SEC Filings

S-4/A
TIME WARNER INC. filed this Form S-4/A on 03/24/2000
Entire Document
 


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                                                                     EXHIBIT 3.5

          CERTIFICATE OF THE VOTING POWERS, DESIGNATIONS, PREFERENCES
                 AND RELATIVE, PARTICIPATING, OPTIONAL OR OTHER
               SPECIAL RIGHTS, AND QUALIFICATIONS, LIMITATIONS OR
                 RESTRICTIONS THEREOF, OF SERIES E CONVERTIBLE
                                PREFERRED STOCK

                                       OF

                              AOL TIME WARNER INC.

                          ___________________________

             Pursuant to Section 151 of the General Corporation Law
                            of the State of Delaware
                          ___________________________


          AOL Time Warner Inc. (the "Corporation"), a corporation organized and
existing by virtue of the General Corporation Law of the State of Delaware (the
"DGCL"), does hereby certify that the following resolution was duly adopted by
action of the Board of Directors of the Corporation (the "Board of Directors")
at a meeting duly held on [               ], 2000.

          RESOLVED that pursuant to the authority expressly granted to and
vested in the Board of Directors by the provisions of Section 2 of Article IV of
the Restated Certificate of Incorporation of the Corporation, as amended from
time to time (the "Certificate of Incorporation"), and Section 151(g) of the
DGCL, the Board of Directors hereby creates, from the authorized shares of
Preferred Stock; par value $0.10 per share ("Preferred Stock"), of the
Corporation authorized to be issued pursuant to the Certificate of
Incorporation, a series of Preferred Stock,
 and hereby fixes the voting powers,
designations, preferences and relative, participating, optional or other special
rights, and qualifications, limitations or restrictions thereof, of the shares
of such series as follows:

          The series of Preferred Stock hereby established shall consist of
3,250,000 shares designated as Series E Convertible Preferred Stock.  The
rights, preferences and limitations of such series shall be as follows:

          1.  Definitions.  As used herein, the following terms shall have the
              -----------                                                     
indicated meanings:

               1.1  "Accrued Dividend Amount" shall have the meaning set forth
in Section 3.1 hereof.

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          1.2  "Board of Directors" shall mean the Board of Directors of the
Corporation or, with respect to any action to be taken by the Board of
Directors, any committee of the Board of Directors duly authorized to take such
action.

          1.3  "Capital Stock" shall mean any and all shares of corporate stock
of a Person (however designated and whether representing rights to vote, rights
to participate in dividends or distributions upon liquidation or otherwise with
respect to such Person, any division or subsidiary thereof, or any joint
venture, partnership, corporation or other entity).

          1.4  "Certificate" shall mean the certificate of the voting powers,
designations, preferences and relative, participating, optional or other special
rights, and qualifications, limitations or restrictions thereof, of Series E
Convertible Preferred Stock filed with respect to this resolution with the
Secretary of State of the State of Delaware pursuant to Section 151 of the DGCL.

          1.5  "Change of Control" and "Change of Control Date" shall have the
following meanings:  "Change of Control" shall mean the occurrence of one or
both of the following events: (a) individuals who would constitute a majority of
the members of the Board of Directors elected at any meeting of stockholders or
by written consent (without regard to any members of the Board of Directors
elected pursuant to the terms of any series of Preferred Stock) shall be elected
to the Board of Directors and the election or the nomination for election by the
stockholders of such directors was not approved by a vote of at least a majority
of the directors in office immediately prior to such election (in which event
"Change of Control Date" shall mean the date of such election) or (b) a Person
or group of Persons acting in concert as a partnership, limited partnership,
syndicate or other group within the meaning of Rule 13d-3 under the Exchange Act
(the "Acquiring Person") shall, as a result of a tender or exchange offer, open
market purchases, privately negotiated purchases, share repurchases, redemptions
or otherwise, have become the beneficial owner (within the meaning of Rule 13d-3
under the Exchange Act) of 40% or more of the outstanding shares of Common Stock
(in which event "Change of Control Date" shall mean the date of the event
resulting in such 40% ownership).

          1.6  "Closing Price" of the Common Stock shall mean the last reported
sale price of the Common Stock (regular way) as shown on the Composite Tape of
the NYSE, or, in case no such sale takes place on such day, the 

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average of the closing bid and asked prices on the NYSE, or, if the Common Stock
is not listed or admitted to trading on the NYSE, on the principal national
securities exchange on which such stock is listed or admitted to trading, or, if
it is not listed or admitted to trading on any national securities exchange, the
last reported sale price of the Common Stock, or, in case no such sale takes
place on such day, the average of the closing bid and asked prices, in either
case as reported by NASDAQ.

               1.7  "Common Stock" shall mean the class of Common Stock, par
value $0.01 per share, of the Corporation authorized at the date of the
Certificate, or any other class of stock resulting from (x) successive changes
or reclassifications of such Common Stock consisting of changes in par value, or
from par value to no par value, (y) a subdivision or combination or (z) any
other changes for which an adjustment is made under Section 3.6(a), and in any
such case including any shares thereof authorized after the date of the
Certificate, together with any associated rights to purchase other securities of
the Corporation that are at the time represented by the certificates
representing such shares of Common Stock.

               1.8  "Conversion Date" shall have the meaning set forth in
Section 3.5 hereof.

               1.9  "Conversion Price" shall have the meaning set forth in
Section 3.1 hereof.

               1.10  "Conversion Rate" shall have the meaning set forth in
Section 3.1 hereof.

               1.11  "Converting Holder" shall have the meaning set forth in
Section 3.5 hereof.

               1.12  "Corporation" shall mean AOL Time Warner Inc., a Delaware
corporation, and any of its successors by operation of law, including by merger,
consolidation or sale or conveyance of all or substantially all of its property
and assets.

               1.13   "Current Market Price" of the Common Stock on any date
shall mean the average of the daily Closing Prices per share of the Common Stock
for the five (5) consecutive Trading Days ending on the Trading Day immediately
preceding the applicable record date, conversion date, redemption date or
exchange date referred to in Section 3 or Section 4.

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                                                                               4

               1.14  "DGCL" shall mean the General Corporation Law of the State
of Delaware.

               1.15  "Dividend Payment Date" shall have the meaning set forth in
Section 2.1 hereof.

               1.16  "Exchange Price" shall have the meaning set forth in
Section 4.1 hereof.

               1.17  "Junior Stock" shall mean the Common Stock, the Series LMC
Stock, the Series LMCN-V Stock and the shares of any other class or series of
Capital Stock of the Corporation that, by the terms of the Certificate of
Incorporation or of the instrument by which the Board of Directors, acting
pursuant to authority granted in the Certificate of Incorporation, shall fix the
relative rights, preferences and limitations thereof, shall be junior to the
Series E Stock in respect of the right to receive dividends or to participate in
any distribution of assets other than by way of dividends.

               1.18  "Liquidation Value" shall have the meaning set forth in
Section 6.1 hereof.

               1.19  "Merger Agreement" shall mean the Amended and Restated
Agreement and Plan of Merger dated as of January 10, 2000, among AOL Time Warner
Inc., America Online, Inc., Time Warner Inc., America Online Merger Sub Inc. and
Time Warner Merger Sub Inc., as such agreement may be amended from time to time
in accordance with its terms.

               1.20  "NASDAQ" shall mean the Nasdaq Stock Market.

               1.21  "NYSE" shall mean the New York Stock Exchange, Inc.

               1.22 "Parity Stock" shall mean the Series F Stock, the Series I
Stock, the Series J Stock and the shares of any other class or series of Capital
Stock of the Corporation that, by the terms of the Certificate of Incorporation
or of the instrument by which the Board of Directors, acting pursuant to
authority granted in the Certificate of Incorporation, shall fix the relative
rights, preferences and limitations thereof, shall, in the event that the stated
dividends thereon are not paid in full, be entitled to share ratably with the
Series E Stock in the payment of dividends, including accumulations, if any, in
accordance with the sums that would be payable on such shares if all dividends
were declared and paid in full, or


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shall, in the event that the amounts payable thereon on liquidation are not paid
in full, be entitled to share ratably with the Series E Stock in any
distribution of assets other than by way of dividends in accordance with the
sums that would be payable in such distribution if all sums payable were
discharged in full; provided, however, that the term "Parity Stock" shall be
                    --------  -------                       
deemed to refer (i) in Section 2.2 hereof, to any stock that is Parity Stock in
respect of dividend rights; (ii) in Section 6 hereof, to any stock that is
Parity Stock in respect of the distribution of assets; and (iii) in Sections 5.2
and 5.3 hereof, to any stock that is Parity Stock in respect of either dividend
rights or the distribution of assets and that, pursuant to the Certificate of
Incorporation or any instrument in which the Board of Directors, acting pursuant
to authority granted in the Certificate of Incorporation, shall so designate, is
entitled to vote with the holders of Series E Stock.

          1.23  "Person" shall mean an individual, corporation, partnership,
joint venture, association, trust, unincorporated organization or other entity.

          1.24  "Preferred Stock" shall mean the class of Preferred Stock, par
value $0.10 per share, of the Corporation authorized at the date of the
Certificate, including any shares thereof authorized after the date of the
Certificate.

          1.25  "Pro Rata Repurchase" shall mean the purchase of shares of
Common Stock by the Corporation or by any of its subsidiaries, whether for cash
or other property or securities of the Corporation, which purchase is subject to
Section 13(e) of the Exchange Act or is made pursuant to an offer made available
to all holders of Common Stock, but excluding any purchase made in open market
transactions that satisfies the conditions of clause (b) of Rule 10b-18 under
the Exchange Act or has been designed (as reasonably determined by the Board of
Directors) to prevent such purchase from having a material effect on the trading
market of the Common Stock.  The "Effective Date" of a Pro Rata Repurchase shall
mean the applicable expiration date (including all extensions thereof) of any
tender or exchange offer that is a Pro Rata Repurchase or the date of purchase
with respect to any Pro Rata Repurchase that is not a tender or exchange offer.

          1.26 "Record Date" shall have the meaning set forth in Section 2.1
hereof.

          1.27 "Redemption Price" shall have the meaning set forth in Section
4.1 hereof.


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          1.28  "Redemption Rescission Event" shall mean the occurrence of (a)
any general suspension of trading in, or limitation on prices for, securities on
the principal national securities exchange on which shares of Common Stock are
registered and listed for trading (or, if shares of Common Stock are not
registered and listed for trading on any such exchange, in the over-the-counter
market) for more than six-and-one-half (6-1/2) consecutive trading hours, (b)
any decline in either the Dow Jones Industrial Average or the Standard & Poor's
Index of 400 Industrial Companies (or any successor index published by Dow Jones
& Company, Inc. or Standard & Poor's Corporation) by either (i) an amount in
excess of 10%, measured from the close of business on any Trading Day to the
close of business on the next succeeding Trading Day during the period
commencing on the Trading Day preceding the day notice of any redemption of
shares of this Series is given (or, if such notice is given after the close of
business on a Trading Day, commencing on such Trading Day) and ending at the
earlier of (x) the time and date fixed for redemption in such notice and (y) the
time and date at which the Corporation shall have irrevocably deposited funds
with a designated bank or trust company pursuant to Section 4.4 or (ii) an
amount in excess of 15% (or, if the time and date fixed for redemption is more
than 15 days following the date on which notice of redemption is given, 20%),
measured from the close of business on the Trading Day preceding the day notice
of such redemption is given (or, if such notice is given after the close of
business on a Trading Day, from such Trading Day) to the close of business on
any Trading Day on or prior to the earlier of the dates specified in clauses (x)
and (y) above, (c) a declaration of a banking moratorium or any suspension of
payments in respect of banks by Federal or state authorities in the United
States or (d) the commencement of a war or armed hostilities or other national
or international calamity directly or indirectly involving the United States
that in the reasonable judgment of the Corporation could have a material adverse
effect on the market for the Common Stock.

          1.29 "Rescission Date" shall have the meaning set forth in Section 4.5
hereof.

          1.30  "Senior Stock" shall mean the shares of any class or series of
Capital Stock of the Corporation that, by the terms of the Certificate of
Incorporation or of the instrument by which the Board of Directors, acting
pursuant to authority granted in the Certificate of Incorporation, shall fix the
relative rights, preferences and limitations thereof, shall be senior to the
Series E Stock in respect of the right to receive dividends or to 

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participate in any distribution of assets other than by way of dividends.

          1.31  "Series E Stock" and "this Series" shall mean the series of
Preferred Stock authorized and designated as the Series E Convertible Preferred
Stock, including any shares thereof authorized and designated after the date of
the Certificate.

          1.32  "Series F Stock" shall mean the series of Preferred Stock
authorized and designated as Series F Convertible Preferred Stock at the date of
the Certificate, including any shares thereof authorized and designated after
the date of the Certificate.

          1.33  "Series I Stock" shall mean the series of Preferred Stock
authorized and designated as Series I Convertible Preferred Stock at the date of
the Certificate, including any shares thereof authorized and designated after
the date of the Certificate.

          1.34  "Series J Stock" shall mean the series of Preferred Stock
authorized and designated as Series J Convertible Preferred Stock at the date of
the Certificate, including any shares thereof authorized and designated after
the date of the Certificate.

          1.35  "Series LMC Stock" shall mean the series of Series Common Stock
authorized and designated as Series LMC Common Stock at the date of the
Certificate, including any shares thereof authorized and designated after the
date of the Certificate.

          1.36  "Series LMCN-V Stock" shall mean the series of Series Common
Stock authorized and designated as Series LMCN-V Common Stock at the date of the
Certificate, including any shares thereof authorized and designated after the
date of the Certificate.

          1.37  "Surrendered Shares" shall have the meaning set forth in Section
3.5 hereof.

          1.38  "Trading Day" shall mean, so long as the Common Stock is listed
or admitted to trading on the NYSE, a day on which the NYSE is open for the
transaction of business, or, if the Common Stock is not listed or admitted to
trading on the NYSE, a day on which the principal national securities exchange
on which the Common Stock is listed is open for the transaction of business, or,
if the Common Stock is not so listed or admitted for trading on any 

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national securities exchange, a day on which NASDAQ is open for the transaction
of business.

          2.  Cash Dividends.
              -------------- 

          2.1  The holders of the outstanding Series E Stock shall be entitled
to receive quarter-annual dividends, as and when declared by the Board of
Directors out of funds legally available therefor.  Each quarter-annual dividend
shall be an amount per share equal to (i) in the case of each Dividend Payment
Date (as defined below) occurring on or prior to January 4, 2001, the greater of
(A) $.9375 per $100 of Liquidation Value of Series E Stock (which is equivalent
to $3.75 per annum), and (B) an amount per $100 of Liquidation Value of Series E
Stock equal to the product of (1) the Conversion Rate and (2) the aggregate per
share amount of regularly scheduled dividends paid in cash on the Common Stock
during the period from but excluding the immediately preceding Dividend Payment
Date to and including such Dividend Payment Date (the "Preferred Dividend
Amount"), and (ii) in the case of each Dividend Payment Date occurring
thereafter, an amount per share of Series E Stock equal to the product of (1)
the Conversion Rate and (2) the aggregate per share amount of regularly
scheduled dividends paid in cash on the Common Stock during the period from but
excluding the immediately preceding Dividend Payment Date to and including such
Dividend Payment Date.  All dividends shall be payable in cash on or about the
first day of March, June, September and December in each year, as fixed by the
Board of Directors, or such other dates as are fixed by the Board of Directors
(provided that January 4, 2001, shall be a Dividend Payment Date) (each a
"Dividend Payment Date"), to the holders of record of Series E Stock at the
close of business on or about the Trading Day next preceding such first day of
March, June, September and December (or January 4, 2001) as the case may be, as
fixed by the Board of Directors, or such other dates as are fixed by the Board
of Directors (each a "Record Date").  Subject to the next sentence, in the case
of dividends payable in respect of periods prior to January 4, 2001, (i) such
dividends shall accrue on each share on a daily basis, whether or not there are
unrestricted funds legally available for the payment of such dividends and
whether or not declared and (ii) any such dividends that become payable for any
partial dividend period shall be computed on the basis of the actual days
elapsed in such period.  Notwithstanding the preceding sentence, the amount
accruing and payable in respect of the first dividend on the Series E Stock
payable after the date of the Certificate shall equal the Preferred Dividend
Amount.  From and after January 4, 2001, dividends on the Series E Stock
(determined as to amount as provided herein) 

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shall accrue to the extent, but only to the extent, that regularly scheduled
cash dividends are declared by the Board of Directors on the Common Stock with a
payment date after January 4, 2001 (or, in the case of Series E Stock originally
issued after January 4, 2001, after the Dividend Payment Date next preceding
such date of original issuance). All dividends that accrue in accordance with
the foregoing provisions shall be cumulative from and after the day immediately
succeeding the date of issuance. The amount payable to each holder of record on
any Dividend Payment Date shall be rounded to the nearest cent.

          2.2  Except as hereinafter provided in this Section 2.2, unless all
dividends on the outstanding shares of Series E Stock and any Parity Stock that
shall have accrued and become payable as of any date shall have been paid, or
declared and funds set apart for payment thereof, no dividend or other
distribution (payable other than in shares of Junior Stock) shall be paid to the
holders of Junior Stock or Parity Stock, and no shares of Series E Stock, Parity
Stock or Junior Stock shall be purchased, redeemed or otherwise acquired by the
Corporation or any of its subsidiaries (except by conversion into or exchange
for Junior Stock), nor shall any monies be paid or made available for a
purchase, redemption or sinking fund for the purchase or redemption of any
Series E Stock, Junior Stock or Parity Stock.  When dividends are not paid in
full upon the shares of this Series and any Parity Stock, all dividends declared
upon shares of this Series and all Parity Stock shall be declared pro rata so
that the amount of dividends declared per share on this Series and all such
Parity Stock shall in all cases bear to each other the same ratio that accrued
dividends per share on the shares of this Series and all such Parity Stock bear
to each other.  No interest, or sum of money in lieu of interest, shall be
payable in respect of any dividend payment or payments on this Series that may
be in arrears.

          2.3  In case the Corporation shall at any time distribute (other than
a distribution in liquidation of the Corporation) to the holders of its shares
of Common Stock any assets or property, including evidences of indebtedness or
securities of the Corporation (other than Common Stock subject to a distribution
or reclassification covered by Section 3.6(a)) or of any other Person (including
common stock of such Person) or cash (but excluding regularly scheduled cash
dividends payable on shares of Common Stock) or in case the Corporation shall at
any time distribute (other than a distribution in liquidation of the
Corporation) to such holders rights, options or warrants to subscribe for or
purchase shares of Common Stock (including 

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shares held in the treasury of the Corporation), or rights, options or warrants
to subscribe for or purchase any other security or rights, options or warrants
to subscribe for or purchase any assets or property (in each case, whether of
the Corporation or otherwise, but other than any distribution of rights to
purchase securities of the Corporation if the holder of shares of this Series
would otherwise be entitled to receive such rights upon conversion of shares of
this Series for Common Stock; provided, however, that if such rights are
                              --------  -------
subsequently redeemed by the Corporation, such redemption shall be treated for
purposes of this Section 2.3 as a cash dividend (but not a regularly scheduled
cash dividend) on the Common Stock), the Corporation shall simultaneously
distribute such assets, property, securities, rights, options or warrants pro
rata to the holders of Series E Stock on the record date fixed for determining
holders of Common Stock entitled to participate in such distribution (or, if no
such record date shall be established, the effective time thereof) in an amount
equal to the amount that such holders of Series E Stock would have been entitled
to receive had their shares of Series E Stock been converted into Common Stock
immediately prior to such record date (or effective time). In the event of a
distribution to holders of Series E Stock pursuant to this Section 2.3, such
holders shall be entitled to receive fractional shares or interests only to the
extent that holders of Common Stock are entitled to receive the same. The
holders of Series E Stock on the applicable record date (or effective time)
shall be entitled to receive in lieu of such fractional shares or interests the
same consideration as is payable to holders of Common Stock with respect
thereto. If there are no fractional shares or interests payable to holders of
Common Stock, the holders of Series E Stock on the applicable record date (or
effective time) shall receive in lieu of such fractional shares or interests the
fair value thereof as determined by the Board of Directors.

          2.4  If a distribution is made in accordance with the provisions of
Section 2.3, anything in Section 3 to the contrary notwithstanding, no
adjustment pursuant to Section 3 shall be effected by reason of the distribution
of such assets, property, securities, rights, options or warrants or the
subsequent modification, exercise, expiration or termination of such securities,
rights, options or warrants.

          2.5  In the event that the holders of Common Stock are entitled to
make any election with respect to the kind or amount of securities or other
property receivable by them in any distribution that is subject to Section 2.3,
the 

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kind and amount of securities or other property that shall be distributable to
the holders of the Series E Stock shall be based on (i) the election, if any,
made by the record holder (as of the date used for determining the holders of
Common Stock entitled to make such election) of the largest number of shares of
Series E Stock in writing to the Corporation on or prior to the last date on
which a holder of Common Stock may make such an election or (ii) if no such
election is timely made, an assumption that such holder failed to exercise any
such rights (provided that if the kind or amount of securities or other property
is not the same for each nonelecting holder, then the kind and amount of
securities or other property receivable by holders of the Series E Stock shall
be based on the kind or amount of securities or other property receivable by a
plurality of the shares held by the nonelecting holders of Common Stock).
Concurrently with the mailing to holders of Common Stock of any document
pursuant to which such holders may make an election of the type referred to in
this Section, the Corporation shall mail a copy thereof to the record holders on
the date of mailing of the largest number of shares of the Series E Stock as of
the date used for determining the holders of record of Common Stock entitled to
such mailing.

          3.  Conversion Rights.
              ----------------- 

          3.1  Each holder of a share of this Series shall have the right at any
time or as to any share of this Series called for redemption or exchange, at any
time prior to the close of business on the date fixed for redemption or exchange
(unless the Corporation defaults in the payment of the Redemption Price or fails
to exchange the shares of this Series for the applicable number of shares of
Common Stock and any cash portion of the Exchange Price or exercises its right
to rescind such redemption pursuant to Section 4.5, in which case such right
shall not terminate at the close of business on such date), to convert such
share into (i) a number of shares of Common Stock equal to 6.24792 shares of
Common Stock for each share of this Series, subject to appropriate adjustment in
the event of a split or combination of shares of this Series and subject to
further adjustment as provided in this Section 3 (such rate, as so adjusted from
time to time, is herein called the "Conversion Rate"; and the "Conversion Price"
at any time shall mean the Liquidation Value per share divided by the Conversion
Rate in effect at such time (rounded to the nearest one hundredth of a cent))
plus (ii) in the event there shall be any dividends on shares of this Series
that shall be accrued and 

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unpaid as of the immediately preceding Dividend Payment Date, a number of shares
of Common Stock equal to:

               (A) the aggregate amount of accrued and unpaid dividends on such
          share of Series E Stock to and including the most recent scheduled
          Dividend Payment Date (whether or not such dividends were declared and
          whether or not there are unrestricted funds legally available for the
          payment thereof) (the "Accrued Dividend Amount") divided by
                                                           ------- --

               (B) the Closing Price of the Common Stock on the last Trading Day
          prior to the Conversion Date;

provided, however, that the Corporation shall have the right to deliver cash
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equal to the Accrued Dividend Amount or any portion thereof, in which case its
obligation to deliver shares of Common Stock pursuant to this clause (ii) shall
be reduced by a number of shares equal to (x) the aggregate amount of cash so
delivered divided by (y) the Closing Price of the Common Stock on the last
          ------- --                                                      
Trading Day prior to the Conversion Date, unless the Corporation shall deliver
cash equal to the entire Accrued Dividend Amount, in which case its entire
obligation under this clause (ii) shall be discharged.  The obligations of the
Corporation to issue the Common Stock (or its option to make cash payments)
provided by this Section 3.1 shall be absolute whether or not any accrued
dividend by which such issuance (or payment) is measured has been declared by
the Board of Directors and whether or not the Corporation would have adequate
surplus or net profits to pay such dividend if declared or is otherwise
restricted from paying such dividend.

          3.2  Except as provided in this Section 3, no adjustments in respect
of payments of dividends on shares surrendered for conversion or any dividend on
the Common Stock issued upon conversion shall be made upon the conversion of any
shares of this Series (it being understood that if the Conversion Date for
shares of Series E Stock occurs after a Record Date and on or prior to a
Dividend Payment Date, the holder of record on such Record Date shall be
entitled to receive the dividend payable with respect to such shares on the
related Dividend Payment Date pursuant to Section 2.1 hereof).

          3.3  The Corporation may, but shall not be required to, in connection
with any conversion of shares of this Series, issue a fraction of a share of
Common Stock, and if the Corporation shall determine not to issue any such
fraction, the Corporation shall, subject to Section 3.6(d), 

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make a cash payment (rounded to the nearest cent) equal to such fraction
multiplied by the Closing Price of the Common Stock on the last Trading Day
prior to the Conversion Date.

          3.4  Any holder of shares of this Series electing to convert such
shares into Common Stock shall surrender the certificate or certificates for
such shares at the office of the transfer agent or agents therefor (or at such
other place as the Corporation may designate by notice to the holders of shares
of this Series) during regular business hours, duly endorsed to the Corporation
or in blank, or accompanied by instruments of transfer to the Corporation or in
blank, or in form satisfactory to the Corporation, and shall give written notice
to the Corporation at such office that such holder elects to convert such shares
of this Series.  If any such certificate or certificates shall have been lost,
stolen or destroyed, the holder shall, in lieu of delivering such certificate or
certificates, deliver to the transfer agent or agents therefor (or such other
place) an indemnification agreement and bond satisfactory to the Corporation.
The Corporation shall, as soon as practicable (subject to Section 3.6(e)) after
such deposit of certificates for shares of this Series or delivery of the
indemnification agreement and bond, accompanied by the written notice above
prescribed, issue and deliver at such office to the holder for whose account
such shares were surrendered, or to his nominee, certificates representing the
number of shares of Common Stock and the cash, if any, to which such holder is
entitled upon such conversion.

          3.5  Conversion shall be deemed to have been made as of the date (the
"Conversion Date") that certificates for the shares of this Series to be
converted, and the written notice prescribed in Section 3.4 are received by the
transfer agent or agents for this Series; and the Person entitled to receive the
Common Stock issuable upon such conversion shall be treated for all purposes as
the record holder of such Common Stock on such date. Notwithstanding anything to
the contrary contained herein, in the event the Corporation shall have rescinded
a redemption of shares of this Series pursuant to Section 4.5, any holder of
shares of this Series that shall have surrendered shares of this Series for
conversion following the day on which notice of the subsequently rescinded
redemption shall have been given but prior to the close of business on the later
of (a) the Trading Day next succeeding the date on which public announcement of
the rescission of such redemption shall have been made and (b) the Trading Day
on which the notice of rescission required by Section 4.5 is deemed given
pursuant to Section 7.2 (a "Converting Holder") 

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may rescind the conversion of such shares surrendered for conversion by (i)
properly completing a form prescribed by the Corporation and mailed to holders
of shares of this Series (including Converting Holders) with the Corporation's
notice of rescission, which form shall provide for the certification by any
Converting Holder rescinding a conversion on behalf of any beneficial owner
(within the meaning of Rule 13d-3 under the Exchange Act) of shares of this
Series that the beneficial ownership (within the meaning of such Rule) of such
shares shall not have changed from the date on which such shares were
surrendered for conversion to the date of such certification and (ii) delivering
such form to the Corporation no later than the close of business on that date
which is ten (10) Trading Days following the date on which the Corporation's
notice of rescission is deemed given pursuant to Section 7.2. The delivery of
such form by a Converting Holder shall be accompanied by (x) any certificates
representing shares of Common Stock issued to such Converting Holder upon a
conversion of shares of this Series that shall be rescinded by the proper
delivery of such form (the "Surrendered Shares"), (y) any securities, evidences
of indebtedness or assets (other than cash) distributed by the Corporation to
such Converting Holder by reason of such Converting Holder's being a record
holder of Surrendered Shares and (z) payment in New York Clearing House funds or
other funds acceptable to the Corporation of an amount equal to the sum of (I)
any cash such Converting Holder may have received in lieu of the issuance of
fractional shares upon conversion and (II) any cash paid or payable by the
Corporation to such Converting Holder by reason of such Converting Holder being
a record holder of Surrendered Shares. Upon receipt by the Corporation of any
such form properly completed by a Converting Holder and any certificates,
securities, evidences of indebtedness, assets or cash payments required to be
returned or made by such Converting Holder to the Corporation as set forth
above, the Corporation shall instruct the transfer agent or agents for shares of
Common Stock and shares of this Series to cancel any certificates representing
Surrendered Shares (which Surrendered Shares shall be deposited in the treasury
of the Corporation) and reissue certificates representing shares of this Series
to such Converting Holder (which shares of this Series shall be deemed to have
been outstanding at all times during the period following their surrender for
conversion). The Corporation shall, as promptly as practicable, and in no event
more than five (5) Trading Days, following the receipt of any such properly
completed form and any such certificates, securities, evidences of indebtedness,
assets or cash payments required to be so returned or made, pay to the
Converting Holder or as otherwise directed by such

<PAGE>
 
                                                                              15

Converting Holder any dividend or other payment made on such shares during the
period from the time such shares shall have been surrendered for conversion to
the rescission of such conversion. All questions as to the validity, form,
eligibility (including time or receipt) and acceptance of any form submitted to
the Corporation to rescind the conversion of shares of this Series, including
questions as to the proper completion or execution of any such form or any
certification contained therein, shall be resolved by the Corporation, whose
determination shall be final and binding. The Corporation shall not be required
to deliver certificates for shares of Common Stock while the stock transfer
books for such stock or for this Series are duly closed for any purpose or
during any period commencing at a Redemption Rescission Event and ending at
either (i) the time and date at which the Corporation's right of rescission
shall expire pursuant to Section 4.5 if the Corporation shall not have exercised
such right or (ii) the close of business on that day which is ten (10) Trading
Days following the date on which the Corporation's notice of rescission pursuant
to Section 4.4 is deemed given pursuant to Section 7.2 if the Corporation shall
have exercised such right of rescission, but certificates for shares of Common
Stock shall be delivered as soon as practicable after the opening of such books
or the expiration of such period.

          3.6  The Conversion Rate shall be adjusted from time to time as
follows for events occurring after the effective time of the transactions
contemplated by the Merger Agreement:

               (a)  In case the Corporation shall (i) pay a dividend in shares
          of its Common Stock, (ii) combine its outstanding shares of Common
          Stock into a smaller number of shares, (iii) subdivide its outstanding
          shares of Common Stock or (iv) reclassify (other than by way of a
          merger or consolidation that is subject to Section 3.7) its shares of
          Common Stock, then the Conversion Rate in effect immediately before
          such action shall be adjusted so that immediately following such event
          the holders of the Series E Stock shall be entitled to receive upon
          conversion or exchange thereof the kind and amount of shares of
          Capital Stock of the Corporation that they would have owned or been
          entitled to receive upon or by reason of such event if such shares of
          Series E Stock had been converted immediately before the record date
          (or, if no record date, the effective date) for such event (it being
          understood that any distribution of cash or 

<PAGE>
 
                                                                              16

          Capital Stock (other than Common Stock), including any distribution of
          Capital Stock (other than Common Stock) that shall accompany a
          reclassification of the Common Stock, shall be subject to Section 2.3
          rather than this Section 3.6(a)). An adjustment made pursuant to this
          Section 3.6(a) shall become effective retroactively immediately after
          the record date in the case of a dividend or distribution and shall
          become effective retroactively immediately after the effective date in
          the case of a subdivision, combination or reclassification. For the
          purposes of this Section 3.6(a), in the event that the holders of
          Common Stock are entitled to make any election with respect to the
          kind or amount of securities receivable by them in any transaction
          that is subject to this Section 3.6(a) (including any election that
          would result in all or a portion of the transaction becoming subject
          to Section 2.3), the kind and amount of securities that shall be
          distributable to the holders of the Series E Stock shall be based on
          (i) the election, if any, made by the record holder (as of the date
          used for determining the holders of Common Stock entitled to make such
          election) of the largest number of shares of Series E Stock in writing
          to the Corporation on or prior to the last date on which a holder of
          Common Stock may make such an election or (ii) if no such election is
          timely made, an assumption that such holder failed to exercise any
          such rights (provided that if the kind or amount of securities is not
          the same for each nonelecting holder, then the kind and amount of
          securities receivable shall be based on the kind or amount of
          securities receivable by a plurality of nonelecting holders of Common
          Stock). Concurrently with the mailing to holders of Common Stock of
          any document pursuant to which such holders may make an election of
          the type referred to in this Section, the Corporation shall mail a
          copy thereof to the record holders of the Series E Stock as of the
          date used for determining the holders of record of Common Stock
          entitled to such mailing.

               (b)  In case a Change of Control shall occur, the Conversion Rate
          in effect immediately prior to the Change of Control Date shall be
          increased (but not decreased) by multiplying such rate by a fraction
          as follows:  (i) in the case of a Change of Control specified in
          Section 1.5(a), a fraction 

<PAGE>
 
                                                                              17

          in which the numerator is the Conversion Price prior to adjustment
          pursuant hereto and the denominator is the Current Market Price of the
          Common Stock at the Change of Control Date, (ii) in the case of a
          Change of Control specified in Section 1.5(b), the greater of the
          following fractions: (x) a fraction the numerator of which is the
          highest price per share of Common Stock paid by the Acquiring Person
          in connection with the transaction giving rise to the Change of
          Control or any transaction within six months prior to or after the
          Change of Control Date (the "Highest Price"), and the denominator of
          which is the Current Market Price of the Common Stock as of the date
          (but not earlier than six months prior to the Change of Control Date)
          on which the first public announcement is made by the Acquiring Person
          that it intends to acquire or that it has acquired 40% or more of the
          outstanding shares of Common Stock (the "Announcement Date") or (y) a
          fraction the numerator of which is the Conversion Price prior to
          adjustment pursuant hereto and the denominator of which is the Current
          Market Price of the Common Stock on the Announcement Date and (iii) in
          the case where there coexists a Change of Control specified in both
          Section 1.5(a) and Section 1.5(b), the greatest of the fractions
          determined pursuant to clauses (i) and (ii). Such adjustment shall
          become effective immediately after the Change of Control Date and
          shall be made, in the case of clauses (ii) and (iii) above,
          successively for six months thereafter in the event and at the time of
          any increase in the Highest Price after the Change of Control Date;
          provided, however, that no such successive adjustment shall be made
          --------  -------                                    
          with respect to the Conversion Rate of the shares of this Series in
          respect of any event occurring after the Conversion Date.

               (c)  In case the Corporation or any subsidiary thereof shall make
          a Pro Rata Repurchase, the Conversion Rate in effect immediately prior
          to such action shall be adjusted (but shall not be decreased) by
          multiplying such Conversion Rate by a fraction, the numerator of which
          shall be the product of (i) the number of shares of Common Stock
          outstanding immediately before such Pro Rata Repurchase minus the
          number of shares of Common Stock repurchased by the Corporation or any
          subsidiary thereof in such Pro 

<PAGE>
 
                                                                              18

          Rata Repurchase and (ii) the Current Market Price of the Common Stock
          as of the day immediately preceding the first public announcement by
          the Corporation of the intent to effect such Pro Rata Repurchase, and
          the denominator of which shall be (i) the product of (x) the number of
          shares of Common Stock outstanding immediately before such Pro Rata
          Repurchase and (y) the Current Market Price of the Common Stock as of
          the day immediately preceding the first public announcement by the
          Corporation of the intent to effect such Pro Rata Repurchase minus
          (ii) the aggregate purchase price of the Pro Rata Repurchase (provided
          that such denominator shall never be less than 1). Such adjustment
          shall become effective immediately after the Effective Date of such
          Pro Rata Repurchase.

               (d)  The Corporation shall be entitled to make such additional
          adjustments in the Conversion Rate, in addition to those required by
          subsections 3.6(a), 3.6(b) and 3.6(c) as shall be necessary in order
          that any dividend or distribution in Common Stock or any subdivision,
          reclassification or combination of shares of Common Stock referred to
          above, shall not be taxable to the holders of Common Stock for United
          States Federal income tax purposes, so long as such additional
          adjustments pursuant to this Section 3.6(d) do not decrease the
          Conversion Rate.

               (e)  In any case in which this Section 3.6 shall require that any
          adjustment be made effective as of or retroactively immediately
          following a record date, the Corporation may elect to defer (but only
          for five (5) Trading Days following the occurrence of the event that
          necessitates the filing of the statement referred to in Section
          3.6(g)) issuing to the holder of any shares of this Series converted
          after such record date (i) the shares of Common Stock and other
          Capital Stock of the Corporation issuable upon such conversion over
          and above (ii) the shares of Common Stock and other Capital Stock of
          the Corporation issuable upon such conversion on the basis of the
          Conversion Rate prior to adjustment; provided, however, that the
                                               --------  -------          
          Corporation shall deliver to such holder a due bill or other
          appropriate instrument evidencing such holder's right to receive such
          additional shares upon the occurrence of the event requiring such
          adjustment.

<PAGE>
 
                                                                              19

               (f)  All calculations under this Section 3 shall be made to the
          nearest cent, one-hundredth of a share or, in the case of the
          Conversion Rate, one hundred-thousandth.  Notwithstanding any other
          provision of this Section 3, the Corporation shall not be required to
          make any adjustment of the Conversion Rate unless such adjustment
          would require an increase or decrease of at least 1.00000% of such
          Conversion Rate.  Any lesser adjustment shall be carried forward and
          shall be made at the time of and together with the next subsequent
          adjustment that, together with any adjustment or adjustments so
          carried forward, shall amount to an increase or decrease of at least
          1.00000% in such rate.  Any adjustments under this Section 3 shall be
          made successively whenever an event requiring such an adjustment
          occurs.

               (g)  Whenever an adjustment in the Conversion Rate is required,
          the Corporation shall forthwith place on file with its transfer agent
          or agents for this Series a statement signed by a duly authorized
          officer of the Corporation, stating the adjusted Conversion Rate
          determined as provided herein.  Such statements shall set forth in
          reasonable detail such facts as shall be necessary to show the reason
          for and the manner of computing such adjustment.  Promptly after the
          adjustment of the Conversion Rate, the Corporation shall mail a notice
          thereof to each holder of shares of this Series.

               (h)  In the event that on or at any time as a result of an
          adjustment made pursuant to this Section 3, the holder of any share of
          this Series thereafter surrendered for conversion shall become
          entitled to receive any shares of Capital Stock of the Corporation
          other than shares of Common Stock, the conversion rate of such other
          shares so receivable upon conversion of any such share of this Series
          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 subparagraphs (a) through (g) and
          (i) of this Section 3.6, and the provisions of Sections 3.1 through
          3.5 and 3.7 through 3.10 shall apply on like or similar terms to any
          such other shares and the determination of the Board of Directors as
          to any such adjustment shall be conclusive.

<PAGE>
 
                                                                              20

               (i)  No adjustment shall be made pursuant to this Section 3.6 (i)
          if the effect thereof would be to reduce the Conversion Price below
          the par value of the Common Stock or (ii) subject to Section 3.6(d)
          hereof, with respect to any share of Series E Stock that is converted,
          prior to the time such adjustment otherwise would be made.

          3.7  In the event that after the effective time of the transactions
contemplated by the Merger Agreement, either (a) any consolidation or merger to
which the Corporation is a party, other than a merger or consolidation in which
the Corporation is the surviving or continuing corporation and that does not
result in any reclassification of, or change (other than a change in par value
or from par value to no par value or from no par value to par value, or as a
result of a subdivision or combination) in, outstanding shares of Common Stock
or (b) any sale or conveyance of all or substantially all of the property and
assets of the Corporation, then lawful provision shall be made as part of the
terms of such transaction whereby the holder of each share of Series E Stock
shall have the right thereafter, during the period such share shall be
convertible or exchangeable, to convert such share into or have such shares
exchanged for the kind and amount of shares of stock or other securities and
property receivable upon such consolidation, merger, sale or conveyance by a
holder of the number of shares of Common Stock into which such shares of this
Series could have been converted or exchanged immediately prior to such
consolidation, merger, sale or conveyance, subject to adjustment that shall be
as nearly equivalent as may be practicable to the adjustments provided for in
this Section 3 (based on (i) the election, if any, made in writing to the
Corporation by the record holder (as of the date used for determining holders of
Common Stock entitled to make such election) of the largest number of shares of
Series E Stock on or prior to the last date on which a holder of Common Stock
may make an election regarding the kind or amount of securities or other
property receivable by such holder in such transaction or (ii) if no such
election is timely made, an assumption that such holder failed to exercise any
such rights (provided that if the kind or amount of securities or other property
is not the same for each nonelecting holder, then the kind and amount of
securities or other property receivable shall be based upon the kind and amount
of securities or other property receivable by a plurality of the nonelecting
holders of Common Stock)). In the event that any of the transactions referred to
in clause (a) or (b) involve the distribution of cash or property (other than
equity securities) to a holder

<PAGE>
 
                                                                              21

of Common Stock, lawful provision shall be made as part of the terms of the
transaction whereby the holder of each share of Series E Stock on the record
date fixed for determining holders of Common Stock entitled to receive such cash
or property (or if no such record date is established, the effective date of
such transaction) shall be entitled to receive the amount of cash or property
that such holder would have been entitled to receive had such holder converted
his shares of Series E Stock into Common Stock immediately prior to such record
date (or effective date) (based on the election or nonelection made by the
record holder of the largest number of shares of Series E Stock, as provided
above). Concurrently with the mailing to holders of Common Stock of any document
pursuant to which such holders may make an election regarding the kind or amount
of securities or other property that will be receivable by such holder in any
transaction described in clause (a) or (b) of the first sentence of this Section
3.7, the Corporation shall mail a copy thereof to the record holders of the
Series E Stock as of the date used for determining the holders of record of
Common Stock entitled to such mailing. The Corporation shall not enter into any
of the transactions referred to in clause (a) or (b) of the preceding sentence
unless effective provision shall be made in the certificate or articles of
incorporation or other constituent documents of the Corporation or the entity
surviving the consolidation or merger, if other than the Corporation, or the
entity acquiring the Corporation's assets, as the case may be, so as to give
effect to the provisions set forth in this Section 3.7. The provisions of this
Section 3.7 shall apply similarly to successive consolidations, mergers, sales
or conveyances. For purposes of this Section 3.7, the term "Corporation" shall
refer to the Corporation (as defined in Section 1.12) as constituted immediately
prior to the merger, consolidation or other transaction referred to in this
Section.

          3.8  The Corporation shall at all times reserve and keep available,
free from preemptive rights, out of its authorized but unissued stock, for the
purpose of effecting the conversion of the shares of this Series, such number of
its duly authorized shares of Common Stock (or, if applicable, any other shares
of Capital Stock of the Corporation) as shall from time to time be sufficient to
effect the conversion of all outstanding shares of this Series into such Common
Stock (or such other shares of Capital Stock) at any time (assuming that, at the
time of the computation of such number of shares, all such Common Stock (or such
other shares of Capital Stock) would be held by a single holder); provided,
                                                                  -------- 
however, that nothing contained herein shall preclude the Corporation from
-------                                                                   

<PAGE>
 
                                                                              22

satisfying its obligations in respect of the conversion of the shares by
delivery of purchased shares of Common Stock (or such other shares of Capital
Stock) that are held in the treasury of the Corporation.  All shares of Common
Stock (or such other shares of Capital Stock of the Corporation) that shall be
deliverable upon conversion of the shares of this Series shall be duly and
validly issued, fully paid and nonassessable. For purposes of this Section 3,
any shares of Common Stock at any time outstanding shall not include shares held
in the treasury of the Corporation.

          3.9  If any shares of Common Stock that would be issuable upon
conversion (or pursuant to redemption or exchange) of shares of this Series
hereunder require registration with or approval of any governmental authority
before such shares may be issued upon conversion, the Corporation will in good
faith and as expeditiously as possible cause such shares to be duly registered
or approved, as the case may be.  The Corporation will use commercially
reasonable efforts to list the shares of (or depositary shares representing
fractional interests in) Common Stock or other shares of Capital Stock required
to be delivered upon conversion of shares of this Series prior to such delivery
upon the principal national securities exchange upon which the outstanding
Common Stock (or other shares of Capital Stock) is listed at the time of such
delivery.

          3.10  The Corporation shall pay any and all issue or other taxes that
may be payable in respect of any issue or delivery of shares of Common Stock on
conversion (or pursuant to redemption or exchange) of shares of this Series
pursuant hereto.  The Corporation shall not, however, be required to pay any tax
that is payable in respect of any transfer involved in the issue or delivery of
Common Stock or such other shares of Capital Stock in a name other than that in
which the shares of this Series so converted were registered, and no such issue
or delivery shall be made unless and until the Person requesting such issue has
paid to the Corporation the amount of such tax, or has established, to the
satisfaction of the Corporation, that such tax has been paid.

          3.11  In case of (i) the voluntary or involuntary dissolution,
liquidation or winding up of the Corporation, (ii) any Pro Rata Repurchase or
(iii) any action triggering an adjustment to the Conversion Rate pursuant to
this Section 3, then, in each case, the Corporation shall cause to be filed with
the transfer agent or agents for the Series E Stock, and shall cause to be
mailed, first-class postage prepaid, to the holders of 

<PAGE>
 
                                                                              23

record of the outstanding shares of Series E Stock, at least fifteen (15) days
prior to the applicable record date for any such transaction (or if no record
date will be established, the effective date thereof), a notice stating (x) the
date, if any, on which a record is to be taken for the purpose of any such
transaction (or, if no record date will be established, the date as of which
holders of record of Common Stock entitled to participate in such transaction
are determined), and (y) the expected effective date thereof. Failure to give
such notice or any defect therein shall not affect the legality or validity of
the proceedings described in this Section 3.11.

          4.  Redemption or Exchange.
              ---------------------- 

          4.1  (a)  The Corporation may, at its sole option, subject to Section
2.2 hereof, from time to time on and after January 4, 2001, redeem, out of funds
legally available therefor, or, as provided below, exchange shares of Common
Stock for, all (or in the case of Section 4.1(b)(i), any part) of the
outstanding shares of this Series.  The redemption price for each share of this
Series called for redemption pursuant to clause (i) of Section 4.1(b) shall be
the Liquidation Value together with an amount equal to the accrued and unpaid
dividends to the date fixed for redemption (hereinafter collectively referred to
as the "Redemption Price").  The exchange price for each share of this Series
called for exchange pursuant to clause (ii) of Section 4.1(b) shall be a number
of shares of Common Stock equal to the Conversion Rate, together with, at the
option of the Corporation, either (x) cash or (y) a number of shares of Common
Stock, valued at the Closing Price on the Trading Day immediately preceding the
date fixed for exchange, equal, in either case, to the aggregate amount of
accrued and unpaid dividends on the Series E Stock to the date fixed for
exchange (hereinafter collectively referred to as the "Exchange Price").

               (b)  On the date fixed for redemption or exchange the Corporation
shall, at its option, effect either

                    (i) a redemption of the shares of this Series to be redeemed
               by way of payment, out of funds legally available therefor, of
               cash equal to the aggregate Redemption Price for the shares of
               this Series then being redeemed;

                    (ii) an exchange of the shares of this Series for the
               Exchange Price in shares of Common Stock (provided that the
                                                         --------         
               Corporation 

<PAGE>
 
                                                                              24

               shall be entitled to deliver cash (A) in lieu of any fractional
               share of Common Stock (determined in a manner consistent with
               Section 3.3) and (B) equal to accrued and unpaid dividends to the
               date fixed for exchange in lieu of shares of Common Stock); or

                    (iii) any combination thereof with respect to each share of
               this Series called for redemption or exchange.

          (c)  Notwithstanding clauses (ii) and (iii) of Section 4.1(b), the
Corporation shall be entitled to effect an exchange of shares of Series E Stock
for Common Stock (or other shares of Capital Stock) only to the extent Common
Stock (or other shares of Capital Stock) shall be available for issuance
(including delivery of previously issued shares of Common Stock held in the
Corporation's treasury on the date fixed for exchange), which shares shall be
duly and validly issued, fully paid and non-assessable. Certificates for shares
of Common Stock issued in exchange for surrendered shares of this Series
pursuant to this Section 4.1 shall be made available by the Corporation not
later than the fifth Trading Day following the date for exchange.

          4.2  In the event that fewer than all the outstanding shares of this
Series are to be redeemed pursuant to Section 4.1(b)(i), the number of shares to
be redeemed from each holder of shares of this Series shall be determined by the
Corporation by lot or pro rata or by any other method as may be determined by
the Board of Directors in its sole discretion to be equitable, and the
certificate of the Corporation's Secretary or an Assistant Secretary filed with
the transfer agent or transfer agents for this Series in respect of such
determination by the Board of Directors shall be conclusive.

          4.3  In the event the Corporation shall redeem or exchange shares of
this Series pursuant to Section 4.1, notice of such redemption or exchange shall
be given by first class mail, postage prepaid, mailed not less than fifteen (15)
nor more than sixty (60) days prior to the date fixed for redemption or
exchange, as the case may be, to each record holder of the shares to be redeemed
or exchanged, at such holder's address as the same appears on the books of the
Corporation.   Each such notice shall state: (i) whether the shares of this
Series are to be redeemed or exchanged; (ii) the time and date as of which the
redemption or exchange shall occur; (iii) the total number of shares of 

<PAGE>
 
                                                                              25

this Series to be redeemed or exchanged and, if fewer than all the shares held
by such holder are to be redeemed, the number of such shares to be redeemed from
such holder; (iv) the Redemption Price or the Exchange Price, as the case may
be; (v) that shares of this Series called for redemption or exchange may be
converted at any time prior to the time and date fixed for redemption or
exchange (unless the Corporation shall, in the case of a redemption, default in
payment of the Redemption Price or, in the case of an exchange, fail to exchange
the shares of this Series for the applicable number of shares of Common Stock
and any cash portion of the Exchange Price or shall exercise its right to
rescind such redemption pursuant to Section 4.5, in which case such right of
conversion shall not terminate at such time and date); (vi) the applicable
Conversion Price and Conversion Rate; (vii) the place or places where
certificates for such shares are to be surrendered for payment of the Redemption
Price, in the case of redemption, or for delivery of certificates representing
the shares of Common Stock and the payment of any cash portion of the Exchange
Price, in the case of exchange; and (viii) that, subject to Section 4.4 of this
Certificate, dividends on the shares of this Series to be redeemed or exchanged
will cease to accrue on such redemption or exchange date.

          4.4  If notice of redemption or exchange shall have been given by the
Corporation as provided in Section 4.3, dividends on the shares of this Series
so called for redemption or exchange shall cease to accrue, such shares shall no
longer be deemed to be outstanding, and all rights of the holders thereof as
stockholders with respect to shares so called for redemption or exchange (except
(i) in the case of redemption, the right to receive from the Corporation the
Redemption Price without interest and in the case of exchange, the right to
receive from the Corporation the Exchange Price without interest and (ii) the
right to convert such shares in accordance with Section 3) shall cease
(including any right to receive dividends otherwise payable on any Dividend
Payment Date that would have occurred after the time and date of redemption or
exchange) either (i) in the case of a redemption or exchange pursuant to Section
4.1, from and after the time and date fixed in the notice of redemption or
exchange as the time and date of redemption or exchange (unless the Corporation
shall (x) in the case of a redemption, default in the payment of the Redemption
Price, (y) in the case of an exchange, fail to exchange the applicable number of
shares of Common Stock and any cash portion of the Exchange Price or (z)
exercise its right to rescind such redemption pursuant to Section 4.5, in which
case such rights shall not terminate at such time and date) or (ii) if the
Corporation 

<PAGE>
 
                                                                              26

shall so elect and state in the notice of redemption or exchange, from and after
the time and date (which date shall be the date fixed for redemption or exchange
or an earlier date not less than fifteen (15) days after the date of mailing of
the redemption or exchange notice) on which the Corporation shall irrevocably
deposit with a designated bank or trust company doing business in the Borough of
Manhattan, City and State of New York, as paying agent, money sufficient to pay
at the office of such paying agent, on the redemption date, the Redemption
Price, in the case of redemption, or certificates representing the shares of
Common Stock to be so exchanged and any cash portion of the Exchange Price, in
the case of an exchange. Any money or certificates so deposited with any such
paying agent that shall not be required for such redemption or exchange because
of the exercise of any right of conversion or otherwise shall be returned to the
Corporation forthwith. Upon surrender (in accordance with the notice of
redemption or exchange) of the certificate or certificates for any shares of
this Series to be so redeemed or exchanged (properly endorsed or assigned for
transfer, if the Corporation shall so require and the notice of redemption or
exchange shall so state), such shares shall be redeemed or exchanged by the
Corporation at the Redemption Price or the Exchange Price, as applicable, as set
forth in Section 4.1 (unless the Corporation shall have exercised its right to
rescind such redemption pursuant to Section 4.5). In case fewer than all the
shares represented by any such certificate are to be redeemed, a new certificate
shall be issued representing the unredeemed shares (or fractions thereof as
provided in Section 7.4), without cost to the holder thereof, together with the
amount of cash, if any, in lieu of fractional shares other than those issuable
in accordance with Section 7.4. Subject to applicable escheat laws, any moneys
so set aside by the Corporation in the case of redemption and unclaimed at the
end of one year from the redemption date shall revert to the general funds of
the Corporation, after which reversion the holders of such shares so called for
redemption or exchange shall look only to the general funds of the Corporation
for the payment of the Redemption Price or the Exchange Price, as applicable,
without interest. Any interest accrued on funds so deposited shall be paid to
the Corporation from time to time.

          4.5  In the event that a Redemption Rescission Event shall occur
following any day on which a notice of redemption shall have been given pursuant
to Section 4.3 but at or prior to the earlier of (a) the time and date fixed for
redemption as set forth in such notice of redemption and (b) the time and date
at which the 

<PAGE>
 
                                                                              27

Corporation shall have irrevocably deposited funds or certificates with a
designated bank or trust company pursuant to Section 4.4, the Corporation may,
at its sole option, at any time prior to the earliest of (i) the close of
business on that day which is two (2) Trading Days following such Redemption
Rescission Event, (ii) the time and date fixed for redemption as set forth in
such notice and (iii) the time and date on which the Corporation shall have
irrevocably deposited such funds with a designated bank or trust company,
rescind the redemption under Section 4.1(b)(i) to which such notice of
redemption shall have related by making a public announcement of such rescission
(the date on which such public announcement shall have been made being
hereinafter referred to as the "Rescission Date"). The Corporation shall be
deemed to have made such announcement if it shall issue a release to the Dow
Jones News Service, Reuters Information Services or any successor news wire
service. From and after the making of such announcement, the Corporation shall
have no obligation to redeem shares of this Series called for redemption
pursuant to such notice of redemption or to pay the redemption price therefor
and all rights of holders of shares of this Series shall be restored as if such
notice of redemption had not been given. The Corporation shall give notice of
any such rescission by one of the means specified in Section 7.2 as promptly as
practicable, but in no event later than the close of business on that date which
is five (5) Trading Days following the Rescission Date to each record holder of
shares of this Series at the close of business on the Rescission Date and to any
other Person or entity that was a record holder of shares of this Series and
that shall have surrendered shares of this Series for conversion following the
giving of notice of the subsequently rescinded redemption. Each notice of
rescission shall (w) state that the redemption described in the notice of
redemption has been rescinded, (x) state that any Converting Holder shall be
entitled to rescind the conversion of shares of this Series surrendered for
conversion following the day on which notice of redemption was given but prior
to the close of business on the later of (1) the Trading Day next succeeding the
date on which public announcement of the rescission of such redemption shall
have been made and (2) the Trading Day on which the Corporation's notice of
rescission is deemed given pursuant to Section 7.2, (y) be accompanied by a form
prescribed by the Corporation to be used by any Converting Holder rescinding the
conversion of shares so surrendered for conversion (and instructions for the
completion and delivery of such form, including instructions with respect to
payments that may be required to accompany such delivery shall be in accordance
with Section 3.5) and (z) state that such form must be

<PAGE>
 
                                                                              28

properly completed and received by the Corporation no later than the close of
business on a date that shall be ten (10) Trading Days following the date such
notice of rescission is deemed given pursuant to Section 7.2.

          4.6  The shares of this Series shall not be subject to the provisions
of Section 5 of Article IV of the Certificate of Incorporation.

          5.  Voting. The shares of this Series shall have no voting rights
              ------                                                       
except as required by law or as set forth below.

          5.1  Each share of this Series shall be entitled to vote together with
holders of the shares of Common Stock (and any other class or series that may
similarly be entitled to vote with the shares of Common Stock) as a single class
upon all matters upon which holders of Common Stock are entitled to vote.  In
any such vote, the holders of this Series shall be entitled to six (6) votes per
$100 of Liquidation Value of Series E Stock, subject to adjustment at the same
time and in the same manner as each adjustment of the Conversion Rate pursuant
to Section 3, so that the holders of this Series shall be entitled following
such adjustment to the number of votes equal to the number of votes such holders
were entitled to under this Section 5.1 immediately prior to such adjustment
multiplied by a fraction (x) the numerator of which is the Conversion Rate as
adjusted pursuant to Section 3 and (y) the denominator of which is the
Conversion Rate immediately prior to such adjustment.

          5.2  (a)  So long as any shares of this Series remain outstanding,
unless a greater percentage shall then be required by law, the Corporation shall
not, without the affirmative vote at a meeting or the written consent with or
without a meeting of the holders of shares of this Series representing at least
66-2/3% of the aggregate voting power of shares of this Series then outstanding
(i) authorize any Senior Stock or reclassify (by merger, consolidation or
otherwise) any Junior Stock or Parity Stock as Senior Stock, (ii) merge into or
consolidate with any Person where the surviving or continuing corporation will
have any authorized Senior Stock other than Capital Stock corresponding to
shares of Senior Stock existing immediately before such merger or consolidation
or (iii) amend, alter or repeal any of the provisions of the Certificate or the
Certificate of Incorporation, so as in any such case to adversely affect the
voting powers, designations, preferences and relative, participating, optional
or other 

<PAGE>
 
                                                                              29

special rights, and qualifications, limitations or restrictions of the shares of
this Series.

          (b)  No consent of holders of shares of this Series shall be required
for (i) the creation of any indebtedness of any kind of the Corporation, (ii)
the authorization or issuance of any class of Junior Stock or Parity Stock,
(iii) the authorization, designation or issuance of additional shares of Series
E Stock (to the extent provided in the Agreement and Plan of Merger dated as of
February 6, 1995, among Cablevision Industries Corporation, Alan Gerry, a
Delaware corporation known on such date as "Time Warner Inc." and TW CVI
Acquisition Corp.) or (iv) subject to Section 5.2(a), the authorization or
issuance of any other shares of Preferred Stock.

          5.3  (a)  If and whenever at any time or times dividends payable on
shares of this Series shall have been in arrears and unpaid in an aggregate
amount equal to or exceeding the amount of dividends payable thereon for six
quarterly dividend periods, then the number of directors constituting the Board
of Directors shall be increased by two and the holders of shares of this Series,
together with the holders of any shares of any Parity Stock as to which in each
case dividends are in arrears and unpaid in an aggregate amount equal to or
exceeding the amount of dividends payable thereon for six quarterly dividend
periods, shall have the exclusive right, voting separately as a class with such
other series, to elect two directors of the Corporation.

          (b)  Such voting right may be exercised initially either by written
consent or at a special meeting of the holders of the Preferred Stock having
such voting right, called as hereinafter provided, or at any annual meeting of
stockholders held for the purpose of electing directors, and thereafter at each
such annual meeting until such time as all dividends in arrears on the shares of
this Series shall have been paid in full and all dividends payable on the shares
of this Series on four subsequent consecutive Dividend Payment Dates shall have
been paid in full on such dates or funds shall have been set aside for the
payment thereof, at which time such voting right and the term of the directors
elected pursuant to Section 5.3(a) shall terminate.

          (c)  At any time when such voting right shall have vested in holders
of shares of such series of Preferred Stock described in Section 5.3(a), and if
such right shall not already have been exercised by written consent, a proper
officer of the Corporation may call, and, upon the written 

<PAGE>
 
                                                                              30

request, addressed to the Secretary of the Corporation, of the record holders of
shares representing twenty-five percent (25%) of the voting power of the shares
then outstanding of such Preferred Stock having such voting right, shall call, a
special meeting of the holders of such Preferred Stock having such voting right.
Such meeting shall be held at the earliest practicable date upon the notice
required for annual meetings of stockholders at the place for holding annual
meetings of stockholders, or, if none, at a place designated by the Board of
Directors. Notwithstanding the provisions of this Section 5.3(c), no such
special meeting shall be called during a period within 60 days immediately
preceding the date fixed for the next annual meeting of stockholders.

          (d)  At any meeting held for the purpose of electing directors at
which the holders of such Preferred Stock shall have the right to elect
directors as provided herein, the presence in Person or by proxy of the holders
of shares representing more than fifty percent (50%) in voting power of the then
outstanding shares of such Preferred Stock having such right shall be required
and shall be sufficient to constitute a quorum of such class for the election of
directors by such class.

          (e)  Any director elected by holders of Preferred Stock pursuant to
the voting right created under this Section 5.3 shall hold office until the next
annual meeting of stockholders (unless such term has previously terminated
pursuant to Section 5.3(b)) and any vacancy in respect of any such director
shall be filled only by vote of the remaining director so elected, or if there
be no such remaining director, by the holders of such Preferred Stock entitled
to elect such director or directors by written consent or at a special meeting
called in accordance with the procedures set forth in Section 5.3(c), or, if no
special meeting is called or written consent executed, at the next annual
meeting of stockholders.  Upon any termination of such voting right, subject to
applicable law, the term of office of all directors elected by holders of such
Preferred Stock voting separately as a class pursuant to this Section 5.3 shall
terminate.

          (f)  In exercising the voting rights set forth in this Section 5.3,
each share of this Series shall have a number of votes equal to its Liquidation
Value.

          6.  Liquidation Rights.
              ------------------ 

          6.1  Upon the dissolution, liquidation or winding up of the
Corporation, whether voluntary or 

<PAGE>
 
                                                                              31

involuntary, the holders of the shares of this Series shall be entitled to
receive out of the assets of the Corporation available for distribution to
stockholders, in preference to the holders of, and before any payment or
distribution shall be made on, Junior Stock, the amount of $100 per share (the
"Liquidation Value") plus an amount equal to all accrued and unpaid dividends to
the date of final distribution. The Liquidation Value shall be subject to
adjustment from time to time to appropriately give effect to any split or
combination of the shares of this Series.

          6.2  Neither the sale, exchange or other conveyance (for cash, shares
of stock, securities or other consideration) of all or substantially all the
property and assets of the Corporation nor the merger or consolidation of the
Corporation into or with any other corporation, or the merger or consolidation
of any other corporation into or with the Corporation, shall be deemed to be a
dissolution, liquidation or winding up, voluntary or involuntary, for the
purposes of this Section 6.

          6.3  After the payment to the holders of the shares of this Series of
full preferential amounts provided for in this Section 6, the holders of this
Series as such shall have no right or claim to any of the remaining assets of
the Corporation.

          6.4  In the event the assets of the Corporation available for
distribution to the holders of shares of this Series upon any dissolution,
liquidation or winding up of the Corporation, whether voluntary or involuntary,
shall be insufficient to pay in full all amounts to which such holders are
entitled pursuant to Section 6.1, no such distribution shall be made on account
of any shares of any Parity Stock upon such dissolution, liquidation or winding
up unless proportionate distributive amounts shall be paid on account of the
shares of this Series, ratably, in proportion to the full distributable amounts
for which holders of all Parity Stock are entitled upon such dissolution,
liquidation or winding up.

          7.  Other Provisions.
              ---------------- 

          7.1  All notices from the Corporation to the holders shall be given by
one of the methods specified in Section 7.2.  With respect to any notice to a
holder of shares of this Series required to be provided hereunder, neither
failure to give such notice, nor any defect therein or in the transmission
thereof, to any particular holder shall affect the sufficiency of the notice or
the validity of the proceedings referred to in such notice with respect 

<PAGE>
 
                                                                              32

to the other holders or affect the legality or validity of any distribution,
right, warrant, reclassification, consolidation, merger, conveyance, transfer,
dissolution, liquidation or winding up, or the vote upon any such action. Any
notice that was mailed in the manner herein provided shall be conclusively
presumed to have been duly given whether or not the holder receives the notice.

          7.2  All notices and other communications hereunder shall be deemed
given (i) on the first Trading Day following the date received, if delivered
personally, (ii) on the Trading Day following timely deposit with an overnight
courier service, if sent by overnight courier specifying next day delivery and
(iii) on the first Trading Day that is at least five days following deposit in
the mails, if sent by first class mail to (x) a holder at its last address as it
appears on the transfer records or registry for the Series E Stock and (y) the
Corporation at the following address (or at such other address as the
Corporation shall specify in a notice pursuant to this Section 7.2):  AOL Time
Warner Inc., 75 Rockefeller Plaza, New York, New York 10019, Attention:  General
Counsel.

          7.3  Any shares of this Series that have been converted, redeemed,
exchanged or otherwise acquired by the Corporation shall, after such conversion,
redemption, exchange or acquisition, as the case may be, be retired and promptly
canceled and the Corporation shall take all appropriate action to cause such
shares to obtain the status of authorized but unissued shares of Preferred
Stock, without designation as to series, until such shares are once more
designated as part of a particular series by the Board of Directors.  The
Corporation may cause a certificate setting forth a resolution adopted by the
Board of Directors that none of the authorized shares of this Series are
outstanding to be filed with the Secretary of State of the State of Delaware.
When such certificate becomes effective, all matters set forth in the
Certificate with respect to the Series E Stock shall be eliminated from the
Certificate of Incorporation and the shares of Preferred Stock designated hereby
as Series E Stock shall have the status of authorized and unissued shares of
Preferred Stock and may be reissued as part of any new series of Preferred Stock
to be created by resolution or resolutions of the Board of Directors.

          7.4  The shares of this Series shall be issuable in whole shares or,
if authorized by the Board of Directors, in any fraction of a whole share so
authorized or any integral multiple of such fraction.

<PAGE>
 
                                                                              33

          7.5  The Corporation shall be entitled to recognize the exclusive
right of a Person registered on its records as the holder of shares of this
Series, and such record holder shall be deemed the holder of such shares for all
purposes.

          7.6  All notice periods referred to in the Certificate shall commence
on the date of the mailing of the applicable notice.

          7.7  Any registered holder of Series E Stock may proceed to protect
and enforce its rights by any available remedy by proceeding at law or in equity
to protect and enforce any such rights, whether for the specific enforcement of
any provision in this Certificate or in aid of the exercise of any power granted
herein, or to enforce any other proper remedy.


               IN WITNESS WHEREOF, AOL Time Warner Inc. has caused this
certificate to be signed this [  ]th day of [          ], 2000.


                                   AOL TIME WARNER INC.,
                                   
                                    by
                                      -----------------------------
                                      Name:
                                      Title: