participating Preferred Stock entitled to receive payment of a dividend or distribution declared thereon, which record date shall be no more than 30 days prior to the date fixed for the payment thereof. Section 3. Voting Rights. The holders of shares of Series A Junior Participating Preferred Stock shall have the following voting rights: (A) Subject to the provisions for adjustment hereinafter set forth, each share of Series A Junior Participating Preferred Stock shall entitle the holder thereof to 100 votes on all matters submitted to a vote of the stockholders of the Corporation. In the event the Corporation shall at any time after the Rights Declaration Date (i) declare any dividend on Common Stock payable in shares of Common Stock, (ii) subdivide the outstanding Common Stock, or (iii) combine the outstanding Common Stock into a smaller number of shares, then in each such case the number of votes per share to which holders of shares of Series A Junior Participating Preferred Stock were entitled immediately prior to such event shall be adjusted by multiplying such number by a fraction the numerator of which is the number of shares of Common Stock outstanding immediately after such event and the denominator of which is the number of shares of Common Stock that were outstanding immediately prior to such event. (B) Except as otherwise provided herein or by law, the holders of shares of Series A Junior Participating Preferred Stock and the holders of shares of Common Stock shall vote together as one class on all matters submitted to a vote of stockholders of the Corporation. (C) (i) If at any time dividends on any Series A Junior Participating Preferred Stock shall be in arrears in an amount equal to six (6) quarterly dividends thereon, the occurrence of such contingency shall mark the beginning of a period (herein called a "default period") which shall extend until such time when all accrued and unpaid dividends for all previous quarterly dividend periods and for the current quarterly dividend period on all shares of Series A Junior Participating Preferred Stock then outstanding shall have been declared and paid or set apart for payment. During each default period, all holders of Preferred Stock (including holders of the Series A Junior Participating Preferred Stock) with dividends in arrears in an amount equal to six (6) quarterly dividends thereon, voting as a class, irrespective of series, shall have the right to elect two (2) Directors. 4 5 (ii) During any default period, such voting right of the holders of Series A Junior Participating Preferred Stock may be exercised initially at a special meeting called pursuant to subparagraph (iii) of this Section 3(C) or at any annual meeting of stockholders, and thereafter at annual meetings of stockholders, provided that neither such voting right nor the right of the holders of any other series of Preferred Stock, if any, to increase, in certain cases, the authorized number of Directors shall be exercised unless the holders of ten percent (10%) in number of shares of Preferred Stock outstanding shall be present in person or by proxy. The absence of a quorum of the holders of Common Stock shall not affect the exercise by the holders of Preferred Stock of such voting right. At any meeting at which the holders of Preferred Stock shall exercise such voting right initially during an existing default period, they shall have the right, voting as a class, to elect Directors to fill such vacancies, if any, in the Board of Directors as may then exist up to two (2) Directors or, if such right is exercised at an annual meeting, to elect two (2) Directors. If the number which may be so elected at any special meeting does not amount to the required number, the holders of the Preferred Stock shall have the right to make such increase in the number of Directors as shall be necessary to permit the election by them of the required number. After the holders of the Preferred Stock shall have exercised their right to elect Directors in any default period and during the continuance of such period, the number of Directors shall not be increased or decreased except by vote of the holders of Preferred Stock as herein provided or pursuant to the rights of any equity securities ranking senior to or pari passu with the Series A Junior Participating Preferred Stock. (iii) Unless the holders of Preferred Stock shall, during an existing default period, have previously exercised their right to elect Directors, the Board of Directors may order, or any stockholder or stockholders owning in the aggregate not less than ten percent (10%) of the total number of shares of Preferred Stock outstanding, irrespective of series, may request, the calling of special meeting of the holders of Preferred Stock, which meeting shall thereupon be called by the President, a Vice-President or the Secretary of the Corporation. Notice of such meeting and of any annual meeting at which holders of Preferred Stock are entitled to vote pursuant to this paragraph (C) (iii) shall be given to each holder of record of Preferred Stock by mailing a copy of such notice to him at his last address as the same appears on the books of the Corporation. Such meeting shall be called for a time not earlier than 20 days and not later than 60 days after such order or request or in default of the calling of such meeting within 60 days after such order or request, such meeting may be called on similar notice by any stockholder or stockholders owning in the aggregate not less than ten percent (10%) of the total number of shares of Preferred Stock outstanding. Notwithstanding the provisions of this paragraph (C) (iii), no such special meeting shall be called during 5 6 the period within 60 days immediately preceding the date fixed for the next annual meeting of the stockholders. (iv) In any default period, the holders of Common Stock, and other classes of stock of the Corporation if applicable, shall continue to be entitled to elect the whole number of Directors until the holders of Preferred Stock shall have exercised their right to elect two (2) Directors voting as a class, after the exercise of which right (x) the Directors so elected by the holders of Preferred Stock shall continue in office until their successors shall have been elected by such holders or until the expiration of the default period, and (y) any vacancy in the Board of Directors may (except as provided in paragraph (C)(ii) of this Section 3) be filled by vote of a majority of the remaining Directors theretofore elected by the holders of the class of stock which elected the Director whose office shall have become vacant. References in this paragraph (C) to Directors elected by the holders of a particular class of stock shall include Directors elected by such Directors to fill vacancies as provided in clause (y) of the foregoing sentence. (v) Immediately upon the expiration of a default period, (x) the right of the holders of Preferred Stock as a class to elect Directors shall cease, (y) the term of any Directors elected by the holders of Preferred Stock as a class shall terminate, and (z) the number of Directors shall be such number as may be provided for in the certificate of incorporation or by-laws irrespective of any increase made pursuant to the provisions of paragraph (C)(ii) of this Section 3 (such number being subject, however, to change thereafter in any manner provided by law or in the certificate of incorporation or bylaws). Any vacancies in the Board of Directors effected by the provisions of clauses (y) and (z) in the preceding sentence may be filled by a majority of the remaining Directors. (D) Except as set forth herein, holders of Series A Junior Participating Preferred Stock shall have no special voting rights and their consent shall not be required (except to the extent they are entitled to vote with holders of Common Stock as set forth herein) for taking any corporate action. 6 7 Section 4. Certain Restrictions. (A) Whenever quarterly dividends or other dividends or distributions payable on the Series A Junior Participating Preferred Stock as provided in Section 2 are in arrears, thereafter and until all accrued and unpaid dividends and distributions, whether or not declared, on shares of Series A Junior Participating Preferred Stock outstanding shall have been paid in full, the Corporation shall not (i) declare or pay dividends on, make any other distributions on, or redeem or purchase or otherwise acquire for consideration any shares of stock ranking junior (either as to dividends or upon liquidation, dissolution or winding up) to the Series A Junior Participating Preferred Stock; (ii) declare or pay dividends on or make any other distributions on any shares of stock ranking on a parity (either as to dividends or upon liquidation, dissolution or winding up) with the Series A Junior Participating Preferred Stock, except dividends paid ratably on the Series A Junior Participating Preferred Stock and all such parity stock on which dividends are payable or in arrears in proportion to the total amounts to which the holders of all such shares are then entitled; (iii) redeem or purchase or otherwise acquire for consideration shares of any stock ranking on a parity (either as to dividends or upon liquidation, dissolution or winding up) with the Series A Junior Participating Preferred Stock, provided that the Corporation may at any time redeem, purchase or otherwise acquire shares of any such parity stock in exchange for shares of any stock of the Corporation ranking junior (either as to dividends or upon dissolution, liquidation or winding up) to the Series A Junior Participating Preferred Stock; (iv) purchase or otherwise acquire for consideration any shares of Series A Junior Participating Preferred Stock, or any shares of stock ranking on a parity with the Series A Junior Participating Preferred Stock, except in accordance with a purchase offer made in writing or by publication (as determined by the Board of Directors) to all holders of such shares upon such terms as the Board of Directors, after consideration of the respective annual dividend rates and other relative rights and preferences of the respective series and classes, shall deter- 7 8 mine in good faith will result in fair and equitable treatment among the respective series or classes. (B) The Corporation shall not permit any subsidiary of the Corporation to purchase or otherwise acquire for consideration any shares of stock of the Corporation unless the Corporation could, under paragraph (A) of this Section 4, purchase or otherwise acquire such shares at such time and in such manner. Section 5. Reacquired Shares. Any shares of Series A Junior Participating Preferred Stock purchased or otherwise acquired by the Corporation in any manner whatsoever shall be retired and cancelled promptly after the acquisition thereof. All such shares shall upon their cancellation become authorized but unissued shares of Preferred Stock and may be reissued as part of a new series of Preferred Stock to be created by resolution or resolutions of the Board of Directors, subject to the conditions and restrictions on issuance set forth herein. Section 6. Liquidation, Dissolution or Winding Up. (A) Upon any liquidation (voluntary or otherwise), dissolution or winding up of the Corporation, no distribution shall be made to the holders of shares of stock ranking junior (either as to dividends or upon liquidation, dissolution or winding up) to the Series A Junior Participating Preferred Stock unless, prior thereto, the holders of shares of Series A Junior Participating Preferred Stock shall have received $1 per share, plus an amount equal to accrued and unpaid dividends and distributions thereon, whether or not declared, to the date of such payment (the "Series A Liquidation Preference"). Following the payment of the full amount of the Series A Liquidation Preference, no additional distributions shall be made to the holders of shares of Series A Junior Participating Preferred Stock unless, prior thereto, the holders of shares of Common Stock shall have received an amount per share (the "Common Adjustment") equal to the quotient obtained by dividing (i) the Series A Liquidation Preference by (ii) 100 (as appropriately adjusted as set forth in subparagraph C below to reflect such event as stock splits, stock dividends and recapitalizations with respect to the Common Stock) (such number in clause (ii), the "Adjustment Number"). Following the payment of the full amount of the Series A Liquidation Preference and the Common Adjustment in respect of all outstanding shares of Series A Junior Participating Preferred Stock and Common Stock, respectively, holders of Series A Junior Participating Preferred Stock and holders of shares of Common Stock shall receive their ratable and proportionate share of the remaining assets to be distributed in the ratio of the Adjustment Number to 8 9 1 with respect to such Preferred Stock and Common Stock, on a per share basis, respectively. (B) In the event, however, that there are not sufficient assets available to permit payment in full of the Series A Liquidation Preference and the liquidation preferences of all other series of preferred stock, if any, which rank on a parity with the Series A Junior Participating Preferred Stock, then such remaining assets shall be distributed ratably to the holders of such parity shares in proportion to their respective liquidation preferences. In the event, however, that there are not sufficient assets available to permit payment in full of the Common Adjustment, then such remaining assets shall be distributed ratably to the holders of Common Stock. (C) In the event the Corporation shall at any time after the Rights Declaration Date (i) declare any dividend on Common Stock payable in shares of Common Stock, (ii) subdivide the outstanding Common Stock, or (iii) combine the outstanding Common Stock into a smaller number of shares, then in each such case the Adjustment Number in effect immediately prior to such event shall be adjusted by multiplying such Adjustment Number by a fraction the numerator of which is the number of shares of Common Stock outstanding immediately after such event and the denominator of which is the number of shares of Common Stock that were outstanding immediately prior to such event. Section 7. Consolidation, Merger, etc. In case the Corporation shall enter into any consolidation, merger, combination or other transaction in which the shares of Common Stock are exchanged for or changed into other stock or securities, cash/or any other property, then in any such case the shares of Series A Junior Participating Preferred Stock shall at the same time be similarly exchanged or changed in an amount per share (subject to the provision for adjustment hereinafter set forth) equal to 100 times the aggregate amount of stock, securities, cash and/or any other property (payable in kind) as the case may be, into which or for which each share of Common Stock is changed or exchanged. In the event the Corporation shall at any time after the Rights Declaration Date (i) declare any dividend on Common Stock payable in shares of Common Stock, (ii) subdivide the outstanding Common Stock, or (iii) combine the outstanding Common Stock into a smaller number of shares, then in each such case the amount set forth in the preceding sentence with respect to the exchange or change of shares of Series A Junior Participating Preferred Stock shall be adjusted by multiplying such amount by a fraction the numerator of which is the number of shares of Common Stock outstanding immediately after such event and the denominator of which is the 9 10 number of shares of Common Stock that were outstanding immediately prior to such event. Section 8. No Redemption. The shares of Series A Junior Participating Preferred Stock shall not be redeemable. Section 9. Ranking. The Series A Junior Participating Preferred Stock shall rank junior to all other series of the Corporation's Preferred Stock as to the payment of dividends and the distribution of assets, unless the terms of any such series shall provide otherwise. Section 10. Amendment. The Restated Certificate of Incorporation of the Corporation shall not be further amended in any manner which would materially alter or change the powers, preferences or special rights of the Series A Junior Participating Preferred Stock so as to affect them adversely without the affirmative vote of the holders of a majority or more of the outstanding shares of Series A Junior Participating Preferred Stock, voting separately as a class. Section 11. Fractional Shares. Series A Junior Participating Preferred Stock may be issued in fractions of a share which shall entitle the holder, in proportion to such holder's fractional shares, to exercise voting rights, receive dividends, participate in distributions and to have the benefit of all other rights of holders of Series A Junior Participating Preferred Stock. D. 13% Senior Redeemable Exchangeable Preferred Stock and 13% Series B Senior Redeemable Exchangeable Preferred Stock. The powers, preferences and relative, participating, optional and other special rights, and the qualifications, limitations and restrictions, of the shares of preferred stock consisting of the series designated the "13% Senior Redeemable Exchangeable Preferred Stock" and the series designated the "13% Series B Senior Redeemable Exchangeable Preferred Stock" are as set forth in this Article FOURTH and in Exhibit A to this Restated Certificate of Incorporation. E. 9.90% Non-voting Mandatorily Redeemable Preferred Stock, Series A. The powers, preferences and relative, participating, optional and other special rights, and the qualifications, limitations and restrictions, of the shares of preferred stock designated the "9.90% Non-voting Mandatorily Redeemable Preferred Stock, Series A" are as set forth in this Article FOURTH and in Exhibit B to this Restated Certificate of Incorporation. 10 11 F. 9.90% Non-voting Mandatorily Redeemable Preferred Stock, Series B. The powers, preferences and relative, participating, optional and other special rights, and the qualifications, limitations and restrictions, of the shares of preferred stock designated the "9.90% Non-voting Mandatorily Redeemable Preferred Stock, Series B" are as set forth in this Article FOURTH and in Exhibit C to this Restated Certificate of Incorporation. G. 5 1/4% Convertible Preferred Stock, Series A. The powers, preferences and relative, participating, optional and other special rights, and the qualifications, limitations and restrictions, of the shares of preferred stock designated the "5 1/4% Convertible Preferred Stock, Series A" are as set forth in this Article FOURTH and in Exhibit D to this Restated Certificate of Incorporation. H. 5 1/4% Convertible Preferred Stock, Series B. The powers, preferences and relative, participating, optional and other special rights, and the qualifications, limitations and restrictions, of the shares of preferred stock designated the "5 1/4% Convertible Preferred Stock, Series B" are as set forth in this Article FOURTH and in Exhibit E to this Restated Certificate of Incorporation. FIFTH: The business and affairs of the Corporation shall be managed by or under the direction of the Board of Directors. The number of directors of the Corporation shall be as from time to time fixed by, or in the manner provided in, the By-laws of the Corporation. The directors shall be divided into three classes, designated Class I, Class II and Class III. Each class shall consist, as nearly as may be possible, of one-third of the total number of directors constituting the entire Board of Directors. The term of the initial Class I directors shall terminate on the date of the 1994 annual meeting of stockholders; the term of the initial Class II directors shall terminate on the date of the 1995 annual meeting of stockholders and the term of the initial Class III directors shall terminate on the date of the 1996 annual meeting of stockholders. At each annual meeting of stockholders beginning in 1994, successors to the class of directors whose term expires at that annual meeting shall be elected for a three-year term. If the number of directors is changed, any increase or decrease shall be apportioned among the classes so as to maintain the number of directors in each class as nearly equal as possible, and any additional directors of any class elected to fill a vacancy resulting from an increase in such class shall hold office for a term that shall coincide with the remaining term of that class, but in no case will a decrease in the number of directors shorten the term of any incumbent director. A director shall hold office until the annual meeting for the year in which his term expires and until his successor shall be elected and shall qualify, subject, however, to prior death, resignation, retirement, disqualification or removal from office. 11 12 Any vacancy on the Board of Directors, howsoever resulting, may be filled by a majority of the directors then in office, even if less than a quorum, or by a sole remaining director. Any director elected to fill a vacancy shall hold office for a term that shall coincide with the term of the class to which such director shall have been elected. Notwithstanding the foregoing, whenever the holders of any one or more classes or series of Preferred Stock issued by the Corporation shall have the right, voting separately by class or series, to elect directors at an annual or special meeting of stockholders, the election, term of office, filling of vacancies and other features of such directorships shall be governed by the terms of this Certificate of Incorporation or the resolution or resolutions adopted by the Board of Directors pursuant to Article FOURTH applicable thereto, and such directors so elected shall not be divided into classes pursuant to this Article FIFTH unless expressly provided by such terms. SIXTH: Subject to the rights, if any, of the holders of shares of Preferred Stock then outstanding, any or all of the directors of the Corporation may be removed from office at any time, but only for cause and only by the affirmative vote of the holders of two-thirds (66 2/3%) of the outstanding shares of the Corporation then entitled to vote generally in the election of directors, considered for purposes of this Article SIXTH as one class. SEVENTH: Any action required or permitted to be taken at any annual or special meeting of stockholders may be taken only upon the vote of the stockholders at an annual or special meeting duly noticed and called, as provided in the By-laws of the Corporation, and may not be taken by a written consent of the stockholders pursuant to the GCL. EIGHTH: Special meetings of the stockholders of the Corporation for any purpose or purposes may be called at any time by the Board of Directors, the Chairman of the Board of Directors or the President. Special meetings of the stockholders of the Corporation may not be called by any other person or persons. NINTH: A. In addition to any affirmative vote required by law or this Certificate of Incorporation or the By-laws of the Corporation, and except as otherwise expressly provided in Section B of this Article NINTH, a Business Combination (as hereinafter defined) with, or proposed by or on behalf of, any Interested Stockholder (as hereinafter defined) or any Affiliate or Associate (as hereinafter defined) of any Interested Stock- 12 13 holder or any person who thereafter would be an Affiliate or Associate of such Interested Stockholder shall require the affirmative vote of not less than sixty-six and two-thirds percent (66-2/3%) of the votes entitled to be cast by the holders of all the then outstanding shares of Voting Stock (as hereinafter defined), voting together as a single class, excluding Voting Stock beneficially owned by any Interested Stockholder or any Affiliate or Associate of such Interested Stockholder. Such affirmative vote shall be required notwithstanding the fact that no vote may be required, or that a lesser percent age or separate class vote may be specified, by law or in any agreement with any national securities exchange or otherwise. B. The provisions of Section A of this Article NINTH shall not be applicable to any particular Business Combination, and such Business Combination shall require only such affirmative vote, if any, as is required by law or any other provision of this Certificate of Incorporation or the By-laws of the Corporation, if all of the conditions specified in either of the following Paragraphs 1 or 2 are met: 1. The Business Combination shall have been approved by a majority of the Continuing Directors (as hereinafter defined). 2. All of the following conditions shall have been met: a. the aggregate amount of the cash and the Fair Market Value (as hereinafter defined) as of the date of the consummation of the Business Combination of consideration other than cash to be received per share by holders of Common Stock in such Business Combination shall be at least equal to the highest amount determined under clauses (i) and (ii) below: (i) (if applicable) the highest per share price (including any brokerage commissions, transfer taxes and soliciting dealers' fees) paid by or on behalf of the Interested Stockholder for any share of Common Stock in connection with the acquisition by the Interested Stockholder of beneficial ownership of shares of Common Stock acquired by it (x) within the two-year period immediately prior to the first public announcement of the proposed Business Combination (the "Announcement Date") or (y) in the transaction in which it became an Interested Stockholder, whichever is higher, in either case as adjusted for any subsequent stock split, stock dividend, subdivision or reclassification with respect to the Common Stock; and 13 14 (ii) the Fair Market Value per share of Common Stock on the Announcement Date or on the date on which the Interested Stockholder became an Interested Stockholder (the "Determination Date"), whichever is higher, as adjusted for any subsequent stock split, stock dividend, subdivision or reclassification with respect to the Common Stock. b. The aggregate amount of the cash and the Fair Market Value as of the date of the consummation of the Business Combination, of consideration other than cash to be received per share by holders of shares of any class or series of outstanding Capital Stock (as hereinafter defined), other than Common Stock, shall be at least equal to the highest amount determined under clauses (i), (ii) and (iii) below: (i) (if applicable) the highest per share price (including any brokerage commissions, transfer taxes and soliciting dealers' fees) paid by or on behalf of the Interested Stockholder for any share of such class or series of Capital Stock in connection with the acquisition by the Interested Stockholder of beneficial ownership of shares of such class or series of Capital Stock (x) within the two-year period immediately prior to the Announcement Date or (y) in the transaction in which it became an Interested Stockholder, whichever is higher, in either case as adjusted for any subsequent stock split, stock dividend, subdivision or reclassification with respect to such class or series of Capital Stock; (ii) the Fair Market Value per share of such class or series of Capital Stock on the Announcement Date or on the Determination Date, whichever is higher, as adjusted for any subsequent stock split, stock dividend, subdivision or reclassification with respect to such class or series of Capital Stock; and (iii) (if applicable) the highest preferential amount per share to which the holders of shares of such class or series of Capital Stock would be entitled in the event of any voluntary or involuntary liquidation, dissolution or winding up of the affairs of the Corporation regardless of whether the Business Combination to be consummated constitutes such an event. 14 15 The provisions of this Paragraph 2 shall be required to be met with respect to every class or series of outstanding Capital Stock, whether or not the Interested Stockholder has previously acquired beneficial ownership of any shares of a particular class or series of Capital Stock. c. The consideration to be received by holders of a particular class or series of outstanding Capital Stock shall be in cash or in the same form as previously has been paid by or on behalf of the Interested Stockholder in connection with its direct or indirect acquisition of beneficial ownership of shares of such class or series of Capital Stock. If the consideration so paid for shares of any class or series of Capital Stock varied as to form, the form of consideration for such class or series of Capital Stock shall be either cash or the form used to acquire beneficial ownership of the largest number of shares of such class or series of Capital Stock previously acquired by the Interested Stockholder. d. After the Determination Date and prior to the consummation of such Business Combination: (i) except as approved by a majority of the Continuing Directors, there shall have been no failure to declare and pay at the regular date therefor any full quarterly dividends (whether or not cumulative) payable in accordance with the terms of any outstanding Capital Stock; (ii) there shall have been no reduction in the annual rate of dividends paid on the Common Stock (except as necessary to reflect any stock split, stock dividend or subdivision of the Common Stock), except as approved by a majority of the Continuing Directors; (iii) there shall have been an increase in the annual rate of dividends paid on the Common Stock as necessary to reflect any reclassification (including any reverse stock split), recapitalization, reorganization or any similar transaction that has the effect of reducing the number of outstanding shares of Common Stock, unless the failure so to increase such annual rate is approved by a majority of the Continuing Directors; and (iv) such Interested Stockholder shall not have become the beneficial owner of any additional shares of Capital Stock except as part of the transaction that result in such Interested Stockholder becoming an Interested Stockholder and except in a transaction that, after giving effect thereto, would not result in any increase in the Interested Stockholder's percentage beneficial ownership of any class or series of Capital Stock. e. A proxy or information statement describing the proposed Business Combination and complying with the requirements of the Securities Exchange Act of 1934, as amended, and the rules and regulations thereunder (the "Act") (or any subsequent provisions replacing such Act, rules or regulations) shall be mailed to all stockholders of the Corporation at least 30 days prior to the consummation of such Business 15 16 Combination (whether or not such proxy or information statement is required to be mailed pursuant to such Act or subsequent provisions). The proxy or information statement shall contain on the first page thereof, in a prominent place, any statement as to the advisability (or inadvisability) of the Business Combination that the Continuing Directors, or any of them, may choose to make and, if deemed advisable by a majority of the Continuing Directors, an opinion of an investment banking firm selected by a majority of the Continuing Directors as to the fairness (or unfairness) of the terms of the Business Combination from a financial point of view to the holders of the outstanding shares of Capital Stock other than the Interested Stockholder and its Affiliates or Associates, such investment banking firm to be paid a reasonable fee for its services by the Corporation. f. Such Interested Stockholder shall not have made any major change in the Corporation's business or equity capital structure without the approval of a majority of the Continuing Directors. C. The following definitions shall apply with respect to this Article NINTH: 1. The term "Business Combination" shall mean: a. any merger or consolidation of the Corporation or any Subsidiary (as hereinafter defined) with (i) any Interested Stockholder or (ii) any other company (whether or not itself an Interested Stockholder) which is or after such merger or consolidation would be an Affiliate or Associate of an Interested Stockholder; or b. any sale, lease, exchange, mortgage, pledge, transfer or other disposition or security arrangement, investment, loan, advance, guarantee, agreement to purchase, agreement to pay, extension of credit, joint venture participation or other arrangement (in one transaction or a series of transactions) with or for the benefit of any Interested Stockholder or any Affiliate or Associate of any Interested Stockholder involving any assets, securities or commitments of the Corporation, any Subsidiary or any Interested Stockholder or any Affiliate or Associate of any Interested Stockholder (except for any arrangement, whether as employee, consultant or otherwise, other than as a director, pursuant to which any Interested Stockholder or any Affiliate or Associate thereof shall, directly or indirectly, have any control over or responsibility for the management of any aspect of the business or affairs of the Corporation, with respect to which arrangements the value tests set forth below shall not apply), together with all other such arrangements (including all contemplated future events), has an aggregate Fair Market Value and/or involves aggregate commitments of $5,000,000 or more or 16 17 constitutes more than 5 percent of the book value of the total assets (in the case of transactions involving assets or commitments other than capital stock) or 5 percent of the stockholders' equity (in the case of transactions in capital stock) of the entity in question (the "Substantial Part"), as reflected in the most recent fiscal year-end consolidated balance sheet of such entity existing at the time the stockholders of the Corporation would be required to approve or authorize the Business Combination involving the assets, securities and/or commitments constituting any Substantial Part; or c. the adoption of any plan or proposal for the liquidation or dissolution of the Corporation or for any amendment to the Corporation's By-laws; or d. any reclassification of securities (including any reverse stock split), or recapitalization of the Corporation, or any merger or consolidation of the Corporation with any of its Subsidiaries or any other transaction (whether or not with or into or otherwise involving an Interested Stockholder) that has the effect, directly or indirectly, of increasing the proportionate share of any class or series of Capital Stock, or any securities convertible into Capital Stock or into equity securities of any Subsidiary, that is beneficially owned by any Interested Stockholder or any Affiliate or Associate of any Interested Stockholder; or e. any agreement, contract or other arrangement providing for any one or more of the actions specified in the foregoing clauses (a) to (d). 2. The term "Capital Stock" shall mean all capital stock of the Corporation authorized to be issued from time to time under Article FOURTH of this Certificate of Incorporation, and the term "Voting Stock" shall mean all Capital Stock which by its terms may be voted on all matters submitted to stockholders of the Corporation generally. 3. The term "person" shall mean any individual, firm, company or other entity and shall include any group comprised of any person and any other person with whom such person or any Affiliate or Associate of such person has any agreement, arrangement or understanding, directly or indirectly, for the purpose of acquiring, holding, voting or disposing of Capital Stock. 4. The term "Interested Stockholder" shall mean any person (other than the Corporation or any Subsidiary and other than any profit-sharing, employee stock ownership or other employee benefit plan of the Corporation or any Subsidiary or any trustee of or fiduciary with respect to any such plan when acting in such capacity who 17 18 (a) is or has announced or publicly disclosed a plan or intention to become the beneficial owner of Voting Stock representing fifteen percent (15%) or more of the votes entitled to be cast by the holders of all then outstanding shares of Voting Stock; or (b) is an Affiliate or Associate of the Corporation and at any time within the two-year period immediately prior to the date in question was the beneficial owner of Voting Stock representing fifteen percent (15%) or more of the votes entitled to be cast by the holders of all then outstanding shares of Voting Stock. 5. A person shall be a "beneficial owner" of any Voting Stock: (a) which such person or any of its Affiliates or Associates beneficially owns, directly or indirectly; (b) which such person or any of its Affiliates or Associates has, directly or indirectly, (i) the right to acquire (whether such right is exercisable immediately or subject only to the passage of time), pursuant to any agreement, arrangement or understanding or upon the exercise of conversion rights, exchange rights, warrants or options, or otherwise, or (ii) the right to vote pursuant to any agreement, arrangement or understanding; or (c) which is beneficially owned, directly or indirectly, by any other person with which such person or any of its Affiliates or Associates has any agreement, arrangement or understanding for the purpose of acquiring, holding, voting or disposing of any shares of Capital Stock. For the purposes of determining whether a person is an Interested Stockholder pursuant to Paragraph 4 of this Section C, the number of shares of Capital Stock deemed to be outstanding shall include shares deemed beneficially owned by such person through applications of this Paragraph 5 of Section C, but shall not include any other shares of Capital Stock that may be issuable pursuant to an agreement, arrangement or understanding, or upon exercise of conversion rights, warrants or options, or otherwise. 6. The terms "Affiliate" or "Associate" shall have the respective meanings ascribed to such terms in Rule 12b-2 of the General Rules and Regulations under the Act, as in effect on April 2, 1993 (the term "registrant" in said Rule 12b-2 meaning in this case the Corporation). 7. "Subsidiary" means any company of which a majority of any class of equity security is beneficially owned by the Corporation; provided, however, that for the purposes of the definition of Interested Stockholder set forth in Paragraph 4 of this Section C, the term "Subsidiary" shall mean only a company of which a majority of each class of equity security is beneficially owned by the Corporation. 8. The term "Continuing Director" means any member of the Board of Directors of the Corporation, while such person is a member of the Board of Directors, 18 19 who is not an Affiliate or Associate or representative of the Interested Stockholder and was a member of the Board of Directors prior to the time that the Interested Stockholder became an Interested Stockholder, and any successor of a Continuing Director while such successor is a member of the Board of Directors, who is not an Affiliate or Associate or representative of the Interested Stockholder and is recommended or elected to succeed the Continuing Director by a majority of Continuing Directors. 9. The term "Fair Market Value" means: (a) in the case of cash, the amount of such cash; (b) in the case of stock, the highest closing sale price during the 30-day period immediately preceding the date in question of a share of such stock on the Composite Tape for New York Stock Exchange-Listed Stocks, or, if such stock is not quoted on the Composite Tape, on the New York Stock Exchange, or, if such stock is not listed on such Exchange, on the principal United States securities exchange registered under the Act on which such stock is listed or, if such stock is not listed on any such exchange, the highest closing bid quotation with respect to a share of such stock during the 30-day period preceding the date in question on the National Association of Securities Dealers, Inc. Automated Quotations System, in the pink sheets of the National Quotation Bureau or any similar system then in use, or if no such quotations are available, the fair market value on the date in question of a share of such stock as determined by a majority of the Continuing Directors in good faith; and (c) in the case of property other than cash or stock, the fair market value of such property on the date in question as determined in good faith by a majority of the Continuing Directors. 10. In the event of any Business Combination in which the Corporation survives, the phrase "consideration other than cash to be received" as used in Paragraphs 2.a. and 2.b. of Section B of this Article NINTH shall include the shares of Common Stock and/or the shares of any other class or series of Capital Stock retained by the holders of such shares. D. A majority of the Continuing Directors shall have the power and duty to determine for the purpose of this Article NINTH, on the basis of information known to them after reasonable inquiry, all questions arising under this Article NINTH, including, without limitation, (a) whether a person is an Interested Stockholder, (b) the number of shares of Capital Stock or other securities beneficially owned by any person, (c) whether a person is an Affiliate or Associate of another, (d) whether a Proposed Action (as hereinafter defined) is with, or proposed by, or on behalf of an Interested Stock holder or an Affiliate or Associate of an Interested Stockholder, (e) whether the assets that are the subject of any Business Combination have, or the consideration to be received for the issuance or transfer of securities by the Corporation or any Subsidiary 19 20 in any Business Combination has, an aggregate Fair Market Value of $5,000,000 or more, and (f) whether the assets or securities that are the subject of any Business Combination constitute a Substantial Part. Any such determination made in good faith shall be binding and conclusive on all parties. The good faith determination of a majority of the Continuing Directors on such matters shall be conclusive and binding for all purposes of this Article NINTH. E. Nothing contained in this Article NINTH shall be construed to relieve any Interested Stockholder from any fiduciary obligation imposed by law. F. The fact that any Business Combination complies with the provisions of Section B of this Article NINTH shall not be construed to impose any fiduciary duty, obligation or responsibility on the Board of Directors, or any member thereof, to approve such Business Combination or recommend its adoption or approval to the stockholders of the Corporation, nor shall such compliance limit, prohibit or otherwise restrict in any manner the Board of Directors, or any member thereof, with respect to evaluations of or actions and responses taken with respect to such Business Combination. G. For the purposes of this Article NINTH, a Business Combination or any proposal to amend, repeal or adopt any provision of this Certificate of Incorporation inconsistent with this Article NINTH (collectively, "Proposed Action") is presumed to have been proposed by, or on behalf of, an Interested Stockholder or an Affiliate or Associate of an Interested Stockholder or a person who thereafter would become such if (1) after the Interested Stockholder became such, the Proposed Action is proposed following the election of any director of the Corporation who with respect to such Interested Stockholder, would not qualify to serve as a Continuing Director or (2) such Interested Stockholder, Affiliate, Associate or person votes for or consents to the adoption of any such Proposed Action, unless as to such Interested Stockholder, Affiliate, Associate or person a majority of the Continuing Directors makes a good faith determination that such Proposed Action is not proposed by or on behalf of such Interested Stockholder, Affiliate, Associate or person, based on information known to them after reasonable inquiry. H. Notwithstanding any other provisions of this Certificate of Incorporation or the By-laws of the Corporation (and notwithstanding the fact that a lesser percentage or separate class vote may be specified by law, this Certificate of Incorporation or the By-laws of the Corporation), any proposal to amend, repeal or adopt any provision of this Certificate of Incorporation inconsistent with this Article NINTH which is proposed by 20 21 or on behalf of an Interested Stockholder or an Affiliate or Associate of an Interested Stockholder shall require the affirmative vote of the holders of not less than sixty-six and two-thirds percent (66-2/3%) of the votes entitled to be cast by the holders of all the then outstanding shares of Voting Stock, voting together as a single class, excluding Voting Stock beneficially owned by such Interested Stockholder; provided, however, that this Section H shall not apply to, and such sixty-six and two-thirds percent (66-2/3%) vote shall not be required for, any amendment, repeal or adoption unanimously recommended by the Board of Directors if all of such directors are persons who would be eligible to serve as Continuing Directors within the meaning of Section C, Paragraph 8 of this Article NINTH. TENTH: No director of the Corporation shall be personally liable to the Corporation or its stockholders for monetary damages for any breach of fiduciary duty by such a director as a director. Notwithstanding the foregoing sentence, a director shall be liable to the extent provided by applicable law (i) for any breach of the director's duty of loyalty to the Corporation or its stockholders, (ii) for acts or omissions not in good faith or which involve intentional misconduct or a knowing violation of law, (iii) pursuant to Section 174 of the GCL or (iv) for any transaction from which the director derived an improper personal benefit. No amendment to or repeal to this Article TENTH shall apply to or have any effect on the liability or alleged liability of any director of the Corporation for or with respect to any acts or omissions of such director occurring prior to such amendment or repeal. ELEVENTH: In furtherance and not in limitation of the powers conferred by statute, the Board of Directors is expressly authorized to adopt, repeal, alter, amend or rescind the By-laws of the Corporation. In addition, the By-laws of the Corporation may be adopted, repealed, altered, amended, or rescinded by the affirmative vote of sixty-six and two-thirds percent (66-2/3%) of the outstanding stock of the Corporation entitled to vote thereon. TWELFTH: Notwithstanding anything contained in this Certificate of Incorporation to the contrary, the affirmative vote of the holders of at least sixty-six and two-thirds percent (66-2/3%) of the Voting Stock, voting together as a single class, shall be required to amend, repeal or adopt any provision inconsistent with Articles FIFTH, SEVENTH, EIGHTH, NINTH, TENTH, and ELEVENTH of this Certificate of Incorporation. THIRTEENTH: The Corporation reserves the right to repeal, alter, amend, or rescind any provision contained in this Restated Certificate of Incorporation, in the manner now 21 22 or hereafter prescribed by statute, and all rights conferred on stockholders herein are granted subject to this reservation. IN WITNESS WHEREOF, NTL Incorporated has caused this Restated Certificate of Incorporation to be signed by Richard J. Lubasch, its Senior Vice President, General Counsel and Secretary, this 1st day of April, 1999. NTL INCORPORATED By: /s/ Richard J. Lubasch ------------------------------- Richard J. Lubasch Senior Vice President, General Counsel and Secretary 22 23 Exhibit A 13% SENIOR REDEEMABLE EXCHANGEABLE PREFERRED STOCK AND 13% SERIES B SENIOR REDEEMABLE EXCHANGEABLE PREFERRED STOCK (a) Designation. There is hereby created out of the authorized and unissued shares of preferred stock of the Corporation a class of preferred stock consisting of two series, one designated as the "13% Senior Redeemable Exchange able Preferred Stock" (the "Series A Preferred") and the other designated as the "13% Series B Senior Redeemable Exchangeable Preferred Stock" (the "Series B Preferred"). The number of shares constituting such class shall be 100,000 plus up to 150,000 shares issued in lieu of cash dividends, and are referred to as the "Preferred Stock." The liquidation preference of the Preferred Stock shall be $1,000.00 per share. (b) Rank. The Preferred Stock shall, with respect to dividends and distributions upon liquidation, winding-up and dissolution of the Corporation, rank (i) senior to (a) all classes of Common Stock, (b) the Junior Preferred Stock, (c) the 5% Preferred Stock and (d) each other class of Capital Stock or series of preferred stock issued by the Corporation after the Issue Date the terms of which specifically provide that such class or series will rank junior to the Preferred Stock as to dividend distributions and distributions upon liquidation, winding-up and dissolution of the Corporation or junior to or on a parity with any class of common stock of the Corporation or which do not specify their rank (the securities described in this clause (i), collectively, "Junior Securities"); (ii) on a parity with each class of Capital Stock or series of preferred stock issued by the Corporation after the Issue Date the terms of which specifically provide that such class or series will rank on a parity with the Preferred Stock as to dividend distributions and distributions upon liquidation, winding-up and dissolution of the Corporation (the securities described in this clause (ii), collectively, "Parity Securities"); and (iii) junior to each other class of Capital Stock or other series of preferred stock issued by the Corporation after the Issue Date the terms of which specifically provide that such series will rank senior to the Preferred Stock as to dividend distributions and distributions upon liquidation, winding-up and dissolution of the Corporation (the securities described in this clause (iii), collectively, "Senior Securities"). (c) Dividends. (i) Beginning on the Issue Date, the Holders of the outstanding shares of Preferred Stock shall be entitled to receive, when, as and if declared by the Board of Directors, out of funds legally available therefor, dividends on the Preferred Stock at a rate equal to 13% per annum ($130 per share). Dividends will accrue from A-1 24 the Issue Date and will be payable quarterly in arrears on February 15, May 15, August 15 and November 15 of each year (each, a "Dividend Payment Date"), commencing on May 15, 1997. Dividends, whether or not earned or declared, will accrue without interest until declared and paid, which declaration may be for all or part of the accrued dividends. Dividends accruing on or prior to February 15, 2004 may, at the option of the Corporation, be paid (i) in cash, (ii) by the issuance of such number of additional fully paid and nonassessable shares (including fractional shares) of Preferred Stock equal to the amount of such dividends then payable divided by $1,000 or (iii) in any combination of the foregoing. Each dividend shall be payable to the Holders of record as they appear on the stock books of the Corporation on such record date as may be fixed by the Board of Directors, which record date will not be less than 10 nor more than 60 days prior to the applicable Dividend Payment Date. Dividends shall cease to accrue in respect of the Preferred Stock on the Exchange Date or on the date of their earlier redemption or repurchase by the Corporation, unless the Corporation shall have failed to issue the appropriate aggregate principal amount of Subordinated Debentures in respect of the Preferred Stock on such Exchange Date or shall have failed to pay the relevant redemption or repurchase price on the date fixed for redemption or repurchase. All dividends paid with respect to shares of the Preferred Stock shall be paid pro rata to the Holders entitled thereto. (ii) No full dividends may be declared or paid or funds set apart for the payment of dividends on any Parity Securities for any period unless all accrued dividends have been or contemporaneously are declared and paid in full or declared and, if payable in cash, a sum in cash is set apart sufficient for such payment on the Preferred Stock. If all accrued dividends have not been so paid, the Preferred Stock shall share dividends pro rata with the Parity Securities based upon the relative liquidation preferences of the outstanding shares of the Preferred Stock and such Parity Securities. No dividends may be declared or paid, nor may funds be set aside for such payment, on Junior Securities, except dividends on Junior Securities which are paid in additional Junior Securities (other than Disqualified Capital Stock), and no Parity Securities or Junior Securities may be repurchased, redeemed or otherwise retired, nor may funds be set apart for such payment, if all accrued dividends have not been paid (or deemed to have been paid) on the Preferred Stock. (iii) In the event that (a) the Exchange Offer Registration Statement is not filed with the Commission on or prior to the 75th day following the Issue Date, (b) the Exchange Offer Registration Statement is not declared effective prior to the 120th day following the Issue Date, (c) the Registered Exchange Offer is not A-2 25 consummated on or prior to the 160th day following the Issue Date or (d) if the Corporation is obligated to file the Shelf Registration Statement under the Registration Rights Agreement and the Shelf Registration Statement is not declared effective on or prior to 160 days after the Issue Date (in each of cases (b), (c) and (d), as such period may be extended in accordance with the proviso of Section 2(a) of the Registration Rights Agreement) (each such event referred to in clauses (a) through (d) above, a "Registration Default"), dividends will accrue on the Preferred Stock (in addition to the stated dividends on the Preferred Stock) from and including the next day following each of (i) such 75-day period in the case of clause (a) above, (ii) such 120-day period in the case of clause (b) above, (iii) such 160-day period in the case of clause (c) above and (iv) such 160-day period in the case of clause (d) above (in each of cases (b), (c) and (d) as such period is extended, if applicable, in the manner aforesaid) (each such period referred to in clauses (i) through (iv) above, an "Accrual Period"), at a rate per annum equal to 0.50% of the liquidation preference of the Preferred Stock (determined daily). The amount of such additional dividends (the "Special Dividends") will increase by an additional 0.50% per annum with respect to each subsequent applicable Accrual Period until all Registration Defaults have been cured, up to a maximum of Special Dividends of 1.50% per annum of the liquidation preference (determined daily). In each case, such additional dividends (the "Special Dividends") will be payable quarterly in arrears each May 15, August 15, November 15 and February 15, commencing May 15, 1997, to Holders of record on the immediately preceding May 1, August 1, November 1 and February 1, respectively. In the event that a Shelf Registration Statement is declared effective pursuant to the Registration Rights Agreement, if the Corporation fails to keep the Shelf Registration Statement continuously effective for the period required by the Registration Rights Agreement, then from such time as the Shelf Registration is no longer effective until the earliest of (i) the date that the Shelf Registration Statement is again deemed effective, (ii) the date that is the third anniversary of the Issue Date or (iii) the date as of which all of the Transfer Restricted Securities are sold pursuant to the Shelf Registration Statement, Special Dividends shall accrue at a rate per annum equal to 0.50% of the liquidation preference of the Preferred Stock (1.00% thereof if the Shelf Registration Statement is no longer effective for 30 days or more) and shall be payable quarterly in arrears each May 15, August 15, November 15 and February 15, commencing May 15, 1997, to Holders of record on the immediately preceding May 1, August 1, November 1 and February 1, respectively. (iv) Nothing herein contained shall in any way or under any circumstances be construed or deemed to require the Board of Directors to declare, or A-3 26 the Corporation to pay or set apart for payment, any dividends on shares of the Preferred Stock at any time. In the event that the Corporation fails to pay dividends, the sole remedy available to Holders will be the election of directors as set forth in paragraph (f)(ii). (v) Accrued dividends may be declared and paid at any time, without reference to any regular Dividend Payment Date, to Holders of record, not more than sixty (60) days prior to payment thereof, as may be fixed by the Board of Directors of the Corporation. (vi) Dividends payable on the Preferred Stock for any period less than a year shall be computed on the basis of a 360-day year of twelve 30-day months and the actual number of days elapsed in the period for which such dividends are payable. (vii) References in this Resolution to "dividends" include Special Dividends unless the context requires otherwise. (d) Liquidation Preference. (i) In the event of any voluntary or involuntary liquidation, dissolution or winding up of the affairs of the Corporation, the Holders of shares of Preferred Stock then outstanding shall be entitled to be paid out of the assets of the Corporation available for distribution to its stockholders, an amount in cash equal to the liquidation preference for each share outstanding, plus an amount in cash equal to accrued and unpaid dividends thereon, if any, to the date fixed for liquidation, dissolution or winding up (including an amount in cash equal to a prorated dividend for the period from the last Dividend Payment Date to the date fixed for liquidation, dissolution or winding up), before any distribution shall be made or any assets distributed to the holders of any of the Junior Securities including, without limitation, any Common Stock. Except as provided in the preceding sentence, Holders shall not be entitled to any distribution in the event of any liquidation, dissolution or winding up of the affairs of the Corporation. If the assets of the Corporation are not sufficient to pay in full the liquidation payments payable to the holders of outstanding shares of the Preferred Stock and all Parity Securities, then the holders of all such shares shall share equally and ratably in such distribution of assets of the Corporation in proportion to the full liquidation preference to which each is entitled. After payment in full of the liquidation preference to which Holders are entitled, such A-4 27 Holders will not be entitled to any further participation in any distribution of assets of the Corporation. (ii) For the purposes of this paragraph (d), neither the sale, conveyance, exchange or transfer (for cash, shares of stock, securities or other consideration) of all or substantially all of the property or assets of the Corporation nor the consolidation or merger of the Corporation with or into one or more entities shall be deemed to be a liquidation, dissolution or winding up of the affairs of the Corporation. (e) Redemption. (i) Optional Redemption. (A) The Corporation may, at the option of the Board of Directors, redeem in whole at any time or in part from time to time, in the manner provided for in paragraph (e)(iii) hereof, any or all of the shares of Preferred Stock, at the redemption prices (expressed as percentages of the liquidation preference thereof) set forth below plus all accrued and unpaid dividends (including an amount in cash equal to a prorated dividend for the period from the Dividend Payment Date immediately prior to the Redemption Date to the Redemption Date) (the "Optional Redemption Price") if redeemed during the 12-month period beginning February 15 of each of the years set forth below: 2002...................................... 106.500% 2003...................................... 104.333% 2004...................................... 102.167% 2005 and thereafter....................... 100.000% (B) Upon a Change of Control Call Event, the Corporation will have the option to redeem all (but not less than all) of the outstanding shares of Preferred Stock at a redemption price (the "Change of Control Call Price") equal to 100% of the liquidation preference thereof, plus the Applicable Premium, plus accrued and unpaid dividends to the date of repurchase; provided, however, no such redemption shall be consummated except contemporaneously with or after the merger, consolidation or business combination referred to in the definition of Change of Control Call Event. Notwithstanding anything to the contrary in paragraph (e)(iii), notice of any such redemption pursuant to this paragraph must be given no later than 90 days following the date upon which the Change of Control Call Event occurred (or no later than 10 days after the date on which a notice of a Change of Control Offer must be mailed pursuant to paragraph (h) if the events giving rise to the Change of Control A-5 28 Call Event also give rise to a Change of Control Triggering Event), and the purchase date must be within 30 days of the date of notice. (C) In the event of a redemption pursuant to paragraph (e)(i)(A) or (B) hereof of only a portion of the then outstanding shares of the Preferred Stock, the Corporation shall effect such redemption on a pro rata basis according to the number of shares held by each Holder of the Preferred Stock, except that the Corporation may redeem such shares held by Holders of fewer than 10 shares (or all shares held by Holders who would hold less than 10 shares as a result of such redemption), as may be determined by the Corporation. No partial redemption of the Preferred Stock may be authorized or made unless prior thereto all accrued dividends thereon shall have been paid in cash or declared and a sum set apart for such payment. (ii) Mandatory Redemption. On February 15, 2009, the Corporation shall redeem, to the extent of funds legally available therefor, in the manner provided for in paragraph (e)(iii) hereof, all of the shares of the Preferred Stock then outstanding at a redemption price equal to 100% of the liquidation preference per share, plus an amount in cash equal to all accrued and unpaid dividends per share (including an amount equal to a prorated dividend for the period from the Dividend Payment Date immediately prior to the Redemption Date to the Redemption Date) (the "Mandatory Redemption Price"). (iii) Procedures for Redemption. (A) At least fifteen (15) days and not more than sixty (60) days prior to the date fixed for any redemption of the Preferred Stock, written notice (the "Redemption Notice") shall be given by first class mail, postage prepaid, to each Holder of record on the record date fixed for such redemption of the Preferred Stock at such Holder's address as it appears on the stock books of the Corporation; provided, however, that no failure to give such notice nor any deficiency therein shall affect the validity of the procedure for the redemption of any shares of Preferred Stock to be redeemed except as to the Holder or Holders to whom the Corporation has failed to give said notice or to whom such notice was defective. If any Preferred Stock is to be redeemed in part only, the Redemption Notice that relates to such Preferred Stock will state the number of shares thereof to be redeemed. Shares of Preferred Stock that have been issued and reacquired in any manner, including shares purchased or redeemed or exchanged, will (upon compliance with any applicable provisions of Delaware law) have the status of authorized but unissued shares of preferred stock of the Corporation undesignated as to series and may, with any and all other authorized but unissued shares of preferred stock of the Corporation, be designated or redesignated and A-6 29 issued or reissued, as the case may be, as part of any series of preferred stock of the Corporation, except that such shares may not be reissued or sold as shares of the Preferred Stock (other than in payment of dividends on the Preferred Stock). The Redemption Notice shall state: (1) whether the redemption is pursuant to paragraph (e)(i)(A), (e)(i)(B) or (e)(ii) hereof; (2) the Optional Redemption Price, the Change of Control Call Price or the Mandatory Redemption Price, as the case may be; (3) whether all or less than all the outstanding shares of the Preferred Stock are to be redeemed and the total number of shares of the Preferred Stock being redeemed; (4) the date fixed for redemption; (5) that the Holder is to surrender to the Corporation, in the manner, at the place or places and at the price designated, such Holder's certificate or certificates representing the shares of Preferred Stock to be redeemed; and (6) that dividends on the shares of the Preferred Stock to be redeemed shall cease to accrue on such Redemption Date unless the Corporation defaults in the payment of the Optional Redemption Price, the Change of Control Call Price or the Mandatory Redemption Price, as the case may be. (B) Each Holder of shares of Preferred Stock shall surrender the certificate or certificates representing such shares to the Corporation, duly endorsed (or otherwise in proper form for transfer, as determined by the Corporation), in the manner and at the place designated in the Redemption Notice, and on the Redemption Date the full Optional Redemption Price, the Change of Control Call Price or the Mandatory Redemption Price, as the case may be, for such shares shall be payable in cash to the Person whose name appears on such certificate or certificates as the owner thereof, and each surrendered certificate shall be canceled and retired. In the event that less than all of the shares represented by any such certificate are redeemed, a new certificate shall be issued representing the unredeemed shares. A-7 30 (C) On the Redemption Date, unless the Corporation defaults in the payment in full of the applicable redemption price, dividends on the Preferred Stock called for redemption shall cease to accrue, and all rights of the Holders of redeemed shares shall terminate with respect thereto, other than the right to receive the Optional Redemption Price, the Change of Control Call Price or the Mandatory Redemption Price, as the case may be, without interest; provided, however, that if a notice of redemption shall have been given as provided in paragraph (iii)(A) above and the funds necessary for redemption (including an amount in respect of all dividends that will accrue to the Redemption Date) shall have been irrevocably deposited in trust for the equal and ratable benefit for the Holders of the shares to be redeemed, then, at the close of business on the day on which such funds are segregated and set aside, the Holders of the shares to be redeemed shall cease to be stockholders of the Corporation and shall be entitled only to receive the Optional Redemption Price, the Change of Control Call Price or the Mandatory Redemption Price, as the case may be, without interest. (f) Voting Rights. (i) The Holders of Preferred Stock, except as otherwise required under Delaware law or as set forth in this paragraph (f), shall not be entitled or permitted to vote on any matter required or permitted to be voted upon by the stockholders of the Corporation. (ii) If (a) dividends on the Preferred Stock are in arrears and unpaid (after February 15, 2004, in cash) for six quarterly periods (whether or not consecutive), (b) the Corporation fails to effect a redemption of the Preferred Stock when required by, and in accordance with, paragraph (e)(ii) or (c) the Corporation fails to make an offer to purchase all of the outstanding shares of Preferred Stock following a Change of Control Triggering Event, if such offer to purchase is required by paragraph (h), or fails to purchase all of the shares of Preferred Stock validly tendered pursuant thereto (each such event described in clauses (a) through (c) above being referred to herein as a "Voting Rights Triggering Event"), then the number of directors constituting the Board of Directors of the Corporation will be increased by two and the holders of the majority of the then outstanding shares of Preferred Stock, voting separately as a class, will be entitled to elect the two additional directors. Such voting rights will continue until such time as, in the case of a default under clause (a), all accrued dividends on the Preferred Stock are paid in full and, in all other cases, any failure, breach or default referred to in clause (b) or (c) is remedied, at which time the term of any directors elected pursuant to the provisions of this A-8 31 paragraph shall immediately terminate. Any vacancy occurring in the office of a director elected by the Holders may be filled by the remaining director elected by such holders unless and until such vacancy shall be filled by such holders. Regardless of the number of Voting Rights Triggering Events, in no event shall the Holders have the right to elect and have serve more than two members of the Board of Directors of the Corporation at any one time. At any time after voting power to elect directors shall have become vested and be continuing in the Holders of shares of the Preferred Stock pursuant to this paragraph (f)(ii), or if vacancies shall exist in the offices of directors elected by the Holders of shares of the Preferred Stock, a proper officer of the Corporation may, and upon the written request of the Holders of record of at least 10% of the shares of Preferred Stock then outstanding addressed to the Secretary of the Corporation shall, call a special meeting of the Holders of Preferred Stock, for the purpose of electing the directors which such Holders are entitled to elect. If such meeting shall not be called by the proper officer of the Corporation within 20 days after personal service of said written request upon the Secretary of the Corporation, or within 20 days after mailing the same within the United States by certified mail, addressed to the Secretary of the Corporation at its principal executive offices, then the Holders of record of at least 20% of the outstanding shares of the Preferred Stock may designate in writing one of their number to call such meeting at the expense of the Corporation, and such meeting may be called by the Person so designated upon the notice required for the annual meetings of stockholders of the Corporation and shall be held at the place for holding the annual meetings of stockholders or such other place in the United States as shall be designated in such notice. Notwithstanding the foregoing, no such special meeting shall be called if any such request is received less than 30 days before the date fixed for the next ensuing annual or special meeting of stockholders of the Corporation. Any Holder of shares of the Preferred Stock so designated shall have, and the Corporation shall provide, access to the lists of Holders of shares of the Preferred Stock for purposes of calling a meeting pursuant to the provisions of this paragraph (f)(ii). (iii) The Corporation shall not, without the affirmative vote or consent of Holders of a majority of the shares of Preferred Stock then outstanding, voting or consenting, as the case may be, separately as one class, given in person or by proxy, either in writing or by resolution adopted at an annual or special meeting, (x) create, authorize or issue any class of Senior Securities or Parity Securities or (y) amend the Certificate of Designation so as to affect adversely the specified rights, preferences, privileges or voting rights of holders of Preferred Stock or authorize the A-9 32 issuance of any additional shares of Preferred Stock (other than in payment of dividends on the Preferred Stock); provided, however, that the Corporation may, without the approval of any Holders, issue or have outstanding shares of Parity Securities (other than Disqualified Capital Stock) issued from time to time in exchange for, or all of the proceeds of which are used to redeem or repurchase, any or all of the shares of Preferred Stock. The Holders of a majority of the outstanding shares of Preferred Stock, voting or consenting, as the case may be, separately as one class, may waive compliance with any provision of the Certificate of Designation. Except as set forth in this paragraph (f)(iii), neither (a) the creation, authorization or issuance of any shares of Junior Securities, Parity Securities or Senior Securities, including the designation of a series thereof within the existing class of Preferred Stock, nor (b) the increase or decrease in the amount of authorized capital stock of any class, including any preferred stock, shall require the consent of any Holders or shall be deemed to affect adversely the rights, preferences, privileges or voting rights of shares of Preferred Stock. (iv) Without the affirmative vote or consent of Holders of a majority of the issued and outstanding shares of Preferred Stock, voting or consenting, as the case may be, as one class, given in person or by proxy, either in writing or by resolution adopted at an annual or special meeting, the Corporation shall not, in a single transaction or series of related transactions, consolidate or merge with or into, or sell, assign, transfer, lease, convey or otherwise dispose of all or substantially all of its assets to, another Person or adopt a plan of liquidation unless: (A) either (1) the Corporation is the surviving or continuing Person or (2) the Person (if other than the Corporation) formed by such consolidation or into which the Corporation is merged or the Person that acquires by conveyance, transfer or lease the properties and assets of the Corporation as an entirety or substantially as an entirety or in the case of a plan of liquidation, the Person to which assets of the Corporation have been transferred, shall be a corporation, partnership or trust organized and existing under the laws of the United States or any State thereof or the District of Columbia; (B) the Preferred Stock shall be converted into or exchanged for and shall become shares of such successor, transferee or resulting Person, having in respect of such successor, transferee or resulting Person the same powers, preferences and relative, participating, optional or other special rights and the qualifications, limitations or restrictions thereon that the Preferred Stock had immediately prior to such transaction, and (C) the Corporation has delivered to the transfer agent for the Preferred Stock prior to the consummation of the proposed transaction an Officers' Certificate and an Opinion of Counsel, each stating that such consolidation, merger or transfer complies with the terms hereof and that all conditions precedent herein relating to such transaction have A-10 33 been satisfied. For purposes of the foregoing, the transfer (by lease, assignment, sale or otherwise, in a single transaction or series of related transactions) of all or substantially all of the properties or assets of one or more subsidiaries of the Corporation, the Capital Stock of which constitutes all or substantially all of the properties and assets of the Corporation shall be deemed to be the transfer of all or substantially all of the properties and assets of the Corporation. (v) On or prior to the Exchange Date, the Corporation shall not amend or modify the form of Indenture (except as expressly provided therein in respects of amendments without the consent of holders of Subordinated Debentures) without the affirmative vote or consent of Holders of at least a majority of the shares of Preferred Stock then outstanding, voting or consenting, as the case may be, as one class, given in person or by proxy, either in writing or by resolution adopted at an annual or special meeting. (vi) In any case in which the Holders shall be entitled to vote as described herein or pursuant to Delaware law, each Holder shall be entitled to one vote for each share of Preferred Stock held by such Holder. (g) Exchange. (i) Requirements. On any Dividend Payment Date, the Corporation may, at its option, exchange the Preferred Stock, in whole but not in part, for the Subordinated Debentures; provided, however, that any such exchange may only be made if on or prior to the date of such exchange (i) the Corporation has paid all accrued dividends on the Preferred Stock (including the dividends payable on the Exchange Date) and there shall be no contractual impediment to such exchange; (ii) there shall be funds legally available sufficient therefor; (iii) the Indenture has been qualified under the Trust Indenture Act of 1939, as amended, if required at the time of such exchange for public indentures; and (iv) the Corporation shall have delivered an Officers' Certificate and an Opinion of Counsel to the effect that all conditions to be satisfied prior to such exchange have been satisfied. Holders of Preferred Stock so exchanged will be entitled to receive $1.00 in principal amount of Subordinated Debentures for each $1.00 of liquidation preference of Preferred Stock held by such holder at the time of exchange. In connection with any such exchange, dividends on shares of Preferred Stock exchanged which have accrued on or prior to February 15, 2004 which have not been paid as of the Exchange Date shall be paid, at the Corporation's option, in cash, in additional Subordinated Debentures in an equivalent principal amount of such accrued and unpaid dividends or in a combination of the foregoing. Dividends on any shares of Preferred Stock accruing after February 15, A-11 34 2004 which have not been paid as of the Exchange Date must be paid in cash on the Exchange Date. On the Exchange Date, all dividends on the Preferred Stock will cease to accrue. Subordinated Debentures issued in exchange for Preferred Stock will be issued in principal amounts of $1,000 and integral multiples thereof to the extent possible, and will also be issued in principal amounts of less than $1,000 so that each holder of Preferred Stock will receive certificates representing the entire amount of Subordinated Debentures to which its shares of Preferred Stock entitle it; provided, however, that the Corporation may, at its option, pay cash in lieu of issuing a Subordinated Debenture in a principal amount less than $1,000. (ii) Procedures. The Corporation shall send by first-class mail, postage prepaid, to each Holder of record on the record date fixed for such exchange of Preferred Stock, at such Holder's address as the same appears on the stock books of the Corporation, written notice (the "Exchange Notice") of its intention to ex change the Preferred Stock for Subordinated Debentures at least 30 and not more than 60 days prior to the Exchange Date; provided, however, that no failure to give such notice nor any deficiency therein shall affect the validity of the procedure for the exchange of any shares of Preferred Stock to be exchanged except as to the Holder or Holders to whom the Corporation has failed to give said notice or to whom such notice was defective. Each Exchange Notice must state (i) the Exchange Date, (ii) the place or places where certificates for shares of Preferred Stock are to be surrendered for exchange into Subordinated Debentures, (iii) that dividends on the shares of Preferred Stock to be exchanged will cease to accrue on the Exchange Date whether or not certificates for shares of Preferred Stock are surrendered for exchange on such Exchange Date unless the Corporation shall default in the delivery of Subordinated Debentures and (iv) that interest on the Subordinated Debentures shall accrue from the Exchange Date whether or not certificates for shares of Preferred Stock are surrendered for exchange on such Exchange Date. (A) On or before the Exchange Date, each Holder shall surrender the certificate or certificates representing such shares of Preferred Stock, in the manner and at the place designated in the Exchange Notice. The Corporation shall cause the Subordinated Debentures to be executed on the Exchange Date and, upon surrender in accordance with the Exchange Notice of the certificates for any shares of Preferred Stock so exchanged, duly endorsed (or otherwise in proper form for transfer, as determined by the Corporation), such shares shall be exchanged by the Corporation for Subordinated Debentures. The Series A Preferred shall be exchanged for Series A Debentures and the Series B Preferred shall be exchanged for Series B A-12 35 Debentures. The Corporation shall pay interest on the Subordinated Debentures at the rate and on the dates specified therein from the Exchange Date. (B) If notice has been mailed as aforesaid, and if before the Exchange Date specified in such notice (1) the Indenture shall have been duly executed and delivered by the Corporation and the trustee thereunder and (2) all Subordinated Debentures necessary for such exchange shall have been duly executed by the Corporation and delivered to the trustee under the Indenture with irrevocable instructions to authenticate the Subordinated Debentures necessary for such exchange, then the rights of the Holders of Preferred Stock so exchanged as stockholders of the Corporation shall cease (except the right to receive Subordinated Debentures, an amount in cash equal to the amount of accrued and unpaid dividends to the Exchange Date and, if the Corporation so elects, cash in lieu of any Subordinated Debenture with a principal amount not an integral multiple of $1,000), and the Person or Persons entitled to receive the Subordinated Debentures issuable upon exchange shall be treated for all purposes as the registered holder or holders of such Subordinated Debentures as of the Exchange Date. (iii) No Exchange in Certain Cases. Notwithstanding the foregoing provisions of this paragraph (g), the Corporation shall not be entitled to exchange the Preferred Stock for Subordinated Debentures if such exchange, or any term or provision of the Indenture or the Subordinated Debentures, or the performance of the Corporation's obligations under the Indenture or the Subordinated Debentures, shall violate any applicable law or if, at the time of such exchange, the Corporation is insolvent or if it would be rendered insolvent by such exchange. (h) Change of Control Put. (i) In the event of a Change of Control Triggering Event, the Corporation shall notify each Holder in writing of such occurrence and shall make an offer to purchase (the "Change of Control Offer") such Holder's shares of Preferred Stock at a purchase price in cash equal to 101% of the liquidation preference thereof plus accrued and unpaid dividends per share (including an amount in cash equal to a prorated dividend for the period from the Dividend Payment Date immediately prior to the Change of Control Payment Date to the Change of Control Payment Date (as defined herein)). (ii) Not later than 90 days following the date upon which the Change of Control Triggering Event occurred, the Corporation shall send, by first A-13 36 class mail, postage prepaid, a notice to each Holder of Preferred Stock at such Holder's last registered address with a copy to the Registrar, which notice shall govern the terms of the Change of Control Offer. The notice to the Holders shall contain all instructions and materials necessary to enable such Holders to tender Preferred Stock pursuant to the Change of Control Offer. Such notice shall state: (A) that a Change of Control has occurred, that the Change of Control Offer is being made pursuant to this paragraph (h) and that all Preferred Stock validly tendered and not withdrawn will be accepted for payment; (B) the purchase price (including the amount of accumulated and unpaid dividends, if any) and the purchase date (which shall be no earlier than 30 days nor later than 60 days from the date such notice if mailed, other than as may be required by law) (the "Change of Control Payment Date"); provided, however, that there shall be no right of any Holder to require the Corporation to purchase such Holder's shares of Preferred Stock until the earlier of the date on which all of the Deferred Coupon Notes have been repaid or have matured; (C) that any shares of Preferred Stock not tendered will continue to accrue dividends; (D) that, unless the Corporation defaults in making payment therefor, any share of Preferred Stock accepted for payment pursuant to the Change of Control Offer shall cease to accrue dividends after the Change of Control Payment Date; (E) that Holders electing to have any shares of Preferred Stock purchased pursuant to a Change of Control Offer will be required to surrender the certificate or certificates representing such shares, properly endorsed for transfer together with such customary documents as the Corporation and the transfer agent may reasonably require, in the manner and at the place specified in the notice prior to the close of business on the Business Day prior to the Change of Control Payment Date; (F) that Holders will be entitled to withdraw their election if the Corporation receives, not later than five Business Days prior to the Change of Control Payment Date, a telegram, telex, facsimile transmission or letter A-14 37 setting forth the name of the Holder, the number of shares of Preferred Stock the Holder delivered for purchase and a statement that such Holder is withdrawing his election to have such shares of Preferred Stock purchased; (G) that Holders whose shares of Preferred Stock are purchased only in part will be issued a new certificate representing the unpurchased shares of Preferred Stock; and (H) the circumstances and relevant facts regarding such Change of Control Triggering Event. (iii) Each Change of Control Offer shall remain open for at least 20 Business Days or such longer period as may be required by law. The Corporation shall comply with Rules 13e-4 and 14e-4 and 14e-1 under the Exchange Act and other provisions of state and federal securities laws and regulations, to the extent such laws and regulations are applicable to the repurchase of the Preferred Stock in connection with a Change of Control Offer. (iv) On the Change of Control Payment Date the Corporation shall (A) accept for payment the shares of Preferred Stock validly tendered pursuant to the Change of Control Offer, (B) pay to the Holders of shares so accepted the purchase price therefor in cash and (C) cancel and retire each surrendered certificate. Unless the Corporation defaults in the payment for the shares of Preferred Stock tendered pursuant to the Change of Control Offer, dividends will cease to accrue with respect to the shares of Preferred Stock tendered and all rights of Holders of such tendered shares will terminate, except for the right to receive payment therefor, on the Change of Control Payment Date. (v) Notwithstanding the foregoing, prior to the mailing of the notice of a Change of Control Offer referred to above, the Corporation shall (i) within 60 days following a Change of Control Triggering Event, either (a) repay in full all indebtedness for borrowed money of the Corporation, and terminate all commitments, under the Potential Credit Facilities, in each case, to the extent required upon a change of control pursuant to the terms thereof (or offer to repay in full all such indebtedness and terminate all such commitments and repay all such indebtedness owed to each lender which has accepted such offer and terminate all such commitments of each such lender), or (b) obtain the requisite consents under the Potential Credit Facilities to permit the repurchase of the Preferred Stock as provided above and (ii) within 90 days following a Change of Control Triggering Event, A-15 38 purchase all Senior Notes (or permitted refinancings thereof) which it is required to purchase by reason of such change of control pursuant to the provisions of the indenture therefor. The Corporation shall first comply with the covenant described in the immediately preceding sentence before it shall be required to repurchase Preferred Stock pursuant to the provisions described above. (i) Conversion or Exchange. The Holders of shares of Preferred Stock shall not have any rights hereunder to convert such shares into or exchange such shares for shares of any other class or classes or of any other series of any class or classes of Capital Stock of the Corporation. (j) Preemptive Rights. No shares of Preferred Stock shall have any rights of preemption whatsoever as to any securities of the Corporation, or any warrants, rights or options issued or granted with respect thereto, regardless of how such securities or such warrants, rights or options may be designated, issued or granted. (k) Reissuance of Preferred Stock. Shares of Preferred Stock that have been issued and reacquired in any manner, including shares purchased or redeemed or exchanged, shall (upon compliance with any applicable provisions of the laws of Delaware) have the status of authorized and unissued shares of Preferred Stock undesignated as to series and may be redesignated and reissued as part of any series of Preferred Stock, provided that any issuance of such shares as Preferred Stock must be in compliance with the terms hereof. (l) Business Day. If any payment, redemption, purchase or exchange shall be required by the terms hereof to be made on a day that is not a Business Day, such payment, redemption, purchase or exchange shall be made on the immediately succeeding Business Day. (m) Reports. Whether or not required by the rules and regulations of the Commission, so long as any Preferred Stock is outstanding, the Corporation will file with the Commission and furnish to the Holders of Preferred Stock all quarterly and annual financial information required to be contained in a filing with the Commission on Forms 10-Q and 10-K (or the equivalent thereof in the event the Corporation becomes a corporation organized under the laws of England and Wales), including a "Management's Discussion and Analysis of Results of Operations and Financial Condition" and, with respect to the annual information only, a report thereon by the Corporation's certified independent accountants, in each case, as required by the rules and regulations of the Commission as in effect on the Issue Date. A-16 39 (n) Definitions. As used in this Certificate of Designation, the following terms shall have the following meanings (with terms defined in the singular having comparable meanings when used in the plural and vice versa), unless the context otherwise requires: "Accrual Period" shall have the meaning ascribed to it in paragraph (c)(iii). "Applicable Premium" means, with respect to any share of Preferred Stock, the greater of (x) 1.0% of the liquidation preference thereof and (y) the excess, if any, of (a) the present value of dividends accruing until and including February 15, 2002 (assuming payment thereof in cash on the applicable Dividend Payment Date) and the liquidation preference and any applicable optional redemption premium therefor payable on such date for such share (in each case assuming payment thereof on February 15, 2002), computed using a discount rate equal to the Treasury Rate plus 100 basis points over (b) the sum of the liquidation preference of such share plus accrued and unpaid dividends to the redemption date. "Board of Directors" shall have the meaning ascribed to it in the first paragraph of this Resolution. "Board Resolution" means a copy of a resolution certified pursuant to an Officers' Certificate to have been duly adopted by the Board of Directors of the Corporation and to be in full force and effect, and delivered to the Holders. "Business Day" means any day except a Saturday, a Sunday, or any day on which banking institutions in New York, New York are required or authorized by law or other governmental action to be closed. "Capital Stock" means any and all shares, interests, participations or other equivalents (however designated) of capital stock of the Corporation. "Certificate of Incorporation" shall have the meaning ascribed to it in the first paragraph of this Resolution. A-17 40 "Change of Control" means (i) the sale, lease or transfer of all or substantially all of the assets of the Corporation to any "person" or "group" (within the meaning of Sections 13(d)(3) and 14(d)(2) of the Exchange Act or any successor provision to either of the foregoing, including any group acting for the purpose of acquiring, holding or disposing of securities within the meaning of Rule 13d-5(b)(1) under the Exchange Act) (other than any Permitted Holder), (ii) the approval by the requisite stockholders of the Corporation of a plan of liquidation or dissolution of the Corporation, (iii) any "person" or "group" (within the meaning of Sections 13(d) and 14(d)(2) of the Exchange Act or any successor provision to either of the foregoing, including any group acting for the purpose of acquiring, holding or disposing of securities within the meaning of Rule 13d-5(b)(1) under the Exchange Act), other than any Permitted Holder, becomes the "beneficial owner" (as defined in Rule 13d-3 under the Exchange Act) of more than 50% of the total voting power of all classes of the voting stock of the Corporation and/or warrants or options to acquire such voting stock, calculated on a fully diluted basis, unless, as a result of such transaction, the ultimate direct or indirect ownership of the Corporation is substantially the same immediately after such transaction as it was immediately prior to such transaction, or (iv) during any period of two consecutive years, individuals who at the beginning of such period constituted the Corporation's Board of Directors (together with any new directors whose election or appointment by such board or whose nomination for election by the shareholders of the Corporation was approved by a vote of a majority of the directors then still in office who were either directors at the beginning of such period or whose election or nomination for election was previously so approved) cease for any reason to constitute a majority of the Corporation's Board of Directors then in office. "Change of Control Call Event" means the entering by the Corporation into a binding agreement providing for a merger, consolidation or business combination of the Corporation with another corporation, association or other entity, which agreement provides that upon consummation thereof that the holders of the Common Stock will own less than 80% of the voting and economic power of the entity, if any, in which holders of the Common Stock will hold equity interests immediately following consummation of any such transaction. "Change of Control Call Price" shall have the meaning ascribed to it in paragraph (e)(ii)(B). A-18 41 "Change of Control Offer" shall have the meaning ascribed to it in paragraph (h)(i). "Change of Control Payment Date" shall have the meaning ascribed to it in paragraph (h)(ii)(B). "Change of Control Triggering Event" means the occurrence of both a Change of Control and a Ratings Decline. "Commission" means the Securities and Exchange Commission. "Common Stock" means any and all shares, interests or other participations in, and other equivalents (however designated and whether voting or non-voting) of, the Corporation's common stock, whether outstanding on the Issue Date or issued after the Issue Date, and includes, without limitation, all series and classes of such common stock. "Corporation" shall have the meaning ascribed to it in the first paragraph of this Resolution. "Deferred Coupon Notes" means (i) the Corporation's 107/8% Senior Deferred Coupon Notes Due 2003, (ii) the Corporation's 12 3/4% Senior Deferred Coupon Notes Due 2005 and (iii) the Corporation's 11 1/2% Senior Deferred Coupon Notes Due 2006. "Disqualified Capital Stock" means any Capital Stock which, by its terms (or by the terms of any security into which it is convertible or for which it is exchangeable), or upon the happening of any event, matures or is mandatorily redeemable, pursuant to a sinking fund obligation or otherwise, or redeemable at the option of the holder thereof, in whole or in part, on or prior to February 15, 2009. "Dividend Payment Date" shall have the meaning ascribed to it in paragraph (c)(i). "Exchange Act" means the Securities Exchange Act of 1934, as amended, and the rules and regulations promulgated thereunder. A-19 42 "Exchange Date" means the date of issuance of the Subordinated Debentures in accordance with paragraph (g) hereof. "Exchange Notice" shall have the meaning ascribed to it in paragraph (g)(ii) hereof. "Exchange Offer Registration Statement" shall have the meaning ascribed to it in the Registration Rights Agreement. "5% Preferred Stock" means the 5% Non-voting Convertible Preferred Stock, Series A, of the Corporation. "GAAP" means generally accepted accounting principles as in effect in the United States from time to time. "Holder" means a holder of shares of Preferred Stock as reflected in the stock books of the Corporation. "Indenture" means the indenture governing the Subordinated Debentures to be entered into between the Corporation and The Chase Manhattan Bank, as trustee, on the Exchange Date, substantially in the form on file with the secretary of the Corporation, which form is available to each Holder without charge upon request. "Investment Grade" means BBB- or higher by S&P or Baa3 or higher by Moody's. In the event that the Corporation shall be permitted to select any other Rating Agency, the equivalent of such ratings of S&P and Moody's used by such other Rating Agency shall be used. "Issue Date" means February 12, 1997, the date of original issuance of the Preferred Stock. "Junior Preferred Stock" means the 1,000,000 shares of Series A Junior Participating Preferred Stock designated and reserved for issuance in the Corporation's Certificate of Incorporation. "Junior Securities" shall have the meaning ascribed to it in paragraph (b) hereof. A-20 43 "Mandatory Redemption Price" shall have the meaning ascribed to it in paragraph (e)(ii) hereof. "Moody's" means Moody's Investors Service, Inc. and its successors. "Officers' Certificate" means a certificate signed by two officers or by an officer and either an Assistant Treasurer or an Assistant Secretary of the Corporation which certificate shall include a statement that, in the opinion of such signers all conditions precedent to be performed by the Corporation prior to the taking of any proposed action have been taken. In addition, such certificate shall include (i) a statement that the signatories have read the relevant covenant or condition, (ii) a brief statement of the nature and scope of such examination or investigation upon which the statements are based, (iii) a statement that, in the opinion of such signatories, they have made such examination or investigation as is reasonably necessary to express an informed opinion and (iv) a statement as to whether or not, in the opinion of the signatories, such relevant conditions or covenants have been complied with. "Opinion of Counsel" means an opinion of counsel that, in such counsel's opinion, all conditions precedent to be performed by the Corporation prior to the taking of any proposed action have been taken. Such opinion shall also include the statements called for in the second sentence under the definition of "Officers' Certificate." "Optional Redemption Price" shall have the meaning ascribed to it in paragraph (e)(i)(A) hereof. "Parity Securities" shall have the meaning ascribed to it in paragraph (b) hereof. "Permitted Designee" means (i) a spouse or a child of a Permitted Holder, (ii) trusts for the benefit of a Permitted Holder or a spouse or child of a Permitted Holder, (iii) in the event of the death or incompetence of a Permitted Holder, his estate, heirs, executor, administrator, committee or other personal representative or (iv) any Person so long as a Permitted Holder owns at least 50% of the voting power of all classes of the voting stock of such Person. A-21 44 "Permitted Holders" means George S. Blumenthal, J. Barclay Knapp and their Permitted Designees. "Person" means an individual, partnership, corporation, unincorporated organization, trust or joint venture, or a governmental agency or political subdivision thereof. "Potential Credit Facilities" has the meaning ascribed to such term in Corporation's Offering Memorandum dated February 7, 1997 relating to the offering of the Senior Notes and the Preferred Stock. "Preferred Stock" shall have the meaning ascribed to it in paragraph (a) hereof. "Rating Agencies" means (i) S&P, (ii) Moody's and (iii) if S&P or Moody's or both shall not make a rating of the Securities publicly available, a nationally recognized securities rating agency or agencies, as the case may be, selected by the Corporation, which shall be substituted for S&P or Moody's or both, as the case may be. "Rating Category" means (i) with respect to S&P, any of the following categories: BB, B, CCC, CC, C and D (or equivalent successor categories), (ii) with respect to Moody's, and of the following categories: Ba, B, Caa, Ca, C and D (or equivalent successor categories) and (iii) the equivalent of any such category of S&P or Moody's used by another Rating Agency. In determining whether the rating of the Securities has decreased by one or more gradations, gradations within Rating Categories (+ and - for S&P; 1, 2 and 3 for Moody's; or the equivalent gradations for another Rating Agency) shall be taken into account (e.g., with respect to S&P, a decline in a rating from BB to BB-, as well as from BB- to B+, will constitute a decrease of one gradation). "Rating Date" means that date which is 90 days prior to the earlier of (x) a Change of Control and (y) public notice of the occurrence of a Change of Control or of the intention by the Corporation or any Permitted Holder to effect a Change of Control. "Ratings Decline" means the occurrence of any of the following events on, or within six months after, the date of public notice of the occurrence of a Change of Control or of the intention of the Corporation or any A-22 45 person to effect a Change of Control (which period shall be extended so long as the rating of any of the Corporation's debt securities is under publicly announced consideration for possible downgrade by any of the Rating Agencies): (a) in the event that any of the Corporation's debt securities are rated by both of the Rating Agencies on the Rating Date as Investment Grade, the rating of such debt securities by either of the Rating Agencies shall be below Investment Grade, (b) in the event that any of the Corporation's debt securities are rated by either, but not both, of the Rating Agencies on the Rating Date as Investment Grade, the rating of such debt securities by both of the Rating Agencies shall be below Investment Grade, or (c) in the event any of the Corporation's debt securities are rated below Investment Grade by both of the Rating Agencies on the Rating Date, the rating of such debt securities by either Rating Agency shall be decreased by one or more gradations (including gradations within Rating Categories as well as between Rating Categories). "Redemption Date," with respect to any shares of Preferred Stock, means the date on which such shares of Preferred Stock are redeemed by the Corporation. "Redemption Notice" shall have the meaning ascribed to it in paragraph (e)(iii) hereof. "Registered Exchange Offer" shall have the meaning ascribed to such term in the Registration Rights Agreement. "Registrar" means Continental Stock Transfer & Trust Company, as transfer agent and Registrar for the Preferred Stock. "Registration Defaults" shall have the meaning ascribed to it in paragraph (c)(iii). "Registration Rights Agreement" means the Registration Rights Agreement relating to the Preferred Stock and the Subordinated Debentures dated as of February 12, 1997 between the Corporation and Donaldson, Lufkin & Jenrette Securities Corporation, Chase Securities Inc. and Merrill Lynch, Pierce, Fenner & Smith Incorporated, a copy of which is available to each Holder without charge upon request from the secretary of the Corporation. A-23 46 "S&P" means Standard & Poor's Ratings Group and its successors. "Securities Act" means the Securities Act of 1933, as amended, and the rules and regulations promulgated thereunder. "Senior Notes" means the 10% Senior Notes Due 2007 of the Corporation. "Senior Securities" shall have the meaning ascribed to it in paragraph (b) hereof. "Series A Debentures" means the 13% Subordinated Exchange Debentures Due 2009 issuable under the Indenture. "Series B Debentures" means the 13% Series B Subordinated Ex change Debentures Due 2009 issuable under the Indenture. "Series A Preferred" shall have the meaning ascribed to it in paragraph (a) hereof. "Series B Preferred" shall have the meaning ascribed to it in paragraph (a) hereof. "Shelf Registration Statement" shall have the meaning ascribed to such term in the Registration Rights Agreement. "Special Dividends" shall have the meaning ascribed to it in paragraph (c)(iii). "Subordinated Debentures" means the Series A Debentures and the Series B Debentures. "Transfer Agent" means Continental Stock Transfer & Trust Company, as Transfer Agent for the Preferred Stock. "Transfer Restricted Securities" shall have the meaning ascribed to it in the Registration Rights Agreement. A-24 47 "Treasury Rate" means the yield to maturity at the time of computation of United States Treasury securities with a constant maturity (as compiled and published in the most recent Federal Reserve Statistical Release H.15 (519) which has become publicly available at least two business days prior to the date fixed for redemption of the Preferred Stock (or, if such Statistical Release is no longer published, any publicly available source of similar data)) most nearly equal to the then remaining period to the date scheduled for the mandatory redemption of the Preferred Stock; provided, however, that if such period is not equal to the constant maturity of a United States Treasury security for which a weekly average yield is given, the Treasury Rate shall be obtained by linear interpolation (calculated to the nearest one-twelfth of a year) from the weekly average yields of United States Treasury securities for which such yields are given, except that if the period to the date scheduled for the mandatory redemption of the Preferred Stock is less than one year, the weekly average yield on actually traded United States Treasury securities adjusted to a constant maturity of one year shall be used. "Voting Rights Triggering Event" shall have the meaning ascribed to it in paragraph (f)(i) hereof. A-25 48 Exhibit B 9.90% NON-VOTING MANDATORILY REDEEMABLE PREFERRED STOCK, SERIES A (1) Designation; Number of Shares. The designation of the series of Preferred Stock, par value $.01 per share, of the Company created hereby shall be "9.90% Non-voting Mandatorily Redeemable Preferred Stock, Series A" (including, in the case of any reclassification, recapitalization, or other change to such Preferred Stock or, in the case of a consolidation or merger of the Company with or into another Person affecting such Preferred Stock, such capital stock to which a holder of such Preferred Stock shall be entitled upon the occurrence of such event, the "Mandatorily Redeemable Preferred Stock"). The authorized number of shares of Mandatorily Redeemable Preferred Stock shall be 125,280, which number may from time to time be increased or decreased (but not below the number then outstanding). Each share of Mandatorily Redeemable Preferred Stock shall have a stated value of $1,000 (the "Stated Value"). Any shares of Mandatorily Redeemable Preferred Stock redeemed or otherwise acquired by the Company shall be retired and shall resume the status of authorized and unissued shares of Preferred Stock, without designation as to series, until such shares are once more designated as part of a particular series of Preferred Stock by the Board of Directors. (2) Certain Definitions. Unless the context otherwise requires, the terms defined in this paragraph (2) shall have, for all purposes of this Certificate of Designations, the meanings herein specified: "Applicable Price" shall mean the aggregate of (A) in the event of a Reorganization in which the holders of Common Stock receive cash, the amount of such cash receivable by the holder of one share of Common Stock (as such share is in effect immediately prior to the consummation of such Reorganization); and (B) in the event of a Reorganization in which the holders of Common Stock receive securities or other property which are traded on an established market (within the meaning of Treasury Regulation 1.1273-2(f)(1) of the Internal Revenue Code of 1986, as in effect on September 30, 1990), the average (or if there be more than one security or item of property the sum of the averages) of the daily Trading Prices of such securities and/or property receivable by the holder of one share of Common Stock (as such share is in effect immediately prior to such consummation) for the period of ten consecutive Trading Days ending on the Trading Day immediately preceding date of occurrence of the Reorganization, appropriately adjusted to take into account any stock dividend on such security or property, or any subdivision, split, combination, reclassification of such security or property that occurs or the "ex" date for which occurs on or prior to such date. B-1 49 "Average Market Price" on any Determination Date, shall mean the average of the daily Closing Prices for the period of 10 consecutive Trading Days, ending on the Trading Day immediately preceding such Determination Date, appropriately adjusted to take into account any stock dividend on the Common Stock or any subdivision, split, combination or reclassification of the Common Stock that occurs, or the date on which "ex-dividend" trading commences, during the period following the first Trading Day in such ten-Trading Day period to and including the Determination Date. "Board" shall mean the Board of Directors of the Company, and, unless the context indicates otherwise, shall also mean, to the extent permitted by law, any committee thereof authorized, with respect to any particular matter, to exercise the power of the Board of Directors of the Company with respect to such matter. "Business Day" shall mean any day other than a Saturday, Sunday or a day on which banking institutions in New York, New York and London, England are authorized to close or not obligated by law or executive order to open. "Closing Price" shall mean, on any day: (i) the average between the high and low reported sale price of a share of Common Stock on and as reported by the Nasdaq Stock Market's National Market on such day; (ii) if the primary trading market for the Common Stock on such day is not the Nasdaq Stock Market's National Market, then the closing sale price regular way on such day, or, in case no such sale takes place on such day, the average of the reported closing bid and asked prices regular way on such day, in either case as reported by the Nasdaq System, the National Quotations Bureau, Inc. or a comparable service; (iii) if the Closing Price on such day is not available pursuant to one of the methods specified above, then the average of the bid and asked prices for the Common Stock on such day as furnished by any New York Stock Exchange member firm selected from time to time by the Board for that purpose; or (iv) if the Closing Price on such day is not available pursuant to the method specified in (iii) above, the determination of Closing Price shall be deter mined in good faith by the Board exercising its reasonable discretion. B-2 50 "Common Stock" shall mean the shares of common stock, par value $0.01 per share, of the Company, which term shall include, where appropriate, in the case of any reclassification, recapitalization or other change in the Common Stock, or in the case of a consolidation or merger of the Company with or into another Person affecting the Common Stock, such capital stock to which a holder of Common Stock shall be entitled upon the occurrence of such event. "Common Stock Dividend Amount" shall have the meaning set forth in paragraph (3) (c). "Convertible Preferred Stock" shall mean the series of Preferred Stock of the Company having the terms set forth in the draft of Convertible Preferred Stock terms attached hereto, as completed pursuant to paragraph (5) hereof. "Convertible Preferred Stock Issue Price" shall have the meaning set forth in paragraph (3)(d) and shall be computed pursuant to paragraph (5). "Convertible Securities" shall mean evidences of indebtedness or shares of stock which are, at the option of the holder hereof, convertible into or exchangeable for shares of Common Stock. "Current Market Price" on the Determination Date for any issuance of Options or Convertible Securities or any distribution in respect of which the Current Market Price is being calculated, shall mean the average of the daily Closing Prices of the Common Stock for the period of 10 consecutive Trading Days ending on the last full Trading Day before such Determination Date. "Determination Date" shall mean: (i) in the case of a dividend payment, the record date for such dividend payment, (ii) in the case of a redemption payment, the date of the notice of the Redemption Date and (iii) in the case of a Reorganization, the date the Reorganization occurs. "Exchange Act" shall mean the Securities Exchange Act of 1934, as amended from time to time, or any successor statute, and the rules and regulations promulgated thereunder. "Fixed Price", on any Determination Date with respect to the Convertible Preferred Stock, shall have the meaning assigned to such term in the Certificate B-3 51 of Designations relating to, and setting forth the terms of, the Convertible Preferred Stock. "Issue Date" shall mean September 22, 1998. "JPPF" shall mean the Series A Junior Participating Preferred Stock of the Company issuable upon exercise of the Rights pursuant to the Rights Agreement. "Junior Stock" shall mean: (i) each class or series of common stock of the Company, including, without limitation, the Common Stock; (ii) the JPPF issuable upon exercise of the Rights; (iii) any other class or series of capital stock of the Company hereafter created, other than (a) any class or series of Parity Stock (except to the extent provided under clause (iv) hereof) and (b) any class or series of Senior Stock, and (iv) any class or series of Senior Stock or Parity Stock to the extent that it ranks junior to the Mandatorily Redeemable Preferred Stock as to dividend rights, rights of redemption or rights on liquidation, as the case may be. For purposes of clause (iii) above, a class or series of Senior Stock or Parity Stock shall rank junior to the Mandatorily Redeemable Preferred Stock as to dividend rights, rights of redemption or rights on liquidation if the holders of shares of Mandatorily Redeem able Preferred Stock shall be entitled to dividend payments, payments on redemption or payments of amounts distributable upon dissolution, liquidation or winding up of the Company, as the case may be, in preference or priority to the holders of shares of such class or series of Senior Stock or Parity Stock. "Liquidating Payment" shall mean an amount equal to the Liquidation Preference of a share of Mandatorily Redeemable Preferred Stock or, if less, the amount payable in respect of one share of Mandatorily Redeemable Preferred Stock pursuant to paragraph (8)(a) upon the voluntary or involuntary liquidation, dissolution or winding up of the affairs of the Company. B-4 52 "Liquidating Payment Date" shall mean the date on which the Company makes the aggregate Liquidating Payment to all holders of outstanding shares of Mandatorily Redeemable Preferred Stock. "Liquidation Preference" measured per share of the Mandatorily Redeemable Preferred Stock, shall mean an amount equal to (a) the Stated Value per share of Mandatorily Redeemable Preferred Stock, plus (b) for purposes of determining the amount payable pursuant to paragraph (8) only, an amount equal to all dividends accrued but unpaid on such share, whether or not such unpaid dividends have been declared or there are funds of the Company legally available for the payment of dividends, to the Liquidating Payment Date. "Mandatorily Redeemable Preferred Stock" shall have the meaning set forth in paragraph (1). "Mandatory Redemption Price" shall have the meaning set forth in paragraph (4)(b). "Option" shall mean any right, option or warrant entitling the holder thereof to subscribe for, purchase, or otherwise acquire Common Stock in the Company (other than the Rights). "Parity Stock" shall mean the Mandatorily Redeemable Preferred Stock and any class or series of capital stock, whether now existing or hereafter created, of the Company to the extent ranking on a parity basis with the Mandatorily Redeemable Preferred Stock as to dividend rights, rights of redemption or rights on liquidation. Capital stock of any class or series, whether now or existing or hereafter created, shall rank on a parity as to dividend, rights of redemption or rights on liquidation with the Mandatorily Redeemable Preferred Stock, whether or not the dividend rates, dividend payment dates, redemption or liquidation prices per share or sinking fund or mandatory redemption provision, if any, are different from those of the Mandatorily Redeemable Preferred Stock, if the holders of shares of such class or series shall be entitled to dividend payments, payments on redemption of payments of amounts distributable upon dissolution, liquidation or winding up of the Company, as the case may be, in proportion to their respective accumulated and accrued and unpaid dividends, redemption prices or liquidation prices, respectively, without preference or priority, one over the other, as between the holders of shares of such class or series and the holders of Mandatorily Redeemable Preferred Stock. No class or series of capital stock that ranks junior to the Mandatorily Redeemable Preferred Stock as to rights on liquidation shall rank or be deemed to rank on a parity basis B-5 53 with the Mandatorily Redeemable Preferred Stock as to dividend rights or rights of redemption. "Payment Record Date" shall have the meaning set forth in paragraph (13). "Person" shall mean any individual corporation, partnership, joint venture, association, joint stock company, limited liability company, trust, unincorporated organization, government or agency or political subdivision thereof, or other entity, whether acting in an individual, fiduciary or other capacity. "Preferred Stock Dividend Amount" shall have the meaning set forth in paragraph (3)(d). "Redemption Agent" shall have the meaning set forth under paragraph (4)(h). "Redemption Date" as to any share of Mandatorily Redeemable Preferred Stock, shall mean the date on which such share is redeemed by the Company pursuant to paragraph (4). "Redemption Notice" shall have the meaning set forth in paragraph (4)(e). "Redemption Price" shall have the meaning set forth in paragraph (4)(a). "Reorganization" shall mean any of the following events: (i) any consolidation or merger of the Company with another entity (other than a merger or consolidation in which the Company is the surviving or continuing corporation and in which the Common Stock outstanding immediately prior to the merger or consolidation remains unchanged), (ii) the sale or other transfer of all or substantially all of its assets to another entity. (iii) any reorganization or reclassification of the Common Stock or other equity securities of the Company, and B-6 54 (iv) any statutory exchange of any shares of capital stock of the Company with another corporation (other than a merger or consolidation in which the Company is the surviving or continuing corporation and in which the Common Stock outstanding immediately prior to the merger or consolidation remains unchanged). "Reorganization Unit" means the kind or amount of securities, cash or other property receivable upon consummation of a Reorganization in substitution of or in exchange for a share of Common Stock as such share is in effect immediately prior to such consummation (provided that if the kind or amount of securities, cash or other property receivable upon consummation of such Reorganization is not the same with respect to each such share, then the kind and amount of securities, cash or other property which shall be deemed receivable upon consummation of such Reorganization with respect to each such share for purposes hereof shall be the kind and amount so receivable per share by a plurality of such shares). "Rights" means the rights issuable pursuant to the Rights Agreement. "Rights Agreement" means the rights agreement, dated as of October 13, 1993, between the Company and Continental Transfer and Trust Company, as rights agent. "Securities Act" shall mean the Securities Act of 1933, as amended from time to time, or any successor statute, and the rules and regulations promulgated thereunder. "Senior Stock" shall mean any class or series of capital stock of the Company hereafter created to the extent ranking prior to the Mandatorily Redeem able Preferred Stock as to dividend rights, rights of redemption or rights on liquidation. Capital stock of any class or series shall rank prior to the Mandatorily Redeem able Preferred Stock as to dividend rights, rights of redemption or rights on liquidation if the holders of shares of such class or series shall be entitled to dividend payments, payments on redemption or payments of amounts distributable upon dissolution, liquidation or winding up of the Company, as the case may be, in preference or priority to the holders of shares of Mandatorily Redeemable Preferred Stock. No class or series of capital stock than ranks on a parity basis with or junior to the Mandatorily Redeemable Preferred Stock as to rights on liquidation shall rank or be deemed to rank prior to the Mandatorily Redeemable Preferred Stock as to dividend rights or rights of redemption, notwithstanding that the dividend rate, dividend payment dates, sinking fund provisions, if any, or mandatory redemption B-7 55 provisions thereof are different from those of the Mandatorily Redeemable Preferred Stock. "Stated Value" shall have the meaning set forth in paragraph (1). "Trading Day" shall mean a day on which the Nasdaq Stock Market's National Market or, if different, the principal exchange on which the Common Stock is quoted or traded is each open for the transaction of business. "Trading Price" of a security or property for any day means the closing sale price regular way on such day, or, in case no such sale takes place on such day, the average of the reported closing bid and asked prices of such security or property on such day on the applicable established market on which such security or property is traded. (3) DIVIDENDS. (a) Payment. The holders of outstanding shares of Mandatorily Redeemable Preferred Stock shall be entitled to receive, when, as and if declared by the Board out of funds legally available therefor (without prejudice to paragraph (3)(b)), cumulative dividends, in preference to dividends on any Junior Stock, at the rate per annum of 9.90% of the Stated Value per share, rounded to the nearest cent. Such dividends shall accrue from the Issue Date and shall be payable on the date the Mandatorily Redeemable Preferred Stock is redeemed pursuant to paragraph (4). Dividends on the outstanding shares of Mandatorily Redeemable Preferred Stock will accrue on a daily basis (without interest or compounding) whether or not there are funds legally available for the payment of such dividends and whether or not such dividends are declared. Dividends will cease to accrue in respect of shares of Mandatorily Redeemable Preferred Stock on the date of their redemption. No interest, or sum of money in lieu of interest, shall be payable in respect of any accrued dividend payment. (b) Declaration and Manner of Payment of Dividends. Any dividends may be paid, in the sole discretion of the Board: (i) in cash out of funds legally available therefor; (ii) through the delivery of shares of Common Stock; (iii) through the delivery of shares of Convertible Preferred Stock, or (iv) through any combination of the foregoing forms of consideration elected by the Board in its sole discretion. If any dividend declared by the Board is to be paid, in whole or in part, through the delivery of shares of Common Stock or Convertible Preferred Stock, B-8 56 each holder of Mandatorily Redeemable Preferred Stock shall receive the same proportion of cash and/or shares of Common Stock or Convertible Preferred Stock (except for cash paid in lieu of fractional shares) delivered in payment of such dividend to other holders of shares of Mandatorily Redeemable Preferred Stock. (c) Payment of Dividends by Delivery of Common Stock. If the Company elects to pay any dividend payment, in whole or in part, by delivery of shares of Common Stock, the amount of such dividend payment to be paid per share of Mandatorily Redeemable Preferred Stock in shares of Common Stock (the "Common Stock Dividend Amount") shall be paid through the delivery to the holders of record for such shares of Mandatorily Redeemable Preferred Stock on the record date for such dividend payment (which shall be not more than 10 days prior to the payment date) of a number of shares of Common Stock determined by dividing the Common Stock Dividend Amount by the Average Market Price. No fractional shares of Common Stock shall be delivered to a holder of shares of Mandatorily Redeemable Preferred Stock, but the Company shall instead pay a cash adjustment determined as provided in paragraph (9). (d) Payment of Dividends by Delivery of Convertible Preferred Stock. Subject to compliance with paragraph (5), if the Company elects to pay any dividend payment, in whole or in part, by delivery of shares of Convertible Preferred Stock, the amount of such dividend payment to be paid per share of Mandatorily Redeemable Preferred Stock in shares of Convertible Preferred Stock (the "Preferred Stock Dividend Amount") shall be paid through the delivery to the holders of record for such shares of Mandatorily Redeemable Preferred Stock on the record date for such dividend payment (which shall be not more than 10 days prior to the payment date) of a number of shares of Convertible Preferred Stock determined by dividing the Preferred Stock Dividend Amount by the issue price of the Convertible Preferred Stock as determined in accordance with paragraph (5) (the "Convertible Preferred Stock Issue Price"). No fractional shares of Convertible Preferred Stock shall be delivered to a holder of shares of Mandatorily Redeemable Preferred Stock, but the Company shall instead pay a cash adjustment determined as provided in paragraph (9). (e) Prohibitions on Cash Dividends. Notwithstanding anything contained in this Certificate to the contrary, but without effect on the accrual thereof, no cash dividends on shares of Mandatorily Redeemable Preferred Stock shall be declared by the Board or paid or set apart for payment by the Company at such time as the terms and provisions of any agreement of the Company, including, without limitation, any agreement, contract, indenture, bond, note, debenture, guarantee or B-9 57 other instrument relating to or evidencing its indebtedness, prohibits such declaration, payment or setting apart for payment or provides that such declaration, payment or setting apart for payment would constitute a breach thereof or a default thereunder; provided, however, that nothing contained in this paragraph (e) shall alter, limit or restrict the Company's obligation to declare and pay accrued dividends, to the extent permitted by applicable law, through the delivery of shares of Common Stock or shares of Convertible Preferred Stock pursuant to paragraph (3)(b), whether permitted by any such agreement or not. (f) Pro Rata. All dividends paid with respect to the shares of Mandatorily Redeemable Preferred Stock shall be paid pro rata (as nearby as may be practicable) to the shareholders entitled thereto. (g) Priority. Payment of dividends to the holders of shares of Mandatorily Redeemable Preferred Stock shall be subject to the prior preferences and other rights of any Senior Stock and to the provisions of paragraph (7). (4) REDEMPTION. (a) Optional Redemption. At any time during the period beginning on the Issue Date until the Redemption Date, the Company shall have the right to redeem the outstanding shares of Mandatorily Redeemable Preferred Stock at a price equal to $1,000 per share, together with an amount equal to all dividends accrued but unpaid thereon to the date fixed for redemption (the "Redemption Price"). (b) Mandatory Redemption. All outstanding shares of Mandatorily Redeemable Preferred Stock shall be mandatorily redeemed by the Company out of funds legally available therefor on the date that is the tenth anniversary of Issue Date at a redemption price equal to $1,000 per share, plus an amount equal to all accrued and unpaid dividends per share (the "Mandatory Redemption Price"). (c) Early Mandatory Redemption. If the Company has not exercised its right to optionally redeem the Mandatorily Redeemable Preferred Stock by December 22, 1999, all outstanding shares of Mandatorily Redeemable Preferred Stock shall be mandatorily redeemed at the Mandatory Redemption Price. (d) Company's Right to Elect Manner of Payment of Redemption Price or Mandatory Redemption Price. The Company may effect the redemption of shares of Mandatorily Redeemable Preferred Stock at the Redemption Price or the Mandatory Redemption Price, in the sole discretion of the Board: (i) in cash out of B-10 58 funds legally available therefor, (ii) in exchange for and through the delivery of shares of Common Stock, (iii) subject to compliance with paragraph (5), in exchange for and through delivery of shares of Convertible Preferred Stock or (iv) through any combination of the foregoing forms of consideration elected by the Board in its sole discretion. (e) Notice of Redemption. In the event of an offer by the Company to redeem any shares of Mandatorily Redeemable Preferred Stock pursuant to paragraph (4)(a) or a redemption of the Mandatorily Redeemable Preferred Stock pursuant to paragraph (4)(b) or (4)(c), the Company shall provide notice of such offer to redeem or such redemption to holders of record of Mandatorily Redeemable Preferred Stock to be redeemed not less than 30 days (not less than 10 days if the Redemption Price or Mandatory Redemption Price is payable in cash or Common Stock) nor more than 60 days prior to the Redemption Date. Such notice (a "Redemption Notice") shall, subject to paragraph (4)(h)(z), be provided in accordance with paragraph (14); provided, however, that neither failure to give such notice nor any defect therein shall affect the validity of the proceedings for the redemption of any shares of Mandatorily Redeemable Preferred Stock to be redeemed. In addition to any information required by law, the Redemption Notice shall state, as appropriate, the following (and may contain such other information as the Company deems advisable): (A) whether the redemption is pursuant to paragraph (4)(a), (4)(b) or (4)(c); (B) the Redemption Date; (C) the number of shares of Mandatorily Redeemable Preferred Stock to be redeemed and, if less than all the shares held by such holder are to be redeemed, the number of shares to be redeemed from such holder; (D) the Redemption Price or Mandatory Redemption Price and the form or forms of consideration that the Company has elected to pay and/or deliver upon such redemption and, if more than one form of consideration has been elected by the Company, the designated portions of the Redemption Price or Mandatory Redemption Price to be paid in each form of consideration so elected; B-11 59 (E) if the Company has elected to exchange and deliver shares of Common Stock in payment of the Redemption Price (or a designated portion thereof), the Company's computation of the number of shares of Common Stock exchangeable and deliver able as provided in paragraph (4)(f); (F) if the Company has elected to exchange and deliver shares of Convertible Preferred Stock in payment of the Redemption Price (or a designated portion thereof), a statement of the Convertible Preferred Stock Issue Price computed pursuant to paragraph (5); (G) the place or places in the United States or England and Wales where certificates for Mandatorily Redeemable Preferred Stock to be redeemed are to be surrendered for redemption; and (H) that dividends on the shares of Mandatorily Redeemable Preferred Stock to be redeemed shall cease to accrue on the Redemption Date (unless the Company defaults in making payment of the Redemption Price). (f) Redemption by Delivery of Common Stock. If the Company elects to pay, in whole or in part, the Redemption Price in respect of shares of Mandatorily Redeemable Preferred Stock in exchange for and through the delivery of shares of Common Stock, then the Company shall deliver to each holder of shares of Mandatorily Redeemable Preferred Stock to be redeemed on the Redemption Date a number of shares of Common Stock equal to the aggregate Redemption Price (or designated portion thereof) of such shares of Mandatorily Redeemable Preferred Stock divided by the Average Market Price. No fractional shares of Common Stock shall be delivered to a holder of shares of Mandatorily Redeemable Preferred Stock in payment of the Redemption Price, but the Company shall instead pay a cash adjustment determined as provided in paragraph (9). (g) Redemption by Delivery of Convertible Preferred Stock. If the Company elects to pay, in whole or in part, the Redemption Price in respect of shares of Mandatorily Redeemable Preferred Stock in exchange for and through the delivery of shares of Convertible Preferred Stock, then the Company shall deliver to each holder of shares of Mandatorily Redeemable Preferred Stock to be redeemed on the Redemption Date a number of shares of Convertible Preferred Stock equal to the B-12 60 aggregate Redemption Price (or designated portion thereof) of such shares of Mandatorily Redeemable Preferred Stock divided by the Convertible Preferred Stock Issue Price. No fractional shares of Convertible Preferred Stock shall be delivered to a holder of shares of Mandatorily Redeemable Preferred Stock in payment of the Redemption Price, but the Company shall instead pay a cash adjustment as determined in paragraph (9). (h) Deposit of Funds and/or Shares. If on or before the Redemption Date: (x) the Company shall have deposited with any bank or trust company organized under the laws of the United States of America or any state thereof having capital, undivided profits and surplus aggregating at least $250 million (the "Redemption Agent"), cash (including cash for any adjustment in lieu of delivering fractional shares) and/or shares of Common Stock or Convertible Preferred Stock, as applicable, sufficient to pay in full the aggregate Redemption Price (calculated through the Redemption Date) for such shares of Mandatorily Redeemable Preferred Stock on such Redemption Date, (y) such cash and/or shares of Common Stock or Convertible Preferred Stock, as applicable, are readily available to, but only to, the holders of Mandatorily Redeemable Preferred Stock in satisfaction of the obligations of the Company with respect to the payment of the Redemption Price and (z) the Company shall prior to the Redemption Date have so notified each record holder of Mandatorily Redeemable Preferred Stock, which notice shall be given to each holder of Mandatorily Redeemable Preferred Stock by courier and shall identify the Redemption Agent, its address and telephone and telecopier numbers and the contact person(s) at the Redemption Agent responsible for administration of the deposit then, effective as of the close of business on such Redemption Date (and notwithstanding that any certificate therefor shall not have been surrendered for cancellation): (i) such shares of Mandatorily Redeemable Preferred Stock shall no longer be deemed outstanding but any shares of Common Stock or Convertible Preferred Stock so deposited in accordance with this paragraph (h) for which such Mandatorily Redeemable Preferred Stock was redeemed shall be deemed to be outstanding; (ii) the holders thereof shall cease to be holders of Mandatorily Redeemable Preferred Stock but shall be shown on the records of the Company as holders of the Common Stock or Convertible Preferred Stock so deposited in accordance with this paragraph (h) in redemption of such Mandatorily Redeemable Preferred Stock; (iii) dividends with respect to the shares so called for redemption shall cease to accrue on the Redemption Date but, subject to paragraph (4)(f), such holders shall be entitled to any dividends which shall thereafter accrue on, and shall be entitled to exercise all other rights associated with, any shares of Common Stock or Convertible Preferred Stock so deposited in accordance with this paragraph (h) in redemption of such Mandatorily Redeemable Preferred Stock; and (iv) all rights whatsoever with respect B-13 61 to the shares so called for redemption shall forthwith cease and terminate (except the right of such holders, upon the surrender of certificates evidencing the shares of Mandatorily Redeemable Preferred Stock so redeemed, to receive the cash and/or Common Stock or Convertible Preferred Stock, as applicable, payable or deliverable in payment of the Redemption Price therefor, and the applicable cash adjustment, if any, in lieu of fractional shares, without interest). Any cash and/or shares of Common Stock or Convertible Preferred Stock so deposited or set apart which shall remain unclaimed at the end of one year after the Redemption Date shall be returned or released to the Company, after which time the holders of shares of Mandatorily Redeemable Preferred Stock called for redemption on such Redemption Date that remain outstanding after such one-year period shall look only to the Company for the payment of the Redemption Price for such shares, without interest. A deposit made in compliance with the immediately preceding sentence shall, except to the extent released or returned to the Company, be deemed to constitute full payment for the shares of Mandatorily Redeemable Preferred Stock to be redeemed. Any interest accrued on funds so deposited shall be paid by the Redemption Agent to the Company from time to time. (i) Surrender of Certificates; Status. Each holder of shares of Mandatorily Redeemable Preferred Stock to be redeemed shall not be entitled to receive payment of the Redemption Price for such shares until such holder shall surrender the certificates evidencing such shares duly endorsed by, or accompanied by, an instrument of transfer (in form reasonably satisfactory to the Company) duly executed by, the holder or such holder's duly authorized attorney-in-fact or, if the shares issuable upon redemption are to be issued in the same name as the name in which such share of the Mandatorily Redeemable Preferred Stock is registered, in blank to the Redemption Agent (or to the Company if there is no Redemption Agent) at the place designated in the Redemption Notice for such redemption and shall thereupon be entitled to receive the consideration for such shares specified in the Redemption Notice in an aggregate amount equal to the Redemption Price for such shares. Holders of shares of Mandatorily Redeemable Preferred Stock that are redeemed on the Redemption Date shall not be entitled to receive dividends declared and paid on any shares of Common Stock or Convertible Preferred Stock exchangeable and deliverable in payment of the Redemption Price (or designated portion thereof) for such shares of Mandatorily Redeemable Preferred Stock, and such shares of Common Stock or Convertible Preferred Stock shall not be entitled to vote, until such shares of Common Stock or Convertible Preferred Stock are delivered upon the surrender of the certificates representing such shares of Mandatorily Redeemable Preferred Stock. Upon such surrender, such holders shall be entitled to receive such B-14 62 dividends declared and paid subsequent to such Redemption Date and prior to the delivery. (j) Priority. The right of the Company to redeem shares of Mandatorily Redeemable Preferred Stock pursuant to this paragraph (4) shall be subject to the prior preferences and other rights of any Senior Stock and to the provisions of paragraph (7). (5) DETERMINATION OF CONVERTIBLE PREFERRED STOCK ISSUE PRICE. (a) If the Company elects to deliver Convertible Preferred Stock in payment of the Redemption Price or Mandatory Redemption Price, it must elect (by notice to the holders of the Mandatorily Redeemable Preferred Stock), at its discretion, either to: (i) deliver to the holder a letter from an independent investment bank (the "Independent Investment Banker") to the holder to the effect that the bank believes on the terms and conditions set out in the letter that the Convertible Preferred Stock, when issued, can be distributed at not less than the Redemption Price of the Mandatorily Redeemable Preferred Stock to be redeemed by the delivery of such Convertible Preferred Stock (without giving effect to commissions); such letter shall be based on (A) the marketing efforts that the management of the Company is committed to make (with dates, schedules, locations and team being specified), (B) the documentation which the Company has committed to make available (such documentation to be specified) and (C) the gross spread as reasonably determined by the holder of the Mandatorily Redeemable Preferred Stock in accordance with normal market practice; or (ii) deliver to the holder a "bought" sale relating to the sale of the Convertible Preferred Stock which will entitle the holder to receive an amount equal to not less than the Redemption Price of the Mandatorily Redeemable Preferred Stock to be redeemed by the delivery of the Convertible Preferred Stock. (b) A notice pursuant to paragraph (a)(i) must be sent at least one month prior to the proposed issue date of the Convertible Preferred Stock. A notice pursuant to clause (a)(ii) must be sent at least one week prior to the proposed issue date of the Convertible Preferred Stock. B-15 63 (c) If the Company elects paragraph (a)(i), it must procure (a) that its management team will be available for a period of not less than 3 Business Days to make presentations to potential institutional and other purchasers of the Convertible Preferred Stock, such presentations to take place within 3 weeks of the dates specified in the letter from the independent investment bank, and (b) that the documentation which it committed to make available pursuant to paragraph (a)(i)(B) is avail able. (d) If the Company elects paragraph (a)(i), the Convertible Preferred Stock Issue Price will be the higher of the Redemption Price of the Mandatorily Redeemable Preferred Stock and the price at which the Convertible Preferred Stock can be placed with institutional investors at the end of the marketing period for such Convertible Preferred Stock (such price to be evidenced by a "bring-down" letter from the Independent Investment Banker), and the principal amount of Convertible Preferred Stock shall be reduced accordingly. The holders will (in case of a distribution under paragraph (a)(i)) pay for the gross spread or discount. All other related costs of the distribution will be paid by the Company. (e) If the Company elects clause (a)(ii), the Convertible Preferred Stock Issue Price shall be at the discretion of the Company. If the Company elects clause (a)(ii), the Company may also establish the Fixed Price so that it may be the higher of US$60 per share and 30% above the Average Market Price at the time of setting of the Fixed Price. (6) REORGANIZATIONS. (a) (i) Reorganizations. If there is to occur any Reorganization, and there is determinable for the entirety of each Reorganization Unit to be issued in connection with such Reorganization on an Applicable Price, then as a condition precedent to such Reorganization proper provision shall be made such that each share of Mandatorily Redeemable Preferred Stock, or each share of mandatorily redeemable preferred stock of the Company or its successor by merger or consolidation issuable to each holder of Mandatorily Redeemable Preferred Stock in exchange or substitution therefor (provided, however, that such share of mandatorily redeemable preferred stock has the same Stated Value, subject to the proviso in paragraph (6)(a)(ii), and substantially the same rights, benefits and privileges as a share of Mandatorily Redeemable Preferred Stock), shall be redeemable upon and from and after the occurrence of such Reorganization into, in lieu of Convertible Preferred Stock as provided herein (and without prejudice to the right of the Company or its B-16 64 successor to redeem convertible preferred stock for cash in accordance herewith), a convertible preferred stock of the successor entity convertible into Reorganization Units determined by dividing the Stated Value of such share by the Fixed Price of such successor entity on the date which is 15 months after the Issue Date. If there is to occur any Reorganization, and any Reorganization Unit to be issued in connection with such Reorganization does not have in whole or in part a determinable Applicable Price, then prior to the occurrence of such Reorganization and on a basis such that the holders of Mandatorily Redeemable Preferred Stock shall be holders of Common Stock for all purposes of such Reorganization, the Company will redeem all Mandatorily Redeemable Preferred Stock in accordance herewith. The Company shall not effect any Reorganization unless prior to or simultaneously with the consummation thereof, the successor entity resulting from such consolidation or merger or the entity purchasing such assets or compelling such exchange, as the case may be, shall make provisions in its certificate or articles of incorporation or other constituent document to establish such right. The provisions of this paragraph (6)(a)(i) shall similarly apply to successive Reorganizations. (ii) Holding Company. Notwithstanding anything herein to the contrary, if the Company is reorganized such that the Common Stock is exchanged for the common stock of a new entity ("Holdco") whose common stock is traded on NASDAQ or another recognized securities exchange, then the Company, by notice to the holders of the Mandatorily Redeemable Preferred Stock but without any required consent on their part, may cause the exchange of this Mandatorily Redeemable Preferred Stock for mandatorily redeemable preferred stock of Holdco having the same terms and conditions as set forth herein, provided that where Holdco is not a Delaware company or where the Holdco share structure is not identical to that of the Company, the rights attaching to the mandatorily redeemable preferred stock of Holdco may be adjusted so as to comply with the local law of the country of incorporation of Holdco or the new share structure of Holdco subject to such rights effectively giving the same economic rights as the Mandatorily Redeemable Preferred Stock (ignoring for these purposes any resultant change in the tax treatment for the holders of such stock). (iii) Other Adjustments. In the event that, as a result of an adjustment made pursuant to paragraph (6)(a), the holder of any Mandatorily Redeemable Preferred Stock thereafter surrendered for redemption shall become entitled to receive any shares of capital stock of the Company other than shares of its Convertible Preferred Stock, thereafter the number of such shares issuable upon redemption of such security shall be subject to adjustment from time to time in a manner and on B-17 65 terms as nearly equivalent as practicable to the provisions with respect to the Convertible Preferred Stock contained in paragraph (5). (b) Notices of Corporate Action. If: (i) the Company or the Board shall approve any Reorganization to which the Company is a party and for which approval of any stockholders of the Company is required; or (ii) there shall be a voluntary or involuntary dissolution, liquidation or winding up of the Company; then, in each case, the Company shall cause to be given to the holders of shares of the Mandatorily Redeemable Preferred Stock in accordance with paragraph (14), as promptly as possible, but at least 10 days prior to the applicable date hereinafter specified, a notice stating the date on which the event giving rise to an adjustment of the type described in paragraph (6)(a), such a Reorganization, dissolution, liquidation or winding up may occur, as the case may be, is expected to become effective or occur, and, if earlier, the date as of which it is expected that holders of Common Stock of record shall be entitled to exchange their shares of Common Stock for stock of the Company, securities, cash or other property deliverable upon such Reorganization, dissolution, liquidation or winding up. Failure to give or receive such notice or any defect therein shall not affect the legality or validity of the action or transactions described in sub-paragraphs (i) or (ii) above. (c) Listing of Common Stock. The Company will list the shares of Common Stock required to be delivered as payment of dividends or upon redemption or conversion of shares of the Mandatorily Redeemable Preferred Stock, prior to delivery, upon each national securities exchange, the Nasdaq Stock Market's National Market or any similar system of automated dissemination of securities prices, if any, upon which the Common Stock is listed at the time of delivery. (d) Provision of Information. So long as any shares of Mandatorily Redeemable Preferred Stock remain outstanding, the Company undertakes to provide without charge to each record holder of such shares copies of each: (i) annual report of the Company on Form 10-K filed pursuant to Section 13(a) of the Exchange Act concurrently with such filing; (ii) quarterly reports of the Company on Form 10-Q and current report of the Company on Form 8-K filed pursu- B-18 66 ant to Section 13(a) or 15(d) or the Exchange Act concurrently with such filing; (iii) definitive proxy or information statement, form of proxy or other material of the Company filed pursu ant to Section 14(a) of the Exchange Act concurrently with such filing; and (iv) notice, press release and other information delivered to holders of Common Stock generally concurrently with such delivery. (7) LIMITATIONS ON DIVIDENDS AND REDEMPTIONS IN RESPECT OF COMPANY STOCK. (a) Limitations on Junior Stock Dividends. As long as any shares of Mandatorily Redeemable Preferred Stock are outstanding, no dividends shall be paid or declared in cash on Junior Stock, nor shall any other distributions be made on any Junior Stock, unless: (i) full dividends on all Parity Stock have been paid, or declared and set aside for payment, for all dividend periods terminating on or prior to the date of such Junior Stock dividend or distribution payment, to the extent such dividends are cumulative; (ii) the Company has paid or set aside all amounts, if any, then or therefore required to be paid or set aside for all purchase, retirement, and sinking funds, if any, for any Parity Stock; and (iii) the Company is not in default on any of its obligations to redeem any Parity Stock. (b) Limitations on Purchase of Junior Stock. As long as any shares of Mandatorily Redeemable Preferred Stock are outstanding, no shares of any Junior Stock may be purchased, redeemed, or otherwise acquired by the Company or any of its Subsidiaries (except in connection with a reclassification of any Junior Stock through the issuance of other Junior Stock and/or Convertible Securities for shares of Junior Stock and cash in lieu of fractional shares in connection therewith or the purchase, redemption or other acquisition of any Junior Stock from any wholly-owned subsidiary), nor may any funds be set aside or made available for any sinking fund for the purchase, redemption or other acquisition of any Junior Stock, unless: (i) full dividends on all Parity Stock have been paid, or declared and set aside for payment, for all dividend periods terminating on or prior to the date of such purchase, redemption or acquisition, to the extent such dividends are cumulative; (ii) the Company has paid or set aside all amounts, if any, then or theretofore required to be paid or set aside for all purchases retirement, and sinking funds, if any, for any Parity Stock; and (iii) the Company is not in default on any, of its obligations to redeem any Parity Stock. (c) Junior Stock Dividends Otherwise Permitted. Subject to the provisions of paragraphs (7)(a) and 8(b), dividends or distributions (payable in cash, property or securities) may be declared and paid on the shares of any Junior Stock from time to time and any Junior Stock may be purchased, redeemed or otherwise acquired by the Company or any of its subsidiaries from time to time. In the event of B-19 67 the declaration and payment of any such dividends or distributions, the holders of such Junior Stock will be entitled, to the exclusion of holders of shares of Convertible Preferred Stock, to share therein according to their respective interests. (d) Limitations on Parity Stock Dividends and Redemptions. As long as any share of Mandatorily Redeemable Preferred Stock is outstanding, dividends or other distributions may not be declared or paid on any Parity Stock, and the Company may not purchase, redeem or otherwise acquire any Parity Stock (except (x) from any wholly owned subsidiaries of the Company or (y) in connection with a mandatory conversion or exchange of such Parity Stock or a conversion or exchange of such Parity Stock at the option of the holder for securities other than Parity Stock or Senior Stock and cash in lieu of fractional shares in connection therewith) unless either: (a)(i) full dividends on all Parity Stock have been paid, or declared and set aside for payment, for all dividend periods terminating on or prior to the date of such Parity Stock dividend, distribution, purchase, redemption or other acquisition payment, to the extent such dividends are cumulative; (ii) the Company has paid or set aside all amounts, if any, then or theretofore required to be paid or act aside for all purchase, retirement, and sinking funds, if any, for any, Parity Stock; and (iii) the Company is not in default on any of its obligations to redeem any Parity Stock, or (b) with respect to the payment of dividends only, any such dividends are declared and paid pro rata so that the amounts of any dividends declared and paid per share on shares of Mandatorily Redeemable Preferred Stock and each other share of such Parity Stock will in all cases bear to each other the same ratio that accrued and unpaid dividends (including any accumulation with respect to unpaid dividends for prior dividend periods, if such dividends are cumulative) per share on shares of Mandatorily Redeemable Preferred Stock and such other share of Parity Stock bear to each other. (e) Certain Permitted Dividends and Redemptions. Nothing contained in this paragraph (7) shall prevent: (i) the payment of dividends or the making of distributions on any Junior Stock solely in shares of Junior Stock and/or Convertible Securities for shares of Junior Stock (together with a cash adjustment for B-20 68 fractional shares, if any) or the redemption, purchase or other acquisition of Junior Stock solely in exchange for (together with a cash adjustment for fractional shares, if any), or through the application of the proceeds from the sale of, shares of Junior Stock and/or Convertible Securities for shares of Junior Stock; (ii) the payment of dividends or the making of distributions on any class or series of Parity Stock solely in (together with a cash adjustment for fractional shares, if any) shares of Junior Stock and/or Convertible Securities for shares of Junior Stock or the redemption, exchange, purchase or other acquisition of say class or series of Parity Stock solely in exchange for (together with a cash adjustment for fractional shares, if any), or through the application of the proceeds from the sale of shares of Junior Stock and/or Convertible Securities for shares of Junior Stock or (iii) the conversion or exchange of Mandatorily Redeemable Preferred Stock into shares of Common Stock (together with a cash adjustment for fractional shares, if any) and other securities, assets or property, if any pursuant to the provisions of paragraphs (4), (5) or (6). (f) Waiver. The provisions of paragraphs (7)(a), (b) and (d) are for the sole benefit of the holders of Mandatorily Redeemable Preferred Stock and any other class or series of Parity Stock having the terms described therein and accordingly, at any time when (i) there are no shares of any such other class or series of Parity Stock outstanding or if the holders of each such other class or series of Parity Stock have, by such vote or consent of the holders thereof as may be provided for in the instrument creating or evidencing such class or series, waived in whole or in part the benefit of such provisions (either generally or in the specific instance), and (ii) the holders of shares of Mandatorily Redeemable Preferred Stock shall have waived (as provided in paragraph (15)) in whole or in part the benefit of such provision (either generally or in the specific instance), then the provisions of paragraphs (7)(a), (b) and (d) shall not (to the extent waived, in the case of any partial waiver) restrict the payment of dividends or the making of distributions on, or the redemption, purchase or other acquisition of any shares of, Mandatorily Redeemable Preferred Stock, any other class or series of Parity Steel or any Junior Stock. (8) LIQUIDATION RIGHTS. (a) Payment of Liquidation Preference. If there is any liquidation, dissolution, or winding up of the Company, whether voluntary or involuntary, then the holders of shares of Mandatorily Redeemable Preferred Stock then outstanding, after payment, or provision for payment of the debts and other liabilities of the Company and the payment or provision for payment of any distribution on any shares of Senior Stock, and before any distribution to the holders of Junior Stock, shall be entitled to be paid out of the assets of the Company available for distribution B-21 69 to its stockholders an amount per share of Mandatorily Redeemable Preferred Stock in cash equal to the Liquidation Preference. If the assets of the Company available for distribution to the holders of the shares of Mandatorily Redeemable Preferred Stock upon any dissolution, liquidation or winding up of the Company shall be insufficient to pay in full the Liquidation Preference payable to the holders of outstanding shares of Mandatorily Redeemable Preferred Stock and the liquidation preference payable to all other shares of Parity Stock (as set forth in the instrument or instruments creating such Parity Stock), then the holders of shares of Mandatorily Redeemable Preferred Stock and of all other shares of Parity Stock shall share ratably in such distribution of assets in proportion to the amount which would be payable on such distribution if the amounts to which the holders of outstanding shares of Mandatorily Redeemable Preferred Stock and the holders of outstanding shares of such other Parity Stock were paid in full. Except as provided in this paragraph (8)(a), holders of Mandatorily Redeemable Preferred Stock shall not be entitled to any distribution in the event of the liquidation, dissolution or winding up of the affairs of the Company. (b) Certain Events Not Deemed Liquidation, Etc. For the purposes of this paragraph (8) a Reorganization shall not be deemed to be a voluntary of involuntary liquidation, dissolution or winding up of the Company. (9) NO FRACTIONAL SHARES. No fractional shares of Common Stock or Convertible Preferred Stock or scrip shall be issued in connection with the delivery of shares of Common Stock or Convertible Preferred Stock in payment, in whole or in part, of any dividend, Redemption Price or Liquidating Payment. Whether or not a fractional share would be delivered to a holder of Mandatorily Redeemable Preferred Stock shall be based upon, in the case of the payment, in whole or in part, of dividends, a Redemption Price of a Liquidating Payment pursuant to paragraphs (3), (4) or (8), respectively, on the total number of shares of Mandatorily Redeemable Preferred Stock at the time held by such holder and the total number of shares of Common Stock or Convertible Preferred Stock, otherwise deliverable in respect thereof. Instead of the issuance of a fraction of a share of Common Stock or Convertible Preferred Stock or scrip, the Company shall pay instead an amount in cash (rounded to the nearest whole cent) equal to, in the case of Common Stock, the same fraction of the Closing Price of a share of preceding the Determination Date and, in the case of Convertible Preferred Stock, equal to the same fraction of the Convertible Preferred Stock Issue Price. B-22 70 (10) PAYMENT OF TAXES. The Company shall pay any and all documentary, stamp or similar transfer taxes payable in respect of the delivery of shares of Common Stock or Convertible Preferred Stock, pursuant to paragraphs (3), (4), (5), or (8), as applicable; provided, however, the Company shall not be required to pay any such tax that may be payable because any such shares are issued in a name other than the name of the holder of such Mandatorily Redeemable Preferred Stock. (11) NO PREEMPTIVE RIGHTS. The holders of shares of Mandatorily Redeemable Preferred Stock shall have no preemptive rights, including preemptive rights with respect to any shares of capital stock or other securities of the Company convertible into or carrying rights or options to purchase any such shares. (12) VOTING RIGHTS. (a) The holders of shares of Mandatorily Redeemable Preferred Stock shall have no Voting rights, except as otherwise required by law and except as set forth in this paragraph (12). When and if the holders of Mandatorily Redeemable Preferred Stock are entitled to vote by law or pursuant to this paragraph (12), each holder will be entitled to one vote per share. (b) Certain Changes to Charter. For as long as any shares of Mandatorily Redeemable Preferred Stock remain outstanding, the affirmative vote of the holders of at least a majority of such outstanding shares (voting separately as a class) given in Person or by proxy at an annual meeting or a special meeting called for such purpose, shall be necessary (i) before the Company may amend any of the provisions of this Certificate of Designations or the Restated Certificate of Incorporation of the Company which would alter or change the powers, preferences or special rights of the holders of the shares of Mandatorily Redeemable Preferred Stock then outstanding so as to affect them adversely; provided, however, that: (x) any such amendment that would authorize, create or increase the authorized amount of any additional shares of Junior Stock or shares of any other class or series of Parity Stock (whether or not already authorized); and (y) any such amendment that would increase the number of authorized shares of Preferred Stock of the Company (but not the number of authorized shares of Mandatorily Redeemable Preferred Stock) or that would decrease (but not below the number of shares, then outstanding) the number of authorized shares of Preferred Stock B-23 71 (but not the number of authorized shares of Mandatorily Redeemable Preferred Stock); shall be deemed not to adversely affect such powers preferences or rights and shall not be subject to approval by the holders of shares of Mandatorily Redeemable Preferred Stock; and (ii) before the Company may reclassify the outstanding shares of Mandatorily Redeemable Preferred Stock into another class or series of capital stock of the Company; provided further, however, that no consent described in clause (i) of this paragraph of the holders of the shares of Mandatorily Redeemable Preferred Stock shall be required if, at or prior to the time when such amendment is to take effect, provision is made for the redemption of all shares of Mandatorily Redeemable Preferred Stock at the time outstanding. (c) Creation of Senior Stock. No consent or vote of the holders of the shares of Mandatorily Redeemable Preferred Stock shall be necessary before the Company or the Board may authorize, create or issue any class or series of Senior Stock. (d) No Other Vote. Except as otherwise set forth in this paragraph (12) or as required by law, the holders of Mandatorily Redeemable Preferred Stock shall not have any relative, participating, optional or other special voting rights and powers and the consent or vote of such holders shall not be required for the taking of any corporate action by the Company or the Board. The provisions of this paragraph (12) are in lieu of, and not in addition to, any voting rights specified in the Restated Certificate of Incorporation as applicable to a series of Preferred Stock. (13) PAYMENTS. Payment of cash amounts due in respect of the Mandatorily Redeemable Preferred Stock will be paid to the holders of shares of Mandatorily Redeemable Preferred Stock (or, in the case of joint holders, the first-named) as appearing in the stock register of the Company for the Mandatorily Redeemable Preferred Stock as at opening of business (New York time) on the date specified in this Certificate for the purpose of determining the holders of Mandatorily Redeemable Preferred Stock entitled to such payments or, if no such date is specified, the fifteenth Business Day before the due date for such payment (the "Payment Record Date"). Payments of cash amounts due in respect of the Mandatorily Redeemable Preferred Stock will be made by a check in U.S. dollars drawn on a bank in New York and mailed to the address (as recorded is the stock register of the Company for the Mandatorily Redeemable Preferred Stock) of the holder thereof (or, in B-24 72 the case of joint holders, the first-named) not later than the relevant date for payment unless, prior to the relevant Payment Record Date, the Company has received from the holder thereof (or, in the case of joint holders, the first-named) written instructions for payment to be made by wire transfer to a specified designated account. If the due date for payment of any cash amount in respect of the Mandatorily Redeemable Preferred Stock is not a Business Day, then the holder thereof will not be entitled to payment thereof until the next following day which is a Business Day and, if such payment is to be made by transfer to a designated account rather than by check, a day on which commercial banks and foreign exchange markets settle, payments in U.S. dollars in the place where the relevant designated account is located. (14) NOTICES. Any notice or communication by a holder of Mandatorily Redeemable Preferred Stock to the Company is duly given if in writing and delivered in person or mailed by first-class mail to the Company at its address as set forth in its then most recently filed Form 10-K or 10-Q as the case may be. Any notice or communications to a holder of Mandatorily Redeem able Preferred Stock shall be mailed by first-class mail to his address shown on the stock register of the Company for the Mandatorily Redeemable Preferred Stock or, if there are more than 20 holders of record of the Mandatorily Redeemable Preferred Stock and the Company in its sole discretion so elects, in a leading daily newspaper having general circulation in New York (which is expected to be the Wall Street Journal) or England and Wales (which is expected to be The Financial Times). Failure to mail a notice or communication to one holder or any defect in it shall not affect its sufficiency with respect to other holders. If a notice or communication is given in the manner provided in this paragraph (14) within the time prescribed by this Certificate, it shall be conclusively presumed to have been duly given, whether or not the person entitled to such notice receives it. (15) WAIVER. Any provision of this Certificate of Designations which, for the benefit of the holders of Mandatorily Redeemable Preferred Stock, prohibits, limits or restricts actions by the Company may be waived in whole or in part, or the application of all or any part of such provision in any particular circumstance or generally may be waived, in each case with the consent of the holders of at least a majority of the number of shares of Mandatorily Redeemable Preferred Stock then outstanding, either in writing or by vote at a meeting called for such purpose at B-25 73 which the holders of Mandatorily Redeemable Preferred Stock shall vote as a separate class. (16) REGISTRATION AND NO TRANSFER. The Company will maintain at its principal executive office a register in which the Company will provide for the registration of shares of Mandatorily Redeemable Preferred Stock. The shares of Mandatorily Redeemable Preferred Stock are not transferrable, and any certificate representing shares of Mandatorily Redeemable Preferred Stock will be so legended. (17) EXCLUSION OF OTHER RIGHTS. Except as may otherwise be required by law, the shares of Mandatorily Redeemable Preferred Stock shall not have any designations, preferences, limitations or relative rights other than those specifically set forth in this Certificate of Designations. (18) SEVERABILITY OF PROVISIONS. Whenever possible, each provision of this Certificate of Designations shall be interpreted in a manner as to be effective and valid under applicable law, but if any provision hereof is held to be prohibited by or invalid under applicable law, such provision shall be ineffective only to the extent of such prohibition or invalidity, without invalidating or otherwise adversely affecting the remaining provisions hereof. If a court of competent jurisdiction should determine that a provision hereof would be valid or enforceable if a period of time were extended or shortened or a particular percentage were increased or decreased, then such court may make such change as shall be necessary to render the provision in question effective and valid under applicable law. B-26 74 Draft of Convertible Preferred Stock CERTIFICATE OF DESIGNATIONS OF PREFERRED STOCK OF NTL INCORPORATED ----------------- PURSUANT TO SECTION 151(G) OF THE GENERAL CORPORATION LAW OF THE STATE OF DELAWARE ----------------- The undersigned, Senior Vice President, General Counsel and Secretary of NTL Incorporated, a Delaware corporation (the "Company"), HEREBY CERTIFIES that the Board of Directors, in accordance with Article IV, Section B of the Company's Restated Certificate of Incorporation and Section 151(g) of the Delaware General Corporation Law (the "DGCL"), has authorized the creation of the series of Preferred Stock hereafter provided for and has established the dividend, redemption, conversion and voting rights thereof and has adopted the following resolution, creating the following new series of the Company's Preferred Stock: "BE IT RESOLVED, that pursuant to authority expressly granted to the Board of Directors by the provisions of Article IV, Section B of the Restated Certificate of Incorporation of the Company and Section 151(g) of the DGCL, there is hereby created and authorized the issuance of a new series of the Company's Preferred Stock, par value $.01 per share ("Preferred Stock"), with the following powers, designations, dividend rights, voting powers, rights on liquidation, conversion rights, redemption rights and other preferences and relative, participating, optional or other special rights and with the qualifications, limitations or restrictions B-27 75 on the shares of such series (in addition to the powers, designations, preferences and relative, participating, optional or other special rights and the qualifications, limitations or restrictions thereof set forth in the Restated Certificate of Incorporation that are applicable to each series of Preferred Stock) hereinafter set forth: (19) Designation; Number of Shares. The designation of the series of Preferred Stock, par value $.01 per share, of the Company created hereby shall be " % Non-voting Convertible Preferred Stock, Series A" (including, in the case of any reclassification, recapitalization, or other change to such Preferred Stock or, in the case of a consolidation or merger of the Company with or into another Person affecting such Preferred Stock, such capital stock to which a holder of such Preferred Stock shall be entitled upon the occurrence of such event, the "Convertible Preferred Stock"). The authorized number of shares of Convertible Preferred Stock shall be , which number may from time to time be increased or decreased (but not below the number then outstanding). Each share of Convertible Preferred Stock shall have a stated value of $ (the "Stated Value"). Any shares of Convertible Preferred Stock redeemed or otherwise acquired by the Company shall be retired and shall resume the status of authorized and unissued shares of Preferred Stock, without designation as to series, until such shares are once more designated as part of a particular series of Preferred Stock by the Board of Directors. (20) Certain Definitions. Unless the context otherwise requires, the terms defined in this paragraph (2) shall have, for all purposes of this Certificate of Designations, the meanings herein specified: "Applicable Price" shall mean the aggregate of (A) in the event of a Reorganization in which the holders of Common Stock receive cash, the amount of such cash receivable by the holder of one share of Common Stock (as such share is in effect immediately prior to the consummation of such Reorganization); and (B) in the event of a Reorganization in which the holders of Common Stock receive securities or other property which are traded on an established market (within the meaning of Treasury Regulation 1.1273-2(f)(1) of the Internal Revenue Code of 1986, as in effect on September 30, 1990), the average (or if there be more than one security or item of property the sum of the averages) of the daily Trading Prices of such securities and/or property receivable by the holder of one share of Common Stock (as such share is in effect immediately prior to such consummation) for the period of ten consecutive Trading Days ending on the Trading Day immediately preceding the Conversion Date, date of occurrence of the Reorganization, appropri- B-28 76 ately adjusted to take into account any stock dividend on such security or property, or any subdivision, split, combination, reclassification of such security or property that occurs or the "ex" date for which occurs on or prior to such date. "Average Market Price" on any Determination Date, shall mean the average of the daily Closing Prices for the period of 10 consecutive Trading Days, ending on the Trading Day immediately preceding such Determination Date, appropriately adjusted to take into account any stock dividend on the Common Stock or any subdivision, split, combination or reclassification of the Common Stock that occurs, or the Ex-Dividend Date for which occurs, during the period following the first Trading Day in such ten-Trading Day period to and including the Determination Date. "Board" shall mean the Board of Directors of the Company, and, unless the context indicates otherwise, shall also mean, to the extent permitted by law, any committee thereof authorized, with respect to any particular matter, to exercise the power of the Board of Directors of the Company with respect to such matter. "Business Day" shall mean any day other than a Saturday, Sunday or a day on which banking institutions in New York, New York and London, England are authorized to close or not obligated by law or executive order to open. "Closing Price" shall mean, on any day: (i) the average between the high and low reported sale price of a share of Common Stock on and as reported by the Nasdaq Stock Market's National Market on such day; (ii) if the primary trading market for the Common Stock on such day is not the Nasdaq Stock Market's National Market, then the closing sale price regular way on such day, or, in case no such sale takes place on such day, the average of the reported closing bid and asked prices regular way on such day, in either case as reported by the Nasdaq System, the National Quotations Bureau, Inc. or a comparable service; (iii) if the Closing Price on such day is not available pursuant to one of the methods specified above, then the average of the bid and asked prices for the Common Stock on such day as furnished by any New York Stock Exchange member firm selected from time to time by the Board for that purpose; or B-29 77 (iv) if the Closing Price on such day is not available pursuant to the method specified in (iii) above, the determination of Closing Price shall be determined in good faith by the Board exercising its reasonable discretion. "Common Stock" shall mean the shares of common stock, par value $0.01 per share, of the Company, which term shall include, where appropriate, in the case of any reclassification, recapitalization or other change in the Common Stock, or in the case of a consolidation or merger of the Company with or into another Person affecting the Common Stock, such capital stock to which a holder of Common Stock shall be entitled upon the occurrence of such event. "Common Stock Dividend Amount" shall have the meaning set forth in paragraph (3) (c). "Computation Date" shall mean the earlier of (a) the date on which the Company shall enter into a firm contract or commitment for the issuance of Options or Convertible Securities or (b) the date of actual issuance of such Options or Convertible Securities. "Conversion Date" shall have the meaning set forth in paragraph (5)(c). "Convertible Preferred Stock" shall have the meaning set forth in paragraph (1). "Convertible Securities" shall mean evidences of indebtedness or shares of stock which are, at the option of the holder hereof, convertible into or exchangeable for shares of Common Stock. "Current Market Price" on the Determination Date for any issuance of Options or Convertible Securities or any distribution in respect of which the Current Market Price is being calculated, shall mean the average of the daily Closing Prices of the Common Stock for the shortest of: (i) the period of 10 consecutive Trading Days ending on the last full Trading Day before such Determination Date, (ii) the period commencing on the date next succeeding the first public announcement of the issuance of Options or Convertible Securities or the B-30 78 distribution in respect of which the Current Market Price is being calculated and ending on the last full Trading Day before such Determination Date, and (iii) the period, if any, commencing on the date next succeeding the Ex-Dividend Date with respect to the relevant issuance of Options or Convertible Securities or the relevant distribution for which an adjustment is required by the provisions of paragraphs (6)(a)(ii) or (iii), and ending on the last full Trading Day before such Determination Date. If multiple events occur which require adjustment pursuant to paragraph (6)(a), the adjustment required by each such event shall be given effect in the order of occurrence but without duplication. "Denominator" shall mean the Fixed Price on the applicable Determination Date. "Determination Date" shall mean: (i) in the case of a dividend payment, the date of notice of the Record Date, (ii) in the case of a redemption payment, the Redemption Date, (iii) in the case of a conversion, the date of notice of the Conversion Date, (iv) in the case of a Reorganization, the date the Reorganization occurs and (v) in the case of any issuance of Options or Convertible Securities or any distribution to which paragraphs (6)(a)(ii) or (iii) respectively apply, the earlier of (a) the record date for the determination of stockholders entitled to receive the Options, Convertible Securities, or the distribution to which such paragraphs apply and (b) the Ex-Dividend Date for such Options, Convertible Securities or distribution. "Dividend Non-Payment" shall have the meaning set forth in paragraph (12)(b). "Dividend Payment Date" shall have the meaning set forth in paragraph (3)(a). "Dividend Period" for any dividend payable on a Dividend Payment Date shall mean the period beginning on the immediately preceding Dividend Payment Date (or on the Issue Date in the case of the first Dividend Period) and ending on the day preceding such later Dividend Payment Date. "Exchange Act" shall mean the Securities Exchange Act of 1934, as amended from time to time, or any successor statute, and the rules and regulations promulgated thereunder. B-31 79 "Ex-Dividend Date" shall mean the date on which "ex-dividend" trading commences for a dividend, an issuance of Options or Convertible Securities or a distribution to which paragraph (6)(a) applies in the Nasdaq Stock Market's National Market or on the principal exchange on which the Common Stock is then quoted or traded. "Fixed Price", on any Determination Date, shall mean $ ,* subject to adjustment as prescribed in paragraph (6)(a). "Issue Date" shall mean the date on which the Convertible Preferred Stock is issued as payment of dividends or upon redemption of shares of the Mandatorily Redeemable Preferred Stock, as set forth in the Certificate of Designations relating to such Mandatorily Redeemable Preferred Stock. "JPPF" shall mean the Series A Junior Participating Preferred Stock of the Company issuable upon exercise of the Rights pursuant to the Rights Agreement. "Junior Stock" shall mean: (i) each class or series of common stock of the Company, including, without limitation, the Common Stock; (ii) the JPPF issuable upon exercise of the Rights; (iii) any other class or series of capital stock of the Company hereafter created, other than (a) any class or series of Parity Stock (except to the extent provided under clause (iv) hereof) and (b) any class or series of Senior Stock, and (iv) any class or series of Senior Stock or Parity Stock to the extent that it ranks junior to the Convertible Preferred Stock as to dividend rights, rights of redemption or rights on liquidation, as the case may be. For purposes of clause (iii) above, a class or series of Senior Stock or Parity Stock shall rank junior to the Convertible Preferred Stock as to dividend rights, rights of redemption or rights on liquidation if the holders of shares of Convertible Preferred Stock shall be entitled to dividend payments, payments on redemption or payments of amounts distributable - -------- * 25% above Average Market Price on Issue Date, subject to adjustment pursuant to paragraph (5)(e) of the 9.90% Preferred Stock. B-32 80 upon dissolution, liquidation or winding up of the Company, as the case may be, in preference or priority to the holders of shares of such class or series of Senior Stock or Parity Stock. "Liquidating Payment" shall mean an amount equal to the Liquidation Preference of a share of Convertible Preferred Stock or, if less, the amount payable in respect of one share of Convertible Preferred Stock pursuant to paragraph (9)(a) upon the voluntary or involuntary liquidation, dissolution or winding up of the affairs of the Company. "Liquidating Payment Date" shall mean the date on which the Company makes the aggregate Liquidating Payment to all holders of outstanding shares of Convertible Preferred Stock. "Liquidation Preference" measured per share of the Convertible Preferred Stock, shall mean an amount equal to (a) the Stated Value per share of Convertible Preferred Stock, plus (b) for purposes of determining the amount payable pursuant to paragraph (8) only, an amount equal to all dividends accrued but unpaid on such share, whether or not such unpaid dividends have been declared or there are funds of the Company legally available for the payment of dividends, to the Liquidating Payment Date. "Mandatory Redemption Price" shall have the meaning set forth in paragraph (4)(b). "Option" shall mean any right, option or warrant entitling the holder thereof to subscribe for, purchase, or otherwise acquire Common Stock in the Company (other than the Rights). "Parity Stock" shall mean the Convertible Preferred Stock and any class or series of capital stock, whether now existing or hereafter created, of the Company to the extent ranking on a parity basis with the Convertible Preferred Stock as to dividend rights, rights of redemption or rights on liquidation. Capital stock of any class or series, whether now or existing or hereafter created, shall rank on a parity as to dividend, rights of redemption or rights on liquidation with the Convertible Preferred Stock, whether or not the dividend rates, dividend payment dates, redemption or liquidation prices per share or sinking fund or mandatory redemption provision, if any, are different from those of the Convertible Preferred Stock, if the holders of shares of such class or series shall be entitled to dividend payments, payments on redemption of payments of amounts distributable upon dissolution, B-33 81 liquidation or winding up of the Company, as the case may be, in proportion to their respective accumulated and accrued and unpaid dividends, redemption prices or liquidation prices, respectively, without preference or priority, one over the other, as between the holders of shares of such class or series and the holders of Convertible Preferred Stock. No class or series of capital stock that ranks junior to the Convertible Preferred Stock as to rights on liquidation shall rank or be deemed to rank on a parity basis with the Convertible Preferred Stock as to dividend rights or rights of redemption. "Payment Record Date" shall have the meaning set forth in paragraph (13). "Person" shall mean any individual corporation, partnership, joint venture, association, joint stock company, limited liability company, trust, unincorporated organization, government or agency or political subdivision thereof, or other entity, whether acting in an individual, fiduciary or other capacity. "Preferred Stock Director" shall have the meaning set forth in paragraph (12)(b). "Preferred Stock Dividend Amount" shall have the meaning set forth in paragraph (3)(d). "Record Date" for the dividends payable on the Dividend Payment Date shall mean the date (not exceeding 45 days preceding the Dividend Payment Date) fixed by the Board as the record date for the Dividend Payment Date. "Redemption Agent" shall have the meaning set forth under paragraph (4)(f). "Redemption Date" as to any share of Convertible Preferred Stock, shall mean the date fixed by the Board for the redemption of such share pursuant to paragraph (4). "Redemption Notice" shall have the meaning set forth in paragraph (4)(c). "Redemption Price" shall have the meaning set forth in paragraph (4)(a). B-34 82 "Reorganization" shall mean any of the following events: (i) any consolidation or merger of the Company with another entity (other than a merger or consolidation in which the Company is the surviving or continuing corporation and in which the Common Stock outstanding immediately prior to the merger or consolidation remains unchanged), (ii) the sale or other transfer of all or substantially all of its assets to another entity. (iii) any reorganization or reclassification of the Common Stock or other equity securities of the Company (other than a transaction to which paragraph (6)(a)(i) applies), and (iv) any statutory exchange of any shares of capital stock of the Company with another corporation (other than a merger or consolidation in which the Company is the surviving or continuing corporation and in which the Common Stock outstanding immediately prior to the merger or consolidation remains unchanged). "Registration Rights Agreement" means the Registration Rights Agreement, dated as of , 1998, between the Company and Vision Net works III B.V., as the same may be amended, supplemented or otherwise modified. "Reorganization Unit" means the kind or amount of securities, cash or other property receivable upon consummation of a Reorganization in substitution of or in exchange for a share of Common Stock as such share is in effect immediately prior to such consummation (provided that if the kind or amount of securities, cash or other property receivable upon consummation of such Reorganization is not the same with respect to each such share, then the kind and amount of securities, cash or other property which shall be deemed receivable upon consummation of such Reorganization with respect to each such share for purposes hereof shall be the kind and amount so receivable per share by a plurality of such shares). "Rights" means the rights issuable pursuant to the Rights Agreement. "Rights Agreement" means the rights agreement, dated as of October 13, 1993, between the Company and Continental Transfer and Trust Company, as rights agent. B-35 83 "Securities Act" shall mean the Securities Act of 1933, as amended from time to time, or any successor statute, and the rules and regulations promulgated thereunder. "Senior Stock" shall mean any class or series of capital stock of the Company hereafter created to the extent ranking prior to the Convertible Preferred Stock as to dividend rights, rights of redemption or rights on liquidation. Capital stock of any class or series shall rank prior to the Convertible Preferred Stock as to dividend rights, rights of redemption or rights on liquidation if the holders of shares of such class or series shall be entitled to dividend payments, payments on redemption or payments of amounts distributable upon dissolution, liquidation or winding up of the Company, as the case may be, in preference or priority to the holders of shares of Convertible Preferred Stock. No class or series of capital stock than ranks on a parity basis with or junior to the Convertible Preferred Stock as to rights on liquidation shall rank or be deemed to rank prior to the Convertible Preferred Stock as to dividend rights or rights of redemption, notwithstanding that the dividend rate, dividend payment dates, sinking fund provisions, if any, or mandatory redemption provisions thereof are different from those of the Convertible Preferred Stock. "Stated Value" shall have the meaning set forth in paragraph (1). "Trading Day" shall mean a day on which the Nasdaq Stock Market's National Market or, if different, the principal exchange on which the Common Stock is quoted or traded is each open for the transaction of business. "Trading Price" of a security or property for any day means the closing sale price regular way on such day, or, in case no such sale takes place on such day, the average of the reported closing bid and asked prices of such security or property on such day on the applicable established market on which such security or property is traded. (21) DIVIDENDS. (a) Payment. The holders of outstanding shares of Convertible Preferred Stock shall be entitled to receive, when, as and if declared by the Board out of funds legally available therefor (without prejudice to paragraph (3)(b)), cumulative dividends, in preference to dividends on any Junior Stock, at the rate per annum of % of the Stated Value per share, rounded to the nearest cent. Such dividends shall accrue from the Issue Date and shall be payable semi-annually in arrears, in whole or in part, on [ ] and [ ] of each year (each, a "Dividend Payment B-36 84 Date") commencing on the second anniversary of the Issue Date; provided, however, that with respect to any Dividend Period during which a redemption or conversion occurs, the Board shall declare accrued dividends to, and pay such dividends on, the related Redemption Date or Conversion Date, respectively, in which case such dividends shall be payable on such Redemption Date or Conversion Date, respectively, to the holders of the shares of Convertible Preferred Stock as of a special record date (not to exceed 45 days preceding the payment date) for such dividend payment. Each dividend on the shares of Convertible Preferred Stock shall be payable to holders of record as they appear on the stock register of the Company on the Record Date or, as the case may be, the special record date for such dividend and, for purposes of calculating the accrual of dividends, dividends will accrue to, but not including, the date fixed for payment. Dividends on the outstanding shares of Convertible Preferred Stock will accrue on a daily basis (without interest or compounding) whether or not there are funds legally available for the payment of such dividends and whether or not such dividends are declared. Dividends will cease to accrue in respect of shares of Convertible Preferred Stock on the date of their redemption or conversion. No interest, or sum of money in lieu of interest, shall be payable in respect of any accrued dividend payment. (b) Declaration and Manner of Payment of Dividends. The Board shall declare and cause to be paid accrued but unpaid dividends on the Convertible Preferred Stock at the rates, times and one for the forms described herein to the maximum extent that the Company has funds legally available therefor; provided, however, that without prejudice to the accrual thereof, such dividends need not be declared or paid in cash to the extent the payment thereof is prohibited by the terms and provision of any agreement of the Company referred to in paragraph (3)(e). Any dividends may be paid, in the sole discretion of the Board: (i) in cash out of funds legally available therefor; (ii) through the delivery of shares of Common Stock; (iii) through the delivery of additional shares of Convertible Preferred Stock; or (iv) through any combination of the foregoing forms of consideration elected by the Board in its sole discretion; provided, however, that if the Board shall fail to declare and cause to be paid an accrued dividend payment in cash on any Dividend Payment Date (whether or not there are unrestricted funds legally available for the payment of such dividends in cash), then the Board shall declare and cause to be paid accrued dividends, whether or not cumulated, through the delivery of shares of Common Stock or additional shares of Convertible Preferred Stock to the extent permitted by applicable law, regardless of the terms and provisions of any agreement of the Company of the type referred to in paragraph (3)(e) including any agreement relating B-37 85 to any indebtedness of the Company. If any dividend declared by the Board is to be paid, in whole or in part, through the delivery of shares of Common Stock or additional shares of Convertible Preferred Stock, each holder of Convertible Preferred Stock shall receive the same proportion of cash and/or shares of Common Stock and/or additional shares of Convertible Preferred Stock (except for cash paid in lieu of fractional shares) delivered in payment of such dividend to other holders of shares of Convertible Preferred Stock. (c) Payment of Dividends by Delivery of Common Stock. If the Company elects to pay any dividend payment, in whole or in part, by delivery of shares of Common Stock, the amount of such dividend payment to be paid per share of Convertible Preferred Stock in shares of Common Stock (the "Common Stock Dividend Amount") shall be paid through the delivery to the holders of record for such shares of Convertible Preferred Stock on the Record Date for such dividend payment of a number of shares of Common Stock determined by dividing the Common Stock Dividend Amount by the Average Market Price. No fractional shares of Common Stock shall be delivered to a holder of shares of Convertible Preferred Stock, but the Company shall instead pay a cash adjustment determined as provided in paragraph (9). (d) Payment of Dividends by Delivery of Additional Convertible Preferred Stock. If the Company elects to pay any dividend payment, in whole or in part, by delivery of additional shares of Convertible Preferred Stock, the amount of such dividend payment to be paid per share of Convertible Preferred Stock in additional shares of Convertible Preferred Stock (the "Preferred Stock Dividend Amount") shall be paid through the delivery to the holders of record of such shares of Convertible Preferred Stock on the Record Date for such dividend payment of a number of shares of Convertible Preferred Stock determined (i) if on such date the Fixed Price is higher than the Average Market Price, then by dividing (A) the product of multiplying the Fixed Price by the Preferred Stock Dividend Amount by (B) the product of multiplying the Average Market Price of the Common Stock by the Stated Value, or (ii) if on such date the Fixed Price is lower than the Average Market Price, then by dividing the Preferred Stock Dividend Amount by the Stated Value. No fractional shares of Convertible Preferred Stock shall be delivered to a holder of shares of Convertible Preferred Stock, but the Company shall instead pay a cash adjustment determined in accordance with paragraph (9). (e) Prohibitions on Cash Dividends. Notwithstanding anything contained in this Certificate to the contrary, but without effect on the accrual thereof, no cash dividends on shares of Convertible Preferred Stock shall be declared by the B-38 86 Board or paid or set apart for payment by the Company at such time as the terms and provisions of any agreement of the Company, including, without limitation, any agreement, contract, indenture, bond, note, debenture, guarantee or other instrument relating to or evidencing its indebtedness, prohibits such declaration, payment or setting apart for payment or provides that such declaration, payment or setting apart for payment would constitute a breach thereof or a default thereunder; provided, however, that nothing contained in this paragraph (e) shall alter, limit or restrict the Company's obligation to declare and pay accrued dividends, to the extent permitted by applicable law, through the delivery of shares of Common Stock or additional shares of Convertible Preferred Stock pursuant to the proviso contained in the second sentence of paragraph (3)(b), whether permitted by any such agreement or not. (f) Pro Rata. All dividends paid with respect to the shares of Convertible Preferred Stock shall be paid pro rata (as nearby as may be practicable) to the shareholders entitled thereto. (g) Credit. Any dividend payment made on the shares of Convertible Preferred Stock shall first be credited against the earliest accrued but unpaid dividend due with respect to the shares of Convertible Preferred Stock. (h) Priority. Payment of dividends to the holders of shares of Convertible Preferred Stock shall be subject to the prior preferences and other rights of any Senior Stock and to the provisions of paragraph (7). (22) REDEMPTION. (a) Optional Redemption. At any time during the period beginning on the third anniversary of the Issue Date until the Redemption Date, the Company shall have the right to redeem the outstanding shares of Convertible Preferred Stock at a price equal to $1,000 per share, together with an amount equal to all dividends accrued but unpaid thereon to the date fixed for redemption (the "Redemption Price"). The Company shall not be required to register a transfer of (i) any shares of Convertible Preferred Stock for a period of 5 Business Days next preceding any selection of shares of Convertible Preferred Stock to be redeemed or (ii) any shares of Convertible Preferred Stock called for redemption. (b) Mandatory Redemption. All outstanding shares of Convertible Preferred Stock shall be mandatorily redeemed by the Company out of funds legally B-39 87 available therefor on the date that is the tenth anniversary of Issue Date at a redemption price equal to $1,000 per share, plus an amount equal to all accrued and unpaid dividends per share (the "Mandatory Redemption Price"). (c) Company's Right to Elect Manner of Payment of Redemption Price. The Company may effect the redemption of shares of Convertible Preferred Stock at the Redemption Price or the Mandatory Redemption Price, in the sole discretion of the Board: (i) in cash out of funds legally available therefor, (ii) in exchange for and through the delivery of shares of Common Stock or (iii) through any combination of the foregoing forms of consideration elected by the Board in its sole discretion. (d) Notice of Redemption. The Company shall provide notice of any redemption of shares of Convertible Preferred Stock to holders of record of Convertible Preferred Stock to be called for redemption not less than 30 days nor more than 60 days prior to the Redemption Date. Such notice (a "Redemption Notice") shall, subject to paragraph (4)(e)(z), be provided in accordance with paragraph (14); provided, however, that neither failure to give such notice nor any defect therein shall affect the validity of the proceedings for the redemption of any shares of Convertible Preferred Stock to be redeemed. In addition to any information required by law, the Redemption Notice shall state, as appropriate, the following (and may contain such other information as the Company deems advisable): (A) the Redemption Date; (B) the number of shares of Convertible Preferred Stock to be redeemed and, if less than all the shares held by such holder are to be redeemed, the number of shares to be redeemed from such holder; (C) the then applicable Redemption Price and the form or forms of consideration that the Company has elected to pay and/or deliver upon such redemption and, if more than one form of consideration has been elected by the Company, the designated portions of the Redemption Price to be paid in each form of consideration so elected; B-40 88 (D) if the Company has elected to exchange and deliver shares of Common Stock in payment of the Redemption Price (or a designated portion thereof), the Company's computation of the number of shares of Common Stock exchangeable and deliverable as provided in paragraph (4)(e) below; (E) the place or places in the United States or England and Wales where certificates for Convertible Preferred Stock to be redeemed are to be surrendered for redemption; and (F) that dividends on the shares of Convertible Preferred Stock to be redeemed shall cease to accrue on the Redemption Date (unless the Company defaults in making payment of the Redemption Price). (e) Redemption by Delivery of Common Stock. If the Company elects to pay, in whole or in part, the Redemption Price in respect of shares of Convertible Preferred Stock in exchange for and through the delivery of shares of Common Stock, then the Company shall deliver to each holder of shares of Convertible Preferred Stock to be redeemed on the Redemption Date a number of shares of Common Stock equal to the aggregate Redemption Price or Mandatory Redemption Price (or designated portion thereof) of such shares of Convertible Preferred Stock divided by the Average Market Price. No fractional shares of Common Stock shall be delivered to a holder of shares of Convertible Preferred Stock in payment of the Redemption Price or Mandatory Redemption Price, but the Company shall instead pay a cash adjustment determined as provided in paragraph (9). (f) Deposit of Funds and/or Shares. If on or before the Redemption Date: (x) the Company shall have deposited with any bank or trust company organized under the laws of the United States of America or any state thereof having capital, undivided profits and surplus aggregating at least $250 million (the "Redemption Agent"), cash (including cash for any adjustment in lieu of delivering fractional shares) and/or shares of Common Stock, as applicable, sufficient to pay in full the aggregate Redemption Price or Mandatory Redemption Price (calculated through the Redemption Date) for such shares of Convertible Preferred Stock on such Redemption Date, (y) such cash and/or shares of Common Stock are readily available to, but only to, the holders of Convertible Preferred Stock in satisfaction of the obligations of the Company with respect to the payment of the Redemption Price or the Mandatory Redemption Price and (z) the Company shall prior to the Redemption Date have so notified each record holder of Convertible Preferred Stock, which B-41 89 notice shall be given to each holder of Convertible Preferred Stock by courier and shall identify the Redemption Agent, its address and telephone and telecopier numbers and the contact person(s) at the Redemption Agent responsible for administration of the deposit then, effective as of the close of business on such Redemption Date (and notwithstanding that any certificate therefor shall not have been surrendered for cancellation): (i) such shares of Convertible Preferred Stock shall no longer be deemed outstanding but any shares of Common Stock so deposited in accordance with this paragraph (e) for which such Convertible Preferred Stock was redeemed shall be deemed to be outstanding; (ii) the holders thereof shall cease to be holders of Convertible Preferred Stock but shall be shown on the records of the Company as holders of the Common Stock so deposited in accordance with this paragraph (e) in redemption of such Convertible Preferred Stock; (iii) dividends with respect to the shares so called for redemption shall cease to accrue on the Redemption Date but, subject to paragraph (4)(f), such holders shall be entitled to any dividends which shall thereafter accrue on, and shall be entitled to exercise all other rights associated with, any shares of Common Stock so deposited in accordance with this paragraph (e) in redemption of such Convertible Preferred Stock; and (iv) all rights whatsoever with respect to the shares so called for redemption shall forthwith cease and terminate (except the right of such holders, upon the surrender of certificates evidencing the shares of Convertible Preferred Stock so redeemed, to receive the cash and/or Common Stock, as applicable, payable or deliverable in payment of the Redemption Price therefor, and the applicable cash adjustment, if any, in lieu of fractional shares, without interest). Any cash and/or shares of Common Stock so deposited or set apart which shall remain unclaimed at the end of one year after the Redemption Date shall be returned or released to the Company, after which time the holders of shares of Convertible Preferred Stock called for redemption on such Redemption Date that remain outstanding after such one-year period shall look only to the Company for the payment of the Redemption Price for such shares, without interest. A deposit made in compliance with the immediately preceding sentence shall, except to the extent released or returned to the Company, be deemed to constitute full payment for the shares of Convertible Preferred Stock to be redeemed. Any interest accrued on funds so deposited shall be paid by the Redemption Agent to the Company from time to time. If any shares of Convertible Preferred Stock called for redemption on such Redemption Date are converted, in accordance with paragraph (5), between the date such cash and/or shares of Common Stock are so deposited with the Redemption Agent and the close of Business on the Redemption Date, then the cash (including cash for any adjustment in lieu of delivering fractional shares) and/or shares of Common Stock, as applicable, so deposited for the B-42 90 redemption of such shares so covered shall be promptly thereafter returned by the Redemption Agent to the Company. (g) Surrender of Certificates; Status. Each holder of shares of Convertible Preferred Stock to be redeemed shall not be entitled to receive payment of the Redemption Price for such shares until such holder shall surrender the certificates evidencing such shares duly endorsed by, or accompanied by, an instrument of transfer (in form reasonably satisfactory to the Company) duly executed by, the holder or such holder's duly authorized attorney-in-fact or, if the shares issuable upon redemption are to be issued in the same name as the name in which such share of the Convertible Preferred Stock is registered, in blank to the Redemption Agent (or to the Company if there is no Redemption Agent) at the place designated in the Redemption Notice for such redemption and shall thereupon be entitled to receive the consideration for such shares specified in the Redemption Notice in an aggregate amount equal to the Redemption Price for such shares. Holders of shares of Convertible Preferred Stock that are redeemed on the Redemption Date shall not be entitled to receive dividends declared and paid on any shares of Common Stock exchangeable and deliverable in payment of the Redemption Price (or designated portion thereof) for such shares of Convertible Preferred Stock, and such shares of Common Stock shall not be entitled to vote, until such shares of Common Stock are delivered upon the surrender of the certificates representing such shares of Convertible Preferred Stock. Upon such surrender, such holders shall be entitled to receive such dividends declared and paid subsequent to such Redemption Date and prior to the delivery. (h) If any shares of Convertible Preferred Stock have been surrendered for conversion into Common Stock pursuant to paragraph (5), then (i) the Company shall not be obligated to redeem such shares and (ii) shares of Common Stock and any funds which shall have been deposited for the payment of the Redemption Price for such surrendered shares of Convertible Preferred Stock shall be returned to the Company immediately after such conversion (subject to declared dividends payable to holders of shares of Convertible Preferred Stock on the record date for such dividends being so payable, to the extent set forth in paragraph (5) hereof, regardless of whether such shares are converted subsequent to such record date and prior to the related Dividend Payment Date). (i) Priority. The right of the Company to redeem shares of Convertible Preferred Stock pursuant to this paragraph (4) shall be subject to the prior preferences and other rights of any Senior Stock and to the provisions of paragraph (7). B-43 91 (23) CONVERSION. (a) Optional Conversion. A holder of one or more shares of the Convertible Preferred Stock shall have the right, exercisable at any time and from time to time after the Issue Date until the Redemption Date with respect to the affected shares, at such holder's option, to convert any or all shares of the Convertible Preferred Stock into such number of shares of Common Stock as is equal to the aggregate Stated Value of the shares of Convertible Preferred Stock surrendered for conversion divided by the Denominator. In the case of shares of Convertible Preferred Stock called for redemption, conversion rights will expire at 5:00 p.m. New York City time on the Business Day prior to the applicable Redemption Date and if not exercised prior to such time, such conversion right will be lost, unless the Company defaults in making the payment due upon redemption. Holders of record of shares of the Convertible Preferred Stock at the close of business on a record date fixed for the payment of a dividend on such shares shall be entitled to receive the dividend notwithstanding the conversion of the shares prior to the dividend payment date. In addition to the right to receive accrued dividends not in arrears as provided for in paragraph (3)(a), if there is an arrearage of dividends in respect of any of the shares of Convertible Preferred Stock surrendered for conversion, upon such conversion, the Company shall pay to the holder of the Convertible Preferred Stock so surrendered such arrearage: (i) in cash out of funds legally available therefor; (ii) through the delivery of shares of Common Stock; or (iii) through any combination of the foregoing elected by the Board in its sole discretion, in each case, subject to, and in accordance with, the provisions of paragraph (3). If the Company elects, or is required by the proviso contained in paragraph (3)(b), to pay any dividend arrearage on the Convertible Preferred Stock, in whole or in part, in shares of Common Stock, each holder of the Convertible Preferred Stock entitled to such dividend payment shall be issued that number of shares of Common Stock equal to the aggregate amount of such dividend arrearage to be paid through the delivery of shares of Common Stock divided by the Average Market Price as of the Conversion Date (with a cash payment in lieu of the issuance of fractional shares determined in accordance with paragraph (9)). Except as provided above and in paragraph (3)(a), the Company shall make no other payment of or allowance for unpaid dividends, whether or not in arrears, on such Convertible Preferred Stock or for previously declared dividends or distributions on the shares of Common Stock issued upon such conversion. Each share surrendered for conversion shall, unless the shares issuable on conversion are to be issued in the same name as the name in which such share of the Convertible Preferred Stock is registered, be duly endorsed by, or be accompa- B-44 92 nied by an instrument of transfer (in form reasonably satisfactory to the Company), duly executed by the holder or such holder's duly authorized attorney-in-fact. (b) Conversion Procedure. To exercise the conversion right, the holder of each share of the Convertible Preferred Stock to be converted shall surrender the certificate representing such share, duly endorsed or assigned to the Company or in blank, at any office of any transfer agent for the Convertible Preferred Stock in New York, New York previously appointed by the Company and identified in a notice given to the holders of Convertible Preferred Stock in accordance with paragraph (14), or, if no such transfer agent has been so appointed and identified, at the office of the Company and (whether or not a transfer agent has been so appointed and identified) shall give not less than 60 days prior notice to the Company in accordance with paragraph (14) that such holder elects to convert the shares represented by such certificate or a portion thereof. Such notice shall also state the name or names (with address(es) in which the certificate or certificates for the shares of Common Stock which shall be issuable upon such conversion shall be issued, and shall be accompanied by funds in an amount sufficient to pay any transfer or similar tax required by the provisions of paragraph (10). Each share surrendered for conversion shall, unless the shares issuable on conversion are to be issued in the same name as the name in which such share of the Convertible Preferred Stock is registered, be duly endorsed by, or be accompanied by an instrument of transfer (in form reason ably satisfactory to the Company), duly executed by the holder or such holder's duly authorized attorney-in-fact. (c) Issuance of Common Stock. As promptly as practicable after the surrender of certificates for shares of the Convertible Preferred Stock for conversion, the giving of the notice and the delivery of the funds, if any, referred to in paragraph (5)(b) above, the Company shall issue and shall deliver to such holder, or on such holder's written order: (i) a certificate or certificates for the number of whole shares of Common Stock issuable upon the conversion of such shares of Convertible Preferred Stock in accordance with the provisions of this paragraph (5); (ii) a check or cash in respect of any fractional interest in respect of a share of Common Stock arising upon such conversion, as provided in paragraph (9) below; and (iii) in respect of any part of any share of Convertible Preferred Stock that is surrendered for conversion in part, a new certificate for a share of Convertible Preferred Stock having a Stated Value (rounded to the nearest whole cent) equal to the part of the share surrendered that was not converted into shares of Common Stock. Each conversion with respect to any shares of the Convertible Preferred Stock shall be deemed to have been effected (irrespective of whether the Company shall have delivered certificates representing the Common Stock) on the date on which the B-45 93 certificates for shares of the Convertible Preferred Stock shall have been surrendered (accompanied by the funds, if any, required by paragraph (10) below), such notice shall have been given and such instruments of transfer, if any, shall have been delivered to the Company or the transfer agent as aforesaid, and the person or persons entitled to receive the Common Stock issuable upon such conversion shall be deemed for all purposes to be the record holder or holders of such Common Stock upon that date at that time (the "Conversion Date"). (d) No Fractional Shares of Common Stock. No fractional shares of Common Stock or scrip representing fractional shares shall be issued upon conversion of Shares of the Convertible Preferred Stock. If more than one share of the Convertible Preferred Stock shall be surrendered for conversion at one time by the same holder, the number of full shares of Common Stock issuable upon conversion thereof shall be computed on the basis of the aggregate number of shares of the Convertible Preferred Stock so surrendered. Instead of any fractional share of Common Stock otherwise issuable upon conversion of any shares of the Convertible Preferred Stock, the Company shall pay a cash amount determined in accordance with paragraph (9) below in respect of such fraction. (e) Reservation of Shares of Common Stock. The Company shall reserve out of its authorized but unissued Common Stock or its Common Stock held in treasury sufficient shares of Common Stock to permit the conversion of all of the outstanding shares of the Convertible Preferred Stock. The Company shall at no time permit the authorized but unissued amount of its Common Stock to be insufficient to permit the conversion of all shares of the Convertible Preferred Stock at the time outstanding. All shares of Common Stock delivered upon conversion of the shares of the Convertible Preferred Stock will, upon delivery, be duly authorized and validly issued, fully paid and nonassessable, free from any adverse claims and preemptive rights with respect thereto. (6) ADJUSTMENTS. (a) Common Stock Dividends, Splits, Subdivisions and Combinations. The Fixed Price shall be subject to adjustment from time to time as follows: (i) If, after the Issue Date, the Company shall (A) pay a dividend or make a distribution on its outstanding Common Stock in shares of its Common Stock, (B) split or subdivide its outstanding Common Stock into a greater number of shares or (C) combine its outstanding Common Stock into a smaller number of shares, then, in each case, the Fixed Price in effect immediately prior to such action B-46 94 shall be adjusted concurrently with the occurrence of such event and without any action on the part of the Company or any holder of Convertible Preferred Stock to that price determined by multiplying the Fixed Price in effect immediately prior to such event by a fraction: (1) the numerator of which shall be the total number of shares of Common Stock outstanding immediately prior to such time, and (2) the denominator of which shall be the total number of shares of Common Stock outstanding immediately after such time. An adjustment made pursuant to this paragraph (i) shall become effective immediately after the record date, in the case of a dividend or distribution (except as provided in paragraph (6)(e) below), and shall become effective immediately after the effective date in the case of a subdivision, split or combination. (ii) If, after the Issue Date, the Company issues Options or Convertible Securities to substantially all holders of Common Stock entitling them (for a period commencing no earlier than the record date for the determination of holders of Common Stock entitled to receive such Options or Convertible Securities and expiring not more than within 45 days after such record date) to subscribe for, purchase, otherwise acquire or convert into shares of Common Stock at a price per share less than the Current Market Price per share of such shares of Common Stock on such record date, then the Fixed Price in effect immediately prior to the Computation Date shall be adjusted on the Computation Date (without any action on the part of the Company or any holder of Convertible Preferred Stock) so that the same shall equal the price determined by multiplying the Fixed Price in effect immediately prior the such Computation Price by a fraction: (1) the numerator of which shall be the number of shares of Common Stock outstanding immediately prior to the Computation Date plus the number of shares of Common Stock which the aggregate offering price of the total number of shares of Common Stock issuable pursuant to such Options or pursuant to the terms of such Convertible Securities would purchase at the then Current Market Price on such Computation Date, and (2) the denominator of which shall be the number of shares of Common Stock outstanding on such Computation Date plus B-47 95 the maximum number of additional shares of Common Stock issuable pursuant to all such Options or necessary to effect the conversion or exchange of all such Convertible Securities. To the extent of the expiration unexercised of the right of conversion or exchange of any Convertible Securities, or to the extent of the expiration, unexercised, of any Options, or upon any increase in the minimum consideration receivable by the Company for the issuance of additional shares of Common Stock pursuant to such Convertible Securities or Options, in either case previously adjusted as aforesaid, then the number of shares of Common Stock deemed to be issued and outstanding by reason of the fact that they were issuable upon conversion or exchange of any such Convertible Securities or upon exercise of any such Options shall no longer be computed as set forth above, and the Fixed Price shall forthwith be readjusted and thereafter be the price which it would have been (but reflecting any other adjustments in the Fixed Price made pursuant to the provisions of this paragraph (6)(a) after the Issue Date) had the adjustment of the Fixed Price made upon the issuance or sale of such Convertible Securities or the issuance of such Options not been made or made upon the basis of such increased minimum consideration, as the case may be. Such adjustment shall be made successively wherever any such Options or Convertible Securities are issued at a price below the Current Market Price therefor as in effect on the date of issuance. In determining whether any Options or Convertible Securities entitle the holders to subscribe for or purchase shares of Common Stock at less than the Current Market Price therefor, and in determining the aggregate offering price of shares of Common Stock, there shall be taken into account any consideration received by the Company for such Options or Convertible Securities, the value of such consideration, if other than cash, to be determined in good faith by the Board. Notwithstanding the foregoing, if the Options or Convertible Securities are exercisable, convertible or exchangeable only upon the occurrence of certain triggering events or the arrival of a specified date, then the Fixed Price will not be adjusted until such triggering events or specified dates occur. (iii) If, after the Issue Date, the Company shall distribute, by way of dividend or otherwise, to all holders of Common Stock shares of any class of stock other than Common Stock, evidences of indebtedness or other assets (other than cash dividends out of current or retained earnings), or shall distribute to substantially all holders of Common Stock, Options (other than those referred to in paragraph (6)(a)(ii) above, then, in each such case, the Fixed Price shall be adjusted on the record date (without any action on the part of the Company or any holder of Convertible Preferred Stock) so that the same shall equal the price determined by multiplying B-48 96 the Fixed Price in effect immediately prior to the date of such distribution by a fraction: (1) the numerator of which shall be the Current Market Price of the Common Stock on the record date mentioned below less the then fair market value (as reasonably determined in good faith by the Board) of the portion of the assets so distributed or of such subscription Options applicable to one share of Common Stock, and (2) the denominator of which shall be such Current Market Price of the Common Stock. Such adjustment shall become effective immediately after the record date for the determination of the holders of Common Stock entitled to receive such distribution. In addition to the foregoing, if, upon the occurrence of the Distribution Date (as defined in the Rights Agreement), the Company shall distribute the Rights: (x) the record holders of Convertible Preferred Stock on the Distribution Date (as so defined) shall be deemed to have been holders of Common Stock issued on or after the Merger (as defined in the Rights Agreement) and prior to the Distribution Date (as so defined) for purposes of the Rights Agreement; and (y) the Company shall make lawful and proper provisions so that each such record holder shall receive, in addition to the shares of Common Stock which may then be issuable upon conversion pursuant to the provisions of this Certificate, the same number of Rights to which a holder of the number of shares of Common Stock into which the shares of Convertible Preferred Stock held by such record holder was convertible immediately prior to the Distribution Date (as so defined) would have been entitled on such Distribution Date pursuant to the Rights Agreement if all the shares of Convertible Preferred Stock held by such record holder had been converted pursuant to the provisions of paragraph (5)(a). (iv) Without prejudice to paragraph (7)(a) of this Certificate, if after the Issue Date, the Company shall, by dividend or otherwise, at any time distribute to all holders of its Common Stock cash (including any distributions of cash out of current or retained earnings of the Company but excluding any cash that is distributed as part of a distribution requiring an adjustment pursuant to paragraph (iii) of this paragraph) in an aggregate amount that, together with the aggregate amount of any other distributions to all holders of its Common Stock made in cash within the 12 months preceding the date fixed for determining the stockholders entitled to such B-49 97 distribution (the "Distribution Record Date") and in respect of which no adjustment pursuant to paragraph (iii) of this paragraph (6) or this paragraph (iv) has made, exceeds 10% of the product of (A) the Current Market Price per share of the Common stock on the Distribution Record Date times (B) the number of shares of Common Stock outstanding on the Distribution Record Date (excluding shares held in the treasury of the Company), the Fixed Price shall be reduced on the Distribution Record Date (without any action on the part of the Company or any holder of Convertible Preferred Stock) so that the same shall equal the price determined by multiplying such Fixed Price in effect immediately prior to the effectiveness of the Fixed Price reduction contemplated by this paragraph (iv) by a fraction: (1) the numerator of which shall be the Current Market Price per share of the Common Stock on the Distribution Record Date less the amount of such cash and other consideration so distributed applicable to one share (based on the pro rata portion of the aggregate amount of such cash and other consideration, divided by the shares of Common Stock outstanding on the Distribution Record Date) of Common Stock; and (2) the denominator of which shall be such Current Market Price per share of the Common Stock on the Distribution Record Date, such reduction to become effective immediately prior to the opening of business on the day following the Distribution Record Date. Such adjustment shall become effective immediately after the record date for the determination of stockholders entitled to receive such distribution, except as provided in paragraph (6)(e) below. Such adjustment shall be made successively whenever any such dividend or distribution shall be made. (v) All calculations under this paragraph (6)(a) shall be made to the nearest cent or nearest 1/1000th of a share of Common Stock. (vi) Notwithstanding anything to the contrary set forth in this paragraph (6), no adjustment shall be made to the Fixed Price (A) upon the issuance or distribution of Options or Convertible Securities (or upon the exercise of such Options or the conversion of such Convertible Securities) pursuant to any stock option, restricted stock or other incentive or benefit plan or stock ownership or purchase plan for the benefit of employees, directors or officers of the Company and its subsidiaries or any dividend reinvestment plan of the Company in effect or B-50 98 adopted on or before the Issue Date or approved by the stockholders or compensation committee of the Company after the Issue Date or (B) upon the deemed issuance of Common Stock (provided, that such issuance does not involve an actual issuance of Common Stock) by reason of adjustments required pursuant to anti-dilution provisions applicable to securities of the Company as in effect on the Issue Date. (vii) The Company shall also be entitled to make such deductions, in addition to those required by paragraph (6)(a)(i), (ii) and (iii), to the Fixed Price as it considers to be advisable in order to avoid or diminish any tax to holders of Common Stock, Options or Convertible Securities resulting from any stock dividends, subdivisions of shares, distributions of Options or Convertible Securities (or any transactions which would be treated as any of the foregoing transactions pursuant to Section 305 of the Internal Revenue Code of 1986, as amended) made by the Company. In addition, the Company from time to time may decrease the Fixed Price by any amount for any period of time if the period is at least 20 days and if the decrease is irrevocable during the period. Whenever the Fixed Price is so decreased, the Company shall give holders of record of shares of Convertible Preferred Stock a notice of the decrease in accordance with paragraph (14) at least 15 days before the date the decreased Fixed Price takes effect, and such notice shall state the decreased Fixed Price and the period it will be in effect. A voluntary adjustment of the Fixed Price shall not change or adjust the Fixed Price otherwise in effect for purposes of this paragraph (6). (viii) If, at any time as a result of an adjustment made pursuant to paragraph (6)(a)(i), (ii) or (iii), the holder of any share of the Convertible Preferred Stock thereafter surrendered for conversion or redemption shall become entitled to receive any securities of the Company other than shares of the Common Stock, thereafter the number of such other securities so receivable upon conversion of any share of the Convertible Preferred Stock shall be subject to adjustment from time to time in a manner and on terms as nearly equivalent as practicable to the provisions with respect to the Common Stock contained in paragraphs (6)(a)(i) through (6)(a)(vii) above, and the other provisions of this paragraph (6)(a)(viii) with respect to the Common Stock shall apply on like terms to any such other shares. (b) (i) Reorganizations. If there is to occur any Reorganization, and there is determinable for the entirety of each Reorganization Unit to be issued in connection with such Reorganization on an Applicable Price, then as a condition precedent to such Reorganization proper provision shall be made such that each share of Convertible Preferred Stock, or each share of convertible preferred stock of the Company or its successor by merger or consolidation issuable to each holder of B-51 99 Convertible Preferred Stock in exchange or substitution therefor (provided that such share of convertible preferred stock has the same Stated Value and, subject to the proviso in paragraph (6)(b)(ii), substantially the same rights, benefits and privileges as a share of Convertible Preferred Stock), shall be convertible or redeemable upon and from and after the occurrence of such Reorganization into, in lieu of Common Stock as provided herein (and without prejudice to the right of the Company or its successor to redeem convertible preferred stock for cash in accordance herewith), a number of Reorganization Units determined by dividing the Stated Value of such share by the higher of (x) the Fixed Price on the Conversion Date and (y) the Applicable Price of a Reorganization Unit on the Conversion Date. If there is to occur any Reorganization, and any Reorganization Unit to be issued in connection with such Reorganization does not have in whole or in part a determinable Applicable Price, then prior to the occurrence of such Reorganization and on a basis such that the holders of Convertible Preferred Stock shall be holders of Common Stock for all purposes of such Reorganization, the Company will redeem all Convertible Preferred Stock in accordance herewith. The Company shall not effect any Reorganization unless prior to or simultaneously with the consummation thereof, the successor entity resulting from such consolidation or merger or the entity purchasing such assets or compelling such exchange, as the case may be, shall make provisions in its certificate or articles of incorporation or other constituent document to establish such right. The provisions of this paragraph (6)(b) shall similarly apply to successive Reorganizations. (ii) Holding Company. Notwithstanding anything herein to the contrary, if the Company is reorganized such that the Common Stock is exchanged for the common stock of a new entity ("Holdco") whose common stock is traded on NASDAQ or another recognized securities exchange, then the Company, by notice to the holders of the Convertible Preferred Stock but without any required consent on their part, may cause the exchange of this Convertible Preferred Stock for convertible preferred stock of Holdco having the same terms and conditions as set forth herein, provided that where Holdco is not a Delaware company or where the Holdco share structure is not identical to that of the Company, the rights attaching to the mandatorily redeemable preferred stock of Holdco may be adjusted so as to comply with the local law of the country of incorporation of Holdco or the new share structure of Holdco subject to such rights effectively giving the same economic rights as the Mandatorily Redeemable Preferred Stock (ignoring for these purposes any resultant change in the tax treatment for the holders of such stock). B-52 100 (iii) Other Adjustments. In the event that, as a result of an adjustment made pursuant to paragraphs (6)(a) or (b), the holder of any Convertible Preferred Stock thereafter surrendered for conversion or redemption shall become entitled to receive any shares of capital stock of the Company other than shares of its Common Stock, thereafter the number of such shares issuable upon conversion or redemption of such security shall be subject to adjustment from time to time in a manner and on terms as nearly equivalent as practicable to the provisions with respect to Common Stock contained in such paragraphs this Article V. (c) Notices of Corporate Action. If: (i) the Company shall take any action which would require an adjustment of the Fixed Price pursuant to paragraph (6)(a); or (ii) the Company or the Board shall approve any Reorganization to which the Company is a party and for which approval of any Stockholders of the Company is required; or (iii) there shall be a voluntary or involuntary dissolution, liquidation or winding up of the Company; then, in each case, the Company shall cause to be filed with the transfer agent for the Convertible Preferred Stock, if any, and shall cause to be given to the holders of shares of the Convertible Preferred Stock in accordance with paragraph (15), as promptly as possible, but at least 10 days prior to the applicable date hereinafter specified, a notice stating (A) the date on which a record is to be taken for the purposes of such dividend or distribution, or, if a record is not to be taken, the date as of which the holders of Common Stock of record to be entitled to such dividend or distribution are to be determined or (B) the date on which the event giving rise to an adjustment of the type described in paragraph (6)(a), such a Reorganization, dissolution, liquidation or winding up may occur, as the case may be, is expected to become effective or occur, and, if earlier, the date as of which it is expected that holders of Common Stock of record shall be entitled to exchange their shares of Common Stock for stock of the Company, securities, cash or other property deliverable upon such Reorganization, dissolution, liquidation or winding up. Failure to give or receive such notice or any defect therein shall not affect the legality or validity of the action or transactions described in sub-paragraphs (i) through (iii) above. (d) Notice of Adjustments. Whenever any adjustment is required by the terms of paragraph (6)(a), the Company shall promptly cause a notice of such B-53 101 adjustment and a computation thereof to be mailed to each registered holder of shares of the Convertible Preferred Stock. (e) Deferral of Issuance and Payment. In any case in which paragraph (6) shall require an adjustment be made immediately following a record date, the Company may elect to defer (but only 5 Business Days following the mailing of the notice referred to in paragraph (6)(d)) issuing to the holder of any shares of the Convertible Preferred Stock converted after such record date the additional shares of Common Stock and other capital stock of the Company issuable upon such conversion over and above the Common Stock and other capital stock of the Company issuable upon such conversion only on the basis of the conversion rate prior to adjustment; provided, however, that in lieu of the shares the issuance of which is so deferred, the Company shall issue or cause its transfer agent to issue due bills or other appropriate evidence of the right to receive such shares and (ii) paying to such holder any amount in cash in lieu of any fraction pursuant to paragraphs (5)(d) and (9) hereof. (f) Listing of Common Stock. The Company will list the shares of Common Stock required to be delivered as any dividend payment or as payment upon redemption or conversion of shares of the Convertible Preferred Stock, prior to delivery, upon each national securities exchange, the Nasdaq Stock Market's National Market or any similar system of automated dissemination of securities prices, if any, upon which the Common Stock is listed at the time of delivery. (g) Provision of Information. So long as any shares of Convertible Preferred Stock remain outstanding, the Company undertakes to provide without charge to each record holder of such shares copies of each: (i) annual report of the Company on Form 10-K filed pursuant to Section 13(a) of the Exchange Act concurrently with such filing; (ii) quarterly reports of the Company on Form 10-Q and current report of the Company on Form 8-K filed pursuant to Section 13(a) or 15(d) or the Exchange Act concurrently with such filing; (iii) definitive proxy or information statement, form of proxy or other material of the Company filed pursu ant to Section 14(a) of the Exchange Act concurrently with such filing; and (iv) notice, press release and other information delivered to holders of Common Stock generally concurrently with such delivery. (7) LIMITATIONS ON DIVIDENDS AND REDEMPTIONS IN RESPECT OF COMPANY STOCK. B-54 102 (a) Limitations on Junior Stock Dividends. As long as any shares Convertible Preferred Stock are outstanding, no dividends shall be paid or declared in cash on Junior Stock, nor shall any other distributions be made on any Junior Stock, unless: (i) full dividends on all Parity Stock have been paid, or declared and set aside for payment, for all dividend periods terminating on or prior to the date of such Junior Stock dividend or distribution payment, to the extent such dividends are cumulative and have fallen due; (ii) the Company has paid or set aside all amounts, if any, then or therefore required to be paid or set aside for all purchase, retirement, and sinking funds, if any, for any Parity Stock; and (iii) the Company is not in default on any of its obligations to redeem any Parity Stock. (b) Limitations on Purchase of Junior Stock. As long as any shares of Convertible Preferred Stock are outstanding, no shares of any Junior Stock may be purchased, redeemed, or otherwise acquired by the Company or any of its Subsidiaries (except in connection with a reclassification of any Junior Stock through the issuance of other Junior Stock and/or Convertible Securities for shares of Junior Stock and cash in lieu of fractional shares in connection therewith or the purchase, redemption or other acquisition of any Junior Stock from any wholly-owned subsidiary), nor may any funds be set aside or made available for any sinking fund for the purchase, redemption or other acquisition of any Junior Stock, unless: (i) full dividends on all Parity Stock have been paid, or declared and set aside for payment, for all dividend periods terminating on or prior to the date of such purchase, redemption or acquisition, to the extent such dividends are cumulative and have fallen due; (ii) the Company has paid or set aside all amounts, if any, then or theretofore required to be paid or set aside for all purchases retirement, and sinking funds, if any, for any Parity Stock; and (iii) the Company is not in default on any of its obligations to redeem any Parity Stock. (c) Junior Stock Dividends Otherwise Permitted. Subject to the provisions of paragraphs (7)(a) and 8(b), dividends or distributions (payable in cash, property or securities) may be declared and paid on the shares of any Junior Stock from time to time and any Junior Stock may be purchased, redeemed or otherwise acquired by the Company or any of its subsidiaries from time to time. In the event of the declaration and payment of any such dividends or distributions, the holders of such Junior Stock will be entitled, to the exclusion of holders of shares of Convertible Preferred Stock, to share therein according to their respective interests. (d) Limitations on Parity Stock Dividends and Redemptions. As long as any shares of Convertible Preferred Stock are outstanding, dividends or other distributions may not be declared or paid on any Parity Stock, and the Company may B-55 103 not purchase, redeem or otherwise acquire any Parity Stock (except (x) from any wholly owned subsidiaries of the Company or (y) in connection with a mandatory conversion or exchange of such Parity Stock or a conversion or exchange of such Parity Stock at the option of the holder for securities other than Parity Stock or Senior Stock and cash in lieu of fractional shares in connection therewith) unless either: (a)(i) full dividends on all Parity Stock have been paid, or declared and set aside for payment, for all dividend periods terminating on or prior to the date of such Parity Stock dividend, distribution, purchase, redemption or other acquisition payment, to the extent such dividends are cumulative and have fallen due; (ii) the Company has paid or set aside all amounts, if any, then or theretofore required to be paid or act aside for all purchase, retirement, and sinking funds, if any, for any, Parity Stock; and (iii) the Company is not in default on any of its obligations to redeem any Parity Stock, or (b) with respect to the payment of dividends only, any such dividends are declared and paid pro rata so that the amounts of any dividends declared and paid per share on shares of Convertible Preferred Stock and each other share of such Parity Stock will in all cases bear to each other the same ratio that accrued and unpaid dividends (including any accumulation with respect to unpaid dividends for prior dividend periods, if such dividends are cumulative) per share on shares of Convertible Preferred Stock and such other share of Parity Stock bear to each other. (e) Certain Permitted Dividends and Redemptions. Nothing contained in this paragraph (7) shall prevent: (i) the payment of dividends or the making of distributions on any Junior Stock solely in shares of Junior Stock and/or Convertible Securities for shares of Junior Stock (together with a cash adjustment for fractional shares, if any) or the redemption, purchase or other acquisition of Junior Stock solely in exchange for (together with a cash adjustment for fractional shares, if any), or through the application of the proceeds from the sale of, shares of Junior Stock and/or Convertible Securities for shares of Junior Stock; (ii) the payment of dividends or the making of distributions on any class or series of Parity Stock solely in (together with a cash adjustment for fractional shares, if any) shares of Junior Stock and/or Convertible Securities for shares of Junior Stock or the redemption, B-56 104 exchange, purchase or other acquisition of say class or series of Parity Stock solely in exchange for (together with a cash adjustment for fractional shares, if any), or through the application of the proceeds from the sale of shares of Junior Stock and/or Convertible Securities for shares of Junior Stock or (iii) the conversion or exchange of Convertible Preferred Stock into shares of Common Stock (together with a cash adjustment for fractional shares, if any) and other securities, assets or property, if any pursuant to the provisions of paragraphs (4), (5) or (6). (f) Waiver. The provisions of paragraphs (7)(a), (b) and (d) are for the sole benefit of the holders of Convertible Preferred Stock and any other class or series of Parity Stock having the terms described therein and accordingly, at any time when (i) there are no shares of any such other class or series of Parity Stock outstanding or if the holders of each such other class or series of Parity Stock have, by such vote or consent of the holders thereof as may be provided for in the instrument creating or evidencing such class or series, waived in whole or in part the benefit of such provisions (either generally or in the specific instance), and (ii) the holders of shares of Convertible Preferred Stock shall have waived (as provided in paragraph (15)) in whole or in part the benefit of such provision (either generally or in the specific instance), then the provisions of paragraphs (7)(a), (b) and (d) shall not (to the extent waived, in the case of any partial waiver) restrict the payment of dividends or the making of distributions on, or the redemption, purchase or other acquisition of any shares of, Convertible Preferred Stock, any other class or series of Parity Steel or any Junior Stock. (8) LIQUIDATION RIGHTS. (a) Payment of Liquidation Preference. If there is any liquidation, dissolution, or winding up of the Company, whether voluntary or involuntary, then the holders of shares of Convertible Preferred Stock then outstanding, after payment, or provision for payment of the debts and other liabilities of the Company and the payment or provision for payment of any distribution on any shares of Senior Stock, and before any distribution to the holders of Junior Stock, shall be entitled to be paid out of the assets of the Company available for distribution to its stockholders an amount per share of Convertible Preferred Stock in cash equal to the Liquidation Preference. If the assets of the Company available for distribution to the holders of the shares of Convertible Preferred Stock upon any dissolution, liquidation or winding up of the Company shall be insufficient to pay in full the Liquidation Preference payable to the holders of outstanding shares of Convertible Preferred Stock and the liquidation preference payable to all other shares of Parity Stock (as set forth in the instrument or instruments creating such Parity Stock), then the B-57 105 holders of shares of Convertible Preferred Stock and of all other shares of Parity Stock shall share ratably in such distribution of assets in proportion to the amount which would be payable on such distribution if the amounts to which the holders of outstanding shares of Convertible Preferred Stock and the holders of outstanding shares of such other Parity Stock were paid in full. Except as provided in this paragraph (9)(a) holders is of Convertible Preferred Stock shall not be entitled to any distribution in the event of the liquidation, dissolution or winding up of the affairs of the Company. (b) Certain Events Not Deemed Liquidation, Etc. For the purposes of this paragraph (8) a Reorganization shall not be deemed to be a voluntary of involuntary liquidation, dissolution or winding up of the Company. (9) NO FRACTIONAL SHARES. No fractional shares of Common Stock or Convertible Preferred Stock or scrip shall be issued in connection with the delivery of shares of Common Stock or Convertible Preferred Stock upon conversion of shares of Convertible Preferred Stock or in payment, in whole or in part, of any dividend, Redemption Price or Liquidating Payment. Whether or not a fractional share would be delivered to a holder of Convertible Preferred Stock shall be based upon, in the case of the payment, in whole or in part, of dividends, a Redemption Price of a Liquidating Payment pursuant to paragraphs (3), (4) or (8), respectively, and, in the case of conversion pursuant to paragraph (5), through the delivery of shares of Common Stock or Convertible Preferred Stock, on the total number of shares of Convertible Preferred Stock at the time held by such holder and the total number of shares of Common Stock or Convertible Preferred Stock, otherwise deliverable in respect thereof. Instead of the issuance of a fraction of a share of Common Stock or Convertible Preferred Stock or scrip, the Company shall pay instead an amount in cash (rounded to the nearest whole cent) equal to, in the case of Common Stock, the same fraction of the Closing Price of a share of preceding the Determination Date. (10) PAYMENT OF TAXES. The Company shall pay any and all documentary, stamp or similar transfer taxes payable in respect of the delivery of shares of Common Stock and Convertible Preferred Stock, pursuant to paragraphs (3), (4), (5), or (8), as applicable; provided, however, the Company shall not be required to pay any such tax that may be payable because any such shares are issued in a name other than the name of the holder of such Convertible Preferred Stock. B-58 106 (11) NO PREEMPTIVE RIGHTS. The holders of shares of Convertible Preferred Stock shall have no preemptive rights, including preemptive rights with respect to any shares of capital stock or other securities of the Company convertible into or carrying rights or options to purchase any such shares. (12) VOTING RIGHTS. (a) The holders of shares of Convertible Preferred Stock shall have no Voting rights, except as otherwise required by law and except as set forth in this paragraph (12). When and if the holders of Convertible Preferred Stock are entitled to vote by law or pursuant to this paragraph (12), each holder will be entitled to one vote per share. (b) Dividend Non-Payment. In the event that the Company shall have failed to pay dividends on the Convertible Preferred Stock for three semi-annual periods (whether or not consecutive) (such failure, a "Dividend Non-Payment"), the number of directors constituting the Board, without further action, shall be increased by two and the holders of the majority of the then outstanding shares of Convertible Preferred Stock shall have the right, voting separately as a class, to elect such two additional members of the Board, at any annual meeting of stockholders of the Company or by written consent pursuant to Section 228 of the DGCL, in each case, who shall continue to serve so long as such dividends on the Convertible Preferred Stock have not been paid. If and when all such accrued and unpaid dividends on the Convertible Preferred Stock have been paid or declared and set apart for payment, the holders of shares of Convertible Preferred Stock shall be divested of the special voting rights provided for by this paragraph (12), subject to revesting in the event of every subsequent Dividend Non-Payment. Upon termination of such special voting rights, the term of office of each director elected pursuant to this paragraph (12) by the holders of shares of Convertible Preferred Stock (a "Preferred Stock Director") shall terminate immediately and the number of directors constituting the Board shall, without further action, be reduced by two, subject always to the increase of the number of directors pursuant to this paragraph (12) in the case of the future right of the holders of Convertible Preferred Stock to elect Preferred Stock Directors. Any Preferred Stock Director may be removed by, and shall not be removed otherwise than by, the vote of the holders of record of a majority of the outstanding shares of the Convertible Preferred Stock entitled to vote thereon present at a meeting called for such purpose at which a quorum is present or by written consent pursuant to Section 228 of the DGCL. So long as a Dividend Non-Payment shall continue, any vacancy in the office of a Preferred Stock Director may be filled by vote of the holders of record of a majority of the outstanding shares of Convertible Preferred Stock entitled to vote thereon present at a meeting called for such purpose at which a quorum is present or by written consent pursuant to Section B-59 107 228 of the DGCL. As long as a Dividend Non-Payment shall continue, holders of shares of Convertible Preferred Stock shall not, as such stockholders, be entitled to vote on the election or removal of directors other than Preferred Stock Directors, but shall not be divested of any other voting rights provided to such stockholders by law or this Certificate of Designations with respect to any other matter to be acted upon by the stockholders of the Company. At any meeting held for the purpose of electing directors at which the holders of outstanding shares of Convertible Preferred Stock shall have the right to elect directors as provided in this paragraph (12), the presence, in person or by proxy, of the holders of at least a majority of the then outstanding shares of Convertible Preferred Stock on which like voting rights have been conferred and are exercisable shall be required and be sufficient to constitute a quorum of such class for the election of directors by such class. At any such meeting or adjournment thereof (i) the absence of a quorum of the holders of the Convertible Preferred Stock present in person or by proxy shall not prevent the election of directors other than those to be elected by the holders of the Convertible Preferred Stock, and the absence of a quorum or quorums of the holders of any class or classes of any stock or other securities of the Company other than the Convertible Preferred Stock shall not prevent the election of directors to be elected by the holders of the Convertible Preferred Stock and (ii) in the absence of a quorum of the holders of any class of stock entitled to vote for the election of directors, a majority of the holders present in person or by proxy of such class shall have the power to adjourn the meeting for the election of directors which the holders of such class are entitled to elect, from time to time, without notice (except as required by law) other than announcement at the meeting, until a quorum shall be present. (c) Certain Changes to Charter. For as long as any shares of Convertible Preferred Stock remain outstanding, the affirmative vote of the holders of at least a majority of such outstanding shares (voting separately as a class) given in Person or by proxy at an annual meeting or a special meeting called for such purpose, shall be necessary (i) before the Company may amend any of the provisions of this Certificate of Designations or the Restated Certificate of Incorporation of the Company which would alter or change the powers, preferences or special rights of the holders of the shares of Convertible Preferred Stock then outstanding so as to affect them adversely; provided, however, that: (x) any such amendment that would authorize, create or increase the authorized amount of any additional shares of Junior Stock or B-60 108 shares of any other class or series of Parity Stock (whether or not already authorized); and (y) any such amendment that would increase the number of authorized shares of Preferred Stock of the Company (but not the number of authorized shares of Convertible Preferred Stock) or that would decrease (but not below the number of shares, then outstanding) the number of authorized shares of Preferred Stock (but not the number of authorized shares of Convertible Preferred Stock); shall be deemed not to adversely affect such powers preferences or rights and shall not be subject to approval by the holders of shares of Convertible Preferred Stock; and (ii) before the Company may reclassify the outstanding shares of Convertible Preferred Stock into another class or series of capital stock of the Company; provided further, however, that no consent described in clause (i) of this paragraph of the holders of the shares of Convertible Preferred Stock shall be required if, at or prior to the time when such amendment is to take effect, provision is made for the redemption of all shares of Convertible Preferred Stock at the time outstanding. (d) Creation of Senior Stock. No consent or vote of the holders of the shares of Convertible Preferred Stock shall be necessary before the Company or the Board may authorize, create or issue any class or series of Senior Stock. (e) No Other Vote. Except as otherwise set forth in this paragraph (12) or as required by law, the holders of Convertible Preferred Stock shall not have any relative, participating, optional or other special voting rights and powers and the consent or vote of such holders shall not be required for the taking of any corporate action by the Company or the Board. The provisions of this paragraph (12) are in lieu of, and not in addition to, any voting rights specified in the Restated Certificate of Incorporation as applicable to a series of Preferred Stock. (13) PAYMENTS. Payment of cash amounts due in respect of the Convertible Preferred Stock will be paid to the holders of shares of Convertible Preferred Stock (or, in the case of joint holders, the first-named) as appearing in the stock register of the Company for the Convertible Preferred Stock as at opening of business (New York time) on the date specified in this Certificate for the purpose of determining the holders of Convertible Preferred Stock entitled to such payments or, it no such date B-61 109 is specified, the fifteenth Business Day before the due date for such payment (the "Payment Record Date"). Payments of cash amounts due in respect of the Convertible Preferred Stock will be made by a check in U.S. dollars drawn on a bank in New York and mailed to the address (as recorded is the stock register of the Company for the Convertible Preferred Stock) of the holder thereof (or, in the case of joint holders, the first-named) not later than the relevant date for payment unless, prior to the relevant Payment Record Date, the Company has received from the holder thereof (or, in the case of joint holders, the first-named) written instructions for payment to be made by wire transfer to a specified designated account. If the due date for payment of any cash amount in respect of the Convertible Preferred Stock is not a Business Day, then the holder thereof will not be entitled to payment thereof until the next following day which is a Business Day and, if such payment is to be made by transfer to a designated account rather than by check, a day on which commercial banks and foreign exchange markets settle, payments in U.S. dollars in the place where the relevant designated account is located. (14) NOTICES. Any notice or communication by a holder of Convertible Preferred Stock to the Company is duly given if in writing and delivered in person or mailed by first-class mail to the Company at its address as set forth in its then most recently filed Form 10-K or 10-Q as the case may be. Any notice or communications to a holder of Convertible Preferred Stock shall be mailed by first-class mail to his address shown on the stock register of the Company for the Convertible Preferred Stock or, if there are more than 20 holders of record of the Convertible Preferred Stock and the Company in its sole discretion so elects, in a leading daily newspaper having general circulation in New York (which is expected to be the Wall Street Journal) or England and Wales (which is expected to be The Financial Times). Failure to mail a notice or communication to one holder or any defect in it shall not affect its sufficiency with respect to other holders. If a notice or communication is given in the manner provided in this paragraph (14) within the time prescribed by this Certificate, it shall be conclusively presumed to have been duly given, whether or not the person entitled to such notice receives it. B-62 110 (15) WAIVER. Any provision of this Certificate of Designations which, for the benefit of the holders of Convertible Preferred Stock, prohibits, limits or restricts actions by the Company may be waived in whole or in part, or the application of all or any part of such provision in any particular circumstance or generally may be waived, in each case with the consent of the holders of at least a majority of the number of shares of Convertible Preferred Stock then outstanding, either in writing or by vote at a meeting called for such purpose at which the holders of Convertible Preferred Stock shall vote as a separate class. (16) REGISTRATION, TRANSFER AND EXCHANGES. (a) The Company will keep with , the registrar and transfer agent, a register in which the Company will provide for the registration and transfer of shares of Convertible Preferred Stock. Any holder of shares of Convertible Preferred Stock may, at its option, in person or by duly authorized attorney, surrender the certificate representing the same for exchange at (duly endorsed or accompanied, if so required by the Company, by a written instrument of transfer duly executed by such holder or his or her duly authorized attorney), and, within a reasonable time thereafter and without expense (other than transfer taxes, if any), receive in exchange therefor one or more duly executed certificate or certificates dated as of the date to which dividends have been paid on the shares of Convertible Preferred Stock so surrendered, or if no dividend has yet been so paid, then dated the date hereof, and registered in such name or names, all as may be designated by such holder, for the same aggregate number of shares of Convertible Preferred Stock as represented by the certificate or certificates so surrendered. The Company covenants and agrees to take and cause to be taken all action reasonably necessary to effect such registrations, transfers and exchanges. Each share of Convertible Preferred Stock issued in exchange for any share shall carry the same rights to unpaid dividends and redemption payments which were carried by the share so exchanged, so that neither gain nor loss of any such right shall result from any such transfer or exchange. (b) The Company and any agent of the Company may treat the person in whose name any share of Convertible Preferred Stock is registered as the owner of such share for the purpose of receiving payment of dividends, and amounts payable on redemption and liquidation in respect of such share and for all other purposes. (c) The holders of Convertible Preferred Stock are entitled to certain rights under the Registration Rights Agreement. The certificates representing shares B-63 111 of Convertible Preferred Stock will bear a legend indicating that they have been issued in a transaction exempt from the Securities Act and may only be transferred in accordance therewith or pursuant to an exemption therefrom. (17) EXCLUSION OF OTHER RIGHTS. Except as may otherwise be required by law, the shares of Convertible Preferred Stock shall not have any designations, preferences, limitations or relative rights other than those specifically set forth in this Certificate of Designations other than the rights set forth in the Registration Rights Agreement, the terms of which are incorporated herein by reference. (18) SEVERABILITY OF PROVISIONS. Whenever possible, each provision of this Certificate of Designations shall be interpreted in a manner as to be effective and valid under applicable law, but if any provision hereof is held to be prohibited by or invalid under applicable law, such provision shall be ineffective only to the extent of such prohibition or invalidity, without invalidating or otherwise adversely affecting the remaining provisions hereof. If a court of competent jurisdiction should determine that a provision hereof would be valid or enforceable if a period of time were extended or shortened or a particular percentage were increased or decreased, then such court may make such change as shall be necessary to render the provision in question effective and valid under applicable law. B-64 112 Exhibit C 9.9% NON-VOTING MANDATORILY REDEEMABLE PREFERRED STOCK, SERIES B (1) Designation; Number of Shares. The designation of the series of Preferred Stock, par value $.01 per share, of the Company created hereby shall be "9.90% Non-voting Mandatorily Redeemable Preferred Stock, Series B" (including, in the case of any reclassification, recapitalization, or other change to such Preferred Stock or, in the case of a consolidation or merger of the Company with or into another Person affecting such Preferred Stock, such capital stock to which a holder of such Preferred Stock shall be entitled upon the occurrence of such event, the "Mandatorily Redeemable Preferred Stock"). The authorized number of shares of Mandatorily Redeemable Preferred Stock shall be 52,217, which number may from time to time be increased or decreased (but not below the number then outstanding). Each share of Mandatorily Redeemable Preferred Stock shall have a stated value of $1,000 (the "Stated Value"). Any shares of Mandatorily Redeemable Preferred Stock redeemed or otherwise acquired by the Company shall be retired and shall resume the status of authorized and unissued shares of Preferred Stock, without designation as to series, until such shares are once more designated as part of a particular series of Preferred Stock by the Board of Directors. (2) Certain Definitions. Unless the context otherwise requires, the terms defined in this paragraph (2) shall have, for all purposes of this Certificate of Designations, the meanings herein specified: "Adjustment Date" shall have the meaning set forth in paragraph (4)(k). "Affiliate" of any Person shall mean another Person that directly or indirectly, through one or more intermediaries, controls, is controlled by, or is under common control with, such first person, where "control" shall mean the possession, directly or indirectly, of the power to direct or cause the direction of the management policies of a person, whether through the ownership of voting securities, by contract, as trustee or executor, or otherwise. "Applicable Price" shall mean the aggregate of (A) in the event of a Reorganization in which the holders of Common Stock receive cash, the amount of such cash receivable by the holder of one share of Common Stock (as such share is in effect immediately prior to the consummation of such Reorganization); and (B) in the event of a Reorganization in which the holders of Common Stock receive securities or other property which are traded on an established market (within the C-1 113 meaning of Treasury Regulation 1.1273-2(f)(1) of the Internal Revenue Code of 1986, as in effect on September 30, 1990), the average (or if there be more than one security or item of property the sum of the averages) of the daily Trading Prices of such securities and/or property receivable by the holder of one share of Common Stock (as such share is in effect immediately prior to such consummation) for the period of ten consecutive Trading Days ending on the Trading Day immediately preceding date of occurrence of the Reorganization, appropriately adjusted to take into account any stock dividend on such security or property, or any subdivision, split, combination, reclassification of such security or property that occurs or the "ex" date for which occurs on or prior to such date. "Average Market Price" on any Determination Date or Adjustment Date, as applicable, shall mean the average of the daily Closing Prices for the period of 10 consecutive Trading Days, ending on the Trading Day immediately preceding such Determination Date or Adjustment Date, as applicable, appropriately adjusted to take into account any stock dividend on the Common Stock or any subdivision, split, combination or reclassification of the Common Stock that occurs, or the date on which "ex-dividend" trading commences, during the period following the first Trading Day in such ten-Trading Day period to and including the Determination Date or Adjustment Date, as applicable. "Board" shall mean the Board of Directors of the Company, and, unless the context indicates otherwise, shall also mean, to the extent permitted by law, any committee thereof authorized, with respect to any particular matter, to exercise the power of the Board of Directors of the Company with respect to such matter. "Business Day" shall mean any day other than a Saturday, Sunday or a day on which banking institutions in New York, New York and London, England are authorized to close or not obligated by law or executive order to open. "Closing Price" shall mean, on any day: (i) the average between the high and low reported sale price of a share of Common Stock on and as reported by the Nasdaq Stock Market's National Market on such day; (ii) if the primary trading market for the Common Stock on such day is not the Nasdaq Stock Market's National Market, then the closing sale price regular C-2 114 way on such day, or, in case no such sale takes place on such day, the average of the reported closing bid and asked prices regular way on such day, in either case as reported by the Nasdaq System, the National Quotations Bureau, Inc. or a comparable service; (iii) if the Closing Price on such day is not available pursuant to one of the methods specified above, then the average of the bid and asked prices for the Common Stock on such day as furnished by any New York Stock Exchange member firm selected from time to time by the Board for that purpose; or (iv) if the Closing Price on such day is not available pursuant to the method specified in (iii) above, the determination of Closing Price shall be deter mined in good faith by the Board exercising its reasonable discretion. "Commission" shall have the meaning set forth in paragraph (4)(k). "Common Stock" shall mean the shares of common stock, par value $0.01 per share, of the Company, which term shall include, where appropriate, in the case of any reclassification, recapitalization or other change in the Common Stock, or in the case of a consolidation or merger of the Company with or into another Person affecting the Common Stock, such capital stock to which a holder of Common Stock shall be entitled upon the occurrence of such event. "Common Stock Dividend Amount" shall have the meaning set forth in paragraph (3) (c). "Convertible Securities" shall mean securities, including evidences of indebtedness or shares of stock, which are, at the option of the holder thereof, convertible into or exchangeable, directly or indirectly, for shares of Common Stock. "Determination Date" shall mean: (i) in the case of a dividend payment, the record date for such dividend payment, (ii) in the case of a redemption payment pursuant to paragraph (4)(a), the Redemption Date, (iii) in the case of a redemption payment pursuant to paragraph (4)(b), the tenth anniversary of the Issue Date, (iv) in the case of a redemption payment pursuant to paragraph (4)(d), the Adjustment Date, and (v) in the case of a Reorganization, the date the Reorganization occurs. C-3 115 "Effectiveness Date" shall have the meaning set forth in paragraph (4)(k). "Exchange Act" shall mean the Securities Exchange Act of 1934, as amended from time to time, or any successor statute, and the rules and regulations promulgated thereunder. "Extended Sale Date" shall have the meaning set forth in paragraph (4)(k). "Fixed Price", on any Determination Date with respect to any Other Equity Security, shall have the meaning assigned to such term in the certificate of designations relating to, and setting forth the terms of, such Other Equity Security. "Full Consideration Amount" shall have the meaning set forth in paragraph (4)(k). "Issue Date" shall mean December 21, 1998. "JPPF" shall mean the Series A Junior Participating Preferred Stock of the Company issuable upon exercise of the Rights pursuant to the Rights Agreement. "Junior Stock" shall mean: (i) each class or series of common stock of the Company, including, without limitation, the Common Stock; (ii) the JPPF issuable upon exercise of the Rights; (iii) any other class or series of capital stock of the Company hereafter created, other than (a) any class or series of Parity Stock (except to the extent provided under clause (iv) hereof) and (b) any class or series of Senior Stock, and (iv) any class or series of Senior Stock or Parity Stock to the extent that it ranks junior to the Mandatorily Redeemable Preferred Stock as to dividend rights, rights of redemption or rights on liquidation, as the case may be. For purposes of clause (iii) above, a class or series of Senior Stock or Parity Stock shall rank C-4 116 junior to the Mandatorily Redeemable Preferred Stock as to dividend rights, rights of redemption or rights on liquidation if the holders of shares of Mandatorily Redeemable Preferred Stock shall be entitled to dividend payments, payments on redemption or payments of amounts distributable upon dissolution, liquidation or winding up of the Company, as the case may be, in preference or priority to the holders of shares of such class or series of Senior Stock or Parity Stock. "Liquidating Payment" shall mean an amount equal to the Liquidation Preference of a share of Mandatorily Redeemable Preferred Stock or, if less, the amount payable in respect of one share of Mandatorily Redeemable Preferred Stock pursuant to paragraph (7)(a) upon the voluntary or involuntary liquidation, dissolution or winding up of the affairs of the Company. "Liquidating Payment Date" shall mean the date on which the Company makes the aggregate Liquidating Payment to all holders of outstanding shares of Mandatorily Redeemable Preferred Stock. "Liquidation Preference" measured per share of the Mandatorily Redeemable Preferred Stock, shall mean an amount equal to (a) the Stated Value per share of Mandatorily Redeemable Preferred Stock, plus (b) for purposes of determining the amount payable pursuant to paragraph (7) only, an amount equal to all dividends accrued but unpaid on such share, whether or not such unpaid dividends have been declared or there are funds of the Company legally available for the payment of dividends, to the Liquidating Payment Date. "Mandatorily Redeemable Preferred Stock" shall have the meaning set forth in paragraph (1). "Mandatory Redemption Price" shall have the meaning set forth in paragraph (4)(b). "Option" shall mean any right, option or warrant entitling the holder thereof to subscribe for, purchase, or otherwise acquire Convertible Securities or Common Stock in the Company (other than the Rights). "Other Equity Security" shall mean any equity security of the Company, other than Common Stock, issued by the Company to provide funds for the payment in cash of the Redemption Price or Mandatory Redemption Price in C-5 117 accordance herewith, with the rights to be determined in the sole discretion of the Company. "Parity Stock" shall mean the Mandatorily Redeemable Preferred Stock and any class or series of capital stock, whether now existing or hereafter created, of the Company to the extent ranking on a parity basis with the Mandatorily Redeemable Preferred Stock as to dividend rights, rights of redemption or rights on liquidation. Capital stock of any class or series, whether now or existing or hereafter created, shall rank on a parity as to dividend, rights of redemption or rights on liquidation with the Mandatorily Redeemable Preferred Stock, whether or not the dividend rates, dividend payment dates, redemption or liquidation prices per share or sinking fund or mandatory redemption provision, if any, are different from those of the Mandatorily Redeemable Preferred Stock, if the holders of shares of such class or series shall be entitled to dividend payments, payments on redemption or payments of amounts distributable upon dissolution, liquidation or winding up of the Company, as the case may be, in proportion to their respective accumulated and accrued and unpaid dividends, redemption prices or liquidation prices, respectively, without preference or priority, one over the other, as between the holders of shares of such class or series and the holders of Mandatorily Redeemable Preferred Stock. No class or series of capital stock that ranks junior to the Mandatorily Redeemable Preferred Stock as to rights on liquidation shall rank or be deemed to rank on a parity basis with the Mandatorily Redeemable Preferred Stock as to dividend rights or rights of redemption. "Payment Record Date" shall have the meaning set forth in paragraph (12). "Permitted Cost" shall mean underwriting costs, brokerage fees and related costs and expenses not exceeding 3% for Common Stock or 5% for any Other Equity Security of either the applicable amount of the Redemption Price or Mandatorily Redemption Price (in the event that any Other Equity Security is issued in order to provide cash for the redemption), or of gross proceeds (in any other case). "Person" shall mean any individual corporation, partnership, joint venture, association, joint stock company, limited liability company, trust, unincorporated organization, government or agency or political subdivision thereof, or other entity, whether acting in an individual, fiduciary or other capacity. C-6 118 "Redemption Agent" shall have the meaning set forth under paragraph (4)(h). "Redemption Date" as to any share of Mandatorily Redeemable Preferred Stock, shall mean the date on which such share is redeemed by the Company pursuant to paragraph (4). "Redemption Notice" shall have the meaning set forth in paragraph (4)(f). "Redemption Price" shall have the meaning set forth in paragraph (4)(a). "Registration Statement" shall have the meaning set forth in paragraph (4)(k). "Reorganization" shall mean any of the following events: (i) any consolidation or merger of the Company with another entity (other than a merger or consolidation in which the Company is the surviving or continuing corporation and in which the Common Stock outstanding immediately prior to the merger or consolidation remains unchanged), (ii) the sale or other transfer of all or substantially all of its assets to another entity, (iii) any reorganization or reclassification of the Common Stock or other equity securities of the Company, and (iv) any statutory exchange of any shares of capital stock of the Company for shares of capital stock of another corporation (other than a merger or consolidation in which the Company is the surviving or continuing corporation and in which the Common Stock outstanding immediately prior to the merger or consolidation remains unchanged). "Reorganization Unit" means the kind or amount of securities, cash or other property receivable upon consummation of a Reorganization in substitution of or in exchange for a share of Common Stock as such share is in effect immediately C-7 119 prior to such consummation (provided that if the kind or amount of securities, cash or other property receivable upon consummation of such Reorganization is not the same with respect to each such share, then the kind and amount of securities, cash or other property which shall be deemed receivable upon consummation of such Reorganization with respect to each such share for purposes hereof shall be the kind and amount so receivable per share by a plurality of such shares). "Rights" means the rights issuable pursuant to the Rights Agreement. "Rights Agreement" means the rights agreement, dated as of October 13, 1993, between the Company and Continental Transfer and Trust Company, as rights agent. "Securities Act" shall mean the Securities Act of 1933, as amended from time to time, or any successor statute, and the rules and regulations promulgated thereunder. "Senior Stock" shall mean any class or series of capital stock of the Company hereafter created to the extent ranking prior to the Mandatorily Redeem able Preferred Stock as to dividend rights, rights of redemption or rights on liquidation. Capital stock of any class or series shall rank prior to the Mandatorily Redeemable Preferred Stock as to dividend rights, rights of redemption or rights on liquidation if the holders of shares of such class or series shall be entitled to dividend payments, payments on redemption or payments of amounts distributable upon dissolution, liquidation or winding up of the Company, as the case may be, in preference or priority to the holders of shares of Mandatorily Redeemable Preferred Stock. No class or series of capital stock that ranks on a parity basis with or junior to the Mandatorily Redeemable Preferred Stock as to rights on liquidation shall rank or be deemed to rank prior to the Mandatorily Redeemable Preferred Stock as to dividend rights or rights of redemption, notwithstanding that the dividend rate, dividend payment dates, sinking fund provisions, if any, or mandatory redemption provisions thereof are different from those of the Mandatorily Redeemable Preferred Stock. "Stated Value" shall have the meaning set forth in paragraph (1). "Trading Day" shall mean a day on which the Nasdaq Stock Market's National Market or, if different, the principal exchange on which the Common Stock is quoted or traded is each open for the transaction of business. C-8 120 "Trading Price" of a security or property for any day means the closing sale price regular way on such day, or, in case no such sale takes place on such day, the average of the reported closing bid and asked prices of such security or property on such day on the applicable established market on which such security or property is traded. (3) DIVIDENDS. (a) Payment. The holders of outstanding shares of Mandatorily Redeemable Preferred Stock shall be entitled to receive, when, as and if declared by the Board out of funds legally available therefor (without prejudice to paragraph (3)(b)), dividends, in preference to dividends on any Junior Stock, at the rate per annum of 9.90% of the Stated Value per share, rounded to the nearest cent. Such dividends shall accrue from the Issue Date and shall be payable on the date the Mandatorily Redeemable Preferred Stock is redeemed pursuant to paragraph (4). Dividends on the outstanding shares of Mandatorily Redeemable Preferred Stock will accrue on a daily basis (without interest or compounding) whether or not there are funds legally available for the payment of such dividends and whether or not such dividends are declared. Dividends will cease to accrue in respect of shares of Mandatorily Redeemable Preferred Stock on the date of their redemption. No interest, or sum of money in lieu of interest, shall be payable in respect of any accrued dividend payment. (b) Declaration and Manner of Payment of Dividends. Any dividends may be paid, in the sole discretion of the Board: (i) in cash out of funds legally available therefor; (ii) through the delivery of shares of Common Stock; or (iii) through any combination of the foregoing forms of consideration elected by the Board in its sole discretion. If any dividend declared by the Board is to be paid, in whole or in part, through the delivery of shares of Common Stock, each holder of Mandatorily Redeemable Preferred Stock shall receive the same proportion of cash and/or shares of Common Stock (except for cash paid in lieu of fractional shares) delivered in payment of such dividend to other holders of shares of Mandatorily Redeemable Preferred Stock. (c) Payment of Dividends by Delivery of Common Stock. If the Company elects to pay any dividend payment, in whole or in part, by delivery of shares of Common Stock, the amount of such dividend payment to be paid per share of Mandatorily Redeemable Preferred Stock in shares of Common Stock (the C-9 121 "Common Stock Dividend Amount") shall be paid through the delivery to the holders of record for such shares of Mandatorily Redeemable Preferred Stock on the record date for such dividend payment (which shall be not more than 10 days prior to the payment date) of a number of shares of Common Stock determined by dividing the Common Stock Dividend Amount by the Average Market Price. No fractional shares of Common Stock shall be delivered to a holder of shares of Mandatorily Redeemable Preferred Stock, but the Company shall instead pay a cash adjustment determined as provided in paragraph (8). Common Stock so payable shall receive the benefit of customary resale registration rights. (d) Prohibitions on Cash Dividends. Notwithstanding anything contained in this Certificate to the contrary, but without effect on the accrual thereof, no cash dividends on shares of Mandatorily Redeemable Preferred Stock shall be declared by the Board or paid or set apart for payment by the Company at such time as the terms and provisions of any agreement of the Company, including, without limitation, any agreement, contract, indenture, bond, note, debenture, guarantee or other instrument relating to or evidencing its indebtedness, prohibits such declaration, payment or setting apart for payment or provides that such declaration, payment or setting apart for payment would constitute a breach thereof or a default thereunder; provided, however, that nothing contained in this paragraph (d) shall alter, limit or restrict the Company's obligation to declare and pay accrued dividends, to the extent permitted by applicable law, through the delivery of shares of Common Stock, whether permitted by any such agreement or not. (e) Pro Rata. All dividends paid with respect to the shares of Mandatorily Redeemable Preferred Stock shall be paid pro rata (as nearly as may be practicable) to the shareholders entitled thereto. (f) Priority. Payment of dividends to the holders of shares of Mandatorily Redeemable Preferred Stock shall be subject to the prior preferences and other rights of any Senior Stock and to the provisions of paragraph (6). (4) REDEMPTION. (a) Optional Redemption. At any time during the period beginning on the Issue Date until the Redemption Date, the Company shall have the right to redeem the outstanding shares of Mandatorily Redeemable Preferred Stock at a price equal to $1,000 per share, together with an amount equal to all dividends accrued but unpaid thereon to the Redemption Date (the "Redemption Price"). C-10 122 (b) Mandatory Redemption. All outstanding shares of Mandatorily Redeemable Preferred Stock shall be mandatorily redeemed by the Company out of funds legally available therefor on the date that is the tenth anniversary of the Issue Date at a redemption price equal to $1,000 per share, plus an amount equal to all accrued and unpaid dividends per share to the Redemption Date (the "Mandatory Redemption Price"). (c) Event of Reorganization. All outstanding shares of Mandatorily Redeemable Preferred Stock shall be mandatorily redeemed by the Company at the Mandatory Redemption Price in the event of a Reorganization, other than a Reorganization as set forth in paragraph (5)(a) or any other transaction undertaken for the bona fide purpose of causing the Common Stock of the Company to be convertible into or exchangeable for, immediately or over time, equity securities of a public limited company incorporated in England and/or Wales for the purpose of listing on the London Stock Exchange. (d) Early Mandatory Redemption. If by June 15, 2000, the Company has neither exercised its right to optionally redeem the Mandatorily Redeemable Preferred Stock pursuant to paragraph (4)(a) nor redeemed the Mandatorily Redeemable Preferred Stock pursuant to paragraph (4)(c), all outstanding shares of Mandatorily Redeemable Preferred Stock shall be mandatorily redeemed by the Company at the Mandatory Redemption Price, less any Permitted Cost. The Redemption Date for such redemption shall be July 1, 2000. (e) Company's Right to Elect Manner of Payment of Redemption Price or Mandatory Redemption Price. The Company may effect the redemption of shares of Mandatorily Redeemable Preferred Stock at the Redemption Price or the Mandatory Redemption Price, in the sole discretion of the Board: (i) in cash out of funds legally available therefor, (ii) subject to compliance with paragraph (g), in exchange for and through the delivery of shares of Common Stock, or (iii) through any combination of the foregoing forms of consideration elected by the Board in its sole discretion. (f) Notice of Redemption. In the event of an offer by the Company to redeem any shares of Mandatorily Redeemable Preferred Stock pursuant to paragraph (4)(a) or a redemption of the Mandatorily Redeemable Preferred Stock pursuant to paragraph (4)(b), (4)(c) or (4)(d), the Company shall provide notice of such offer to redeem or such redemption to holders of record of Mandatorily Re- C-11 123 deemable Preferred Stock to be redeemed not less than 30 days (not less than 10 days if the Redemption Price or Mandatory Redemption Price is payable in cash or Common Stock) nor more than 60 days prior to the Redemption Date. Such notice (a "Redemption Notice") shall, subject to paragraph (4)(h)(z), be provided in accordance with paragraph (13); provided, however, that neither failure to give such notice nor any defect therein shall affect the validity of the proceedings for the redemption of any shares of Mandatorily Redeemable Preferred Stock to be redeemed. In addition to any information required by law, the Redemption Notice shall state, as appropriate, the following (and may contain such other information as the Company deems advisable): (A) whether the redemption is pursuant to paragraph (4)(a), (4)(b), (4)(c) or (4)(d); (B) the Redemption Date; (C) the number of shares of Mandatorily Redeemable Preferred Stock to be redeemed and, if less than all the shares held by such holder are to be redeemed, the number of shares to be redeemed from such holder; (D) the Redemption Price or Mandatory Redemption Price and the form or forms of consideration that the Company has elected to pay and/or deliver upon such redemption and, if more than one form of consideration has been elected by the Company, the designated portions of the Redemption Price or Mandatory Redemption Price to be paid in each form of consideration so elected; (E) the place or places in the United States or England and Wales where certificates for Mandatorily Redeemable Preferred Stock to be redeemed are to be surrendered for redemption; and (F) that dividends on the shares of Mandatorily Redeemable Preferred Stock to be redeemed shall cease to accrue on the Redemption Date (unless the Company defaults in making payment of the Redemption Price). C-12 124 (g) Redemption by Delivery of Common Stock. If the Company elects to pay, in whole or in part, the Redemption Price in respect of shares of Mandatorily Redeemable Preferred Stock in exchange for and through the delivery of shares of Common Stock, then the Company shall deliver to each holder of shares of Mandatorily Redeemable Preferred Stock to be redeemed on the Redemption Date a number of shares of Common Stock equal to the aggregate Redemption Price (or designated portion thereof) of such shares of Mandatorily Redeemable Preferred Stock divided by the Average Market Price. No fractional shares of Common Stock shall be delivered to a holder of shares of Mandatorily Redeemable Preferred Stock in payment of the Redemption Price, but the Company shall instead pay a cash adjustment determined as provided in paragraph (8). (h) Deposit of Funds and/or Shares. If on or before the Redemption Date: (x) the Company shall have deposited with any bank or trust company organized under the laws of the United States of America or any state thereof having capital, undivided profits and surplus aggregating at least $250 million (the "Redemption Agent"), cash (including cash for any adjustment in lieu of delivering fractional shares) and/or shares of Common Stock sufficient to pay in full the aggregate Redemption Price (calculated through the Redemption Date) for such shares of Mandatorily Redeemable Preferred Stock on such Redemption Date, (y) such cash and/or shares of Common Stock are readily available to, but only to, the holders of Mandatorily Redeemable Preferred Stock in satisfaction of the obligations of the Company with respect to the payment of the Redemption Price and (z) the Company shall prior to the Redemption Date have so notified each record holder of Mandatorily Redeemable Preferred Stock, which notice shall be given to each holder of Mandatorily Redeemable Preferred Stock by courier and shall identify the Redemption Agent, its address and telephone and telecopier numbers and the contact person(s) at the Redemption Agent responsible for administration of the deposit then, effective as of the close of business on such Redemption Date (and notwithstanding that any certificate therefor shall not have been surrendered for cancellation): (i) such shares of Mandatorily Redeemable Preferred Stock shall no longer be deemed outstanding but any shares of Common Stock so deposited in accordance with this paragraph (h) for which such Mandatorily Redeemable Preferred Stock was redeemed shall be deemed to be outstanding; (ii) the holders thereof shall cease to be holders of Mandatorily Redeemable Preferred Stock but shall be shown on the records of the Company as holders of the Common Stock so deposited in accordance with this paragraph (h) in redemption of such Mandatorily Redeemable Preferred Stock; (iii) dividends with respect to the shares so called for redemption shall cease to accrue on the Redemption Date but, subject to paragraph (4)(g), such holders shall C-13 125 be entitled to any dividends which shall thereafter accrue on, and shall be entitled to exercise all other rights associated with, any shares of Common Stock so deposited in accordance with this paragraph (h) in redemption of such Mandatorily Redeemable Preferred Stock; and (iv) all rights whatsoever with respect to the shares so called for redemption shall forthwith cease and terminate (except the right of such holders, upon the surrender of certificates evidencing the shares of Mandatorily Redeemable Preferred Stock so redeemed, to receive the cash and/or Common Stock payable or deliverable in payment of the Redemption Price therefor, and the applicable cash adjustment, if any, in lieu of fractional shares, without interest). Any cash and/or shares of Common Stock so deposited or set apart which shall remain unclaimed at the end of one year after the Redemption Date shall be returned or released to the Company, after which time the holders of shares of Mandatorily Redeemable Preferred Stock called for redemption on such Redemption Date that remain outstanding after such one-year period shall look only to the Company for the payment of the Redemption Price for such shares, without interest. Subject to compliance with paragraph (4)(k), a deposit made in compliance with the immediately preceding sentence shall, except to the extent released or returned to the Company, be deemed to constitute full payment for the shares of Mandatorily Redeemable Preferred Stock to be redeemed. Any interest accrued on funds so deposited shall be paid by the Redemption Agent to the Company from time to time. (i) Surrender of Certificates; Status. Each holder of shares of Mandatorily Redeemable Preferred Stock to be redeemed shall not be entitled to receive payment of the Redemption Price or Mandatory Redemption Price for such shares until such holder shall surrender the certificates evidencing such shares duly endorsed by, or accompanied by, an instrument of transfer (in form reasonably satisfactory to the Company) duly executed by, the holder or such holder's duly authorized attorney-in-fact or, if the shares issuable upon redemption are to be issued in the same name as the name in which such share of the Mandatorily Redeemable Preferred Stock is registered, in blank to the Redemption Agent (or to the Company if there is no Redemption Agent) at the place designated in the Redemption Notice for such redemption and shall thereupon be entitled to receive the consideration for such shares specified in the Redemption Notice in an aggregate amount equal to the Redemption Price or Mandatory Redemption Price for such shares. Holders of shares of Mandatorily Redeemable Preferred Stock that are redeemed on the Redemption Date shall not be entitled to receive dividends declared and paid on any shares of Common Stock exchangeable and deliverable in payment of the Redemp- C-14 126 tion Price or Mandatory Redemption Price (or designated portion thereof) for such shares of Mandatorily Redeemable Preferred Stock, and such shares of Common Stock shall not be entitled to vote, until such shares of Common Stock are delivered upon the surrender of the certificates representing such shares of Mandatorily Redeemable Preferred Stock. Upon such surrender, such holders shall be entitled to receive such dividends declared and paid subsequent to such Redemption Date and prior to the delivery. (j) Priority. The right of the Company to redeem shares of Mandatorily Redeemable Preferred Stock pursuant to this paragraph (4) shall be subject to the prior preferences and other rights of any Senior Stock and to the provisions of paragraph (7). (k) Full Consideration Amount. If the Company elects to exchange and deliver shares of Common Stock in payment of the Mandatory Redemption Price (or a designated portion thereof) pursuant to paragraph (e), the Company shall be obligated to file (on or prior to April 1, 2000) and cause to be declared effective by the Securities and Exchange Commission (the "Commission") a resale "shelf" registration statement (the "Registration Statement"), or such other successor form of registration statement that may be adopted by the Commission from time to time, on behalf of the holders of such Common Stock. The Company may deliver shares of Common Stock having a value (equal to the Average Market Price as of April 1, 2000) to the holders. When the Registration Statement is declared effective (the "Effectiveness Date"), the holders shall sell at the time (but no later than the later to occur of June 15, 2000 and ten Business Days after the Effectiveness Date (the "Extended Sale Date")) and in a bona fide manner designated by the Company (but shall not sell or transfer in any other manner until after June 15, 2000 (if the Effectiveness Date has not theretofore occurred) and prior to the Effectiveness Date), the shares of Common Stock received in redemption of the Mandatorily Redeemable Preferred Stock and the holders shall be required to cooperate fully (including by executing customarily required documentation) in such process and the holders shall retain the proceeds of such sale. On or prior to the later to occur of July 1, 2000 and two Business Days after the Extended Sale Date (either, the "Adjustment Date"), the Company shall deliver to such holders, on a pro rata per share basis, consideration (payable as set forth in paragraph (l)) equal to (a) (pound)31 million, together with accrued and unpaid dividends, calculated to the date of such delivery, as if the Mandatorily Redeemable Preferred Stock had remained outstanding until the Adjustment Date (the "Full Consideration Amount"), minus the aggregate of (b) (i) in the event that any such holders have previously sold all or a portion of their shares of Common C-15 127 Stock pursuant to such Registration Statement or otherwise by such date, the aggregate amount of proceeds from any such sale (without deduction of any customary underwriting costs, brokerage fees and other related costs and expenses not exceeding the Permitted Cost), plus (ii) in the event that any such holders still retain (by agreement of the holders and the Company) all or a portion of their shares of Common Stock on such date, the amount which is equal to the current market value of such shares of Common Stock, as determined using the Average Market Price, as of the Adjustment Date, plus (iii) the aggregate amount of any cash previously delivered in payment of the Redemption Price; provided, however, that (i) in no event shall any payment be made pursuant to this paragraph if the amount determined pursuant to subparagraph (b) above exceeds the Full Consideration Amount and (ii) if for any reason (other than agreement of the holders and the Company) shares of Common Stock are not sold by the Adjustment Date, the Full Consideration Amount shall be adjusted to and calculated as of the date the shares are actually sold. (l) Payments with Respect to Full Consideration Amount. Any payment required to be made by the Company pursuant to the preceding paragraph may be paid, in the sole discretion of the Company, (i) in cash out of funds legally available therefor, (ii) in exchange for and through the delivery of shares of Common Stock, valued as of the Adjustment Date, or (iii) through any combination of the foregoing forms of consideration elected by Company in its sole discretion. Common Stock so payable shall be valued at the Average Market Price as of the Adjustment Date and shall promptly receive the benefit of customary resale registration rights. (m) Other Equity Security. If the Company elects to sell any Other Equity Security at any time prior to June 15, 2000 in order to fund the redemption of the Mandatorily Redeemable Preferred Stock and/or Common Stock issued in redemption thereof, the holders will deliver such securities to the Company in exchange for the proceeds of the sale of such Other Equity Security (less any Permitted Cost). (5) REORGANIZATIONS. (a) Holding Company. Notwithstanding anything herein to the contrary, if the Company is reorganized such that the Common Stock is exchanged for the common stock of a new entity ("Holdco") whose common stock is traded on NASDAQ or another recognized securities exchange, then the Company, by notice to C-16 128 the holders of the Mandatorily Redeemable Preferred Stock but without any required consent on their part, may cause the exchange of this Mandatorily Redeemable Preferred Stock for mandatorily redeemable preferred stock of Holdco having the same terms and conditions as set forth herein, provided that where Holdco is not solely incorporated as a Delaware company or where the Holdco share structure is not identical to that of the Company, the rights attaching to the mandatorily redeem able preferred stock of Holdco may be adjusted so as to comply with the local law of the country of incorporation of Holdco or the new share structure of Holdco subject to such rights effectively giving the same economic rights as the Mandatorily Redeemable Preferred Stock (ignoring for these purposes any resultant change in the tax treatment for the holders of such stock). (b) Notices of Corporate Action. If: (i) the Company or the Board shall approve any Reorganization to which the Company is a party and for which approval of any stockholders of the Company is required; or (ii) there shall be a voluntary or involuntary dissolution, liquidation or winding up of the Company; then, in each case, the Company shall cause to be given to the holders of shares of the Mandatorily Redeemable Preferred Stock in accordance with paragraph (13), as promptly as possible, but at least 10 days prior to the applicable date hereinafter specified, a notice stating the date on which the event giving rise to an adjustment of the type described in paragraph (6)(a), such a Reorganization, dissolution, liquidation or winding up may occur, as the case may be, is expected to become effective or occur, and, if earlier, the date as of which it is expected that holders of Common Stock of record shall be entitled to exchange their shares of Common Stock for stock of the Company, securities, cash or other property deliverable upon such Reorganization, dissolution, liquidation or winding up. Failure to give or receive such notice or any defect therein shall not affect the legality or validity of the action or transactions described in sub-paragraphs (i) or (ii) above. (c) Listing of Common Stock. The Company will list the shares of Common Stock required to be delivered as payment of dividends or upon redemption or conversion of shares of the Mandatorily Redeemable Preferred Stock, prior to delivery, upon each national securities exchange, the Nasdaq Stock Market's Na- C-17 129 tional Market or any similar system of automated dissemination of securities prices, if any, upon which the Common Stock is listed at the time of delivery. (d) Provision of Information. So long as any shares of Mandatorily Redeemable Preferred Stock remain outstanding, the Company undertakes to provide without charge to each record holder of such shares copies of each: (i) annual report of the Company on Form 10-K filed pursuant to Section 13(a) of the Exchange Act concurrently with such filing; (ii) quarterly reports of the Company on Form 10-Q and current report of the Company on Form 8-K filed pursuant to Section 13(a) or 15(d) or the Exchange Act concurrently with such filing; (iii) definitive proxy or information statement, form of proxy or other material of the Company filed pursuant to Section 14(a) of the Exchange Act concurrently with such filing; and (iv) notice, press release and other information delivered to holders of Common Stock generally concurrently with such delivery. (6) LIMITATIONS ON DIVIDENDS AND REDEMPTIONS IN RESPECT OF COMPANY STOCK. (a) Limitations on Junior Stock Dividends. As long as any shares of Mandatorily Redeemable Preferred Stock are outstanding, no dividends shall be paid or declared in cash on Junior Stock, nor shall any other distributions be made on any Junior Stock. (b) Limitations on Purchase of Junior Stock. As long as any shares of Mandatorily Redeemable Preferred Stock are outstanding, no shares of any Junior Stock may be purchased, redeemed, or otherwise acquired by the Company or any of its subsidiaries (except in connection with a reclassification of any Junior Stock through the issuance of other Junior Stock and/or Convertible Securities for shares of Junior Stock and cash in lieu of fractional shares in connection therewith, or the purchase, redemption or other acquisition of any Junior Stock from any wholly-owned subsidiary), nor may any funds be set aside or made available for any sinking fund for the purchase, redemption or other acquisition of any Junior Stock. (c) Limitations on Parity Stock Dividends and Redemptions. As long as any share of Mandatorily Redeemable Preferred Stock is outstanding, dividends or other distributions may not be declared or paid on any Parity Stock, and the Company may not purchase, redeem or otherwise acquire any Parity Stock (other than any outstanding shares of 9.90% Non-Voting Mandatorily Redeemable Preferred Stock, Series A, issued pursuant to the Certificate of Designations of the Company, dated C-18 130 September 21, 1998, or outstanding shares of 13% Series B Senior Redeemable Exchangeable Preferred Stock, issued pursuant to the Certificate of Designations of the Company, dated February 12, 1997) (except (x) from any wholly-owned subsidiaries of the Company or (y) in connection with a mandatory conversion or exchange of such Parity Stock or a conversion or exchange of such Parity Stock at the option of the holder for securities other than Parity Stock or Senior Stock and cash in lieu of fractional shares in connection therewith), unless with respect to the payment of dividends only, any such dividends are declared and paid pro rata so that the amounts of any dividends declared and paid per share on shares of Mandatorily Redeemable Preferred Stock and each other share of such Parity Stock will in all cases bear to each other the same ratio that accrued and unpaid dividends (including any accumulation with respect to unpaid dividends for prior dividend periods, if such dividends are cumulative) per share on shares of Mandatorily Redeemable Preferred Stock and such other share of Parity Stock bear to each other. (d) Certain Permitted Dividends and Redemptions. Nothing contained in this paragraph (6) shall prevent: (i) the payment of dividends or the making of distributions on any Junior Stock solely in shares of Junior Stock and/or Convertible Securities for shares of Junior Stock (together with a cash adjustment for fractional shares, if any) or the redemption, purchase or other acquisition of Junior Stock solely in exchange for (together with a cash adjustment for fractional shares, if any), or through the application of the proceeds from the sale of, shares of Junior Stock and/or Convertible Securities for shares of Junior Stock; (ii) the payment of dividends or the making of distributions on any class or series of Parity Stock solely in (together with a cash adjustment for fractional shares, if any) shares of Junior Stock and/or Convertible Securities for shares of Junior Stock or the redemption, exchange, purchase or other acquisition of any class or series of Parity Stock solely in exchange for (together with a cash adjustment for fractional shares, if any), or through the application of the proceeds from the sale of shares of Junior Stock and/or Convertible Securities for shares of Junior Stock or (iii) the conversion or exchange of Mandatorily Redeemable Preferred Stock into or for shares of Common Stock (together with a cash adjustment for fractional shares, if any) and other securities, assets or property, if any pursuant to the provisions of paragraphs (3), (4) or (5). (f) Waiver. The provisions of paragraphs (6)(a), (b) and (d) are for the sole benefit of the holders of Mandatorily Redeemable Preferred Stock and any other class or series of Parity Stock having the terms described therein and accordingly, at any time when (i) there are no shares of any such other class or series of Parity Stock outstanding or if the holders of each such other class or series of Parity C-19 131 Stock have, by such vote or consent of the holders thereof as may be provided for in the instrument creating or evidencing such class or series, waived in whole or in part the benefit of such provisions (either generally or in the specific instance), and (ii) the holders of shares of Mandatorily Redeemable Preferred Stock shall have waived (as provided in paragraph (14)) in whole or in part the benefit of such provision (either generally or in the specific instance), then the provisions of paragraphs (6)(a), (b) and (d) shall not (to the extent waived, in the case of any partial waiver) restrict the payment of dividends or the making of distributions on, or the redemption, purchase or other acquisition of any shares of, Mandatorily Redeemable Preferred Stock, any other class or series of Parity Stock or any Junior Stock. (7) LIQUIDATION RIGHTS. (a) Payment of Liquidation Preference. If there is any liquidation, dissolution, or winding up of the Company, whether voluntary or involuntary, then the holders of shares of Mandatorily Redeemable Preferred Stock then outstanding, after payment, or provision for payment of the debts and other liabilities of the Company and the payment or provision for payment of any distribution on any shares of Senior Stock, and before any distribution to the holders of Junior Stock, shall be entitled to be paid out of the assets of the Company available for distribution to its stockholders an amount per share of Mandatorily Redeemable Preferred Stock in cash equal to the Liquidation Preference. If the assets of the Company available for distribution to the holders of the shares of Mandatorily Redeemable Preferred Stock upon any dissolution, liquidation or winding up of the Company shall be insufficient to pay in full the Liquidation Preference payable to the holders of outstanding shares of Mandatorily Redeemable Preferred Stock and the liquidation preference payable to all other shares of Parity Stock (as set forth in the instrument or instruments creating such Parity Stock), then the holders of shares of Mandatorily Redeemable Preferred Stock and of all other shares of Parity Stock shall share ratably in such distribution of assets in proportion to the amount which would be payable on such distribution if the amounts to which the holders of outstanding shares of Mandatorily Redeemable Preferred Stock and the holders of outstanding shares of such other Parity Stock were paid in full. Except as provided in this paragraph (7)(a), holders of Mandatorily Redeemable Preferred Stock shall not be entitled to any distribution in the event of the liquidation, dissolution or winding up of the affairs of the Company. C-20 132 (b) Certain Events Not Deemed Liquidation, Etc. For the purposes of this paragraph (7) a Reorganization shall not be deemed to be a voluntary of involuntary liquidation, dissolution or winding up of the Company. (8) NO FRACTIONAL SHARES. No fractional shares of Common Stock or scrip shall be issued in connection with the delivery of shares of Common Stock in payment, in whole or in part, of any dividend, Redemption Price or Liquidating Payment. Whether or not a fractional share would be delivered to a holder of Mandatorily Redeemable Preferred Stock shall be based upon, in the case of the payment, in whole or in part, of dividends, a Redemption Price or a Liquidating Payment pursuant to paragraphs (3), (4) or (7), respectively, on the total number of shares of Mandatorily Redeemable Preferred Stock at the time held by such holder and the total number of shares of Common Stock, otherwise deliverable in respect thereof. Instead of the issuance of a fraction of a share of Common Stock or scrip, the Company shall pay instead an amount in cash (rounded to the nearest whole cent) equal to, in the case of Common Stock, the same fraction of the Closing Price of a share of preceding the Determination Date. (9) PAYMENT OF TAXES. The Company shall pay any and all documentary, stamp or similar transfer taxes payable in respect of the delivery of shares of Common Stock, pursuant to paragraphs (3), (4) or (7), as applicable; provided, however, the Company shall not be required to pay any such tax that may be payable because any such shares are issued in a name other than the name of the holder of such Mandatorily Redeemable Preferred Stock. (10) NO PREEMPTIVE RIGHTS. The holders of shares of Mandatorily Redeemable Preferred Stock shall have no preemptive rights, including preemptive rights with respect to any shares of capital stock or other securities of the Company convertible into or carrying rights or options to purchase any such shares. (11) VOTING RIGHTS. (a) The holders of shares of Mandatorily Redeemable Preferred Stock shall have no Voting rights, except as otherwise required by law and except as set forth in this paragraph (11). When and if the holders of Mandatorily Redeemable Preferred Stock are entitled to vote by law or pursuant to this paragraph (11), each holder will be entitled to one vote per share. (b) Certain Changes to Charter. For as long as any shares of Mandatorily Redeemable Preferred Stock remain outstanding, the affirmative vote of the holders of at least a majority of such outstanding shares (voting separately as a C-21 133 class) given in Person or by proxy at an annual meeting or a special meeting called for such purpose, shall be necessary (i) before the Company may amend any of the provisions of this Certificate of Designations or the Restated Certificate of Incorporation of the Company which would alter or change the powers, preferences or special rights of the holders of the shares of Mandatorily Redeemable Preferred Stock then outstanding so as to affect them adversely; provided, however, that: (x) any such amendment that would authorize, create or increase the authorized amount of any additional shares of Junior Stock or shares of any other class or series of Parity Stock (whether or not already authorized); and (y) any such amendment that would increase the number of authorized shares of Preferred Stock of the Company (but not the number of authorized shares of Mandatorily Redeemable Preferred Stock) or that would decrease (but not below the number of shares, then outstanding) the number of authorized shares of Preferred Stock (but not the number of authorized shares of Mandatorily Redeemable Preferred Stock); shall be deemed not to adversely affect such powers preferences or rights and shall not be subject to approval by the holders of shares of Mandatorily Redeemable Preferred Stock; and (ii) before the Company may reclassify the outstanding shares of Mandatorily Redeemable Preferred Stock into another class or series of capital stock of the Company; provided further, however, that no consent described in clause (i) of this paragraph of the holders of the shares of Mandatorily Redeemable Preferred Stock shall be required if, at or prior to the time when such amendment is to take effect, provision is made for the redemption of all shares of Mandatorily Redeemable Preferred Stock at the time outstanding. (c) Creation of Senior Stock. No consent or vote of the holders of the shares of Mandatorily Redeemable Preferred Stock shall be necessary before the Company or the Board may authorize, create or issue any class or series of Senior Stock. (d) No Other Vote. Except as otherwise set forth in this paragraph (11) or as required by law, the holders of Mandatorily Redeemable Preferred Stock shall not have any relative, participating, optional or other special voting rights and powers and the consent or vote of such holders shall not be required for the taking of C-22 134 any corporate action by the Company or the Board. The provisions of this paragraph (11) are in lieu of, and not in addition to, any voting rights specified in the Restated Certificate of Incorporation as applicable to a series of Preferred Stock. (12) PAYMENTS. Payment of cash amounts due in respect of the Mandatorily Redeemable Preferred Stock will be paid to the holders of shares of Mandatorily Redeemable Preferred Stock (or, in the case of joint holders, the first-named) as appearing in the stock register of the Company for the Mandatorily Redeemable Preferred Stock as at opening of business (New York time) on the date specified in this Certificate for the purpose of determining the holders of Mandatorily Redeemable Preferred Stock entitled to such payments or, if no such date is specified, the fifteenth Business Day before the due date for such payment (the "Payment Record Date"). Payments of cash amounts due in respect of the Mandatorily Redeemable Preferred Stock will be made by a check in U.S. dollars drawn on a bank in New York and mailed to the address (as recorded in the stock register of the Company for the Mandatorily Redeemable Preferred Stock) of the holder thereof (or, in the case of joint holders, the first-named) not later than the relevant date for payment unless, prior to the relevant Payment Record Date, the Company has received from the holder thereof (or, in the case of joint holders, the first-named) written instructions for payment to be made by wire transfer to a specified designated account. If the due date for payment of any cash amount in respect of the Mandatorily Redeemable Preferred Stock is not a Business Day, then the holder thereof will not be entitled to payment thereof until the next following day which is a Business Day and, if such payment is to be made by transfer to a designated account rather than by check, a day on which commercial banks and foreign exchange markets settle, payments in U.S. dollars in the place where the relevant designated account is located. (13) NOTICES. Any notice or communication by a holder of Mandatorily Redeemable Preferred Stock to the Company is duly given if in writing and delivered in person or mailed by first-class mail to the Company at its address as set forth in its then most recently filed Form 10-K or 10-Q as the case may be. Any notice or communications to a holder of Mandatorily Redeemable Preferred Stock shall be mailed by first-class mail to his address shown on the stock register of the Company for the Mandatorily Redeemable Preferred Stock or, if there are more than 200 holders of record of the Mandatorily Redeemable Preferred C-23 135 Stock and the Company in its sole discretion so elects, in a leading daily newspaper having general circulation in New York (which is expected to be the Wall Street Journal) or England and Wales (which is expected to be The Financial Times). Failure to mail a notice or communication to one holder or any defect in it shall not affect its sufficiency with respect to other holders. If a notice or communication is given in the manner provided in this paragraph (13) within the time prescribed by this Certificate, it shall be conclusively presumed to have been duly given, whether or not the person entitled to such notice receives it. (14) WAIVER. Any provision of this Certificate of Designations which, for the benefit of the holders of Mandatorily Redeemable Preferred Stock, prohibits, limits or restricts actions by the Company may be waived in whole or in part, or the application of all or any part of such provision in any particular circumstance or generally may be waived, in each case with the consent of the holders of at least a majority of the number of shares of Mandatorily Redeemable Preferred Stock then outstanding, either in writing or by vote at a meeting called for such purpose at which the holders of Mandatorily Redeemable Preferred Stock shall vote as a separate class. (15) REGISTRATION AND NO TRANSFER. The Company will maintain at its principal executive office a register in which the Company will provide for the registration of shares of Mandatorily Redeemable Preferred Stock. The shares of Mandatorily Redeemable Preferred Stock are not transferrable, except to any Affiliate of any holder thereof, provided, that such shares shall be reconveyed to any such holder who transfers to an Affiliate in the event that such Affiliate ceases to be an Affiliate of such transferring holder, and any certificate representing shares of Mandatorily Redeemable Preferred Stock will be so legended. (16) EXCLUSION OF OTHER RIGHTS. Except as may otherwise be required by law, the shares of Mandatorily Redeemable Preferred Stock shall not have any designations, preferences, limitations or relative rights other than those specifically set forth in this Certificate of Designations. (17) SEVERABILITY OF PROVISIONS. Whenever possible, each provision of this Certificate of Designations shall be interpreted in a manner as to be effective and valid under applicable law, but if any provision hereof is held to be prohibited by or invalid under applicable law, such provision shall be ineffective C-24 136 only to the extent of such prohibition or invalidity, without invalidating or otherwise adversely affecting the remaining provisions hereof. If a court of competent jurisdiction should determine that a provision hereof would be valid or enforceable if a period of time were extended or shortened or a particular percentage were increased or decreased, then such court may make such change as shall be necessary to render the provision in question effective and valid under applicable law. C-25 137 Exhibit D 5 1/4% CONVERTIBLE PREFERRED STOCK, SERIES A (1) Number and Designation. 500,000 shares of the Preferred Stock of the Corporation shall be designated as 5 1/4% Convertible Preferred Stock, Series A (the "5 1/4% Preferred Stock") and no other shares of Preferred Stock shall be designated as 5 1/4% Preferred Stock. (2) Definitions. For purposes of the 5 1/4% Preferred Stock, the following terms shall have the meanings indicated: "Board of Directors" shall mean the board of directors of the Corporation or the Executive Committee, if any, of such board of directors or any other committee duly authorized by such board of directors to perform any of its responsibilities with respect to the 5 1/4% Preferred Stock. "Business Day" shall mean any day other than a Saturday, Sunday or a day on which state or federally chartered banking institutions in New York, New York are not required to be open. "Common Stock" shall mean the Corporation's Common Stock, par value $.01 per share. "Constituent Person" shall have the meaning set forth in paragraph (8)(e) hereof. "Conversion Rate" shall have the meaning set forth in paragraph (8)(a) hereof. "Current Market Price" of publicly traded shares of Common Stock or any other class of capital stock or other security of the Corporation or any other issuer for any day shall mean (i) if the security is then listed or admitted to trading on a national securities exchange in the United States, the last reported sale price, regular way, for the security as reported in the consolidated transaction or other reporting system for securities listed or traded on such exchange, or (ii) if the security is quoted on the Nasdaq National Market, the last reported sale price, regular way, for the security as reported on such list, or (iii) if the security is not so admitted for trading on any national securities exchange or the Nasdaq National Market, the average of the last reported closing bid and asked prices reported by the Nasdaq as furnished by any member in good standing of the National Association of Securities Dealers, Inc., selected from time to time by the Company for that D-1 138 purpose or as quoted by the National Quotation Bureau Incorporated. In the event that no such quotation is available for such day, the Current Market Price shall be the average of the quotations for the last five Trading Days for which a quotation is available within the last 30 Trading Days prior to such day. In the event that five such quotations are not available within such 30-Trading Day period, the Board of Directors shall be entitled to determine the Current Market Price on the basis of such quotations as it reasonably considers appropriate. "Determination Date" shall have the meaning set forth in paragraph (8)(d) hereof. "Dividend Payment Date" shall mean September 30, December 30, March 30 and June 30 of each year, commencing on March 30, 1999; provided, however, that if any Dividend Payment Date falls on any day other than a Business Day, the dividend payment due on such Dividend Payment Date shall be paid on the Business Day immediately following such Dividend Payment Date. "Dividend Periods" shall mean quarterly dividend periods commencing on September 30, December 30, March 30 and June 30 of each year and ending on and including the day preceding the first day of the next succeeding Dividend Period (other than the initial Dividend Period which shall commence on the Issue Date and end on and include March 30, 1999). "Fair Market Value" shall mean the average of the daily Current Market Prices of a share of Common Stock for the 25 Trading Days immediately prior to the date for which such value is to be computed. "5 1/4% Preferred Stock" shall have the meaning set forth in paragraph (1) hereof. "Issue Date" shall mean the first date on which shares of 5 1/4% Preferred Stock are issued. "Junior Securities" shall have the meaning set forth in paragraph (3) hereof. "Junior Securities Distribution" shall have the meaning set forth in paragraph (4)(e) hereof. D-2 139 "Mandatory Redemption Date" shall have the meaning set forth in paragraph (6)(c) hereof. "Mandatory Redemption Obligation" shall have the meaning set forth in paragraph (6)(d) hereof. "Nasdaq" means the National Association of Securities Dealers, Inc. Automated Quotations System. "non-electing share" shall have the meaning set forth in paragraph (8)(e) hereof. "NYSE" means the New York Stock Exchange. "outstanding", when used with reference to shares of stock, shall mean issued shares, excluding shares held by the Corporation or a subsidiary. "Parity Securities" shall have the meaning set forth in paragraph (3) hereof. "Person" shall mean any individual, a corporation, a partnership, an association, a joint-stock company, a limited liability company, a trust, any unincorporated organization, or a government or political subdivision thereof. "Preferred Stock" shall have the meaning set forth in the first resolution above. "Preferred Shares" has the meaning set forth in paragraph (9)(b). "Relevant Compounding Factor" shall mean, with respect to each share of 5 1/4% Preferred Stock, upon initial issuance 1.00, and shall on each Dividend Payment Date be increased to equal the product of the Relevant Compounding Factor in effect immediately prior to such Dividend Payment Date and 1.013125. "Securities" shall have the meaning set forth in paragraph (8)(d) hereof. D-3 140 "Senior Securities" shall have the meaning set forth in paragraph (3) hereof. "set apart for payment" shall be deemed to include, without any action other than the following, the recording by the Corporation in its accounting ledgers of any accounting or bookkeeping entry which indicates, pursuant to a declaration of dividends or other distribution by the Board of Directors, the allocation of funds to be so paid on any series or class of capital stock of the Corporation; provided, however, that if any funds for any class or series of Junior Securities or any class or series of Parity Securities are placed in a separate account of the Corporation or delivered to a disbursing, paying or other similar agent, then "set apart for payment" with respect to the 5 1/4% Preferred Stock shall mean placing such funds in a separate account or delivering such funds to a disbursing, paying or other similar agent. "Trading Day" shall mean any day on which the securities in question are traded on the NYSE, or if such securities are not listed or admitted for trading on the NYSE, on the principal national securities exchange on which such securities are listed or admitted, or if not listed or admitted for trading on any national securities exchange, on the Nasdaq National Market, or if such securities are not quoted thereon, in the applicable securities market in which the securities are traded. "Transaction" shall have the meaning set forth in paragraph (8)(e) hereof. (3) Rank. Any class or series of stock of the Corporation shall be deemed to rank: (a) prior to the 5 1/4% Preferred Stock, either as to the payment of dividends or as to distribution of assets upon liquidation, dissolution or winding up, or both, if the holders of such class or series shall be entitled by the terms thereof to the receipt of dividends and of amounts distributable upon liquidation, dissolution or winding up, in preference or priority to the holders of 5 1/4% Preferred Stock ("Senior Securities"); D-4 141 (b) on a parity with the 5 1/4% Preferred Stock, either as to the payment of dividends or as to distribution of assets upon liquidation, dissolution or winding up, or both, whether or not the dividend rates, dividend payment dates or redemption or liquidation prices per share thereof be different from those of the 5 1/4% Preferred Stock, if the holders of the 5 1/4% Preferred Stock and of such class of stock or series shall be entitled by the terms thereof to the receipt of dividends or of amounts distributable upon liquidation, dissolution or winding up, or both, in proportion to their respective amounts of accrued and unpaid dividends per share or liquidation preferences, without preference or priority one over the other and such class of stock or series is not a class of Senior Securities (Parity Securities); and (c) junior to the 5 1/4% Preferred Stock, either as to the payment of dividends or as to the distribution of assets upon liquidation, dissolution or winding up, or both, if such stock or series shall be Common Stock or if the holders of the 5 1/4% Preferred Stock shall be entitled to receipt of dividends, and of amounts distributable upon liquidation, dissolution or winding up, in preference or priority to the holders of shares of such stock or series ("Junior Securities"). The 13% Series B Senior Redeemable Exchangeable Preferred Stock (the "13% Preferred") is a Senior Security. Each of the 9.9% Non-Voting Mandatory Redeemable Preferred Stock, Series A ("Series A Preferred"), and 9.9% Non-Voting Mandatory Redeemable Preferred Stock, Series B ("Series B Preferred"), is a Junior Security. One or more classes of Additional Preferred (as defined below) shall be Parity Securities provided, however, that there shall be no issue of other Parity Securities except as approved by the holders of the 5 1/4% Preferred Stock pursuant to paragraph 9(d). The respective definitions of Senior Securities, Junior Securities and Parity Securities shall also include any rights or options exercisable for or convertible into any of the Senior Securities, Junior Securities and Parity Securities, as the case may be. The 5 1/4% Preferred Stock shall be subject to the creation of Junior Securities, Parity Securities and Senior Securities as set forth herein. D-5 142 (4) Dividends. (a) Subject to paragraph (8)(b)(ii), the holders of shares of 5 1/4% Preferred Stock shall be entitled to receive, when, as and if declared by the Board of Directors, out of funds legally available for the payment of dividends, dividends at the quarterly rate of $13.125 per share (assuming a $1,000.00 face amount) payable in cash, shares of Common Stock equal to $13.125 per share of 5 1/4% Preferred Stock (having a value equal to the Current Market Price as of the record date for such Dividend Payment Date) or additional shares of Preferred Stock of a class to be designated by the Board of Directors having terms substantially identical to the 5 1/4% Preferred Stock except that: (i) the Conversion Rate (as set forth in Section 8(a)) shall be the product of the Conversion Rate (as then in effect) and the Relevant Compounding Factor and (ii) the number of the shares of such Preferred Stock payable as a dividend on any Dividend Payment Date shall increase for each Dividend Payment Date from the first Dividend Payment Date by the Relevant Compounding Factor (such classes of Preferred Stock singularly and collectively, the "Additional Preferred"). Such dividends shall be payable in arrears quarterly on each Dividend Payment Date. Dividends on the 5 1/4% Preferred Stock shall be cumulative from the Issue Date (except that dividends on Additional Shares shall accrue from the date such Additional Shares are issued or would have been issued in accordance with this Certificate of Designation if such dividends had been declared), whether or not in any Dividend Period or Periods there shall be funds of the Corporation legally available for the payment of such dividends. Each such dividend shall be payable to the holders of record of shares of the 5 1/4% Preferred Stock, as they appear on the stock records of the Corporation at the close of business on the record date for such dividend. Upon the declaration of any such dividend, the Board of Directors shall fix as such record date on the fifth Business Day preceding the relevant Dividend Payment Date and shall give notice on or prior to the record date of the form of payment of such dividend. Accrued and unpaid dividends for any past Dividend Payment Date may be declared and paid at any time, without reference to any Dividend Payment Date, to holders of record on such record date, not more than 45 days nor less than five Business Days preceding the payment date thereof, as may be fixed by the Board of Directors. (b) For the purpose of determining the number of Additional Preferred to be issued pursuant to paragraph (4)(a), each such Additional Preferred shall be valued at $1,000.00. Holders of such Additional Preferred shall be entitled to receive dividends payable at the rates specified in paragraph (4)(a). D-6 143 (c) The dividends payable for the initial Dividend Period, or any other period shorter than a full Dividend Period, on the 5 1/4% Preferred Stock shall accrue daily and be computed on the basis of a 360-day year and the actual number of days in such period. Holders of shares of 5 1/4% Preferred Stock shall not be entitled to any dividends, whether payable in cash, property or stock, in excess of cumulative dividends, as herein provided, on the 5 1/4% Preferred Stock except as otherwise provided herein. No interest, or sum of money in lieu of interest, shall be payable in respect of any dividend payment or payments on the 5 1/4% Preferred Stock that may be in arrears except as otherwise provided herein. (d) So long as any shares of the 5 1/4% Preferred Stock are outstanding, no dividends, except as described in the next succeeding sentence, shall be declared or paid or set apart for payment on Parity Securities, for any period, nor shall any Parity Securities be redeemed, purchased or otherwise acquired for any consideration (or any moneys be paid to or made available for a sinking fund for the redemption of any such Parity Securities) by the Corporation (except for conversion into or exchange into other Parity Securities) unless, in each case, (i) full cumulative dividends on all outstanding shares of the 5 1/4% Preferred Stock for all Dividend Periods terminating on or prior to the date of such redemption, repurchase or other acquisition shall have been paid or set apart for payment, (ii) sufficient funds shall have been paid or set apart for the payment of the dividend for the current Dividend Period with respect to the 5 1/4% Preferred Stock and (iii) the Corporation is not in default with respect to any redemption of shares of 5 1/4% Preferred Stock by the Corporation pursuant to paragraph (6) below. When dividends are not fully paid in Common Stock or Additional Preferred or are not paid in full in cash or a sum sufficient for such payment is not set apart, as aforesaid, all dividends declared upon shares of the 5 1/4% Preferred Stock and all dividends declared upon Parity Securities shall be declared ratably in proportion to the respective amounts of dividends accumulated and unpaid on the 5 1/4% Preferred Stock and accumulated and unpaid on such Parity Securities. (e) So long as any shares of the 5 1/4% Preferred Stock are outstanding, no dividends (other than (i) any rights issued pursuant to a D-7 144 shareholder rights plan as provided in paragraph 11 and (ii) dividends or distributions paid in shares of, or options, warrants or rights to subscribe for or purchase shares of, Junior Securities) shall be declared or paid or set apart for payment or other distribution declared or made upon Junior Securities, nor shall any Junior Securities be redeemed, purchased or otherwise acquired (other than a redemption, purchase or other acquisition of shares of Common Stock made for purposes of an employee incentive or benefit plan of the Corporation or any subsidiary) (all such dividends, distributions, redemptions or purchases being hereinafter referred to as "Junior Securities Distributions") for any consideration (or any moneys be paid to or made available for a sinking fund for the redemption of any shares of any such stock) by the Corporation, directly or indirectly (except by conversion into or exchange for Junior Securities, including pursuant to paragraph 4(c) of the Series A Preferred and paragraph 4(d) of the Series B Preferred), unless in each case (i) the full cumulative dividends on all outstanding shares of the 5 1/4% Preferred Stock and any other Parity Securities shall have been paid or set apart for payment for all past Dividend Periods with respect to the 5 1/4% Preferred Stock and all past dividend periods with respect to such Parity Securities and (ii) sufficient funds shall have been paid or set apart for the payment of the dividend for the current Dividend Period with respect to the 5 1/4% Preferred Stock and the current dividend period with respect to such Parity Securities. (5) Liquidation Preference. (a) In the event of any liquidation, dissolution or winding up of the Corporation, whether voluntary or involuntary, before any payment or distribution of the assets of the Corporation (whether capital or surplus) shall be made to or set apart for the holders of Junior Securities, the holders of the shares of 5 1/4% Preferred Stock shall be entitled to receive $1,000.00 per share of 5 1/4% Preferred Stock plus an amount equal to all dividends (whether or not earned or declared) accrued and unpaid thereon to the date of final distribution to such holders; but such holders shall not be entitled to any further payment. If, upon any liquidation, dissolution or winding up of the Corporation, the assets of the Corporation, or proceeds thereof, distributable among the holders of the shares of 5 1/4% Preferred Stock shall be insufficient to pay in full the preferential amount aforesaid and liquidating payments on any Parity Securities, then such assets, or the proceeds thereof, shall be distributed among the holders of shares of 5 1/4% Preferred Stock and any such other Parity Securities ratably in accordance with the respective amounts that would be payable on such shares of D-8 145 5 1/4% Preferred Stock and any such other stock if all amounts payable thereon were paid in full. For the purposes of this paragraph (5), (i) a consolidation or merger of the Corporation with one or more corporations, or (ii) a sale or transfer of all or substantially all of the Corporation's assets, shall not be deemed to be a liquidation, dissolution or winding up, voluntary or involuntary, of the Corporation. (b) Subject to the rights of the holders of any Parity Securities, upon any liquidation, dissolution or winding up of the Corporation, after payment shall have been made in full to the holders of the 5 1/4% Preferred Stock, as provided in this paragraph (5), any other series or class or classes of Junior Securities shall, subject to the respective terms and provisions (if any) applying thereto, be entitled to receive any and all assets remaining to be paid or distributed, and the holders of the 5 1/4% Preferred Stock shall not be entitled to share therein. (6) Redemption. (a) On and after the earlier to occur of (i) the seventh anniversary of the Issue Date or (ii) the date on which the Current Market Price of the Common Stock shall have exceeded $120.00 for twenty-five (25) consecutive Trading Days, to the extent the Corporation shall have funds legally available for such payment, the Corporation may redeem at its option shares of 5 1/4% Preferred Stock, in whole or from time to time in part, payable at the option of the Corporation in (A) cash, at a redemption price of $1,000.00 per share, or (B) in shares of Common Stock, at a redemption price of $1,025.00 per share in the case of a redemption permitted by clause (i) or $1,000.00 per share in the case of a redemption permitted by clause (ii), or (C) in a combination of cash and Common Stock at a redemption price based on the respective combination of consideration, together in each case with accrued and unpaid dividends thereon, whether or not declared, to, but excluding, the date fixed for redemption, without interest. For purposes of determining the number of shares of the Common Stock to be issued pursuant to this paragraph (6)(a), the price per share of Common Stock valued at the Fair Market Value. (b) On and after January 28, 2009, each holder of shares of 5 1/4% Preferred Stock shall have the right to require the Corporation, to the extent the Corporation shall have funds legally available therefor, to redeem such holder's shares of 5 1/4% Preferred Stock in whole or from time to time in part at a redemption price of $1,000.00 per share, D-9 146 payable at the option of the Corporation in cash, shares of Common Stock or a combination thereof, together with accrued and unpaid dividends thereon to, but excluding, the date fixed for redemption, without interest. For purposes of determining the number of shares of the Common Stock to be issued pursuant to this paragraph (6)(b), the price per share of Common Stock shall equal the Fair Market Value. Any holder of shares of 5 1/4% Preferred Stock who elects to exercise its rights pursuant to this paragraph (6)(b) shall deliver to the Corporation a written notice of election not less than 20 days prior to January 28, 2009, as the case may be, which notice shall set forth the name of the Holder, the number of shares of 5 1/4% Preferred Stock to be redeemed and a statement that the election to exercise a redemption right is being made thereby; and shall deliver to the Corporation on or before the date of redemption certificates evidencing the shares of 5 1/4% Preferred Stock to be redeemed, duly endorsed for transfer to the Corporation. (c) If the Corporation shall not have redeemed all outstanding shares of 5 1/4% Preferred Stock pursuant to paragraphs (6)(a) and (6)(b), on the twentieth anniversary of the Issue Date (the "Mandatory Redemption Date"), to the extent the Corporation shall have funds legally available for such payment, the Corporation shall redeem all outstanding shares of 5 1/4% Preferred Stock, at a redemption price of $1,000.00 per share, payable at the option of the Corporation in cash, shares of Common Stock or a combination thereof, together with accrued and unpaid dividends thereon to, but excluding, the Mandatory Redemption Date, without interest. For purposes of determining the number of shares of the Common Stock to be issued pursuant to this paragraph (6)(c), the price per share of Common Stock shall be valued at the Fair Market Value. (d) If the Corporation is unable or shall fail to discharge its obligation to redeem all outstanding shares of 5 1/4% Preferred Stock pursuant to paragraph (6)(c) (the "Mandatory Redemption Obligation"), the Mandatory Redemption Obligation shall be discharged as soon as the Corporation is able to discharge such Mandatory Redemption Obligation. If and so long as any Mandatory Redemption Obligation with respect to the 5 1/4% Preferred Stock shall not be fully discharged, the Corporation shall not (i) directly or indirectly, redeem, purchase, or otherwise acquire any Parity Security or discharge any mandatory or optional redemption, D-10 147 sinking fund or other similar obligation in respect of any Parity Securities (except in connection with a redemption, sinking fund or other similar obligation to be satisfied pro rata with the 5 1/4% Preferred Stock) or (ii) declare or make any Junior Securities Distribution (other than dividends or distributions paid in shares of, or options, warrants or rights to subscribe for or purchase shares of, Junior Securities), or, directly or indirectly, discharge any mandatory or optional redemption, sinking fund or other similar obligation in respect of the Junior Securities. (e) Upon any redemption of 5 1/4% Preferred Stock, the Corporation shall pay the redemption price and any accrued and unpaid dividends in arrears to, but excluding, the applicable redemption date. (f) For purposes of paragraph (6)(a) only, unless full cumulative dividends (whether or not declared) on all outstanding shares of 5 1/4% Preferred Stock and any Parity Securities shall have been paid or contemporaneously are declared and paid or set apart for payment for all Dividend Periods terminating on or prior to the applicable redemption date, none of the shares of 5 1/4% Preferred Stock shall be redeemed, and no sum shall be set aside for such redemption, unless shares of 5 1/4% Preferred Stock are redeemed pro rata. (7) Procedure for Redemption. (a) If the Corporation shall redeem shares of 5 1/4% Preferred Stock pursuant to paragraph 6(a), notice of such redemption shall be given by certified mail, return receipt requested, postage prepaid, mailed not less than 30 days nor more than 60 days prior to the redemption date, to each holder of record of the shares to be redeemed at such holder's address as the same appears on the stock register of the Corporation and confirmed by facsimile transmission to each holder of record if the Corporation has been furnished with such facsimile address by the holder(s); provided that neither the failure to give such notice nor confirmation nor any defect therein or in the mailing thereof, to any particular holder, shall affect the sufficiency of the notice or the validity of the proceedings for redemption with respect to the other holders. Any notice that was mailed in the manner herein provided shall be conclusively presumed to have been duly given on the date mailed whether or not the holder receives the notice. Each such notice shall state: (i) the redemption date; (ii) the number of shares of 5 1/4% Preferred Stock to be redeemed and, if fewer than all the shares held by such holder are to be redeemed, the number of shares to be D-11 148 redeemed from such holder; (iii) the amount payable, whether in Common Stock or cash and if the payment is in Common Stock an explanation of the determination of the amount to be paid; (iv) the place or places where certificates for such shares are to be surrendered for payment of the redemption price; and (v) that dividends on the shares to be redeemed will cease to accrue on such redemption date, except as otherwise provided herein. (b) If notice has been mailed as aforesaid, from and after the redemption date (unless default shall be made by the Corporation in providing for the payment of the redemption price of the shares called for redemption and dividends accrued and unpaid thereon, if any), (i) except as otherwise provided herein, dividends on the shares of 5 1/4% Preferred Stock so called for redemption shall cease to accrue, (ii) said shares shall no longer be deemed to be outstanding, and (iii) all rights of the holders thereof as holders of the 5 1/4% Preferred Stock shall cease (except the right to receive from the Corporation the redemption price without interest thereon, upon surrender and endorsement of their certificates if so required, and to receive any dividends payable thereon). (c) Upon surrender in accordance with notice given pursuant to this paragraph (7) of the certificates for any shares so redeemed (properly endorsed or assigned for transfer, if the Board of Directors of the Corporation shall so require and the notice shall so state), such shares shall be redeemed by the Corporation at the redemption price aforesaid, plus any dividends payable thereon. If fewer than all the outstanding shares of 5 1/4% Preferred Stock are to be redeemed, the number of shares to be redeemed shall be determined by the Board of Directors and the shares to be redeemed shall be selected pro rata (with any fractional shares being rounded to the nearest whole share). In case fewer than all the shares represented by any such certificate are redeemed, a new certificate shall be issued representing the unredeemed shares without cost to the holder thereof. (8) Conversion. (a) Subject to and upon compliance with the provisions of this paragraph (8), a holder of shares of 5 1/4% Preferred Stock shall have the right, at any time and from time to time, at such holder's option, to convert any or all outstanding shares of 5 1/4% Preferred Stock held by such holder, but not fractions of shares, into fully paid and non-assessable shares of Common D-12 149 Stock by surrendering such shares to be converted, such surrender to be made in the manner provided in paragraph (8)(b) hereof. The number of shares of Common Stock deliverable upon conversion of each share of 5 1/4% Preferred Stock shall be equal to $1,000.00 divided by 10.00 (as adjusted as provided herein, the "Conversion Rate"); provided that the aggregate number of shares of Common Stock deliverable upon conversion of the 5 1/4% Preferred Stock (together with the conversion of any Additional Preferred) shall not be greater than 7,590,994 subject to adjustment as provided herein. The Conversion Rate is subject to adjustment from time to time pursuant to paragraph (8)(d) hereof. The right to convert shares called for redemption pursuant to paragraph (7) shall terminate at the close of business on the date immediately preceding the date fixed for such redemption unless the Corporation shall default in making payment of the amount payable upon such redemption. Upon conversion of any share of 5 1/4% Preferred Stock the holder thereof shall continue to be entitled to receive from the Corporation any accrued but unpaid dividends thereon. (b) (i) In order to exercise the conversion privilege, the holder of each share of 5 1/4% Preferred Stock to be converted shall surrender the certificate representing such share, duly endorsed or assigned to the Corporation or in blank, at the office of the Corporation, or to any transfer agent of the Corporation previously designated by the Corporation to the holders of the 5 1/4% Preferred Stock for such purposes, with a written notice of election to convert completed and signed, specifying the number of shares to be converted. Such notice shall state that the holder has satisfied any legal or regulatory requirement for conversion, including compliance with the Hart-Scott-Rodino Antitrust Improvements Act of 1976. Such notice shall also state the name or names (with address and social security or other taxpayer identification number) in which the certificate or certificates for Common Stock are to be issued. Unless the shares issuable on conversion are to be issued in the same name as the name in which such share of 5 1/4% Preferred Stock is registered, each share surrendered for conversion shall be accompanied by instruments of transfer, in form satisfactory to the Corporation, duly executed by the holder or the holder's duly authorized attorney and an amount sufficient to pay any transfer or similar tax (or evidence reasonably satisfactory to the Corporation demonstrating that such taxes have been paid). All certificates representing shares of 5 1/4% Preferred Stock surrendered for conversion shall be canceled by the Corporation or the transfer agent. D-13 150 (ii) Holders of shares of 5 1/4% Preferred Stock at the close of business on a dividend payment record date shall not be entitled to receive the dividend payable on such shares on the corresponding Dividend Payment Date if such holder shall have surrendered for conversion such shares at any time following the preceding Dividend Payment Date and prior to such Dividend Payment Date. (iii) As promptly as practicable after the surrender by a holder of the certificates for shares of 5 1/4% Preferred Stock as aforesaid, the Corporation shall issue and shall deliver to such holder, or on the holder's written order, a certificate or certificates (which certificate or certificates shall have the legend set forth in paragraph 10(c)) for the whole number of duly authorized, validly issued, fully paid and non-assessable shares of Common Stock issuable upon the conversion of such shares in accordance with the provisions of this paragraph (8), and any fractional interest in respect of a share of Common Stock arising on such conversion shall be settled as provided in paragraph (8)(c). Upon conversion of only a portion of the shares of 5 1/4% Preferred Stock represented by any certificate, a new certificate shall be issued representing the unconverted portion of the certificate so surrendered without cost to the holder thereof. Upon the surrender of certificates representing shares of 5 1/4% Preferred Stock to be converted, such shares shall no longer be deemed to be outstanding and all rights of a holder with respect to such shares surrendered for conversion shall immediately terminate except the right to receive the Common Stock and other amounts payable pursuant to this paragraph (8). (iv) Each conversion shall be deemed to have been effected immediately prior to the close of business on the date on which the certificates for shares of 5 1/4% Preferred Stock shall have been surrendered and such notice received by the Corporation as aforesaid, and the Person or Persons in whose name or names any certificate or certificates for shares of Common Stock shall be issuable upon such conversion shall be deemed to have become the holder or holders of record of the shares of Common Stock represented thereby at such time on such date and such conversion shall be into a number of shares of Common Stock equal to the product of the number of shares of 5 1/4% Preferred Stock surrendered times the Conversion Rate in effect at such time on such date, unless the stock D-14 151 transfer books of the Corporation shall be closed on that date, in which event such Person or Persons shall be deemed to have become such holder or holders of record at the close of business on the next succeeding day on which such stock transfer books are open, but such conversion shall be based upon the Conversion Rate in effect on the date upon which such shares shall have been surrendered and such notice received by the Corporation. (c) No fractional shares or scrip representing fractions of shares of Common Stock shall be issued upon conversion of the 5 1/4% Preferred Stock. Instead of any fractional interest in a share of Common Stock that would otherwise be deliverable upon the conversion of a share of 5 1/4% Preferred Stock, the Corporation shall pay to the holder of such share an amount in cash based upon the Current Market Price of Common Stock on the Trading Day immediately preceding the date of conversion. If more than one share shall be surrendered for conversion at one time by the same holder, the number of full shares of Common Stock issuable upon conversion thereof shall be computed on the basis of the aggregate number of shares of 5 1/4% Preferred Stock surrendered for conversion by such holder. (d) The Conversion Rate shall be adjusted from time to time as follows: (i) If the Corporation shall after the Issue Date (A) declare a dividend or make a distribution on its Common Stock in shares of its Common Stock, (B) subdivide its outstanding Common Stock into a greater number of shares or (C) combine its outstanding Common Stock into a smaller number of shares, the Conversion Rate in effect on the record date for such dividend or distribution, or the effective date of such subdivision or combination, as the case may be, shall be proportionately adjusted so that the holder of any share of 5 1/4% Preferred Stock thereafter surrendered for conversion shall be entitled to receive the number and kind of shares of Common Stock that such holder would have owned or have been entitled to receive after the happening of any of the events described above had such share been converted immediately prior to the record date in the case of a dividend or distribution or the effective date in the case of a subdivision or combination. An adjustment made pursuant to this D-15 152 subparagraph (i) shall become effective immediately after the opening of business on the Business Day next following the record date (except as provided in paragraph (8)(h)) in the case of a dividend or distribution and shall become effective immediately after the opening of business on the Business Day next following the effective date in the case of a subdivision, combination or reclassification. Adjustments in accordance with this paragraph (8)(d)(i) shall be made whenever any event listed above shall occur. (ii) If the Corporation shall after the Issue Date fix a record date for the issuance of rights or warrants (in each case, other than any rights issued pursuant to a shareholder rights plan) to all holders of Common Stock entitling them (for a period expiring within 45 days after such record date) to subscribe for or purchase Common Stock (or securities convertible into Common Stock) at a price per share (or, in the case of a right or warrant to purchase securities convertible into Common Stock, having an effective exercise price per share of Common Stock, computed on the basis of the maximum number of shares of Common Stock issuable upon conversion of such convertible securities, plus the amount of additional consideration payable, if any, to receive one share of Common Stock upon conversion of such securities) less than the Fair Market Value per share of Common Stock on the date on which such issuance was declared or otherwise announced by the Corporation (the "Determination Date"), then the Conversion Rate in effect at the opening of business on the Business Day next following such record date shall be adjusted so that the holder of each share of 5 1/4% Preferred Stock shall be entitled to receive, upon the conversion thereof, the number of shares of Common Stock determined by multiplying (I) the Conversion Rate in effect immediately prior to such record date by (II) a fraction, the numerator of which shall be the sum of (A) the number of shares of Common Stock outstanding on the close of business on the Determination Date and (B) the number of additional shares of Common Stock offered for subscription or purchase pursuant to such rights or warrants (or in the case of a right or warrant to purchase securities convertible into Common Stock, the aggregate number of additional shares of Common Stock into which the convertible securities so offered are initially convertible), and the denominator of which shall be the sum of (A) the number of shares of Common Stock outstanding on the close of business on the Determination Date and (B) the number D-16 153 of shares that the aggregate proceeds to the Corporation from the exercise of such rights or warrants for Common Stock would purchase at such Fair Market Value on such date (or, in the case of a right or warrant to purchase securities convertible into Common Stock, the number of shares of Common Stock obtained by dividing the aggregate exercise price of such rights or warrants for the maximum number of shares of Common Stock issuable upon conversion of such convertible securities, plus the aggregate amount of additional consideration payable, if any, to convert such securities into Common Stock, by such Fair Market Value). Such adjustment shall become effective immediately after the opening of business on the Business Day next following such record date (except as provided in paragraph (8)(h)). Such adjustment shall be made successively whenever such a record date is fixed. In the event that after fixing a record date such rights or warrants are not so issued, the Conversion Rate shall be readjusted to the Conversion Rate which would then be in effect if such record date had not been fixed. In determining whether any rights or warrants entitle the holders of Common Stock to subscribe for or purchase shares of Common Stock at less than such Fair Market Value, there shall be taken into account any consideration received by the Corporation upon issuance and upon exercise of such rights or warrants, the value of such consideration, if other than cash, to be determined by the Board of Directors in good faith. In case any rights or warrants referred to in this subparagraph (ii) shall expire unexercised after the same shall have been distributed or issued by the Corporation (or, in the case of rights or warrants to purchase securities convertible into Common Stock once exercised, the conversion right of such securities shall expire), the Conversion Rate shall be readjusted at the time of such expiration to the Conversion Rate that would have been in effect if no adjustment had been made on account of the distribution or issuance of such expired rights or warrants. (iii) If the Corporation shall fix a record date for the making of a distribution to all holders of its Common Stock of evidences of its indebtedness, shares of its capital stock or assets (excluding regular cash dividends or distributions declared in the ordinary course by the Board of Directors and dividends payable in Common Stock for which an adjustment is made pursuant to paragraph (8)(d)(i)) or rights or warrants (in each case, other than any rights issued pursuant to a shareholder rights plan) to subscribe for or purchase any of its securities (excluding those rights and D-17 154 warrants issued to all holders of Common Stock entitling them for a period expiring within 45 days after the record date referred to in subparagraph (ii) above to subscribe for or purchase Common Stock or securities convertible into shares of Common Stock, which rights and warrants are referred to in and treated under subparagraph (ii) above) (any of the foregoing being hereinafter in this subparagraph (iii) called the "Securities"), then in each such case the Conversion Rate shall be adjusted so that the holder of each share of 5 1/4% Preferred Stock shall be entitled to receive, upon the conversion thereof, the number of shares of Common Stock determined by multiplying (I) the Conversion Rate in effect immediately prior to the close of business on such record date by (II) a fraction, the numerator of which shall be the Fair Market Value per share of the Common Stock on such record date, and the denominator of which shall be the Fair Market Value per share of the Common Stock on such record date less the then-fair market value (as determined by the Board of Directors in good faith, whose determination shall be conclusive) of the portion of the assets, shares of its capital stock or evidences of indebtedness so distributed or of such rights or warrants applicable to one share of Common Stock. Such adjustment shall be made successively whenever such a record date is fixed; and in the event that after fixing a record date such distribution is not so made, the Conversion Rate shall be readjusted to the Conversion Rate which would then be in effect if such record date had not been fixed. Such adjustment shall become effective immediately at the opening of business on the Business Day next following (except as provided in paragraph (8)(h)) the record date for the determination of shareholders entitled to receive such distribution. For the purposes of this subparagraph (iii), the distribution of a Security, which is distributed not only to the holders of the Common Stock on the date fixed for the determination of shareholders entitled to such distribution of such Security, but also is distributed with each share of Common Stock delivered to a Person converting a share of 5 1/4% Preferred Stock after such determination date, shall not require an adjustment of the Conversion Rate pursuant to this subparagraph (iii); provided that on the date, if any, on which a Person converting a share of 5 1/4% Preferred Stock would no longer be entitled to receive such Security with a share of Common Stock (other than as a result of the termination of all such Securities), a distribution of such Securities shall be deemed to have occurred and the Conversion Rate shall be adjusted as provided in this subparagraph (iii) (and such day shall be D-18 155 deemed to be "the date fixed for the determination of shareholders entitled to receive such distribution" and "the record date" within the meaning of the three preceding sentences). If any rights or warrants referred to in this subparagraph (iii) shall expire unexercised after the same shall have been distributed or issued by the Corporation, the Conversion Rate shall be readjusted at the time of such expiration to the Conversion Rate that would have been in effect if no adjustment had been made on account of the distribution or issuance of such expired rights or warrants. (iv) In case the Corporation shall, by dividend or otherwise, distribute to all holders of its Common Stock cash in an amount per share that, together with the aggregate of the per share amounts of any other cash distributions to all holders of its Common Stock made within the 12 months preceding the date of payment of such distribution and in respect of which no adjustment pursuant to this paragraph (iv) has been made exceeds 5.0% of the Fair Market Value immediately prior to the date of declaration of such dividend or distribution (excluding any dividend or distribution in connection with the liquidation, dissolution or winding up of the Corporation, whether voluntary or involuntary, and any cash that is distributed upon a merger, consolidation or other transaction for which an adjustment pursuant to paragraph 8(e) is made), then, in such case, the Conversion Rate shall be adjusted so that the same shall equal the rate determined by multiplying the Conversion Rate in effect immediately prior to the close of business on the Record Date for the cash dividend or distribution by a fraction the numerator of which shall be the Current Market Price of a share of the Common Stock on the Record Date and the denominator shall be such Current Market Price less the per share amount of cash so distributed during the 12-month period applicable to one share of Common Stock, such adjustment to be effective immediately prior to the opening of business on the Business Day following the Record Date; provided, however, that in the event the denominator of the foregoing fraction is zero or negative, in lieu of the foregoing adjustment, adequate provision shall be made so that each holder of 5 1/4% Preferred Stock shall have the right to receive upon conversion, in addition to the shares of Common Stock to which the holder is entitled, the amount of cash such holder would have received had such holder converted each share of 5 1/4% Preferred Stock at the beginning of the 12-month period. In the event that such dividend or distribution is not so paid or made, the Conversion Rate D-19 156 shall again be adjusted to be the Conversion Rate which would then be in effect if such dividend or distribution had not been declared. Notwithstanding the foregoing, if any adjustment is required to be made as set forth in this paragraph (8)(d)(iv), the calculation of any such adjustment shall include the amount of the quarterly cash dividends paid during the 12-month reference period only to the extent such dividends exceed the regular quarterly cash dividends paid during the 12 months preceding the 12-month reference period. For purposes of this paragraph (8)(d)(iv), "Record Date" shall mean, with respect to any dividend or distribution in which the holders of Common Stock have the right to receive cash, the date fixed for determination of shareholders entitled to receive such cash. In the event that at any time cash distributions to holders of Common Stock are not paid equally on all series of Common Stock, the provisions of this paragraph 8(d)(iv) will apply to any cash dividend or cash distribution on any series of Common Stock otherwise meeting the requirements of this paragraph, and shall be deemed amended to the extent necessary so that any adjustment required will be made on the basis of the cash dividend or cash distribution made on any such series. (v) In case of the consummation of a tender or exchange offer (other than an odd-lot tender offer) made by the Corporation or any subsidiary of the Corporation for all or any portion of the outstanding shares of Common Stock to the extent that the cash and fair market value (as determined in good faith by the Board of Directors of the Corporation, whose determination shall be conclusive and shall be described in a resolution of such Board) of any other consideration included in such payment per share of Common Stock at the last time (the "Expiration Time") tenders or exchanges may be made pursuant to such tender or exchange offer (as amended) exceed by more than 5.0%, with any smaller excess being disregarded in computing the adjustment to the Conversion Rate provided in this paragraph (8)(d)(v), the first reported sale price per share of Common Stock on the Trading Day next succeeding the Expiration Time, then the Conversion Rate shall be adjusted so that the same shall equal the rate determined by multiplying the Conversion Rate in effect immediately prior to the Expiration Time by a fraction the numerator of which shall be the sum of (x) the fair market value (determined as aforesaid) of the aggregate consideration payable to shareholders based on D-20 157 the acceptance (up to any maximum specified in the terms of the tender or exchange offer) of all shares validly tendered or exchanged and not withdrawn as of the Expiration Time (the shares deemed so accepted, up to any such maximum, being referred to as the "Purchased Shares") and (y) the product of the number of shares of Common Stock outstanding (less any Purchased Shares) on the Expiration Time and the first reported sale price of the Common Stock on the Trading Day next succeeding the Expiration Time, and the denominator of which shall be the number of shares of Common Stock outstanding (including any tendered or exchanged shares) on the Expiration Time multiplied by the first reported sale price of the Common Stock on the Trading Day next succeeding the Expiration Time, such adjustment to become effective immediately prior to the opening of business on the day following the Expiration Time. (vi) No adjustment in the Conversion Rate shall be required unless such adjustment would require a cumulative increase or decrease of at least 1% in the Conversion Rate; provided, however, that any adjustments that by reason of this subparagraph (vi) are not required to be made shall be carried forward and taken into account in any subsequent adjustment until made; and provided, further, that any adjustment shall be required and made in accordance with the provisions of this paragraph (8) (other than this subparagraph (vi)) not later than such time as may be required in order to preserve the tax-free nature of a distribution for United States income tax purposes to the holders of shares of 5 1/4% Preferred Stock or Common Stock. Notwithstanding any other provisions of this paragraph (8), the Corporation shall not be required to make any adjustment of the Conversion Rate for the issuance of any shares of Common Stock pursuant to any plan providing for the reinvestment of dividends or interest payable on securities of the Corporation and the investment of additional optional amounts in shares of Common Stock under such plan. All calculations under this paragraph (8) shall be made to the nearest dollar or to the nearest 1/1,000 of a share, as the case may be. Anything in this paragraph (8)(d) to the contrary notwithstanding, the Corporation shall be entitled, to the extent permitted by law, to make such adjustments in the Conversion Rate, in addition to those required by this paragraph (8)(d), as it in its discretion shall determine to be advisable in order that any stock dividends, subdivision of shares, reclassification or combination of shares, distribution of rights or warrants to purchase stock or securities, or a D-21 158 distribution of other assets (other than cash dividends) hereafter made by the Corporation to its shareholders shall not be taxable. (vii) In the event that, at any time as a result of shares of any other class of capital stock becoming issuable in exchange or substitution for or in lieu of shares of Common Stock or as a result of an adjustment made pursuant to the provisions of this paragraph (8)(d), the holder of 5 1/4% Preferred Stock upon subsequent conversion shall become entitled to receive any shares of capital stock of the Corporation other than Common Stock, the number of such other shares so receivable upon conversion of any shares of 5 1/4% Preferred Stock shall thereafter be subject to adjustment from time to time in a manner and on terms as nearly equivalent as practicable to the provisions contained herein. (e) (i) If the Corporation shall be a party to any transaction (including, without limitation, a merger, consolidation, sale of all or substantially all of the Corporation's assets or recapitalization of the Common Stock and excluding any transaction as to which paragraph (8)(d)(i) applies) (each of the foregoing being referred to herein as a "Transaction"), in each case as a result of which shares of Common Stock shall be converted into the right to receive stock, securities or other property (including cash or any combination thereof), there shall be no adjustment to the Conversion Rate but each share of 5 1/4% Preferred Stock which is not converted into the right to receive stock, securities or other property in connection with such Transaction shall thereafter be convertible into the kind and amount of shares of stock, securities and other property (including cash or any combination thereof) receivable upon the consummation of such Transaction by a holder of that number of shares or fraction thereof of Common Stock into which one share of 5 1/4% Preferred Stock was convertible immediately prior to such Transaction, assuming such holder of Common Stock (i) is not a Person with which the Corporation consolidated or into which the Corporation merged or which merged into the Corporation or to which such sale or transfer was made, as the case may be ("Constituent Person"), or an affiliate of a Constituent Person and (ii) failed to exercise his rights of election, if any, as to the kind or amount of stock, securities and other property (including cash) receivable upon such Transaction (provided that if the kind or amount of stock, securities and other property (including cash) receivable upon such Trans- D-22 159 action is not the same for each share of Common Stock of the Corporation held immediately prior to such Transaction by other than a Constituent Person or an affiliate thereof and in respect of which such rights of election shall not have been exercised ("non-electing share"), then for the purpose of this paragraph (8)(e) the kind and amount of stock, securities and other property (including cash) receivable upon such Transaction by each non-electing share shall be deemed to be the kind and amount so receivable per share by a plurality of the non-electing shares). The provisions of this paragraph (8)(e) shall similarly apply to successive Transactions. (ii) Notwithstanding anything herein to the contrary, if the Company is reorganized such that the Common Stock is exchanged for the common stock of a new entity ("Holdco") whose common stock is traded on NASDAQ or another recognized securities exchange, then the Company, by notice to the holders of the 5 1/4% Preferred Stock but without any required consent on their part, may cause the exchange of this 5 1/4% Preferred Stock for preferred stock of Holdco having the same terms and conditions as set forth herein, provided that where Holdco is not solely incorporated as a Delaware company or where the Holdco share structure is not identical to that of the Company, the rights attaching to the preferred stock of Holdco may be adjusted so as to comply with the local law of the country of incorporation of Holdco or the new share structure of Holdco subject to such rights effectively giving the same economic rights as the 5 1/4% Preferred Stock (ignoring for these purposes any resultant change in the tax treatment for the holders of such stock). (f) If: (i) the Corporation shall declare a dividend (or any other distribution) on the Common Stock; or (ii) the Corporation shall authorize the granting to the holders of the Common Stock of rights or warrants to subscribe for or purchase any shares of any class or any other rights or warrants; or (iii) there shall be any subdivision, combination or reclassification of the Common Stock or any consolidation or merger to which the D-23 160 Corporation is a party and for which approval of any shareholders of the Corporation is required, or the sale or transfer of all or substantially all of the assets of the Corporation as an entirety; or (iv) there shall occur the voluntary or involuntary liquidation, dissolution or winding up of the Corporation; then the Corporation shall cause to be filed with any transfer agent designated by the Corporation pursuant to paragraph (8)(b) and shall cause to be mailed to the holders of shares of the 5 1/4% Preferred Stock at their addresses as shown on the stock records of the Corporation, as promptly as possible, but at least ten days prior to the applicable date hereinafter specified, a notice stating (A) the date on which a record is to be taken for the purpose of such dividend (or such other distribution) or rights or warrants, or, if a record is not to be taken, the date as of which the holders of Common Stock of record to be entitled to such dividend, distribution or rights or warrants are to be determined or (B) the date on which such subdivision, combination, reclassification, consolidation, merger, sale, transfer, liquidation, dissolution or winding up or other action is expected to become effective, and the date as of which it is expected that holders of Common Stock of record shall be entitled to exchange their shares of Common Stock for securities or other property, if any, deliverable upon such subdivision, combination, reclassification, consolidation, merger, sale, transfer, liquidation, dissolution or winding up. Failure to give or receive such notice or any defect therein shall not affect the legality or validity of any distribution, right, warrant, subdivision, combination, reclassification, consolidation, merger, sale, transfer, liquidation, dissolution, winding up or other action, or the vote upon any of the foregoing. (g) Whenever the Conversion Rate is adjusted as herein provided, the Corporation shall prepare an officer's certificate with respect to such adjustment of the Conversion Rate setting forth the adjusted Conversion Rate and the effective date of such adjustment and shall mail a copy of such officer's certificate to the holder of each share of 5 1/4% Preferred Stock at such holder's last address as shown on the stock records of the Corporation. If the Corporation shall have designated a transfer agent pursuant to paragraph (8)(b), it shall also promptly file with such transfer agent an officer's certificate setting forth the Conversion Rate after D-24 161 such adjustment and setting forth a brief statement of the facts requiring such adjustment which certificate shall be conclusive evidence of the correctness of such adjustment. (h) In any case in which paragraph (8)(d) provides that an adjustment shall become effective on the day next following a record date for an event, the Corporation may defer until the occurrence of such event (i) issuing to the holder of any share of 5 1/4% Preferred Stock converted after such record date and before the occurrence of such event the additional shares of Common Stock issuable upon such conversion by reason of the adjustment required by such event over and above the Common Stock issuable upon such conversion before giving effect to such adjustment and (ii) paying to such holder any amount in cash in lieu of any fraction pursuant to paragraph (8)(c). (i) For purposes of this paragraph (8), the number of shares of Common Stock at any time outstanding shall not include any shares of Common Stock then owned or held by or for the account of the Corporation. The Corporation shall not pay a dividend or make any distribution on shares of Common Stock held in the treasury of the Corporation. (j) There shall be no adjustment of the Conversion Rate in case of the issuance of any stock of the Corporation in a reorganization, acquisition or other similar transaction except as specifically set forth in this paragraph (8). If any single action would require adjustment of the Conversion Rate pursuant to more than one subparagraph of this paragraph (8), only one adjustment shall be made and such adjustment shall be the amount of adjustment that has the highest absolute value. (k) If the Corporation shall take any action affecting the Common Stock, other than action described in this paragraph (8), that in the opinion of the Board of Directors materially adversely affects the conversion rights of the holders of the shares of 5 1/4% Preferred Stock, the Conversion Rate may be adjusted, to the extent permitted by law, in such manner, if any, and at such time, as the Board of Directors may determine to be equitable in the circumstances; provided that the provisions of this D-25 162 paragraph (8)(k) shall not affect any rights the holders of 5 1/4% Preferred Stock may have at law or in equity. (l) (i) The Corporation covenants that it will at all times reserve and keep available, free from preemptive rights, out of the aggregate of its authorized but unissued shares of Common Stock or its issued shares of Common Stock held in its treasury, or both, for the purpose of effecting conversion of the 5 1/4% Preferred Stock, the full number of shares of Common Stock deliverable upon the conversion of all outstanding shares of 5 1/4% Preferred Stock not theretofore converted. For purposes of this paragraph (8)(1) the number of shares of Common Stock that shall be deliverable upon the conversion of all outstanding shares of 5 1/4% Preferred Stock shall be computed as if at the time of computation all such outstanding shares were held by a single holder. (ii) The Corporation covenants that any shares of Common Stock issued upon conversion of the 5 1/4% Preferred Stock shall be duly authorized, validly issued, fully paid and non-assessable. Before taking any action that would cause an adjustment increasing the Conversion Rate such that the quotient of $1,000.00 and the Conversion Rate (which initially shall be $100.00) would be reduced below the then-par value of the shares of Common Stock deliverable upon conversion of the 5 1/4% Preferred Stock, the Corporation will take any corporate action that, in the opinion of its counsel, may be necessary in order that the Corporation may validly and legally issue fully paid and non-assessable shares of Common Stock based upon such adjusted Conversion Rate. (iii) Prior to the delivery of any securities that the Corporation shall be obligated to deliver upon conversion of the 5 1/4% Preferred Stock, the Corporation shall comply with all applicable federal and state laws and regulations which require action to be taken by the Corporation. (m) The Corporation will pay any and all documentary stamp or similar issue or transfer taxes payable in respect of the issue or delivery of shares of Common Stock or other securities or property on conversion of the 5 1/4% Preferred Stock pursuant hereto; provided, how ever, that the Corporation shall not be required to pay any tax that may be payable in respect of any transfer involved in the issue or delivery of D-26 163 shares of Common Stock or other securities or property in a name other than that of the holder of the 5 1/4% Preferred Stock to be converted and no such issue or delivery shall be made unless and until the Person requesting such issue or delivery has paid to the Corporation the amount of any such tax or established, to the satisfaction of the Corporation, that such tax has been paid. (9) Voting Rights. (a) The holders of record of shares of 5 1/4% Preferred Stock shall not be entitled to any voting rights except as hereinafter provided in paragraph (b) or as otherwise provided by law. (b) If and whenever six quarterly dividends (whether or not consecutive) payable on the 5 1/4% Preferred Stock have not been paid in full or if the Corporation shall have failed to discharge its Mandatory Redemption Obligation, the number of directors then constituting the Board of Directors shall be increased by two and the holders of shares of 5 1/4% Preferred Stock, together with the holders of shares of every other series of preferred stock (including, without limitation, Additional Preferred) upon which like rights to vote for the election of two additional directors have been conferred and are exercisable (resulting from either the failure to pay dividends or the failure to redeem) (any such other series is referred to as the "Preferred Shares"), voting as a single class regardless of series, shall be entitled to elect the two additional directors to serve on the Board of Directors at any annual meeting of stockholders or special meeting held in place thereof, or at a special meeting of the holders of the 5 1/4% Preferred Stock and the Preferred Shares called as hereinafter provided. Whenever all arrears in dividends on the 5 1/4% Preferred Stock and the Preferred Shares then outstanding shall have been paid and dividends thereon for the current quarterly dividend period shall have been paid or declared and set apart for payment, or the Corporation shall have fulfilled its Mandatory Redemption Obligation and any redemption obligation in respect of the Preferred Shares, as the case may be, then the right of the holders of the 5 1/4% Preferred Stock and the Preferred Shares to elect such additional two directors shall cease (but subject always to the same provisions for the vesting of such voting rights in the case of any similar future arrearages in six quarterly dividends or failure to fulfill any Mandatory Redemption Obligation), and the terms of office of all persons elected as directors by the holders of the 5 1/4% Preferred Stock and the D-27 164 Preferred Shares shall forthwith terminate and the number of the Board of Directors shall be reduced accordingly. At any time after such voting power shall have been so vested in the holders of shares of 5 1/4% Preferred Stock and the Preferred Shares, the secretary of the Corporation may, and upon the written request of any holder of 5 1/4% Preferred Stock (addressed to the secretary at the principal office of the Corporation) shall, call a special meeting of the holders of the 5 1/4% Preferred Stock and of the Preferred Shares for the election of the two directors to be elected by them as herein provided, such call to be made by notice similar to that provided in the Bylaws of the Corporation for a special meeting of the stockholders or as required by law. If any such special meeting required to be called as above provided shall not be called by the secretary within 20 days after receipt of any such request, then any holder of shares of 5 1/4% Preferred Stock may call such meeting, upon the notice above provided, and for that purpose shall have access to the stock books of the Corporation. The directors elected at any such special meeting shall hold office until the next annual meeting of the stockholders or special meeting held in lieu thereof if such office shall not have previously terminated as above provided. If any vacancy shall occur among the directors elected by the holders of the 5 1/4% Preferred Stock and the Preferred Shares, a successor shall be elected by the Board of Directors, upon the nomination of the then-remaining director elected by the holders of the 5 1/4% Preferred Stock and the Preferred Shares or the successor of such remaining director, to serve until the next annual meeting of the stockholders or special meeting held in place thereof if such office shall not have previously terminated as provided above. (c) Without the written consent of the holders of at least 66 2/3% in liquidation preference of the outstanding shares of 5 1/4% Preferred Stock or the vote of holders of at least 66 2/3% in liquidation preference of the outstanding shares of 5 1/4% Preferred Stock at a meeting of the holders of 5 1/4% Preferred Stock called for such purpose, the Corporation will not amend, alter or repeal any provision of the Certificate of Incorporation (by merger or otherwise) so as to adversely affect the preferences, rights or powers of the 5 1/4% Preferred Stock; provided that any such amendment that changes the dividend payable on, the conversion rate with respect to, or the liquidation preference of the 5 1/4% Preferred Stock shall require the affirmative vote at a meeting of holders of 5 1/4% Preferred D-28 165 Stock called for such purpose or written consent of the holder of each share of 5 1/4% Preferred Stock. (d) Without the written consent of the holders of at least 66 2/3% in liquidation preference of the outstanding shares of 5 1/4% Preferred Stock or the vote of holders of at least 66 2/3% in liquidation preference of the outstanding shares of 5 1/4% Preferred Stock at a meeting of such holders called for such purpose, the Corporation will not issue any additional 5 1/4% Preferred Stock or create, authorize or issue any Parity Securities or Senior Securities or increase the authorized amount of any such other class or series; provided that paragraph 9(d) shall not limit the right of the Corporation to (i) issue Additional Preferred as dividends pursuant to paragraph 4 or (ii) to issue Parity Securities or Senior Securities in order to refinance, redeem or refund the 13% Preferred, provided that the maximum accrual value (i.e., the sum of stated value and maximum amount payable in kind over the term from issuance to first date of mandatory redemption or redemption at the option of the holder) of such Parity Securities may not exceed the maximum acrual value of the 13% Preferred. (e) In exercising the voting rights set forth in this paragraph 9, each share of 5 1/4% Preferred Stock shall have one vote per share, except that when any other series of preferred stock shall have the right to vote with the 5 1/4% Preferred Stock as a single class on any matter, then the 5 1/4% Preferred Stock and such other series shall have with respect to such matters one vote per $1,000 of stated liquidation preference. Except as otherwise required by applicable law or as set forth herein, the shares of 5 1/4% Preferred Stock shall not have any relative, participating, optional or other special voting rights and powers and the consent of the holders thereof shall not be required for the taking of any corporate action. (10) General Provisions. (a) The headings of the paragraphs, subparagraphs, clauses and subclauses of this Statement of Designations are for convenience of reference only and shall not define, limit or affect any of the provisions hereof. (b) If the Corporation shall have failed to declare or pay dividends as required pursuant to paragraph (4) hereof or shall have failed D-29 166 to discharge any obligation to redeem shares of 5 1/4% Preferred Stock pursuant to paragraph (6) hereof, the holders of shares of 5 1/4% Preferred Stock shall be entitled to receive, in addition to all other amounts required to be paid hereunder, when, as and if declared by the Board of Directors, out of funds legally available for the payment of dividends, cash dividends on the aggregate dividends which the Corporation shall have failed to declare or pay or the redemption price, together with accrued and unpaid dividends thereon, as the case may be, at a rate of 2% per quarter, compounded quarterly, for the period during which the failure to pay dividends or failure to discharge an obligation to redeem shares of 5 1/4% Preferred Stock shall continue. (c) The shares of 5 1/4% Preferred Stock shall bear the following legend: THE SHARES OF PREFERRED STOCK REPRESENTED BY THIS CERTIFICATE MAY NOT BE TRANSFERRED OTHER THAN TO AN AFFILIATE OF THE HOLDER. The shares of Common Stock issuable upon conversion of the 5 1/4% Preferred Stock shall bear the following legend: THE SHARES OF COMMON STOCK, PAR VALUE $.01, OF THE COMPANY (THE "COMMON STOCK") REPRESENTED BY THIS CERTIFICATE MAY NOT BE OFFERED OR SOLD IN THE UNITED STATES ABSENT REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT") AND ANY APPLICABLE STATE SECURITIES LAWS OR AN APPLICABLE EXEMPTION FROM REGISTRATION REQUIREMENTS. THE SHARES REPRESENTED BY THIS CERTIFICATE MAY NOT BE TRANSFERRED PRIOR TO JANUARY 28, 2001 (OTHER THAN TO AN AFFILIATE OF THE HOLDER) AND THEREAFTER MAY ONLY BE SOLD IN BROKERS TRANSACTIONS (AS DEFINED IN RULE 144 UNDER THE ACT) OR TO PERSONS WHO, GIVING EFFECT TO THE SALE OF THE SHARES REPRESENTED HEREBY, WILL NOT BE THE BENEFICIAL OWNER OF 5% OR MORE OF THE COMMON STOCK. D-30 167 (11) Shareholder Rights Plan. The shares of 5 1/4% Preferred Stock shall be entitled to the benefits of a number of rights issuable under the Rights Agreement, dated as of October 13, 1993, between the Company and Continental Stock Transfer & Trust Company or any successor plan of similar purpose and effect ("Rights") equal to the number of shares of Common Stock then issuable upon conversion of the 5 1/4% Preferred Stock at the prevailing Conversion Rate. Any shares of Common Stock deliverable upon conversion of a share of 5 1/4% Preferred Stock or upon payment of a dividend shall be accomplished by a Right. D-31 168 Exhibit E 5 1/4% CONVERTIBLE PREFERRED STOCK, SERIES B (1) Number and Designation. 4,447.92 shares of the Preferred Stock of the Corporation shall be designated as 5 1/4% Convertible Preferred Stock, Series B (the "5 1/4% Preferred Stock") and no other shares of Preferred Stock shall be designated as 5 1/4% Preferred Stock. (2) Definitions. For purposes of the 5 1/4% Preferred Stock, the following terms shall have the meanings indicated: "Board of Directors" shall mean the board of directors of the Corporation or the Executive Committee, if any, of such board of directors or any other committee duly authorized by such board of directors to perform any of its responsibilities with respect to the 5 1/4% Preferred Stock. "Business Day" shall mean any day other than a Saturday, Sunday or a day on which state or federally chartered banking institutions in New York, New York are not required to be open. "Common Stock" shall mean the Corporation's Common Stock, par value $.01 per share. "Constituent Person" shall have the meaning set forth in paragraph (8)(e) hereof. "Conversion Rate" shall have the meaning set forth in paragraph (8)(a) hereof. "Current Market Price" of publicly traded shares of Common Stock or any other class of capital stock or other security of the Corporation or any other issuer for any day shall mean (i) if the security is then listed or admitted to trading on a national securities exchange in the United States, the last reported sale price, regular way, for the security as reported in the consolidated transaction or other reporting system for securities listed or traded on such exchange, or (ii) if the security is quoted on the Nasdaq National Market, the last reported sale price, regular way, for the security as reported on such list, or (iii) if the security is not so admitted for trading on any national securities exchange or the Nasdaq National Market, the average of the last reported closing bid and asked prices reported by the Nasdaq as furnished by any member in good standing of the National Association of Securities Dealers, Inc., selected from time to time by the Company for that purpose or as quoted by the National Quotation Bureau Incorporated. In the event that no such E-1 169 quotation is available for such day, the Current Market Price shall be the average of the quotations for the last five Trading Days for which a quotation is available within the last 30 Trading Days prior to such day. In the event that five such quotations are not available within such 30-Trading Day period, the Board of Directors shall be entitled to determine the Current Market Price on the basis of such quotations as it reasonably considers appropriate. "Determination Date" shall have the meaning set forth in paragraph (8)(d) hereof. "Dividend Payment Date" shall mean September 30, December 30, March 30 and June 30 of each year, commencing on June 30, 1999; provided, however, that if any Dividend Payment Date falls on any day other than a Business Day, the dividend payment due on such Dividend Payment Date shall be paid on the Business Day immediately following such Dividend Payment Date. "Dividend Periods" shall mean quarterly dividend periods commencing on September 30, December 30, March 30 and June 30 of each year and ending on and including the day preceding the first day of the next succeeding Dividend Period. "Fair Market Value" shall mean the average of the daily Current Market Prices of a share of Common Stock for the 25 Trading Days immediately prior to the date for which such value is to be computed. "5 1/4% Preferred Stock" shall have the meaning set forth in paragraph (1) hereof. "Issue Date" shall mean the first date on which shares of 5 1/4% Preferred Stock are issued. "Junior Securities" shall have the meaning set forth in paragraph (3) hereof. "Junior Securities Distribution" shall have the meaning set forth in paragraph (4)(e) hereof. "Mandatory Redemption Date" shall have the meaning set forth in paragraph (6)(c) hereof. "Mandatory Redemption Obligation" shall have the meaning set forth in paragraph (6)(d) hereof. E-2 170 "Nasdaq" means the National Association of Securities Dealers, Inc. Automated Quotations System. "non-electing share" shall have the meaning set forth in paragraph (8)(e) hereof. "NYSE" means the New York Stock Exchange. "outstanding", when used with reference to shares of stock, shall mean issued shares, excluding shares held by the Corporation or a subsidiary. "Parity Securities" shall have the meaning set forth in paragraph (3) hereof. "Person" shall mean any individual, a corporation, a partnership, an association, a joint-stock company, a limited liability company, a trust, any unincorporated organization, or a government or political subdivision thereof. "Preferred Stock" shall have the meaning set forth in the first resolution above. "Preferred Shares" has the meaning set forth in paragraph (9)(b). "Relevant Compounding Factor" shall mean, with respect to each share of 5 1/4% Preferred Stock, upon initial issuance 1.00, and shall on each Dividend Payment Date be increased to equal the product of the Relevant Compounding Factor in effect immediately prior to such Dividend Payment Date and 1.013125. "Securities" shall have the meaning set forth in paragraph (8)(d) hereof. "Senior Securities" shall have the meaning set forth in paragraph (3) hereof. "set apart for payment" shall be deemed to include, without any action other than the following, the recording by the Corporation in its accounting ledgers of any accounting or bookkeeping entry which indicates, pursuant to a declaration of dividends or other distribution by the Board of Directors, the allocation of funds to be so paid on any series or class of capital stock of the Corporation; provided, however, that if any funds for any class or series of Junior Securities or any class or series of Parity Securities are placed in a separate account of the Corporation or delivered to a disbursing, paying or other similar agent, then "set apart for payment" E-3 171 with respect to the 5 1/4% Preferred Stock shall mean placing such funds in a separate account or delivering such funds to a disbursing, paying or other similar agent. "Trading Day" shall mean any day on which the securities in question are traded on the NYSE, or if such securities are not listed or admitted for trading on the NYSE, on the principal national securities exchange on which such securities are listed or admitted, or if not listed or admitted for trading on any national securities exchange, on the Nasdaq National Market, or if such securities are not quoted thereon, in the applicable securities market in which the securities are traded. "Transaction" shall have the meaning set forth in paragraph (8)(e) hereof. (3) Rank. Any class or series of stock of the Corporation shall be deemed to rank: (a) prior to the 5 1/4% Preferred Stock, either as to the payment of dividends or as to distribution of assets upon liquidation, dissolution or winding up, or both, if the holders of such class or series shall be entitled by the terms thereof to the receipt of dividends and of amounts distributable upon liquidation, dissolution or winding up, in preference or priority to the holders of 5 1/4% Preferred Stock ("Senior Securities"); (b) on a parity with the 5 1/4% Preferred Stock and the 5 1/4% Convertible Preferred Stock, Series A, either as to the payment of dividends or as to distribution of assets upon liquidation, dissolution or winding up, or both, whether or not the dividend rates, dividend payment dates or redemption or liquidation prices per share thereof be different from those of the 5 1/4% Preferred Stock, if the holders of the 5 1/4% Preferred Stock and of such class of stock or series shall be entitled by the terms thereof to the receipt of dividends or of amounts distributable upon liquidation, dissolution or winding up, or both, in proportion to their respective amounts of accrued and unpaid dividends per share or liquidation preferences, without preference or priority one over the other and such class of stock or series is not a class of Senior Securities ("Parity Securities"); and (c) junior to the 5 1/4% Preferred Stock, either as to the payment of dividends or as to the distribution of assets upon liquidation, dissolution or winding up, or both, if such stock or series shall be Common Stock or if the holders of the 5 1/4% Preferred Stock shall be entitled to receipt of dividends, and of amounts distributable upon liquidation, dissolution or winding up, in preference or priority to the holders of shares of such stock or series ("Junior Securities"). E-4 172 The 13% Series B Senior Redeemable Exchangeable Preferred Stock (the "13% Preferred") is a Senior Security. Each of the 9.9% Non-Voting Mandatory Redeemable Preferred Stock, Series A ("Series A Preferred"), and 9.9% Non-Voting Mandatory Redeemable Preferred Stock, Series B ("Series B Preferred"), is a Junior Security. One or more classes of Additional Preferred (as defined below) shall be Parity Securities provided, however, that there shall be no issue of other Parity Securities except as approved by the holders of the 5 1/4% Preferred Stock pursuant to paragraph 9(d). The respective definitions of Senior Securities, Junior Securities and Parity Securities shall also include any rights or options exercisable for or convertible into any of the Senior Securities, Junior Securities and Parity Securities, as the case may be. The 5 1/4% Preferred Stock shall be subject to the creation of Junior Securities, Parity Securities and Senior Securities as set forth herein. (4) Dividends. (a) Subject to paragraph (8)(b)(ii), the holders of shares of 5 1/4% Preferred Stock shall be entitled to receive, when, as and if declared by the Board of Directors, out of funds legally available for the payment of dividends, dividends at the quarterly rate of $13.125 per share (assuming a $1,000.00 face amount) payable in cash, shares of Common Stock equal to $13.125 per share of 5 1/4% Preferred Stock (having a value equal to the Current Market Price as of the record date for such Dividend Payment Date) or additional shares of Preferred Stock of a class to be designated by the Board of Directors having terms substantially identical to the 5 1/4% Preferred Stock except that: (i) the Conversion Rate (as set forth in Section 8(a)) shall be the product of the Conversion Rate (as then in effect) and the Relevant Compounding Factor and (ii) the number of the shares of such Preferred Stock payable as a dividend on any Dividend Payment Date shall increase for each Dividend Payment Date from the first Dividend Payment Date by the Relevant Compounding Factor (such classes of Preferred Stock singularly and collectively, the "Additional Preferred"). Such dividends shall be payable in arrears quarterly on each Dividend Payment Date. Dividends on the 5 1/4% Preferred Stock shall be cumulative from the Issue Date (except that dividends on Additional Shares shall accrue from the date such Additional Shares are issued or would have been issued in accordance with this Certificate of Designation if such dividends had been declared), whether or not in any Dividend Period or Periods there shall be funds of the Corporation legally available for the payment of such dividends. Each such dividend shall be payable to the holders of record of shares of the 5 1/4% Preferred Stock, as they appear on the stock records of the Corporation at the close of business on the record date for such dividend. Upon the declaration of any such dividend, the Board of Directors shall fix as such record date on the fifth Business Day preceding the relevant Dividend Payment Date and shall give notice on or prior to the record date of the form of E-5 173 payment of such dividend. Accrued and unpaid dividends for any past Dividend Payment Date may be declared and paid at any time, without reference to any Dividend Payment Date, to holders of record on such record date, not more than 45 days nor less than five Business Days preceding the payment date thereof, as may be fixed by the Board of Directors. (b) For the purpose of determining the number of Additional Preferred to be issued pursuant to paragraph (4)(a), each such Additional Preferred shall be valued at $1,000.00. Holders of such Additional Preferred shall be entitled to receive dividends payable at the rates specified in paragraph (4)(a). (c) The dividends payable for any period shorter than a full Dividend Period, on the 5 1/4% Preferred Stock shall accrue daily and be computed on the basis of a 360-day year and the actual number of days in such period. Holders of shares of 5 1/4% Preferred Stock shall not be entitled to any dividends, whether payable in cash, property or stock, in excess of cumulative dividends, as herein provided, on the 5 1/4% Preferred Stock except as otherwise provided herein. No interest, or sum of money in lieu of interest, shall be payable in respect of any dividend payment or payments on the 5 1/4% Preferred Stock that may be in arrears except as otherwise provided herein. (d) So long as any shares of the 5 1/4% Preferred Stock are outstanding, no dividends, except as described in the next succeeding sentence, shall be declared or paid or set apart for payment on Parity Securities, for any period, nor shall any Parity Securities be redeemed, purchased or otherwise acquired for any consideration (or any moneys be paid to or made available for a sinking fund for the redemption of any such Parity Securities) by the Corporation (except for conversion into or exchange into other Parity Securities) unless, in each case, (i) full cumulative dividends on all outstanding shares of the 5 1/4% Preferred Stock for all Dividend Periods terminating on or prior to the date of such redemption, repurchase or other acquisition shall have been paid or set apart for payment, (ii) sufficient funds shall have been paid or set apart for the payment of the dividend for the current Dividend Period with respect to the 5 1/4% Preferred Stock and (iii) the Corporation is not in default with respect to any redemption of shares of 5 1/4% Preferred Stock by the Corporation pursuant to paragraph (6) below. When dividends are not fully paid in Common Stock or Additional Preferred or are not paid in full in cash or a sum sufficient for such payment is not set apart, as aforesaid, all dividends declared upon shares of the 5 1/4% Preferred Stock and all dividends declared upon Parity Securities shall be declared ratably in propor- E-6 174 tion to the respective amounts of dividends accumulated and unpaid on the 5 1/4% Preferred Stock and accumulated and unpaid on such Parity Securities. (e) So long as any shares of the 5 1/4% Preferred Stock are outstanding, no dividends (other than (i) any rights issued pursuant to a shareholder rights plan as provided in paragraph 11 and (ii) dividends or distributions paid in shares of, or options, warrants or rights to subscribe for or purchase shares of, Junior Securities) shall be declared or paid or set apart for payment or other distribution declared or made upon Junior Securities, nor shall any Junior Securities be redeemed, purchased or otherwise acquired (other than a redemption, purchase or other acquisition of shares of Common Stock made for purposes of an employee incentive or benefit plan of the Corporation or any subsidiary) (all such dividends, distributions, redemptions or purchases being hereinafter referred to as "Junior Securities Distributions") for any consideration (or any moneys be paid to or made available for a sinking fund for the redemption of any shares of any such stock) by the Corporation, directly or indirectly (except by conversion into or exchange for Junior Securities, including pursuant to paragraph 4(c) of the Series A Preferred and paragraph 4(d) of the Series B Preferred), unless in each case (i) the full cumulative dividends on all outstanding shares of the 5 1/4% Preferred Stock and any other Parity Securities shall have been paid or set apart for payment for all past Dividend Periods with respect to the 5 1/4% Preferred Stock and all past dividend periods with respect to such Parity Securities and (ii) sufficient funds shall have been paid or set apart for the payment of the dividend for the current Dividend Period with respect to the 5 1/4% Preferred Stock and the current dividend period with respect to such Parity Securities. (5) Liquidation Preference. (a) In the event of any liquidation, dissolution or winding up of the Corporation, whether voluntary or involuntary, before any payment or distribution of the assets of the Corporation (whether capital or surplus) shall be made to or set apart for the holders of Junior Securities, the holders of the shares of 5 1/4% Preferred Stock shall be entitled to receive $1,000.00 per share of 5 1/4% Preferred Stock plus an amount equal to all dividends (whether or not earned or declared) accrued and unpaid thereon to the date of final distribution to such holders; but such holders shall not be entitled to any further payment. If, upon any liquidation, dissolution or winding up of the Corporation, the assets of the Corporation, or proceeds thereof, distributable among the holders of the shares of 5 1/4% Preferred Stock shall be insufficient to pay in full the preferential amount aforesaid and liquidating payments on any Parity Securities, then such assets, or the proceeds thereof, shall be distributed among the holders of shares of 5 1/4% Preferred Stock and any such other Parity Securities ratably in accordance with the respective amounts that would be payable on such shares of 5 1/4% Preferred Stock and any such E-7 175 other stock if all amounts payable thereon were paid in full. For the purposes of this paragraph (5), (i) a consolidation or merger of the Corporation with one or more corporations, or (ii) a sale or transfer of all or substantially all of the Corporation's assets, shall not be deemed to be a liquidation, dissolution or winding up, voluntary or involuntary, of the Corporation. (b) Subject to the rights of the holders of any Parity Securities, upon any liquidation, dissolution or winding up of the Corporation, after payment shall have been made in full to the holders of the 5 1/4% Preferred Stock, as provided in this paragraph (5), any other series or class or classes of Junior Securities shall, subject to the respective terms and provisions (if any) applying thereto, be entitled to receive any and all assets remaining to be paid or distributed, and the holders of the 5 1/4% Preferred Stock shall not be entitled to share therein. (6) Redemption. (a) On and after the earlier to occur of (i) January 28, 2006 or (ii) the date on which the Current Market Price of the Common Stock shall have exceeded $120.00 for twenty-five (25) consecutive Trading Days, to the extent the Corporation shall have funds legally available for such payment, the Corporation may redeem at its option shares of 5 1/4% Preferred Stock, in whole or from time to time in part, payable at the option of the Corporation in (A) cash, at a redemption price of $1,000.00 per share, or (B) in shares of Common Stock, at a redemption price of $1,025.00 per share in the case of a redemption permitted by clause (i) or $1,000.00 per share in the case of a redemption permitted by clause (ii), or (C) in a combination of cash and Common Stock at a redemption price based on the respective combination of consideration, together in each case with accrued and unpaid dividends thereon, whether or not declared, to, but excluding, the date fixed for redemption, without interest. For purposes of determining the number of shares of the Common Stock to be issued pursuant to this paragraph (6)(a), the price per share of Common Stock valued at the Fair Market Value. (b) On and after January 28, 2009, each holder of shares of 5 1/4% Preferred Stock shall have the right to require the Corporation, to the extent the Corporation shall have funds legally available therefor, to redeem such holder's shares of 5 1/4% Preferred Stock in whole or from time to time in part at a redemption price of $1,000.00 per share, payable at the option of the Corporation in cash, shares of Common Stock or a combination thereof, together with accrued and unpaid dividends thereon to, but excluding, the date fixed for redemption, without interest. For purposes of determining the number of shares of the Common Stock to be issued pursuant to this paragraph (6)(b), the price per share of Common Stock shall equal the Fair Market Value. Any holder of shares of 5 1/4% Preferred Stock who elects to exercise its rights pursuant to this paragraph (6)(b) shall deliver to the Corpo- E-8 176 ration a written notice of election not less than 20 days prior to January 28, 2009, as the case may be, which notice shall set forth the name of the Holder, the number of shares of 5 1/4% Preferred Stock to be redeemed and a statement that the election to exercise a redemption right is being made thereby; and shall deliver to the Corporation on or before the date of redemption certificates evidencing the shares of 5 1/4% Preferred Stock to be redeemed, duly endorsed for transfer to the Corporation. (c) If the Corporation shall not have redeemed all outstanding shares of 5 1/4% Preferred Stock pursuant to paragraphs (6)(a) and (6)(b), on January 28, 2019 (the "Mandatory Redemption Date"), to the extent the Corporation shall have funds legally available for such payment, the Corporation shall redeem all outstanding shares of 5 1/4% Preferred Stock, at a redemption price of $1,000.00 per share, payable at the option of the Corporation in cash, shares of Common Stock or a combination thereof, together with accrued and unpaid dividends thereon to, but excluding, the Mandatory Redemption Date, without interest. For purposes of determining the number of shares of the Common Stock to be issued pursuant to this paragraph (6)(c), the price per share of Common Stock shall be valued at the Fair Market Value. (d) If the Corporation is unable or shall fail to discharge its obligation to redeem all outstanding shares of 5 1/4% Preferred Stock pursuant to paragraph (6)(c) (the "Mandatory Redemption Obligation"), the Mandatory Redemption Obligation shall be discharged as soon as the Corporation is able to discharge such Mandatory Redemption Obligation. If and so long as any Mandatory Redemption Obligation with respect to the 5 1/4% Preferred Stock shall not be fully discharged, the Corporation shall not (i) directly or indirectly, redeem, purchase, or otherwise acquire any Parity Security or discharge any mandatory or optional redemption, sinking fund or other similar obligation in respect of any Parity Securities (except in connection with a redemption, sinking fund or other similar obligation to be satisfied pro rata with the 5 1/4% Preferred Stock) or (ii) declare or make any Junior Securities Distribution (other than dividends or distributions paid in shares of, or options, warrants or rights to subscribe for or purchase shares of, Junior Securities), or, directly or indirectly, discharge any mandatory or optional redemption, sinking fund or other similar obligation in respect of the Junior Securities. (e) Upon any redemption of 5 1/4% Preferred Stock, the Corporation shall pay the redemption price and any accrued and unpaid dividends in arrears to, but excluding, the applicable redemption date. E-9 177 (f) For purposes of paragraph (6)(a) only, unless full cumulative dividends (whether or not declared) on all outstanding shares of 5 1/4% Preferred Stock and any Parity Securities shall have been paid or contemporaneously are declared and paid or set apart for payment for all Dividend Periods terminating on or prior to the applicable redemption date, none of the shares of 5 1/4% Preferred Stock shall be redeemed, and no sum shall be set aside for such redemption, unless shares of 5 1/4% Preferred Stock are redeemed pro rata. (7) Procedure for Redemption. (a) If the Corporation shall redeem shares of 5 1/4% Preferred Stock pursuant to paragraph 6(a), notice of such redemption shall be given by certified mail, return receipt requested, postage prepaid, mailed not less than 30 days nor more than 60 days prior to the redemption date, to each holder of record of the shares to be redeemed at such holder's address as the same appears on the stock register of the Corporation and confirmed by facsimile transmission to each holder of record if the Corporation has been furnished with such facsimile address by the holder(s); provided that neither the failure to give such notice nor confirmation nor any defect therein or in the mailing thereof, to any particular holder, shall affect the sufficiency of the notice or the validity of the proceedings for redemption with respect to the other holders. Any notice that was mailed in the manner herein provided shall be conclusively presumed to have been duly given on the date mailed whether or not the holder receives the notice. Each such notice shall state: (i) the redemption date; (ii) the number of shares of 5 1/4% Preferred Stock to be redeemed and, if fewer than all the shares held by such holder are to be redeemed, the number of shares to be redeemed from such holder; (iii) the amount payable, whether in Common Stock or cash and if the payment is in Common Stock an explanation of the determination of the amount to be paid; (iv) the place or places where certificates for such shares are to be surrendered for payment of the redemption price; and (v) that dividends on the shares to be redeemed will cease to accrue on such redemption date, except as otherwise provided herein. (b) If notice has been mailed as aforesaid, from and after the redemption date (unless default shall be made by the Corporation in providing for the payment of the redemption price of the shares called for redemption and dividends accrued and unpaid thereon, if any), (i) except as otherwise provided herein, dividends on the shares of 5 1/4% Preferred Stock so called for redemption shall cease to accrue, (ii) said shares shall no longer be deemed to be outstanding, and (iii) all rights of the holders thereof as holders of the 5 1/4% Preferred Stock shall cease (except the right to receive from the Corporation the redemption price without interest thereon, upon surrender and endorsement of their certificates if so required, and to receive any dividends payable thereon). E-10 178 (c) Upon surrender in accordance with notice given pursuant to this paragraph (7) of the certificates for any shares so redeemed (properly endorsed or assigned for transfer, if the Board of Directors of the Corporation shall so require and the notice shall so state), such shares shall be redeemed by the Corporation at the redemption price aforesaid, plus any dividends payable thereon. If fewer than all the outstanding shares of 5 1/4% Preferred Stock are to be redeemed, the number of shares to be redeemed shall be determined by the Board of Directors and the shares to be redeemed shall be selected pro rata (with any fractional shares being rounded to the nearest whole share). In case fewer than all the shares represented by any such certificate are redeemed, a new certificate shall be issued representing the unredeemed shares without cost to the holder thereof. (8) Conversion. (a) Subject to and upon compliance with the provisions of this paragraph (8), a holder of shares of 5 1/4% Preferred Stock shall have the right, at any time and from time to time, at such holder's option, to convert any or all outstanding shares of 5 1/4% Preferred Stock held by such holder, but not fractions of shares, into fully paid and non-assessable shares of Common Stock by surrendering such shares to be converted, such surrender to be made in the manner provided in paragraph (8)(b) hereof. The number of shares of Common Stock deliverable upon conversion of each share of 5 1/4% Preferred Stock shall be equal to 101.3125 (as adjusted as provided herein, the "Conversion Rate"); provided that the aggregate number of shares of Common Stock deliverable upon conversion of the 5 1/4% Preferred Stock (together with the conversion of any 5 1/4% Convertible Preferred Stock, Series A or any additional preferred stock issued as payment for dividends with respect thereto and any Additional Preferred) shall not be greater than 7,590,994 subject to adjustment as provided herein. The Conversion Rate is subject to adjustment from time to time pursuant to paragraph (8)(d) hereof. The right to convert shares called for redemption pursuant to paragraph (7) shall terminate at the close of business on the date immediately preceding the date fixed for such redemption unless the Corporation shall default in making payment of the amount payable upon such redemption. Upon conversion of any share of 5 1/4% Preferred Stock the holder thereof shall continue to be entitled to receive from the Corporation any accrued but unpaid dividends thereon. (b) (i) In order to exercise the conversion privilege, the holder of each share of 5 1/4% Preferred Stock to be converted shall surrender the certificate representing such share, duly endorsed or assigned to the Corporation or in blank, at the office of the Corporation, or to any transfer agent of the Corporation previously designated by the Corporation to the holders of the 5 1/4% Preferred Stock for such purposes, with a written notice of election to convert completed and signed, specifying the number of shares to be converted. Such notice shall state that the holder has satisfied any legal E-11 179 or regulatory requirement for conversion, including compliance with the Hart-Scott-Rodino Antitrust Improvements Act of 1976. Such notice shall also state the name or names (with address and social security or other taxpayer identification number) in which the certificate or certificates for Common Stock are to be issued. Unless the shares issuable on conversion are to be issued in the same name as the name in which such share of 5 1/4% Preferred Stock is registered, each share surrendered for conversion shall be accompanied by instruments of transfer, in form satisfactory to the Corporation, duly executed by the holder or the holder's duly authorized attorney and an amount sufficient to pay any transfer or similar tax (or evidence reason ably satisfactory to the Corporation demonstrating that such taxes have been paid). All certificates representing shares of 5 1/4% Preferred Stock surrendered for conversion shall be canceled by the Corporation or the transfer agent. (ii) Holders of shares of 5 1/4% Preferred Stock at the close of business on a dividend payment record date shall not be entitled to receive the dividend payable on such shares on the corresponding Dividend Payment Date if such holder shall have surrendered for conversion such shares at any time following the preceding Dividend Payment Date and prior to such Dividend Payment Date. (iii) As promptly as practicable after the surrender by a holder of the certificates for shares of 5 1/4% Preferred Stock as aforesaid, the Corporation shall issue and shall deliver to such holder, or on the holder's written order, a certificate or certificates (which certificate or certificates shall have the legend set forth in paragraph 10(c)) for the whole number of duly authorized, validly issued, fully paid and non-assessable shares of Common Stock issuable upon the conversion of such shares in accordance with the provisions of this paragraph (8), and any fractional interest in respect of a share of Common Stock arising on such conversion shall be settled as provided in paragraph (8)(c). Upon conversion of only a portion of the shares of 5 1/4% Preferred Stock represented by any certificate, a new certificate shall be issued representing the unconverted portion of the certificate so surrendered without cost to the holder thereof. Upon the surrender of certificates representing shares of 5 1/4% Preferred Stock to be converted, such shares shall no longer be deemed to be outstanding and all rights of a holder with respect to such shares surrendered for conversion shall immediately terminate except the right to receive the Common Stock and other amounts payable pursuant to this paragraph (8). (iv) Each conversion shall be deemed to have been effected immediately prior to the close of business on the date on which the certifi- E-12 180 cates for shares of 5 1/4% Preferred Stock shall have been surrendered and such notice received by the Corporation as aforesaid, and the Person or Persons in whose name or names any certificate or certificates for shares of Common Stock shall be issuable upon such conversion shall be deemed to have become the holder or holders of record of the shares of Common Stock represented thereby at such time on such date and such conversion shall be into a number of shares of Common Stock equal to the product of the number of shares of 5 1/4% Preferred Stock surrendered times the Conversion Rate in effect at such time on such date, unless the stock transfer books of the Corporation shall be closed on that date, in which event such Person or Persons shall be deemed to have become such holder or holders of record at the close of business on the next succeeding day on which such stock transfer books are open, but such conversion shall be based upon the Conversion Rate in effect on the date upon which such shares shall have been surrendered and such notice received by the Corporation. (c) No fractional shares or scrip representing fractions of shares of Common Stock shall be issued upon conversion of the 5 1/4% Preferred Stock. Instead of any fractional interest in a share of Common Stock that would otherwise be deliverable upon the conversion of a share of 5 1/4% Preferred Stock, the Corporation shall pay to the holder of such share an amount in cash based upon the Current Market Price of Common Stock on the Trading Day immediately preceding the date of conversion. If more than one share shall be surrendered for conversion at one time by the same holder, the number of full shares of Common Stock issuable upon conversion thereof shall be computed on the basis of the aggregate number of shares of 5 1/4% Preferred Stock surrendered for conversion by such holder. (d) The Conversion Rate shall be adjusted from time to time as follows: (i) If the Corporation shall after the Issue Date (A) declare a dividend or make a distribution on its Common Stock in shares of its Common Stock, (B) subdivide its outstanding Common Stock into a greater number of shares or (C) combine its outstanding Common Stock into a smaller number of shares, the Conversion Rate in effect on the record date for such dividend or distribution, or the effective date of such subdivision or combination, as the case may be, shall be proportionately adjusted so that the holder of any share of 5 1/4% Preferred Stock thereafter surrendered for conversion shall be entitled to receive the number and kind of shares of Common Stock that such holder would have owned or have been entitled to receive after the happening of any of the events described above had such share been converted immediately prior to the record date in the case of a E-13 181 dividend or distribution or the effective date in the case of a subdivision or combination. An adjustment made pursuant to this subparagraph (i) shall become effective immediately after the opening of business on the Business Day next following the record date (except as provided in paragraph (8)(h)) in the case of a dividend or distribution and shall become effective immediately after the opening of business on the Business Day next following the effective date in the case of a subdivision, combination or reclassification. Adjustments in accordance with this paragraph (8)(d)(i) shall be made whenever any event listed above shall occur. (ii) If the Corporation shall after the Issue Date fix a record date for the issuance of rights or warrants (in each case, other than any rights issued pursuant to a shareholder rights plan) to all holders of Common Stock entitling them (for a period expiring within 45 days after such record date) to subscribe for or purchase Common Stock (or securities convertible into Common Stock) at a price per share (or, in the case of a right or warrant to purchase securities convertible into Common Stock, having an effective exercise price per share of Common Stock, computed on the basis of the maximum number of shares of Common Stock issuable upon conversion of such convertible securities, plus the amount of additional consideration payable, if any, to receive one share of Common Stock upon conversion of such securities) less than the Fair Market Value per share of Common Stock on the date on which such issuance was declared or otherwise announced by the Corporation (the "Determination Date"), then the Conversion Rate in effect at the opening of business on the Business Day next following such record date shall be adjusted so that the holder of each share of 5 1/4% Preferred Stock shall be entitled to receive, upon the conversion thereof, the number of shares of Common Stock determined by multiplying (I) the Conversion Rate in effect immediately prior to such record date by (II) a fraction, the numerator of which shall be the sum of (A) the number of shares of Common Stock outstanding on the close of business on the Determination Date and (B) the number of additional shares of Common Stock offered for subscription or purchase pursuant to such rights or warrants (or in the case of a right or warrant to purchase securities convertible into Common Stock, the aggregate number of additional shares of Common Stock into which the convertible securities so offered are initially convertible), and the denominator of which shall be the sum of (A) the number of shares of Common Stock outstanding on the close of business on the Determination Date and (B) the number of shares that the aggregate proceeds to the Corporation from the exercise of such rights or warrants for Common Stock would purchase at such Fair Market Value on such date (or, in the case of a right or warrant to purchase securities convertible into Common Stock, the number of shares of Common Stock obtained by dividing the aggregate exercise price of such E-14 182 rights or warrants for the maximum number of shares of Common Stock issuable upon conversion of such convertible securities, plus the aggregate amount of additional consideration payable, if any, to convert such securities into Common Stock, by such Fair Market Value). Such adjustment shall become effective immediately after the opening of business on the Business Day next following such record date (except as provided in paragraph (8)(h)). Such adjustment shall be made successively whenever such a record date is fixed. In the event that after fixing a record date such rights or warrants are not so issued, the Conversion Rate shall be readjusted to the Conversion Rate which would then be in effect if such record date had not been fixed. In determining whether any rights or warrants entitle the holders of Common Stock to subscribe for or purchase shares of Common Stock at less than such Fair Market Value, there shall be taken into account any consideration received by the Corporation upon issuance and upon exercise of such rights or warrants, the value of such consideration, if other than cash, to be determined by the Board of Directors in good faith. In case any rights or warrants referred to in this subparagraph (ii) shall expire unexercised after the same shall have been distributed or issued by the Corporation (or, in the case of rights or warrants to purchase securities convertible into Common Stock once exercised, the conversion right of such securities shall expire), the Conversion Rate shall be readjusted at the time of such expiration to the Conversion Rate that would have been in effect if no adjustment had been made on account of the distribution or issuance of such expired rights or warrants. (iii) If the Corporation shall fix a record date for the making of a distribution to all holders of its Common Stock of evidences of its indebtedness, shares of its capital stock or assets (excluding regular cash dividends or distributions declared in the ordinary course by the Board of Directors and dividends payable in Common Stock for which an adjustment is made pursuant to paragraph (8)(d)(i)) or rights or warrants (in each case, other than any rights issued pursuant to a shareholder rights plan) to subscribe for or purchase any of its securities (excluding those rights and warrants issued to all holders of Common Stock entitling them for a period expiring within 45 days after the record date referred to in subparagraph (ii) above to subscribe for or purchase Common Stock or securities convertible into shares of Common Stock, which rights and warrants are referred to in and treated under subparagraph (ii) above) (any of the foregoing being hereinafter in this subparagraph (iii) called the "Securities"), then in each such case the Conversion Rate shall be adjusted so that the holder of each share of 5 1/4% Preferred Stock shall be entitled to receive, upon the conversion thereof, the number of shares of Common Stock determined by multiplying (I) the Conversion Rate in effect immediately prior to the close of business on such record date by (II) a fraction, the numerator of which shall be the Fair Market Value per share of E-15 183 the Common Stock on such record date, and the denominator of which shall be the Fair Market Value per share of the Common Stock on such record date less the then-fair market value (as determined by the Board of Directors in good faith, whose determination shall be conclusive) of the portion of the assets, shares of its capital stock or evidences of indebtedness so distributed or of such rights or warrants applicable to one share of Common Stock. Such adjustment shall be made successively whenever such a record date is fixed; and in the event that after fixing a record date such distribution is not so made, the Conversion Rate shall be readjusted to the Conversion Rate which would then be in effect if such record date had not been fixed. Such adjustment shall become effective immediately at the opening of business on the Business Day next following (except as provided in paragraph (8)(h)) the record date for the determination of shareholders entitled to receive such distribution. For the purposes of this subparagraph (iii), the distribution of a Security, which is distributed not only to the holders of the Common Stock on the date fixed for the determination of shareholders entitled to such distribution of such Security, but also is distributed with each share of Common Stock delivered to a Person converting a share of 5 1/4% Preferred Stock after such determination date, shall not require an adjustment of the Conversion Rate pursuant to this subparagraph (iii); provided that on the date, if any, on which a Person converting a share of 5 1/4% Preferred Stock would no longer be entitled to receive such Security with a share of Common Stock (other than as a result of the termination of all such Securities), a distribution of such Securities shall be deemed to have occurred and the Conversion Rate shall be adjusted as provided in this subparagraph (iii) (and such day shall be deemed to be "the date fixed for the determination of shareholders entitled to receive such distribution" and "the record date" within the meaning of the three preceding sentences). If any rights or warrants referred to in this subparagraph (iii) shall expire unexercised after the same shall have been distributed or issued by the Corporation, the Conversion Rate shall be readjusted at the time of such expiration to the Conversion Rate that would have been in effect if no adjustment had been made on account of the distribution or issuance of such expired rights or warrants. (iv) In case the Corporation shall, by dividend or otherwise, distribute to all holders of its Common Stock cash in an amount per share that, together with the aggregate of the per share amounts of any other cash distributions to all holders of its Common Stock made within the 12 months preceding the date of payment of such distribution and in respect of which no adjustment pursuant to this paragraph (iv) has been made exceeds 5.0% of the Fair Market Value immediately prior to the date of declaration of such dividend or distribution (excluding any dividend or distribution in connection with the liquidation, dissolution or winding up of the Corporation, whether E-16 184 voluntary or involuntary, and any cash that is distributed upon a merger, consolidation or other transaction for which an adjustment pursuant to paragraph 8(e) is made), then, in such case, the Conversion Rate shall be adjusted so that the same shall equal the rate determined by multiplying the Conversion Rate in effect immediately prior to the close of business on the Record Date for the cash dividend or distribution by a fraction the numerator of which shall be the Current Market Price of a share of the Common Stock on the Record Date and the denominator shall be such Current Market Price less the per share amount of cash so distributed during the 12-month period applicable to one share of Common Stock, such adjustment to be effective immediately prior to the opening of business on the Business Day following the Record Date; provided, however, that in the event the denominator of the foregoing fraction is zero or negative, in lieu of the foregoing adjustment, adequate provision shall be made so that each holder of 5 1/4% Preferred Stock shall have the right to receive upon conversion, in addition to the shares of Common Stock to which the holder is entitled, the amount of cash such holder would have received had such holder converted each share of 5 1/4% Preferred Stock at the beginning of the 12-month period. In the event that such dividend or distribution is not so paid or made, the Conversion Rate shall again be adjusted to be the Conversion Rate which would then be in effect if such dividend or distribution had not been declared. Notwithstanding the foregoing, if any adjustment is required to be made as set forth in this paragraph (8)(d)(iv), the calculation of any such adjustment shall include the amount of the quarterly cash dividends paid during the 12-month reference period only to the extent such dividends exceed the regular quarterly cash dividends paid during the 12 months preceding the 12-month reference period. For purposes of this paragraph (8)(d)(iv), "Record Date" shall mean, with respect to any dividend or distribution in which the holders of Common Stock have the right to receive cash, the date fixed for determination of shareholders entitled to receive such cash. In the event that at any time cash distributions to holders of Common Stock are not paid equally on all series of Common Stock, the provisions of this paragraph 8(d)(iv) will apply to any cash dividend or cash distribution on any series of Common Stock otherwise meeting the requirements of this paragraph, and shall be deemed amended to the extent necessary so that any adjustment required will be made on the basis of the cash dividend or cash distribution made on any such series. (v) In case of the consummation of a tender or exchange offer (other than an odd-lot tender offer) made by the Corporation or any subsidiary of the Corporation for all or any portion of the outstanding shares of Common Stock to the extent that the cash and fair market value (as deter- E-17 185 mined in good faith by the Board of Directors of the Corporation, whose determination shall be conclusive and shall be described in a resolution of such Board) of any other consideration included in such payment per share of Common Stock at the last time (the "Expiration Time") tenders or exchanges may be made pursuant to such tender or exchange offer (as amended) exceed by more than 5.0%, with any smaller excess being disregarded in computing the adjustment to the Conversion Rate provided in this paragraph (8)(d)(v), the first reported sale price per share of Common Stock on the Trading Day next succeeding the Expiration Time, then the Conversion Rate shall be adjusted so that the same shall equal the rate determined by multiplying the Conversion Rate in effect immediately prior to the Expiration Time by a fraction the numerator of which shall be the sum of (x) the fair market value (determined as aforesaid) of the aggregate consideration payable to share holders based on the acceptance (up to any maximum specified in the terms of the tender or exchange offer) of all shares validly tendered or exchanged and not withdrawn as of the Expiration Time (the shares deemed so accepted, up to any such maximum, being referred to as the "Purchased Shares") and (y) the product of the number of shares of Common Stock outstanding (less any Purchased Shares) on the Expiration Time and the first reported sale price of the Common Stock on the Trading Day next succeeding the Expiration Time, and the denominator of which shall be the number of shares of Common Stock outstanding (including any tendered or exchanged shares) on the Expiration Time multiplied by the first reported sale price of the Common Stock on the Trading Day next succeeding the Expiration Time, such adjustment to become effective immediately prior to the opening of business on the day following the Expiration Time. (vi) No adjustment in the Conversion Rate shall be required unless such adjustment would require a cumulative increase or decrease of at least 1% in the Conversion Rate; provided, however, that any adjustments that by reason of this subparagraph (vi) are not required to be made shall be carried forward and taken into account in any subsequent adjustment until made; and provided, further, that any adjustment shall be required and made in accordance with the provisions of this paragraph (8) (other than this subparagraph (vi)) not later than such time as may be required in order to preserve the tax-free nature of a distribution for United States income tax purposes to the holders of shares of 5 1/4% Preferred Stock or Common Stock. Notwithstanding any other provisions of this paragraph (8), the Corporation shall not be required to make any adjustment of the Conversion Rate for the issuance of any shares of Common Stock pursuant to any plan providing for the reinvestment of dividends or interest payable on securities of the Corporation and the investment of additional optional amounts in shares of Common Stock under such plan. All calculations under this paragraph (8) shall be made to the E-18 186 nearest dollar or to the nearest 1/1,000 of a share, as the case may be. Anything in this paragraph (8)(d) to the contrary notwithstanding, the Corporation shall be entitled, to the extent permitted by law, to make such adjustments in the Conversion Rate, in addition to those required by this paragraph (8)(d), as it in its discretion shall determine to be advisable in order that any stock dividends, subdivision of shares, reclassification or combination of shares, distribution of rights or warrants to purchase stock or securities, or a distribution of other assets (other than cash dividends) hereafter made by the Corporation to its shareholders shall not be taxable. (vii) In the event that, at any time as a result of shares of any other class of capital stock becoming issuable in exchange or substitution for or in lieu of shares of Common Stock or as a result of an adjustment made pursuant to the provisions of this paragraph (8)(d), the holder of 5 1/4% Preferred Stock upon subsequent conversion shall become entitled to receive any shares of capital stock of the Corporation other than Common Stock, the number of such other shares so receivable upon conversion of any shares of 5 1/4% Preferred Stock shall thereafter be subject to adjustment from time to time in a manner and on terms as nearly equivalent as practicable to the provisions contained herein. (e) (i) If the Corporation shall be a party to any transaction (including, without limitation, a merger, consolidation, sale of all or substantially all of the Corporation's assets or recapitalization of the Common Stock and excluding any transaction as to which paragraph (8)(d)(i) applies) (each of the foregoing being referred to herein as a "Transaction"), in each case as a result of which shares of Common Stock shall be converted into the right to receive stock, securities or other property (including cash or any combination thereof), there shall be no adjustment to the Conversion Rate but each share of 5 1/4% Preferred Stock which is not converted into the right to receive stock, securities or other property in connection with such Transaction shall thereafter be convertible into the kind and amount of shares of stock, securities and other property (including cash or any combination thereof) receivable upon the consummation of such Transaction by a holder of that number of shares or fraction thereof of Common Stock into which one share of 5 1/4% Preferred Stock was convertible immediately prior to such Transaction, assuming such holder of Common Stock (i) is not a Person with which the Corporation consolidated or into which the Corporation merged or which merged into the Corporation or to which such sale or transfer was made, as the case may be ("Constituent Person"), or an affiliate of a Constituent Person and (ii) failed to exercise his rights of election, if any, as to the kind or amount of stock, securities and other property (including cash) receivable upon such Transaction (provided that if the kind or amount of E-19 187 stock, securities and other property (including cash) receivable upon such Transaction is not the same for each share of Common Stock of the Corporation held immediately prior to such Transaction by other than a Constituent Person or an affiliate thereof and in respect of which such rights of election shall not have been exercised ("non-electing share"), then for the purpose of this paragraph (8)(e) the kind and amount of stock, securities and other property (including cash) receivable upon such Transaction by each non-electing share shall be deemed to be the kind and amount so receivable per share by a plurality of the non-electing shares). The provisions of this paragraph (8)(e) shall similarly apply to successive Transactions. (ii) Notwithstanding anything herein to the contrary, if the Company is reorganized such that the Common Stock is exchanged for the common stock of a new entity ("Holdco") whose common stock is traded on NASDAQ or another recognized securities exchange, then the Company, by notice to the holders of the 5 1/4% Preferred Stock but without any required consent on their part, may cause the exchange of this 5 1/4% Preferred Stock for preferred stock of Holdco having the same terms and conditions as set forth herein, provided that where Holdco is not solely incorporated as a Delaware company or where the Holdco share structure is not identical to that of the Company, the rights attaching to the preferred stock of Holdco may be adjusted so as to comply with the local law of the country of incorporation of Holdco or the new share structure of Holdco subject to such rights effectively giving the same economic rights as the 5 1/4% Preferred Stock (ignoring for these purposes any resultant change in the tax treatment for the holders of such stock). (f) If: (i) the Corporation shall declare a dividend (or any other distribution) on the Common Stock; or (ii) the Corporation shall authorize the granting to the holders of the Common Stock of rights or warrants to subscribe for or purchase any shares of any class or any other rights or warrants; or (iii) there shall be any subdivision, combination or reclassification of the Common Stock or any consolidation or merger to which the Corporation is a party and for which approval of any shareholders of the Corporation is required, or the sale or transfer of all or substantially all of the assets of the Corporation as an entirety; or E-20 188 (iv) there shall occur the voluntary or involuntary liquidation, dissolution or winding up of the Corporation; then the Corporation shall cause to be filed with any transfer agent designated by the Corporation pursuant to paragraph (8)(b) and shall cause to be mailed to the holders of shares of the 5 1/4% Preferred Stock at their addresses as shown on the stock records of the Corporation, as promptly as possible, but at least ten days prior to the applicable date hereinafter specified, a notice stating (A) the date on which a record is to be taken for the purpose of such dividend (or such other distribution) or rights or warrants, or, if a record is not to be taken, the date as of which the holders of Common Stock of record to be entitled to such dividend, distribution or rights or warrants are to be determined or (B) the date on which such subdivision, combination, reclassification, consolidation, merger, sale, transfer, liquidation, dissolution or winding up or other action is expected to become effective, and the date as of which it is expected that holders of Common Stock of record shall be entitled to exchange their shares of Common Stock for securities or other property, if any, deliverable upon such subdivision, combination, reclassification, consolidation, merger, sale, transfer, liquidation, dissolution or winding up. Failure to give or receive such notice or any defect therein shall not affect the legality or validity of any distribution, right, warrant, subdivision, combination, reclassification, consolidation, merger, sale, transfer, liquidation, dissolution, winding up or other action, or the vote upon any of the foregoing. (g) Whenever the Conversion Rate is adjusted as herein provided, the Corporation shall prepare an officer's certificate with respect to such adjustment of the Conversion Rate setting forth the adjusted Conversion Rate and the effective date of such adjustment and shall mail a copy of such officer's certificate to the holder of each share of 5 1/4% Preferred Stock at such holder's last address as shown on the stock records of the Corporation. If the Corporation shall have designated a transfer agent pursuant to paragraph (8)(b), it shall also promptly file with such transfer agent an officer's certificate setting forth the Conversion Rate after such adjustment and setting forth a brief statement of the facts requiring such adjustment which certificate shall be conclusive evidence of the correctness of such adjustment. (h) In any case in which paragraph (8)(d) provides that an adjustment shall become effective on the day next following a record date for an event, the Corporation may defer until the occurrence of such event (i) issuing to the holder of any share of 5 1/4% Preferred Stock converted after such record date and before the occurrence of such event the additional shares of Common Stock issuable upon such conversion by reason of the adjustment required by such event over and above the Common Stock issuable upon such E-21 189 conversion before giving effect to such adjustment and (ii) paying to such holder any amount in cash in lieu of any fraction pursuant to paragraph (8)(c). (i) For purposes of this paragraph (8), the number of shares of Common Stock at any time outstanding shall not include any shares of Common Stock then owned or held by or for the account of the Corporation. The Corporation shall not pay a dividend or make any distribution on shares of Common Stock held in the treasury of the Corporation. (j) There shall be no adjustment of the Conversion Rate in case of the issuance of any stock of the Corporation in a reorganization, acquisition or other similar transaction except as specifically set forth in this paragraph (8). If any single action would require adjustment of the Conversion Rate pursuant to more than one subparagraph of this paragraph (8), only one adjustment shall be made and such adjustment shall be the amount of adjustment that has the highest absolute value. (k) If the Corporation shall take any action affecting the Common Stock, other than action described in this paragraph (8), that in the opinion of the Board of Directors materially adversely affects the conversion rights of the holders of the shares of 5 1/4% Preferred Stock, the Conversion Rate may be adjusted, to the extent permitted by law, in such manner, if any, and at such time, as the Board of Directors may determine to be equitable in the circumstances; provided that the provisions of this paragraph (8)(k) shall not affect any rights the holders of 5 1/4% Preferred Stock may have at law or in equity. (l) (i) The Corporation covenants that it will at all times reserve and keep available, free from preemptive rights, out of the aggregate of its authorized but unissued shares of Common Stock or its issued shares of Common Stock held in its treasury, or both, for the purpose of effecting conversion of the 5 1/4% Preferred Stock, the full number of shares of Common Stock deliverable upon the conversion of all outstanding shares of 5 1/4% Preferred Stock not theretofore converted. For purposes of this paragraph (8)(1) the number of shares of Common Stock that shall be deliverable upon the conversion of all outstanding shares of 5 1/4% Preferred Stock shall be computed as if at the time of computation all such outstanding shares were held by a single holder. (ii) The Corporation covenants that any shares of Common Stock issued upon conversion of the 5 1/4% Preferred Stock shall be duly authorized, validly issued, fully paid and non-assessable. Before taking any action that would cause an adjustment increasing the Conversion Rate such that the E-22 190 quotient of $1,000.00 and the Conversion Rate (which initially shall be $100.00) would be reduced below the then-par value of the shares of Common Stock deliverable upon conversion of the 5 1/4% Preferred Stock, the Corporation will take any corporate action that, in the opinion of its counsel, may be necessary in order that the Corporation may validly and legally issue fully paid and non-assessable shares of Common Stock based upon such adjusted Conversion Rate. (iii) Prior to the delivery of any securities that the Corporation shall be obligated to deliver upon conversion of the 5 1/4% Preferred Stock, the Corporation shall comply with all applicable federal and state laws and regulations which require action to be taken by the Corporation. (m) The Corporation will pay any and all documentary stamp or similar issue or transfer taxes payable in respect of the issue or delivery of shares of Common Stock or other securities or property on conversion of the 5 1/4% Preferred Stock pursuant hereto; provided, however, that the Corporation shall not be required to pay any tax that may be payable in respect of any transfer involved in the issue or delivery of shares of Common Stock or other securities or property in a name other than that of the holder of the 5 1/4% Preferred Stock to be converted and no such issue or delivery shall be made unless and until the Person requesting such issue or delivery has paid to the Corporation the amount of any such tax or established, to the satisfaction of the Corporation, that such tax has been paid. (9) Voting Rights. (a) The holders of record of shares of 5 1/4% Preferred Stock shall not be entitled to any voting rights except as hereinafter provided in paragraph (b) or as otherwise provided by law. (b) If and whenever six quarterly dividends (whether or not consecutive) payable on the 5 1/4% Preferred Stock have not been paid in full or if the Corporation shall have failed to discharge its Mandatory Redemption Obligation, the number of directors then constituting the Board of Directors shall be increased by two and the holders of shares of 5 1/4% Preferred Stock, together with the holders of shares of every other series of preferred stock (including, without limitation, Additional Preferred) upon which like rights to vote for the election of two additional directors have been conferred and are exercisable (resulting from either the failure to pay dividends or the failure to redeem) (any such other series is referred to as the "Preferred Shares"), voting as a single class regardless of series, shall be entitled to elect the two additional directors to serve on the Board of Directors at any annual meeting of stockholders or special meeting held in place thereof, or at a special meeting of the holders of the 5 1/4% Preferred Stock and E-23 191 the Preferred Shares called as hereinafter provided. Whenever all arrears in dividends on the 5 1/4% Preferred Stock and the Preferred Shares then outstanding shall have been paid and dividends thereon for the current quarterly dividend period shall have been paid or declared and set apart for payment, or the Corporation shall have fulfilled its Mandatory Redemption Obligation and any redemption obligation in respect of the Preferred Shares, as the case may be, then the right of the holders of the 5 1/4% Preferred Stock and the Preferred Shares to elect such additional two directors shall cease (but subject always to the same provisions for the vesting of such voting rights in the case of any similar future arrearages in six quarterly dividends or failure to fulfill any Mandatory Redemption Obligation), and the terms of office of all persons elected as directors by the holders of the 5 1/4% Preferred Stock and the Preferred Shares shall forthwith terminate and the number of the Board of Directors shall be reduced accordingly. At any time after such voting power shall have been so vested in the holders of shares of 5 1/4% Preferred Stock and the Preferred Shares, the secretary of the Corporation may, and upon the written request of any holder of 5 1/4% Preferred Stock (addressed to the secretary at the principal office of the Corporation) shall, call a special meeting of the holders of the 5 1/4% Preferred Stock and of the Preferred Shares for the election of the two directors to be elected by them as herein provided, such call to be made by notice similar to that provided in the Bylaws of the Corporation for a special meeting of the stockholders or as required by law. If any such special meeting required to be called as above provided shall not be called by the secretary within 20 days after receipt of any such request, then any holder of shares of 5 1/4% Preferred Stock may call such meeting, upon the notice above provided, and for that purpose shall have access to the stock books of the Corporation. The directors elected at any such special meeting shall hold office until the next annual meeting of the stockholders or special meeting held in lieu thereof if such office shall not have previously terminated as above provided. If any vacancy shall occur among the directors elected by the holders of the 5 1/4% Preferred Stock and the Preferred Shares, a successor shall be elected by the Board of Directors, upon the nomination of the then-remaining director elected by the holders of the 5 1/4% Preferred Stock and the Preferred Shares or the successor of such remaining director, to serve until the next annual meeting of the stockholders or special meeting held in place thereof if such office shall not have previously terminated as provided above. (c) Without the written consent of the holders of at least 66 2/3% in liquidation preference of the outstanding shares of 5 1/4% Preferred Stock or the vote of holders of at least 66 2/3% in liquidation preference of the outstanding shares of 5 1/4% Preferred Stock at a meeting of the holders of 5 1/4% Preferred Stock called for such purpose, the Corporation will not E-24 192 amend, alter or repeal any provision of the Certificate of Incorporation (by merger or otherwise) so as to adversely affect the preferences, rights or powers of the 5 1/4% Preferred Stock; provided that any such amendment that changes the dividend payable on, the conversion rate with respect to, or the liquidation preference of the 5 1/4% Preferred Stock shall require the affirmative vote at a meeting of holders of 5 1/4% Preferred Stock called for such purpose or written consent of the holder of each share of 5 1/4% Preferred Stock. (d) Without the written consent of the holders of at least 66 2/3% in liquidation preference of the outstanding shares of 5 1/4% Preferred Stock or the vote of holders of at least 66 2/3% in liquidation preference of the outstanding shares of 5 1/4% Preferred Stock at a meeting of such holders called for such purpose, the Corporation will not issue any additional 5 1/4% Preferred Stock or create, authorize or issue any Parity Securities or Senior Securities or increase the authorized amount of any such other class or series; provided that paragraph 9(d) shall not limit the right of the Corporation to (i) issue Additional Preferred as dividends pursuant to paragraph 4 or (ii) to issue Parity Securities or Senior Securities in order to refinance, redeem or refund the 13% Preferred, provided that the maximum accrual value (i.e., the sum of stated value and maximum amount payable in kind over the term from issuance to first date of mandatory redemption or redemption at the option of the holder) of such Parity Securities may not exceed the maximum accrual value of the 13% Preferred. (e) In exercising the voting rights set forth in this paragraph 9, each share of 5 1/4% Preferred Stock shall have one vote per share, except that when any other series of preferred stock shall have the right to vote with the 5 1/4% Preferred Stock as a single class on any matter, then the 5 1/4% Preferred Stock and such other series shall have with respect to such matters one vote per $1,000 of stated liquidation preference. Except as otherwise required by applicable law or as set forth herein, the shares of 5 1/4% Preferred Stock shall not have any relative, participating, optional or other special voting rights and powers and the consent of the holders thereof shall not be required for the taking of any corporate action. (10) General Provisions. (a) The headings of the paragraphs, subparagraphs, clauses and subclauses of this Statement of Designations are for convenience of reference only and shall not define, limit or affect any of the provisions hereof. (b) If the Corporation shall have failed to declare or pay dividends as required pursuant to paragraph (4) hereof or shall have failed to E-25 193 discharge any obligation to redeem shares of 5 1/4% Preferred Stock pursuant to paragraph (6) hereof, the holders of shares of 5 1/4% Preferred Stock shall be entitled to receive, in addition to all other amounts required to be paid hereunder, when, as and if declared by the Board of Directors, out of funds legally available for the payment of dividends, cash dividends on the aggregate dividends which the Corporation shall have failed to declare or pay or the redemption price, together with accrued and unpaid dividends thereon, as the case may be, at a rate of 2% per quarter, compounded quarterly, for the period during which the failure to pay dividends or failure to discharge an obligation to redeem shares of 5 1/4% Preferred Stock shall continue. (c) The shares of 5 1/4% Preferred Stock shall bear the following legend: THE SHARES OF PREFERRED STOCK REPRESENTED BY THIS CERTIFICATE MAY NOT BE TRANSFERRED OTHER THAN TO AN AFFILIATE OF THE HOLDER. The shares of Common Stock issuable upon conversion of the 5 1/4% Preferred Stock shall bear the following legend: THE SHARES OF COMMON STOCK, PAR VALUE $.01, OF THE COMPANY (THE "COMMON STOCK") REPRESENTED BY THIS CERTIFICATE MAY NOT BE OFFERED OR SOLD IN THE UNITED STATES ABSENT REGISTRATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT") AND ANY APPLICABLE STATE SECURITIES LAWS OR AN APPLICABLE EXEMPTION FROM REGISTRATION REQUIREMENTS. THE SHARES REPRESENTED BY THIS CERTIFICATE MAY NOT BE TRANSFERRED PRIOR TO JANUARY 28, 2001 (OTHER THAN TO AN AFFILIATE OF THE HOLDER) AND THEREAFTER MAY ONLY BE SOLD IN BROKERS TRANSACTIONS (AS DEFINED IN RULE 144 UNDER THE ACT) OR TO PERSONS WHO, GIVING EFFECT TO THE SALE OF THE SHARES REPRESENTED HEREBY, WILL NOT BE THE BENEFICIAL OWNER OF 5% OR MORE OF THE COMMON STOCK. (11) Shareholder Rights Plan. The shares of 5 1/4% Preferred Stock shall be entitled to the benefits of a number of rights issuable under the Rights Agreement, dated as of October 13, 1993, between the Company and Continental Stock Transfer & Trust Company or any successor plan of similar purpose and effect ("Rights") equal to the number of shares of Common Stock then issuable upon conversion of the 5 1/4% Preferred Stock at the prevailing Conversion Rate. Any E-26 194 shares of Common Stock deliverable upon conversion of a share of 5 1/4% Preferred Stock or upon payment of a dividend shall be accomplished by a Right. E-27 EX-3.4 4 BY-LAWS OF NTL INCORPORATED 1 BY-LAWS OF NTL COMMUNICATIONS CORP. (hereinafter called the "Corporation") ARTICLE I OFFICES Section 1. Registered Office. The registered office of the Corporation shall be in the City of Dover, County of Kent, State of Delaware. Section 2. Other Offices. The Corporation may also have offices at such other places both within and without the State of Delaware as the Board of Directors may from time to time determine. ARTICLE II MEETINGS OF STOCKHOLDERS Section 1. Place of Meetings. Meetings of the stockholders for the election of directors or for any other purpose shall be held at such time and place, either within or without the State of Delaware as shall be designated from time to time by the Board of Directors and stated in the notice of the meeting or in a duly executed waiver of notice thereof. Section 2. Annual Meetings. Annual meetings of stockholders shall be held on such date and at such time as shall be designated from time to time by the Board of Directors and stated in the notice of the meeting, at which meetings the stockholders shall elect by a plurality vote a Board of Directors, and transact such other business as may properly be brought before the meeting in accordance with these By-laws. Written notice of the annual meeting stating the place, date and hour of the meeting shall be given to each stockholder entitled to vote at such meeting not less than ten nor more than sixty days before the date of the meeting. 2 Section 3. Special Meetings. Special meetings of stockholders, for any purpose or purposes, may be called by the Board of Directors, the Chairman of the Board of Directors or the President. Special meetings of stockholders may not be called by any other person or persons. Written notice of a special meeting stating the place, date and hour of the meeting and the purpose or purposes for which the meeting is called shall be given not less than ten nor more than sixty days before the date of the meeting to each stockholder entitled to vote at such meeting, and only such business as is stated in such notice shall be acted upon thereat. Section 4. Advance Notification of Business to be Transacted at Stockholder Meetings. To be properly brought before the annual or any special stockholders' meeting, business must be either (a) specified in the notice of meeting (or any supplement or amendment thereto) given by or at the direction of the Board of Directors, (b) otherwise properly brought before the meeting by or at the direction of the Board of Directors, or (c) otherwise properly brought before the meeting by a stockholder. In addition to any other applicable requirements, for business to be properly brought before an annual or any special stockholders' meeting by a stockholder, the stockholder must have given timely notice thereof in writing to the secretary of the Corporation. To be timely, a stockholder's notice must be delivered to or mailed and received at the principal executive offices of the Corporation not less than 75 days nor more than 90 days prior to the meeting; provided, however, that in the event that less than 90 days' notice or prior public disclosure of the date of the meeting is given or made to stockholders, notice by the stockholder to be timely must be so received not later than the close of business on the fifteenth day following the day on which such notice of the date of the meeting was mailed or such public disclosure was made, whichever first occurs. Such stockholder's notice to the Secretary shall set forth as to each matter the stockholder proposes to bring before the meeting (i) a brief description of the business desired to be brought before the meeting and the reasons for conducting such business at the meeting, (ii) the name and record address of the stockholder proposing such business, (iii) the class, series and number of shares of capital stock of the Corporation which are beneficially owned by the stockholder and (iv) any material interest of the stockholder in such business. 2 3 Notwithstanding anything in these By-laws to the contrary, no business shall be conducted at the annual or any special meeting except in accordance with the procedures set forth in this Article II, Section 4, provided, however, that nothing in this Section 5 shall be deemed to preclude discussion by any stockholder of any business properly brought before the meeting. The officer of the Corporation presiding at the meeting shall, if the facts warrant, determine and declare to the meeting that business was not properly brought before the meeting in accordance with the provisions of this Article II, Section 4, and if he should so determine, he shall so declare to the meeting and any such business not properly brought before the meeting shall not be transacted. Section 5. Quorum. Except as otherwise provided by law or by the Certificate of Incorporation, the holders of a majority of the capital stock issued and outstanding and entitled to vote thereat, present in person or represented by proxy, shall constitute a quorum at all meetings of the stockholders for the transaction of business. If, however, such quorum shall not be present or represented at any meeting of the stockholders, the stockholders entitled to vote thereat, present in person or represented by proxy, shall have power to adjourn the meeting from time to time, without notice other than announcement at the meeting, until a quorum shall be present or represented. At such adjourned meeting at which a quorum shall be present or represented, any business may be transacted which might have been transacted at the meeting as originally noticed. If the adjournment is for more than thirty days, or if after the adjournment a new record date is fixed for the adjourned meeting, a notice of the adjourned meeting shall be given to each stockholder entitled to vote at the meeting. Section 6. Voting. Unless otherwise required by law, the Restated Certificate of Incorporation or these By-laws, any question brought before any meeting of stockholders shall be decided by the vote of the holders of a majority of the stock represented and entitled to vote thereat. Unless otherwise provided in the Restated Certificate of Incorporation, each stockholder represented at a meeting of stockholders shall be entitled to cast one vote for each share of the capital stock entitled to vote thereat held by such stockholder. The Board of Directors, in its discretion, or the officer of the Corporation presiding at a meeting of stockholders, in his 3 4 discretion, may require that any votes cast at such meeting shall be cast by written ballot. Section 7. List of Stockholders Entitled to Vote. The officer of the Corporation who has charge of the stock ledger of the Corporation shall prepare and make, at least ten days before every meeting of stockholders, a complete list of the stockholders entitled to vote at the meeting, arranged in alphabetical order, and showing the address of each stockholder and the number of shares registered in the name of each stockholder. Such list shall be open to the examination of any stockholder, for any purpose germane to the meeting, during ordinary business hours, for a period of at least ten days prior to the meeting, either at a place within the city where the meeting is to be held, which place shall be specified in the notice of the meeting, or, if not so specified, at the place where the meeting is to be held. The list shall also be produced and kept at the time and place of the meeting during the whole time thereof, and may be inspected by any stockholder of the Corporation who is present. Section 8. Stock Ledger. The stock ledger of the Corporation shall be the only evidence as to who are the stockholders entitled to examine the stock ledger, the list required by Section 7 of this Article II or the books of the Corporation, or to vote in person or by proxy at any meeting of stockholders. ARTICLE III DIRECTORS Section 1. Number and Election of Directors. Subject to the rights, if any, of holders of preferred stock of the Corporation, the Board of Directors shall consist of not less than three nor more than fifteen members, the exact number of which shall be fixed from time to time by the Board of Directors. Except as provided in Section 3 of this Article III, directors shall be elected by a plurality of the votes cast at Annual Meetings of Stockholders, and each director so elected shall hold office as provided by Article FIFTH of the Certificate of Incorporation. Any director may resign at any time upon written notice to the Corporation. Directors need not be stockholders. 4 5 Section 2. Nomination of Directors. Only persons who are nominated in accordance with the following procedures shall be eligible for election as directors. Nominations of persons for election to the Board of Directors of the Corporation at the Annual Meeting may be made at such meeting by or at the direction of the Board of Directors, by any committee or persons appointed by the Board of Directors or by any stockholder of the Corporation entitled to vote for the election of directors at the meeting who complies with the notice procedures set forth in this Article III, Section 2. Such nominations, other than those made by or at the direction of the Board of Directors, shall be made pursuant to timely notice in writing to the Secretary of the Corporation. To be timely, a stockholder's notice must be delivered to or mailed and received at the principal executive offices of the Corporation not less than 75 days nor more than 90 days prior to the meeting; provided, however, that in the event that less than 90 days' notice or prior public disclosure of the date of the meeting is given or made to stockholders, notice by the stockholder to be timely must be so received not later than the close of business on the fifteenth day following the day on which such notice of the date of the meeting was mailed or such public disclosure was made, whichever first occurs. Such stockholder's notice to the Secretary shall set forth (a) as to each person whom the stockholder proposes to nominate for election or re-election as a director, (i) the name, age, business address and residence address of the person, (ii) the principal occupation or employment of the person, (iii) the class, series and number of shares of capital stock of the Corporation which are beneficially owned by the person and (iv) any other information relating to the person that is required to be disclosed in solicitations for proxies for election of directors pursuant to the Rules and Regulations of the Securities and Exchange Commission under Section 14 of the Securities Exchange Act of 1934, as amended; and (b) as to the stockholder giving the notice (i) the name and record address of the stockholder and (ii) the class, series and number of shares of capital stock of the Corporation which are beneficially owned by the stockholder. Such notice shall be accompanied by the executed consent of each nominee to serve as a director if so elected. The Corporation may require any proposed nominee to furnish such other information as may reasonably be required by the Corporation to determine the eligibility of such proposed nominee to serve as a director of the Corpora- 5 6 tion. No person shall be eligible for election as a director of the Corporation unless nominated in accordance with the procedures set forth herein. The officer of the Corporation presiding at an Annual Meeting shall, if the facts warrant, determine and declare to the meeting that a nomination was not made in accordance with the foregoing procedure, and if he should so determine, he shall so declare to the meeting, and the defective nomination shall be disregarded. Section 3. Vacancies. Any vacancy on the Board of Directors, howsoever resulting, may be filled by a majority of the directors then in office, though less than a quorum, or by a sole remaining director. Any director elected to fill a vacancy shall hold office for a term that shall coincide with the term of the class to which such director shall have been elected. Section 4. Duties and Powers. The business of the Corporation shall be managed by or under the direction of the Board of Directors which may exercise all such powers of the Corporation and do all such lawful acts and things as are not by statute or by the Certificate of Incorporation or by these By-laws directed or required to be exercised or done by the stockholders. Section 5. Meetings. The Board of Directors of the Corporation may hold meetings, both regular and special, either within or without the State of Delaware. Regular meetings of the Board of Directors may be held without notice at such time and at such place as may from time to time be determined by the Board of Directors. Special meetings of the Board of Directors may be called by the Chairman of the Board of Directors, the President or by a majority of the Board of Directors. Notice thereof stating the place, date and hour of the meeting shall be given to each director either by mail not less than forty-eight (48) hours before the date of the meeting, or personally or by telephone, telegram, telex or similar means of communication on twenty-four (24) hours' notice, or on such shorter notice as the person or persons calling such meeting may deem necessary or appropriate in the circumstances. Section 6. Quorum; Action of the Board of Directors. Except as may be otherwise specifically provided by law, the Certificate of Incorporation or these By-laws, at all meetings of the Board of Directors, a 6 7 majority of the entire Board of Directors shall constitute a quorum for the transaction of business and the act of a majority of the directors present at any meeting at which there is a quorum shall be the act of the Board of Directors. If a quorum shall not be present at any meeting of the Board of Directors, the directors present thereat may adjourn the meeting from time to time, without notice other than announcement at the meeting, until a quorum shall be present. Section 7. Action by Written Consent. Any action required or permitted to be taken at any meeting of the Board of Directors or of any committee thereof may be taken without a meeting, if all the members of the Board of Directors or committee, as the case may be, consent thereto in writing, and the writing or writings are filed with the minutes of proceedings of the Board of Directors or committee. Section 8. Meetings by Means of Conference Telephone. Members of the Board of Directors of the Corporation, or any committee designated by the Board of Directors, may participate in a meeting of the Board of Directors or such committee by means of a conference telephone or similar communications equipment by means of which all persons participating in the meeting can hear each other, and participation in a meeting pursuant to this Section 8 shall constitute presence in person at such meeting. Section 9. Committees. The Board of Directors may, by resolution passed by a majority of the entire Board of Directors, designate one or more committees, each committee to consist of one or more of the directors of the Corporation. The Board of Directors may designate one or more directors as alternate members of any committee, who may replace any absent or disqualified member at any meeting of any such committee. In the absence or disqualification of a member of a committee, and in the absence of a designation by the Board of Directors of an alternate member to replace the absent or disqualified member, the member or members thereof present at any meeting and not disqualified from voting, whether or not he or they constitute a quorum, may unanimously appoint another member of the Board of Directors to act at the meeting in the place of any absent or disqualified member. Any committee, to the extent allowed by law and provided in the resolution establishing such committee, 7 8 shall have and may exercise all the powers and authority of the Board of Directors in the management of the business and affairs of the Corporation. Unless the Board of Directors or such committee shall otherwise provide, regular and special meetings and other actions of any shall be governed by the provisions of this Article III applicable to meetings and actions of the Board of Directors. Each committee shall keep regular minutes and report to the Board of Directors when required. Section 10. Fees and Compensation. Directors and members of committees may receive such compensation, if any, for their services, and such reimbursement for expenses, as may be fixed or determined by the Board of Directors. No such payment shall preclude any director from serving the Corporation in any other capacity and receiving compensation therefor. Section 11. Interested Directors. No contract or transaction between the Corporation and one or more of its directors or officers, or between the Corporation and any other corporation, partnership, association, or other organization in which one or more of its directors or officers are directors or officers, or have a financial interest, shall be void or voidable solely for this reason, or solely because the director or officer is present at or participates in the meeting of the Board of Directors or committee thereof which authorizes the contract or transaction, or solely because his or their votes are counted for such purpose if (a) the material facts as to his or their relationship or interest and as to the contract or transaction are disclosed or are known to the Board of Directors or the committee, and the Board of Directors or committee in good faith authorizes the contract or transaction by the affirmative votes of a majority of the disinterested directors, even though the disinterested directors be less than a quorum; or (b) the material facts as to his or their relationship or interest and as to the contract or transaction are disclosed or are known to the stockholders entitled to vote thereon, and the contract or transaction is specifically approved in good faith by vote of the stockholders; or (c) the contract or transaction is fair as to the Corporation as of the time it is authorized, approved or ratified, by the Board of Directors, a committee thereof or the stockholders. Common or interested directors may be counted in determining the presence of a quorum at a meeting of 8 9 the Board of Directors or of a committee which authorizes the contract or transaction. ARTICLE IV OFFICERS Section 1. General. The officers of the Corporation shall be chosen by the Board of Directors and shall be a President, one or more Vice Presidents, a Secretary and a Treasurer. The Board of Directors, in its discretion, may also choose a Chairman of the Board of Directors (who must be a director) and Assistant Secretaries, Assistant Treasurers and other officers. Such officers as the Board of Directors may choose shall perform such duties and have such powers as from time to time may be assigned to them by the Board of Directors. The Board of Directors may delegate to any other officer of the Corporation the power to choose such other officers and to prescribe their respective duties and powers. Any number of offices may be held by the same person, unless otherwise prohibited by law, the Certificate of Incorporation or these By-laws. The officers of the Corporation need not be stockholders of the Corporation nor, except in the case of the Chairman of the Board of Directors, need such officers be directors of the Corporation. Section 2. Election. The Board of Directors at its first meeting held after each Annual Meeting of Stockholders shall elect the officers of the Corporation, who shall be subject to the control of the Board of Directors and shall hold their offices for such terms and shall exercise such powers and perform such duties as shall be determined from time to time by the Board of Directors, and all officers of the Corporation shall hold office until their successors are chosen and qualified, or until their earlier resignation or removal. Any officer elected by the Board of Directors may be removed at any time by the Board of Directors with or without cause. Any vacancy occurring in any office of the Corporation shall be filled by the Board of Directors. The salaries of all officers of the Corporation shall be fixed by the Board of Directors. 9 10 Section 3. Voting Securities Owned by the Corporation. Powers of attorney, proxies, waivers of notice of meeting, consents and other instruments relating to securities owned by the Corporation may be executed in the name of and on behalf of the Corporation by the President or any Vice President and any such officer may, in the name of and on behalf of the Corporation, take all such action as any such officer may deem advisable to vote in person or by proxy at any meeting of security holders of any corporation in which the Corporation may own securities and at any such meeting shall possess and may exercise any and all rights and power incident to the ownership of such securities and which, as the owner thereof, the Corporation might have exercised and possessed if present. The Board of Directors may, by resolution, from time to time confer like powers upon any other person or persons. ARTICLE V STOCK Section 1. Form of Certificates. Every holder of stock in the Corporation shall be entitled to have a certificate signed, in the name of the Corporation (a) by the Chairman of the Board of Directors, the President or a Vice President and (b) by the Treasurer or an Assistant Treasurer, or the Secretary or an Assistant Secretary of the Corporation, certifying the number of shares owned by him in the Corporation. Section 2. Signatures. Where a certificate is countersigned by (a) a transfer agent other than the Corporation or its employee or (b) a registrar other than the Corporation or its employee, any other signature on the certificate may be a facsimile. In case any officer, transfer agent or registrar who has signed or whose facsimile signature has been placed upon a certificate shall have ceased to be such officer, transfer agent or registrar before such certificate is issued, it may be issued by the Corporation with the same effect as if he were such officer, transfer agent or registrar at the date of issue. Section 3. Lost Certificates. The Board of Directors may direct a new certificate to be issued in place of any certificate theretofore issued by the Corporation alleged to have been lost, stolen or destroyed, 10 11 upon the making of an affidavit of that fact by the person claiming the certificate of stock to be lost, stolen or destroyed. When authorizing such issue of a new certificate, the Board of Directors may, in its discretion and as a condition precedent to the issuance thereof, require the owner of such lost, stolen or destroyed certificate, or his legal representative, to advertise the same in such manner as the Board of Directors shall require and/or to give the Corporation a bond in such sum as it may direct as indemnity against any claim that may be made against the Corporation with respect to the certificate alleged to have been lost, stolen or destroyed. Section 4. Transfers. Stock of the Corporation shall be transferable in the manner prescribed by law and in these By-laws. Transfers of stock shall be made on the books of the Corporation only by the person named in the certificate or by his attorney lawfully constituted in writing and upon the surrender of the certificate therefor, which shall be cancelled before a new certificate shall be issued. Section 5. Record Date. In order that the Corporation may determine the stockholders entitled to notice of or to vote at any meeting of stockholders or any adjournment thereof, or entitled to receive payment of any dividend or other distribution or allotment of any rights, or entitled to exercise any rights in respect of any change, conversion or exchange of stock, or for the purpose of any other lawful action, the Board of Directors may fix, in advance, a record date, which shall not be more than sixty days nor less than ten days before the date of such meeting, nor more than sixty days prior to any other action. A determination of stockholders of record entitled to notice of or to vote at a meeting of stockholders shall apply to any adjournment of the meeting; provided, however, that the Board of Directors may fix a new record date for the adjourned meeting. Section 6. Beneficial Owners. The Corporation shall be entitled to recognize the exclusive right of a person registered on its books as the owner of shares to receive dividends, and to vote as such owner, and to hold liable for calls and assessments a person registered on its books as the owner of shares, and shall not be bound to recognize any equitable or other claim to or interest in such share or shares on the part of any other person, 11 12 whether or not it shall have express or other notice thereof, except as otherwise provided by law. ARTICLE VI NOTICES Section 1. Notices. Whenever written notice is required by law, the Certificate of Incorporation or these By-laws, to be given to any director or stockholder, such notice may be given by mail, addressed to such director or stockholder, at his address as it appears on the records of the Corporation, with postage thereon prepaid, and such notice shall be deemed to be given at the time when the same shall be deposited in the United States mail. Written notice may also be given personally or by telegram, telex, cable or facsimile transmission. Section 2. Waivers of Notice. Whenever any notice is required by law, the Certificate of Incorporation or these By-laws, to be given to any director or stockholder, a waiver thereof in writing, signed, by the person or persons entitled to said notice, whether before or after the time stated therein, shall be deemed equivalent thereto. ARTICLE VII GENERAL PROVISIONS Section 1. Dividends. Dividends upon the capital stock of the Corporation, subject to the provisions of the Certificate of Incorporation, if any, may be declared by the Board of Directors at any regular or special meeting pursuant to law. Dividends may be paid in cash, in property or in shares of capital stock. Before payment of any dividend, there may be set aside out of any funds of the Corporation available for dividends such sum or sums as the Board of Directors from time to time, in its absolute discretion, deems proper as a reserve or reserves to meet contingencies, or for equalizing dividends, or for repairing or maintaining any property of the Corporation, or for any proper purpose, and the Board of Directors may modify or abolish any such reserve. 12 13 Section 2. Disbursements. All checks or demands for money and notes of the Corporation shall be signed by such officer or officers or such other person or persons as the Board of Directors may from time to time designate. Section 3. Fiscal Year. The fiscal year of the Corporation shall be fixed by resolution of the Board of Directors. Section 4. Corporate Seal. The corporate seal shall have inscribed thereon the name of the Corporation, the year of its organization and the words "Corporate Seal, Delaware". The seal may be used by causing it or a facsimile thereof to be impressed or affixed or reproduced or otherwise. ARTICLE VIII INDEMNIFICATION The Corporation shall indemnify to the full extent authorized or permitted by law (as now or hereafter in effect) any person made, or threatened to be made, a defendant or witness to any action, suit or proceeding (whether civil or criminal or otherwise) by reason of the fact that he, his testator or intestate, is or was a director or officer of the Corporation or by reason of the fact that such director or officer, at the request of the Corporation, is or was serving any other corporation, partnership, joint venture, trust, employee benefit plan or other enterprise, in any capacity. ARTICLE IX AMENDMENTS These By-laws may be altered, amended or repealed, in whole or in part, or new By-laws may be adopted by either the affirmative vote of the holders of sixty-six and two-thirds percent (66-2/3%) of the outstanding capital stock of the Corporation entitled to vote thereon or by the Board of Directors. 13 EX-4.4 5 FIRST SUPPLEMENTAL INDENTURE 1 Exhibit 4.4 NTL INCORPORATED, NTL COMMUNICATIONS CORP. and THE CHASE MANHATTAN BANK, as Trustee ----------------------- FIRST SUPPLEMENTAL INDENTURE Dated as of March 31, 1999 Supplementing the Indenture dated as of December 16, 1998 between NTL Incorporated and The Chase Manhattan Bank, as Trustee 7% CONVERTIBLE SUBORDINATED NOTES DUE 2008 2 FIRST SUPPLEMENTAL INDENTURE, dated as of March 31, 1999, between NTL Incorporated, a Delaware corporation (the "COMPANY"), NTL Communi cations Corp., a Delaware corporation and a direct, wholly owned subsidiary of the Company ("HOLDCO") and The Chase Manhattan Bank, a New York corporation, as trustee (the "TRUSTEE"). WITNESSETH: WHEREAS, the Company and the Trustee previously executed and delivered the Indenture, dated as of December 16, 1998 (the "INDENTURE"), providing for the creation, execution authentication and delivery of the Company's 7% Convertible Subordinated Notes due 2008 (the "SECURITIES"), which Securities are convertible into shares of common stock, par value $.01 per share (the "NTL COMMON STOCK"), of the Company in accordance with the terms and conditions of the Indenture; WHEREAS, Section 11.01 of the Indenture provides that the Company and the Trustee may from time to time amend or supplement the Indenture without the consent of any holders of the Securities, in order to, among other things, comply with Section 5.12 of the Indenture regarding the effect of reclassifications, consolidations, mergers or sales on conversion privileges; WHEREAS, on March 26, 1999, the Company, Holdco and NTL Mergerco, Inc., a Delaware corporation that is a direct wholly-owned subsidiary of Holdco and an indirect wholly-owned subsidiary of the Company ("MERGER SUB"), entered into an Agreement and Plan of Merger (the "MERGER AGREEMENT"), pursuant to which, among other things, Merger Sub shall be merged with and into the Company in accordance with Section 251(g) of the General Corporation Law of the State of Delaware (the "MERGER"), with the Company continuing as the surviving corporation (the "SURVIVING CORPORATION") under the name "NTL Communications Corp." and as a wholly-owned subsidiary of Holdco; WHEREAS, pursuant to the Merger, each outstanding share of NTL Common Stock shall be converted into the right to receive one validly issued, fully paid and nonassessable share of common stock, par value $.01 per share, of Holdco (the "HOLDCO COMMON STOCK"); WHEREAS, upon consummation of the Merger and except as expressly set forth in Section 2.01 of this First Supplemental Indenture, the Com- 2 3 pany, as the Surviving Corporation, shall continue to be liable for the obligations of the Company under the Securities and the Indenture; and WHEREAS, all actions necessary to make this First Supplemental Indenture and the Securities valid, binding and enforceable obligations of the Company and, to the extent applicable, Holdco, have been performed and fulfilled; NOW, THEREFORE, for and in consideration of the premises and mutual covenants herein contained each party agrees as follows for the benefit of the other party and for the equal and ratable benefit of the holders of the Securities: ARTICLE I DEFINITIONS SECTION 1.01 GENERAL. For all purposes of the Indenture and this First Supplemental Indenture, except as otherwise expressly provided or unless the context otherwise requires: (a) the words "herein", "hereof" and "hereunder" and other words of similar import refer to the Indenture and this First Supplemental Indenture as a whole and not to any particular Article, Section or subdivision; and (b) capitalized terms used but not defined herein shall have the meanings assigned to them in the Indenture. ARTICLE II EFFECT OF MERGER ON CONVERSION PRIVILEGE; ADJUSTMENT OF CONVERSION PRICE SECTION 2.01 CONVERSION OF SECURITIES FOR HOLDCO COMMON STOCK. In accordance with Section 5.12 of the Indenture, upon and as of the consumma tion of the Merger, the holder of each Security then outstanding shall have the right to convert such Security into the amount of shares of Holdco Common Stock receivable upon effectiveness of the Merger by a holder of the number of shares of NTL Common Stock deliverable upon conversion of such Security immediately prior to the Merger. All of the covenants and provisions by or for the benefit of the Company that are contained in Article V of the Indenture relating to the conversion 3 4 of the Securities shall, upon consum mation of the Merger, bind and inure to the benefit of Holdco, including without limitation the covenant set forth in Section 5.05 of the Indenture, which shall require that Holdco at all times reserve and keep available, free from preemptive rights, out of authorized but unissued Holdco Common Stock and solely for the purpose of issuance upon conversion of Securities, a sufficient number of shares of Holdco Common Stock to permit conversion of all outstanding Securities for shares of Holdco Common Stock. SECTION 2.02 ADJUSTMENTS. Upon consummation of the Merger, any adjustments of the Conversion Price shall continue to be made in accordance with Article V of the Indenture, except that adjustments previously applicable with respect to the NTL Common Stock, shall then be applicable in the same manner with respect to the Holdco Common Stock. SECTION 2.03 RIGHTS UPON CONVERSION. Nothing in this First Supplemental Indenture shall be construed to affect in any way the right that a holder of a Security may otherwise have, pursuant to clause (ii) of the last sentence of subsection (c) of Section 5.06, to receive Rights upon conversion of a Security. SECTION 2.04 HOLDCO AS SIGNATORY. In accordance with Section 5.12 of the Indenture, Holdco, as the issuer of the consideration receivable by holders of NTL Common Stock upon consummation of the Merger, has also executed this First Supplemental Indenture. SECTION 2.05 RIGHTS, POWERS AND OBLIGATIONS OF THE COMPANY CONTINUE. Upon consummation of the Merger and except as expressly set forth in Section 2.01 of this First Supplemental Indenture, the Company as the Surviving Corpora tion shall exercise all of the rights and powers of the Company under the Indenture and the Securities and shall be solely liable for all of the obligations of the Company thereunder, including the performance and observance of every covenant of the Indenture to be performed or observed on the part of the Company. 4 5 ARTICLE III MISCELLANEOUS SECTION 3.01 EFFECT OF FIRST SUPPLEMENTAL INDENTURE. Upon the execution and delivery of this First Supplemental Indenture by the Company and the Trustee, the Indenture shall be supplemented in accordance herewith, and this First Supplemental Indenture shall form a part of the Indenture for all purposes, and every holder of Securities heretofore or hereafter authenticated and delivered under the Inden ture shall be bound thereby. SECTION 3.02 NOTATION REFLECTING FIRST SUPPLEMENTAL INDENTURE. The Trustee may place an appropriate notation about the First Supplemental Indenture on any Security authenticated after the execution and delivery of this First Supplemental Indenture. The Company in exchange for all Securities may issue and the Trustee shall authenticate new Securities that reflect the First Supplemental Indenture. SECTION 3.03 INDENTURE REMAINS IN FULL FORCE AND EFFECT. Except as supplemented hereby, all provisions in the Indenture shall remain in full force and effect. SECTION 3.04 INDENTURE AND FIRST SUPPLEMENTAL INDENTURE CONSTRUED TOGETHER. This First Supplemental Indenture is an indenture supplemental to and in implementation of the Indenture, and the Indenture and this First Supplemental Indenture shall henceforth be read and construed together. SECTION 3.05 CONFIRMATION AND PRESERVATION OF INDENTURE. The Indenture as supplemented by this First Supplemental Indenture is in all respects confirmed and preserved. SECTION 3.06 CONFLICT WITH TRUST INDENTURE ACT. If any provision of this First Supplemental Indenture limits, qualifies or conflicts with any provision of the Trust Indenture Act that is required under the Trust Indenture Act to be part of and govern any provision of this First Supplemental Indenture, the provision of the Trust Indenture Act shall control. If any provision of this First Supplemental Indenture modifies or excludes any provision of the Trust Indenture Act that may be so modified or excluded, the provision of the Trust Indenture Act 5 6 shall be deemed to apply to the Indenture as so modified or to be excluded by this First Supplemental Indenture, as the case may be. SECTION 3.07 SEVERABILITY. In case any provision in this First Supplemental Indenture shall be invalid, illegal or unenforceable, the validity, legality and enforceability of the remaining provisions shall not in any way be affected or impaired thereby. SECTION 3.08 HEADINGS. The Article and Section headings of this First Supplemental Indenture have been inserted for convenience of reference only, are not to be considered a part of this First Supplemental Indenture and shall in no way modify or restrict any of the terms or provisions hereof. SECTION 3.09 BENEFITS OF FIRST SUPPLEMENTAL INDENTURE, ETC. Nothing in this First Supplemental Indenture or the Securities, express or implied, shall give to any Person, other than the parties hereto and thereto and their successors hereunder and thereunder and the holders of the Securities, any benefit of any legal or equitable right, remedy or claim under the Indenture, this First Supplemental Indenture or the Securities. SECTION 3.10 SUCCESSORS. All agreements of the Company in this First Supplemental Indenture shall bind its successors. All agreements of the Trustee in this First Supplemental Indenture shall bind its successors. SECTION 3.11 TRUSTEE NOT RESPONSIBLE FOR RECITALS. The Trustee accepts the amendments to the Indenture effected by the First Supplemental Indenture and agrees to perform the same upon the terms of the Indenture as supplemented by this First Supplemental Indenture. Without limiting the generality of the foregoing, the Trustee shall not be liable or responsible for the validity as to the Company or sufficiency of this First Supplemental Indenture or as to the due execution hereof by the Company or as to recitals of fact contained herein, all of which are made by the Company solely. SECTION 3.12 CERTAIN DUTIES AND RESPONSIBILITIES OF THE TRUSTEE. In entering into this First Supplemental Indenture, the Trustee shall be entitled to the benefit of every provision of the Indenture relating to the conduct or affecting the liability of or affording protection to the Trustee, whether or not elsewhere herein so provided. 6 7 SECTION 3.13 GOVERNING LAW. The internal law of the State of New York shall govern and be used to construe this First Supplemental Indenture. SECTION 3.14 COUNTERPART ORIGINALS. The parties may sign any number of copies of this First Supplemental Indenture. Each signed copy shall be an original, but all of them together represent the same agreement. 7 8 IN WITNESS WHEREOF, the parties hereto have caused this First Supplemental Indenture to be duly executed, all as of the date first above written. NTL INCORPORATED By: /S/ Richard J. Lubasch ---------------------------------------- Name: Richard J. Lubasch Title: Senior Vice President, General Counsel and Secretary NTL COMMUNICATIONS CORP. By: /S/ Richard J. Lubasch ---------------------------------------- Name: Richard J. Lubasch Title: Senior Vice President, General Counsel and Secretary THE CHASE MANHATTAN BANK, as Trustee By: /S/ Andrew M.Deck ---------------------------------------- Name: Andrew M. Deck Title: Vice President 8 EX-4.16 6 FIRST SUPPLEMENTAL INDENTURE 1 Exhibit 4.16 NTL INCORPORATED, NTL COMMUNICATIONS CORP. and THE CHASE MANHATTAN BANK, as Trustee ----------------------- FIRST SUPPLEMENTAL INDENTURE Dated as of March 31, 1999 Supplementing the Indenture dated as of June 12, 1996 between NTL Incorporated (formerly known as International CableTel Incorporated) and The Chase Manhattan Bank (formerly known as Chemical Bank), as Trustee 7% CONVERTIBLE SUBORDINATED NOTES DUE 2008 2 FIRST SUPPLEMENTAL INDENTURE, dated as of March 31, 1999, between NTL Incorporated (formerly known as International CableTel Incorporated), a Delaware corporation (the "COMPANY"), NTL Communications Corp., a Delaware corporation and a direct, wholly owned subsidiary of the Company ("HOLDCO"), and The Chase Manhattan Bank (formerly known as Chemical Bank), a New York corporation, as trustee (the "TRUSTEE"). WITNESSETH: WHEREAS, the Company and the Trustee previously executed and delivered the Indenture, dated as of June 12, 1996 (the "INDENTURE"), providing for the creation, execution, authentication and delivery of the Company's 7% Convertible Subordinated Notes due 2008 (each a "SECURITY" and collectively the "SECURITIES"), which Securities are convertible into shares of common stock, par value $.01 per share (the "NTL COMMON STOCK"), of the Company in accordance with the terms and condi tions of the Indenture; WHEREAS, Section 11.01 of the Indenture provides that the Company and the Trustee may from time to time amend or supplement the Indenture without the consent of any holders of the Securities, in order to, among other things, comply with Section 5.12 of the Indenture regarding the effect of reclassifications, consolidations, mergers or sales on conversion privileges; WHEREAS, on March 26, 1999, the Company, Holdco and NTL Mergerco, Inc., a Delaware corporation that is a direct wholly-owned subsidiary of Holdco and an indirect wholly-owned subsidiary of the Company ("MERGER SUB"), entered into an Agreement and Plan of Merger (the "MERGER AGREEMENT"), pursuant to which, among other things, Merger Sub shall be merged with and into the Company in accordance with Section 251(g) of the General Corporation Law of the State of Delaware (the "MERGER"), with the Company continuing as the surviving corporation (the "SURVIVING CORPORATION") under the name "NTL Communications Corp." and as a wholly-owned subsidiary of Holdco; WHEREAS, pursuant to the Merger, each outstanding share of NTL Common Stock shall be converted into the right to receive one validly issued, fully paid and nonassessable share of common stock, par value $.01 per share, of Holdco (the "HOLDCO COMMON STOCK"); 2 3 WHEREAS, upon consummation of the Merger and except as expressly set forth in Section 2.01 of this First Supplemental Indenture, the Company, as the Surviving Corporation, shall continue to be liable for the obligations of the Company under the Securities and the Indenture; and WHEREAS, all actions necessary to make this First Supplemental Indenture and the Securities valid, binding and enforceable obligations of the Company and, to the extent applicable, Holdco, have been performed and fulfilled; NOW, THEREFORE, for and in consideration of the premises and mutual covenants herein contained each party agrees as follows for the benefit of the other party and for the equal and ratable benefit of the holders of the Securities: ARTICLE I DEFINITIONS SECTION 1.01 GENERAL. For all purposes of the Indenture and this First Supplemental Indenture, except as otherwise expressly provided or unless the context otherwise requires: (a) the words "herein", "hereof" and "hereunder" and other words of similar import refer to the Indenture and this First Supplemental Indenture as a whole and not to any particular Article, Section or subdivision; and (b) capitalized terms used but not defined herein shall have the meanings assigned to them in the Indenture. ARTICLE II EFFECT OF MERGER ON CONVERSION PRIVILEGE; ADJUSTMENT OF CONVERSION PRICE SECTION 2.01 CONVERSION OF SECURITIES FOR HOLDCO COMMON STOCK. In accordance with Section 5.12 of the Indenture, upon and as of the consumma tion of the Merger, the holder of each Security then outstanding shall have the right to convert such Security into the amount of shares of Holdco Common Stock receivable upon effectiveness of the Merger by a holder of the number of shares of NTL Common Stock deliverable upon conversion of such Security immediately prior 3 4 to the Merger. All of the covenants and provisions by or for the benefit of the Company that are contained in Article V of the Indenture relating to the conversion of the Securities shall, upon consum mation of the Merger, bind and inure to the benefit of Holdco, including without limitation the covenant set forth in Section 5.05 of the Indenture, which shall require that Holdco at all times reserve and keep available, free from preemptive rights, out of authorized but unissued Holdco Common Stock and solely for the purpose of issuance upon conversion of Securities, a sufficient number of shares of Holdco Common Stock to permit conversion of all outstanding Securities for shares of Holdco Common Stock. SECTION 2.02 ADJUSTMENTS. Upon consummation of the Merger, any adjustments of the Conversion Price shall continue to be made in accordance with Article V of the Indenture, except that adjustments previously applicable with respect to the NTL Common Stock, shall then be applicable in the same manner with respect to the Holdco Common Stock. SECTION 2.03 RIGHTS UPON CONVERSION. Nothing in this First Supplemental Indenture shall be construed to affect in any way the right that a holder of a Security may otherwise have, pursuant to clause (ii) of the last sentence of subsection (c) of Section 5.06, to receive Rights upon conversion of a Security. SECTION 2.04 HOLDCO AS SIGNATORY. In accordance with Section 5.12 of the Indenture, Holdco, as the issuer of the consideration receivable by holders of NTL Common Stock upon consummation of the Merger, has also executed this First Supplemental Indenture. SECTION 2.05 RIGHTS, POWERS AND OBLIGATIONS OF THE COMPANY CONTINUE. Upon consummation of the Merger and except as expressly set forth in Section 2.01 of this First Supplemental Indenture, the Company as the Surviving Corpora tion shall exercise all of the rights and powers of the Company under the Indenture and the Securities and shall be solely liable for all of the obligations of the Company thereunder, including the performance and observance of every covenant of the Indenture to be performed or observed on the part of the Company. 4 5 ARTICLE III MISCELLANEOUS SECTION 3.01 EFFECT OF FIRST SUPPLEMENTAL INDENTURE. Upon the execution and delivery of this First Supplemental Indenture by the Company and the Trustee, the Indenture shall be supplemented in accordance herewith, and this First Supplemental Indenture shall form a part of the Indenture for all purposes, and every holder of Securities heretofore or hereafter authenticated and delivered under the Inden ture shall be bound thereby. SECTION 3.02 NOTATION REFLECTING FIRST SUPPLEMENTAL INDENTURE. The Trustee may place an appropriate notation about the First Supplemental Indenture on any Security authenticated after the execution and delivery of this First Supplemental Indenture. The Company in exchange for all Securities may issue and the Trustee shall authenticate new Securities that reflect the First Supplemental Indenture. SECTION 3.03 INDENTURE REMAINS IN FULL FORCE AND EFFECT. Except as supplemented hereby, all provisions in the Indenture shall remain in full force and effect. SECTION 3.04 INDENTURE AND FIRST SUPPLEMENTAL INDENTURE CONSTRUED TOGETHER. This First Supplemental Indenture is an indenture supplemental to and in implementation of the Indenture, and the Indenture and this First Supplemental Indenture shall henceforth be read and construed together. SECTION 3.05 CONFIRMATION AND PRESERVATION OF INDENTURE. The Indenture as supplemented by this First Supplemental Indenture is in all respects confirmed and preserved. SECTION 3.06 CONFLICT WITH TRUST INDENTURE ACT. If any provision of this First Supplemental Indenture limits, qualifies or conflicts with any provision of the Trust Indenture Act that is required under the Trust Indenture Act to be part of and govern any provision of this First Supplemental Indenture, the provision of the Trust Indenture Act shall control. If any provision of this First Supplemental Indenture modifies or excludes any provision of the Trust Indenture Act that may be so modified or excluded, the provision of the Trust Indenture Act 5 6 shall be deemed to apply to the Indenture as so modified or to be excluded by this First Supplemental Indenture, as the case may be. SECTION 3.07 SEVERABILITY. In case any provision in this First Supplemental Indenture shall be invalid, illegal or unenforceable, the validity, legality and enforceability of the remaining provisions shall not in any way be affected or impaired thereby. SECTION 3.08 HEADINGS. The Article and Section headings of this First Supplemental Indenture have been inserted for convenience of reference only, are not to be considered a part of this First Supplemental Indenture and shall in no way modify or restrict any of the terms or provisions hereof. SECTION 3.09 BENEFITS OF FIRST SUPPLEMENTAL INDENTURE, ETC. Nothing in this First Supplemental Indenture or the Securities, express or implied, shall give to any Person, other than the parties hereto and thereto and their successors hereunder and thereunder and the holders of the Securities, any benefit of any legal or equitable right, remedy or claim under the Indenture, this First Supplemental Indenture or the Securities. SECTION 3.10 SUCCESSORS. All agreements of the Company in this First Supplemental Indenture shall bind its successors. All agreements of the Trustee in this First Supplemental Indenture shall bind its successors. SECTION 3.11 TRUSTEE NOT RESPONSIBLE FOR RECITALS. The Trustee accepts the amendments to the Indenture effected by the First Supplemental Indenture and agrees to perform the same upon the terms of the Indenture as supplemented by this First Supplemental Indenture. Without limiting the generality of the foregoing, the Trustee shall not be liable or responsible for the validity as to the Company or sufficiency of this First Supplemental Indenture or as to the due execution hereof by the Company or as to recitals of fact contained herein, all of which are made by the Company solely. SECTION 3.12 CERTAIN DUTIES AND RESPONSIBILITIES OF THE TRUSTEE. In entering into this First Supplemental Indenture, the Trustee shall be entitled to the benefit of every provision of the Indenture relating to the conduct or affecting the liability of or affording protection to the Trustee, whether or not elsewhere herein so provided. 6 7 SECTION 3.13 GOVERNING LAW. The internal law of the State of New York shall govern and be used to construe this First Supplemental Indenture. SECTION 3.14 COUNTERPART ORIGINALS. The parties may sign any number of copies of this First Supplemental Indenture. Each signed copy shall be an original, but all of them together represent the same agreement. 7 8 IN WITNESS WHEREOF, the parties hereto have caused this First Supplemental Indenture to be duly executed, all as of the date first above written. NTL INCORPORATED By: /S/ Richard J. Lubasch ---------------------------------------- Name: Richard J. Lubasch Title: Senior Vice President, General Counsel and Secretary NTL COMMUNICATIONS CORP. By: /S/ Richard J. Lubasch ---------------------------------------- Name: Richard J. Lubasch Title: Senior Vice President, General Counsel and Secretary THE CHASE MANHATTAN BANK, as Trustee By: /S/ Andrew M. Deck ---------------------------------------- Name: Andrew M. Deck Title: Vice President 8 EX-5.1 7 OPINION OF SKADDEN ARPS SLATE MEAGHER & FLOM LLP 1 SKADDEN, ARPS, SLATE, MEAGHER & FLOM LLP 919 THIRD AVENUE NEW YORK NEW YORK 10022 TEL: (212) 735-3000 FAX: (212) 735-2000 June 3, 1999 NTL Incorporated NTL Communications Corp. 110 East 59th Street New York, NY 10022 Re: NTL Incorporated NTL Communications Corp. Registration Statement on Form S-3 Ladies and Gentlemen: We have acted as special counsel to NTL Incorporated ("NTL Inc.") and NTL Communications Corp. ("NTL CC" and, together with NTL Inc., the "Companies"), each a Delaware corporation, in connection with the preparation of a registration statement on Form S-3 (File No. 333-72335) relating to the registration for resale of (a) up to $600,000,000 aggregate principal amount of NTL CC's 7% Convertible Subordinated Notes Due 2008 (the "Notes") issued under an indenture, dated as of December 16, 1998 (the "Indenture"), by and among the Company and The Chase Manhattan Bank, as trustee (the "Trustee"), and (b) the shares (the "Shares") of NTL Inc.'s common stock, par value $0.01 per share (the "Common Stock"), issuable upon conversion of the Notes. The Notes and the Shares are referred to herein collectively as the "Securities". 2 NTL Incorporated NTL Communications Corp. June 3, 1999 Page 2 This opinion is being furnished in accordance with the requirements of Item 601(b)(5) of Regulation S-K under the Securities Act of 1933, as amended (the "Act"). In connection with this opinion, we have examined originals or copies, certified or otherwise identified to our satisfaction, of (i) the Registration Statement on Form S-3 (Registration No. 333-72335) as filed with the Securities and Exchange Commission (the "Commission") on February 12, 1999 under the Act, Amendment No. 1 thereto as filed with the Commission on May 13, 1999 and Amendment No. 2 thereto as filed with the Commission on June 2, 1999 (such Registration Statement, as so amended, being hereinafter referred to as the "Registration Statement"); (ii) an executed copy of the Indenture filed as an exhibit to the Registration Statement; (iii) an executed copy of the First Supplemental Indenture, dated as of March 31, 1999, between NTL Inc., NTL CC and The Chase Manhattan Bank, as Trustee; (iv) the Agreement and Plan of Merger, dated as of March 26, 1999, by and among NTL Inc., NTL CC and NTL Merger Co., Inc.; (v) executed copies of the Notes; (vi) the Restated Certificate of Incorporation of each of the Companies, as amended to date; (vii) the By-Laws of each of the Companies, as amended to date; (viii) the Form T-1 of the Trustee filed as an exhibit to the Registration Statement; (ix) a specimen certificate evidencing the Common Stock; (x) the Cross-Receipt, dated December 16, 1998, executed by Donaldson, Lufkin & Jenrette Securities Corporation and NTL CC relating to the issuance of the Notes and the receipt of payment therefor; and (xi) certain resolutions of the Board of Directors of NTL CC and of the Pricing Committee established by the Board of Directors of NTL CC, in each case, relating to the issuance of the Securities, the Indenture and related matters. We have also examined originals or copies, certified or otherwise identified to our satisfaction, of such records of the Companies and such agreements, certificates of public officials, certificates of officers or other representatives of the Companies and others, and such other documents, certificates and records as we have deemed necessary or appropriate as a basis for the opinions set forth herein. In our examination, we have assumed the legal capacity of all natural persons, the genuineness of all signatures, the authenticity of all documents submitted to us as originals, the conformity to original documents of all documents submitted to us as certified, conformed or photostatic copies and the authenticity of the originals of such latter documents. In making our examination of executed documents, we have assumed that the parties thereto, other than the Companies, had the power, corporate or other, to enter into and perform all obligations thereunder and have also assumed the due authorization by all requisite action, corporate or other, and execution and delivery by such parties of such documents and the validity and binding effect thereof on such parties. As to any facts material to the opinions expressed herein which we have not independently established or verified, we have relied upon statements and representations of officers and other representatives of the Companies and others. In rendering the opinion set forth 3 NTL Incorporated NTL Communications Corp. June 3, 1999 Page 3 in paragraph 2 below, we have assumed that the certificates representing the shares of Common Stock issued upon conversion of the Notes will conform to the specimen certificate examined by us and will be countersigned by a duly authorized officer of the transfer agent for the Common Stock and duly registered by the registrar for the Common Stock in the share record books of NTL Inc. Our opinions set forth herein are limited to Delaware corporate law and the laws of the State of New York which are normally applicable to transactions of the type contemplated by the Indenture and the Notes and to the extent that judicial or regulatory orders or decrees or consents, approvals, licenses, authorizations, validations, filings, recordings or registrations with governmental authorities are relevant, to those required under such laws (all of the foregoing being referred to as "Opined on Law"). We do not express any opinion with respect to the law of any jurisdiction other than Opined on Law or as to the effect of any such non opined law on the opinions herein stated. Based upon and subject to the foregoing and the limitations, qualifications, exceptions and assumptions set forth herein, we are of the opinion that: 1. The Notes are valid and binding obligations of NTL CC entitled to the benefits of the Indenture and enforceable against NTL CC in accordance with their terms, except to the extent that enforcement thereof may be limited by (a) bankruptcy, insolvency, reorganization, moratorium, fraudulent conveyance or other similar laws now or hereafter in effect relating to creditors' rights generally and (b) general principles of equity (regardless of whether enforceability is considered in a proceeding at law or in equity). 2. The shares of Common Stock initially issuable upon conversion of the Notes, if and when the Notes are converted into shares of Common Stock in accordance with their terms and the terms of the Indenture, will be validly issued, fully paid and nonassessable. In rendering the opinions set forth above, we have assumed that the execution and delivery by NTL CC of the Notes and the Indenture and the performance by NTL CC of its obligations thereunder do not and will not violate, conflict with or constitute a default under any agreement or instrument to which NTL CC or its properties is subject, except for those agreements and instruments which were identified to us by NTL CC as being material to it and which are listed as exhibits to NTL CC's Annual Report on Form 10-K for the year ended December 31, 1998. 4 NTL Incorporated NTL Communications Corp. June 3, 1999 Page 4 We hereby consent to the filing of this opinion with the Commission as an exhibit to the Registration Statement. We also consent to the reference to our firm under the caption "Legal Matters" in the Registration Statement. In giving this consent, we do not thereby admit that we are included in the category of persons whose consent is required under Section 7 of the Act or the rules and regulations of the Commission Very truly yours, /s/ SKADDEN, ARPS, SLATE, MEAGHER & FLOM LLP EX-12.1 8 COMPUTATION OF RATIO OF EARNINGS 1 NTL Exhibit 12.1
March 31 December 31 ------------ ---------------------------------------------- 1999 1998 1997 1996 ------------ ---------------------------------------------- Fixed charges: Interest $141,187,000 $356,575,000 $209,340,000 $147,326,000 Amortization of debt expense 2,773,000 10,227,000 7,831,000 8,873,000 Interest portion of rental expense 2,422,000 9,687,000 6,016,000 4,957,000 ------------ ------------ ------------ ------------ $146,382,000 $376,489,000 $223,187,000 $161,156,000 ============ Preferred Stock Dividend Requirement 13,092,000 18,761,000 11,978,000 ------------ ------------ ------------ Combined Fixed Charges and Preferred Stock Dividends $159,474,000 $395,250,000 $235,165,000 ============ ============ ============ Earnings: Income (loss) from operations ($230,419,000) ($537,943,000) ($348,648,000) ($246,801,000) Fixed charges per above 146,382,000 376,489,000 223,187,000 161,156,000 Less: Capitalized interest (10,364,000) (27,760,000) (6,770,000) (10,294,000) ------------ ------------ ------------ ------------ ($94,401,000) ($189,214,000) ($132,231,000) ($95,939,000) ============ ============ ============ ============ Ratio of Earnings to Fixed Charges (1) -- -- -- -- Ratio of Earnings to Combined Fixed Charges and Preferred Stock Dividends (2) -- -- -- December 31 ------------------------------ 1995 1994 ------------------------------ Fixed charges: Interest $40,562,000 $15,316,000 Amortization of debt expense 1,424,000 502,000 Interest portion of rental expense 647,000 369,000 ----------- ----------- $42,633,000 $16,187,000 =========== =========== Preferred Stock Dividend Requirement Combined Fixed Charges and Preferred Stock Dividends Earnings: Income (loss) from operations ($93,262,000) ($27,943,000) Fixed charges per above 42,633,000 16,187,000 Less: Capitalized interest (12,183,000) (3,906,000) ----------- ----------- ($62,812,000) ($15,662,000) =========== =========== Ratio of Earnings to Fixed Charges (1) -- -- Ratio of Earnings to Combined Fixed Charges and Preferred Stock Dividends (2)
The ratio of earnings to fixed charges and combined fixed charges and preferred stock dividends is not meaningful for the periods that result in a deficit. (1) For the three months ended March 31, 1999 and the years ended December 31, 1998, 1997, 1996, 1995, and 1994, the deficit of earnings to fixed charges was $240,783,000, $565,703,000, $355,418,000, $257,095,000, $105,445,000 and $31,849,000, respectively. (2) For the three months ended March 31, 1999 and the years ended December 31, 1998 and 1997 the deficit of earnings to combined fixed charges and preferred stock dividends was $253,875,000, $584,464,000 and $367,396,000, respectively. EX-23.1 9 CONSENT OF ERNST & YOUNG, LLP 1 EXHIBIT 23.1 CONSENT OF INDEPENDENT AUDITORS We consent to the reference to our firm under the caption "Experts" in Amendment No. 2 to the Registration Statement (Form S-3) and related Prospectus of NTL Incorporated for the registration of $600,000,000 of its 7% convertible subordinated notes due 2008 and shares of its common stock and to the incorporation by reference therein of our report dated March 26, 1999, with respect to the consolidated financial statements and schedules of NTL Incorporated included in its Annual Report (Form 10-K) for the year ended December 31, 1998, filed with the Securities and Exchange Commission. /s/ ERNST & YOUNG LLP June 2, 1999 New York, New York EX-23.2 10 CONSENT OF DELOITTE & TOUCHE LLP 1 Exhibit 23.2 INDEPENDENT AUDITORS' CONSENT We consent to the incorporation by reference in this Amendment No. 2 to Registration Statement No. 333-72335 of NTL Incorporated and NTL Communications Corp. on Form S-3 of our report dated February 27, 1998, appearing in the NTL Incorporated Proxy Statement dated January 29, 1999, on the consolidated financial statements as of December 31, 1997 and 1996 and for each of the three years in the period ended December 31, 1997 of Comcast UK Cable Partners Limited and subsidiaries and to the reference to us under the heading "Experts" in the Prospectus, which is part of this Registration Statement. /s/ Deloitte & Touche, LLP Philadelphia, Pennsylvania June 2, 1999 EX-23.3 11 CONSENT OF DELOITTE & TOUCHE - BIRMINGHAM 1 Exhibit 23.3 INDEPENDENT AUDITORS' CONSENT We consent to the incorporation by reference in this Amendment No. 2 to Registration Statement No. 333-72335 of NTL Incorporated and NTL Communications Corp. on Form S-3 of our report dated February 27, 1998 (March 16, 1998 as to Note 3), appearing in the NTL Incorporated Proxy Statement dated January 29, 1999, on the consolidated financial statements as of December 31, 1997 and 1996 and for each of the three years in the period ended December 31, 1997 of Birmingham Cable Corporation Limited and subsidiaries and to the reference to us under the heading "Experts" in the Prospectus, which is part of this Registration Statement. /s/ Deloitte & Touche Birmingham, England June 2, 1999 EX-23.4 12 CONSENT OF DELOITTE & TOUCHE - LONDON 1 Exhibit 23.4 INDEPENDENT AUDITORS' CONSENT We consent to the incorporation by reference in this Amendment No. 2 to Registration Statement No. 333-72335 of NTL Incorporated and NTL Communications Corp. on Form S-3 of our report dated February 27, 1998, appearing in the NTL Incorporated Proxy Statement dated January 29, 1999, on the consolidated financial statements as of December 31, 1997 and 1996 and for each of the three years in the period ended December 31, 1997 of Cable London PLC and subsidiaries and to the reference to us under the heading "Experts" in the Prospectus, which is part of this Registration Statement. /s/ Deloitte & Touche London, England June 2, 1999 EX-23.5 13 CONSENT OF DELOITTE & TOUCHE - COMTEL 1 Exhibit 23.5 CONSENT OF INDEPENDENT AUDITORS We consent to the reference to our firm under the caption "Experts" and to the use of our report dated June 5, 1998 (except Note 10 as to which the date is July 16, 1998) with respect to the financial statements of ComTel UK Finance B.V., and of our report dated June 5, 1998 (except Note 9 as to which the date is July 16, 1998) with respect to the combined financial statements of Telecential Communications (Canada) Limited and Telecential Communications (UK) Limited, incorporated by reference in Amendment No. 1 to the Registration Statement on Form S-4 relating to the exchange of new 9 3/4% Series B Senior Deferred Coupon Notes due 2009 and in the Amendment No. 2 to the Registration Statement on Form S-3 relating to the resale by certain security holders of 7% Convertible Subordinated Notes Due 2008, both to be filed by NTL Communications Corp. /s/ Deloitte & Touche ________________________ Deloitte & Touche Chartered Accountants Bracknell, England June 1, 1999 EX-23.6 14 CONSENT OF COOPERS & LYBRAND - COMTEL 1 Exhibit 23.6 [Coopers & Lybrand Letterhead] 1 June 1999 We hereby consent to the incorporation by reference in the amendment to the Registration Statement of NTL Incorporated on Form S-3 , of our report, dated 5 June 1998, except for Note 10 as to which the date is 16 July 1998, on our audit of the Combined Financial Information of ComTel UK Finance B.V. as of and for the year ended 31 December 1996. We also consent to the reference to our firm under the caption "Experts". /s/ Coopers & Lybrand - ---------------------- Coopers & Lybrand Chartered Accountants London, United Kingdom EX-23.7 15 CONSENT OF KPMG - DIAMOND 1 EXHIBIT 23.7 CONSENT OF INDEPENDENT AUDITORS To the shareholders Diamond Cable Communications Plc: We consent to the use of our report dated March 30, 1999 with respect to Diamond Cable Communications Plc incorporated by reference herein and to the references to our firm under the heading "Experts" in the Registration Statement on Form S-3 of NTL Incorporated. /s/ KPMG KPMG Nottingham, England June 1, 1999 EX-25.1 16 FORM T-1: STATEMENT OF ELIGIBILITY 1 SECURITIES AND EXCHANGE COMMISSION Washington, D. C. 20549 FORM T-1 STATEMENT OF ELIGIBILITY UNDER THE TRUST INDENTURE ACT OF 1939 OF A CORPORATION DESIGNATED TO ACT AS TRUSTEE CHECK IF AN APPLICATION TO DETERMINE ELIGIBILITY OF A TRUSTEE PURSUANT TO SECTION 305(b)(2) ________ THE CHASE MANHATTAN BANK (Exact name of trustee as specified in its charter) NEW YORK 13-4994650 (State of incorporation (I.R.S. employer if not a national bank) identification No.) 270 PARK AVENUE NEW YORK, NEW YORK 10017 (Address of principal executive offices) (Zip Code)
William H. McDavid General Counsel 270 Park Avenue New York, New York 10017 Tel: (212) 270-2611 (Name, address and telephone number of agent for service) NTL COMMUNICATIONS CORP. (Exact name of obligor as specified in its charter) DELAWARE 52-1822078 (State or other jurisdiction of (I.R.S. employer incorporation or organization) identification No.) 110 EAST 59TH STREET, 26TH FLOOR NEW YORK, NEW YORK 10022 (Address of principal executive offices) (Zip Code)
7% CONVERTIBLE SUBORDINATED NOTES DUE 2008 (Title of the indenture securities) 2 GENERAL Item 1. General Information. Furnish the following information as to the trustee: (a)Name and address of each examining or supervising authority to which it is subject. New York State Banking Department, State House, Albany, New York 12110. Board of Governors of the Federal Reserve System, Washington, D.C., 20551 Federal Reserve Bank of New York, District No. 2, 33 Liberty Street, New York, N.Y. Federal Deposit Insurance Corporation, Washington, D.C., 20429. (b) Whether it is authorized to exercise corporate trust powers. Yes. Item 2. Affiliations with the Obligor. If the obligor is an affiliate of the trustee, describe each such affiliation. None. -2- 3 Item 16. List of Exhibits List below all exhibits filed as a part of this Statement of Eligibility. 1. A copy of the Articles of Association of the Trustee as now in effect, including the Organization Certificate and the Certificates of Amendment dated February 17, 1969, August 31, 1977, December 31, 1980, September 9, 1982, February 28, 1985, December 2, 1991 and July 10, 1996 (see Exhibit 1 to Form T-1 filed in connection with Registration Statement No. 333-06249, which is incorporated by reference). 2. A copy of the Certificate of Authority of the Trustee to Commence Business (see Exhibit 2 to Form T-1 filed in connection with Registration Statement No. 33-50010, which is incorporated by reference. On July 14, 1996, in connection with the merger of Chemical Bank and The Chase Manhattan Bank (National Association), Chemical Bank, the surviving corporation, was renamed The Chase Manhattan Bank). 3. None, authorization to exercise corporate trust powers being contained in the documents identified above as Exhibits 1 and 2. 4. A copy of the existing By-Laws of the Trustee (see Exhibit 4 to Form T-1 filed in connection with Registration Statement No. 333-06249, which is incorporated by reference). 5. Not applicable. 6. The consent of the Trustee required by Section 321(b) of the Act (see Exhibit 6 to Form T-1 filed in connection with Registration Statement No. 33-50010, which is incorporated by reference. On July 14, 1996, in connection with the merger of Chemical Bank and The Chase Manhattan Bank (National Association), Chemical Bank, the surviving corporation, was renamed The Chase Manhattan Bank). 7. A copy of the latest report of condition of the Trustee, published pursuant to law or the requirements of its supervising or examining authority. 8. Not applicable. 9. Not applicable. SIGNATURE Pursuant to the requirements of the Trust Indenture Act of 1939 the Trustee, The Chase Manhattan Bank, a corporation organized and existing under the laws of the State of New York, has duly caused this statement of eligibility to be signed on its behalf by the undersigned, thereunto duly authorized, all in the City of New York and State of New York, on the 2nd day of June 1999. THE CHASE MANHATTAN BANK By /s/Andrew M. Deck ------------------------------- Andrew M. Deck Vice President -3- 4 Exhibit 7 to Form T-1 Bank Call Notice RESERVE DISTRICT NO. 2 CONSOLIDATED REPORT OF CONDITION OF The Chase Manhattan Bank of 270 Park Avenue, New York, New York 10017 and Foreign and Domestic Subsidiaries, a member of the Federal Reserve System, at the close of business December 31, 1998, in accordance with a call made by the Federal Reserve Bank of this District pursuant to the provisions of the Federal Reserve Act.
DOLLAR AMOUNTS ASSETS IN MILLIONS Cash and balances due from depository institutions: Noninterest-bearing balances and currency and coin ......................................................... $ 13,915 Interest-bearing balances ................................................. 7,805 Securities: Held to maturity securities .................................................... 1,429 Available for sale securities .................................................. 56,327 Federal funds sold and securities purchased under agreements to resell ...................................................... 21,733 Loans and lease financing receivables: Loans and leases, net of unearned income ......................... $131,095 Less: Allowance for loan and lease losses ........................ 2,711 Less: Allocated transfer risk reserve ............................ 0 -------- Loans and leases, net of unearned income, allowance, and reserve .................................................... 128,384 Trading Assets ................................................................. 48,949 Premises and fixed assets (including capitalized leases) ........................................................................ 3,095 Other real estate owned ........................................................ 239 Investments in unconsolidated subsidiaries and associated companies ...................................................... 199 Customers' liability to this bank on acceptances outstanding ............................................................... 1,209 Intangible assets .............................................................. 2,081 Other assets ................................................................... 11,352 -------- TOTAL ASSETS ................................................................... $296,717 ========
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LIABILITIES Deposits In domestic offices .................................................... $105,879 Noninterest-bearing .................................................... $ 39,175 Interest-bearing ....................................................... 66,704 -------- In foreign offices, Edge and Agreement, subsidiaries and IBF's.................................................. 79,294 Noninterest-bearing .................................................... $ 4,082 Interest-bearing ....................................................... 75,212 Federal funds purchased and securities sold under agree- ments to repurchase ......................................................... 32,546 Demand notes issued to the U.S. Treasury .................................... 629 Trading liabilities ......................................................... 36,807 Other borrowed money (includes mortgage indebtedness and obligations under capitalized leases): With a remaining maturity of one year or less .......................... 4,478 With a remaining maturity of more than one year through three years .... 213 With a remaining maturity of more than three years 115 Bank's liability on acceptances executed and outstanding .................... 1,209 Subordinated notes and debentures ........................................... 5,408 Other liabilities ........................................................... 10,855 TOTAL LIABILITIES ........................................................... 277,433 -------- EQUITY CAPITAL Perpetual preferred stock and related surplus ............................... 0 Common stock ................................................................ 1,211 Surplus (exclude all surplus related to preferred stock) ................... 11,016 Undivided profits and capital reserves ...................................... 6,762 Net unrealized holding gains (losses) on available-for-sale securities ............................................ 279 Cumulative foreign currency translation adjustments ......................... 16 TOTAL EQUITY CAPITAL ........................................................ 19,284 -------- TOTAL LIABILITIES AND EQUITY CAPITAL ........................................ $296,717 ========
I, Joseph L. Sclafani, E.V.P. & Controller of the above-named bank, do hereby declare that this Report of Condition has been prepared in conformance with the instructions issued by the appropriate Federal regulatory authority and is true to the best of my knowledge and belief. JOSEPH L. SCLAFANI We, the undersigned directors, attest to the correctness of this Report of Condition and declare that it has been examined by us, and to the best of our knowledge and belief has been prepared in conformance with the instructions issued by the appropriate Federal regulatory authority and is true and correct. WALTER V. SHIPLEY ) THOMAS G. LABRECQUE ) DIRECTORS WILLIAM B. HARRISON, JR.) -5- -----END PRIVACY-ENHANCED MESSAGE-----