1
FILED
STATE OF WASHINGTON
MAR 30, 1998
RALPH MUNRO
SECRETARY OF STATE
CERTIFICATE OF DESIGNATION OF THE POWERS,
PREFERENCES AND RELATIVE, PARTICIPATING,
OPTIONAL AND OTHER SPECIAL RIGHTS OF THE 6-1/2%
CUMULATIVE CONVERTIBLE PREFERRED STOCK AND
QUALIFICATIONS, LIMITATIONS AND RESTRICTIONS THEREOF
- --------------------------------------------------------------------------------
Pursuant to Section 23B.06.020 of the
Business Corporation Act of the State of Washington
- --------------------------------------------------------------------------------
NEXTLINK Communications, Inc. (the "Corporation"), a corporation
organized and existing under the Business Corporation Act of the State of
Washington, does hereby certify that, pursuant to authority conferred upon the
board of directors of the Corporation (the "Board of Directors") by its Articles
of Incorporation, as amended (the "Articles of Incorporation"), and pursuant to
the provisions of RCW 23B.06.020, by unanimous written consent, as permitted by
RCW 23B.08.210, effective as of March 26, 1998, established and authorized the
Pricing Committee of the Board of Directors (the "Pricing Committee"), as
permitted by RCW 23B.08.250, to fix the powers, designations, preferences and
relative participating, optional or other special rights and qualifications,
limitations or restrictions of a new series of Preferred Stock, and the Pricing
Committee, at a meeting thereof on March 30, 1998, duly approved and adopted a
resolution as follows (the "Resolution"):
RESOLVED, that, pursuant to the authority vested in the
Board of Directors by NEXTLINK Communications, Inc.'s Articles of
Incorporation, and delegated by the Board of Directors to the
Pricing Committee of the Board of Directors, does hereby create,
authorize and provide for the issuance of a series of Preferred
Stock designated as the 6-1/2% Cumulative Convertible Preferred
Stock, (liquidation preference $50 per share) in an amount not to
exceed 4,600,000 shares, having the designations, preferences,
relative, participating, optional and other special rights and
the qualifications, limitations and restrictions thereof that are
set forth in the Articles of Incorporation and in this Resolution
as follows:
(a) Designation.
There is hereby created out of the authorized and unissued
Preferred Stock of the Corporation a class of Preferred Stock designated
as the "6-1/2% Cumulative Convertible Preferred Stock." The number of
shares constituting such class shall not exceed
1
2
4,600,000 and are referred to as the "Convertible Preferred Stock." The
liquidation preference of the Convertible Preferred Stock shall be $50
per share.
(b) Ranking.
The Convertible Preferred Stock shall, with respect to dividends
and distributions upon liquidation, winding-up and dissolution of the
Corporation, rank (i) senior to each class of Capital Stock of the
Corporation (including, without limitation, the Corporation's Class A
Common Stock, par value $.0l per share and the Class B Common Stock, par
value $.022658 per share) outstanding or hereafter created the terms of
which do not expressly provide that it ranks senior to, or on a parity
with, the Convertible Preferred Stock as to dividends and distributions
upon liquidation, winding-up and dissolution of the Corporation
(collectively referred to as "Junior Shares"); (ii) on a parity with any
class of Capital Stock of the Corporation or series of Preferred Stock
of the Corporation hereafter created the terms of which expressly
provide that such class or series will rank on a parity with the
Convertible Preferred Stock as to dividends and distributions upon
liquidation, winding-up and dissolution (collectively referred to as
"Parity Shares"); and (iii) junior to the Corporation's 14% Senior
Exchangeable Redeemable Preferred Shares and each other class of Capital
Stock of the Corporation or series of Preferred Stock of the Corporation
hereafter created the terms of which expressly provide that such class
or series will rank senior to the Convertible Preferred Stock as to
dividends and distributions upon liquidation, winding-up and dissolution
of the Corporation (collectively referred to as "Senior Shares").
(c) Dividends.
(i)
(A) Beginning on the Issue Date, the Holders of the
outstanding Convertible Preferred Stock shall be entitled to
receive, when, as and if declared by the Board of Directors, out
of funds legally available therefor, distributions in the form of
dividends on each share of Convertible Preferred Stock, at a rate
per annum equal to 6-1/2% of the liquidation preference per share
of the Convertible Preferred Stock, payable quarterly. No
interest shall be payable in respect to any dividends that may be
in arrears. All dividends shall be cumulative, whether or not
earned or declared, on a daily basis from their date of issuance
and shall be payable quarterly in arrears on each Dividend
Payment Date, commencing on the first Dividend Payment Date after
the Issue Date. Such dividends shall be paid only in cash. Each
dividend shall be payable to the shares of Convertible Preferred
Stock held by Holders of record as they appear on the share books
of the Corporation on the Dividend Record Date immediately
preceding the related Dividend Payment Date. Dividends shall
cease to accumulate in respect of shares of Convertible Preferred
Stock on the date of their redemption unless
2
3
the Corporation shall have failed to pay the relevant redemption
price on the date fixed for redemption.
(B) In the event that (1) the Corporation has not
filed the registration statement relating to the shelf
registration of the Convertible Preferred Stock for resale by
Holders contemplated by the Registration Rights Agreement (the
"Resale Registration") on or before the 90th day after the Issue
Date, (2) the Resale Registration has not become effective on or
before the 120th day after the Issue Date, or (3) the Resale
Registration is filed and declared effective but shall thereafter
cease to be effective (except as specifically permitted therein)
without being succeeded immediately by an additional registration
statement filed and declared effective (any such event referred
to in clauses (1) through (3), a "Registration Default"), then
additional dividends will accrue (in addition to the stated
dividends on the Convertible Preferred Stock) at the rate of
0.25% per annum on the liquidation preference of the Convertible
Preferred Stock for the period from and including the occurrence
of the Registration Default until such time as no Registration
Default is in effect. Such additional dividends (the "Special
Dividends") will be payable quarterly in arrears on each regular
Dividend Payment Date in accordance with the provisions of this
paragraph (c). For each 90-day period that the Registration
Default continues, the per annum rate of such Special Dividends
will increase by an additional 0.25%; provided that such rate
shall in no event exceed 1.0% per annum in the aggregate. At such
time as the Registration Default is no longer in effect, the
dividend rate on the Convertible Preferred Stock shall be the
rate stated in paragraph (c)(i)(A) hereof and no further Special
Dividends will accrue unless and until another Registration
Default shall occur.
(ii) All dividends paid with respect to the Convertible
Preferred Stock pursuant to paragraph (c)(i) shall be paid pro rata to
the Holders entitled thereto.
(iii) Nothing herein contained shall in any way or under
any circumstances be construed or deemed to require the Board of
Directors to declare, or the Corporation to pay or set apart for
payment, any dividends on the Convertible Preferred Stock at any time.
(iv) Dividends on account of arrears for any past Dividend
Period and dividends in connection with any mandatory redemption
pursuant to paragraph (e)(ii) may be declared and paid at any time,
without reference to any regular Dividend Payment Date, to Holders of
record on such date, not more than forty-five (45) days prior to the
payment thereof, as may be fixed by the Board of Directors of the
Corporation.
(v) No full dividends shall be declared by the Board of
Directors or paid or set apart for payment by the Corporation on any
Parity Shares for any period unless full
3
4
cumulative dividends have been or contemporaneously are declared and
paid in full, or declared and, if payable in cash, a sum in cash set
apart sufficient for such payment, on the Convertible Preferred Stock
for all Dividend Periods terminating on or prior to the date of payment
of such full dividends on such Parity Shares. If full dividends are not
so paid, all dividends declared upon the Convertible Preferred Stock and
any other Parity Shares shall be declared pro rata so that the amount of
dividends declared per share on the Convertible Preferred Stock and such
Parity Shares shall in all cases bear to each other the same ratio that
accrued dividends per share on the Convertible Preferred Stock and such
Parity Shares bear to each other.
(vi)
(A) Holders of shares of Convertible Preferred Stock
shall be entitled to receive the dividends provided for in
paragraph (c)(i) hereof in preference to and in priority over any
dividends upon any of the Junior Shares.
(B) No dividends may be paid or set apart for such
payment on Junior Shares (except dividends on Junior Shares
payable in additional Junior Shares) if full cumulative, accrued
dividends have not been paid in full on the Convertible Preferred
Stock. So long as any shares of Convertible Preferred Stock are
outstanding, the Corporation shall not make any payment on
account of, or set apart for payment money for a sinking or other
similar fund for, the purchase, redemption or other retirement
of, any Parity Shares or Junior Shares, or any warrants, rights,
calls or options to purchase any Parity Shares or Junior Shares,
whether in cash, obligations or shares of the Corporation or
other property, and shall not permit any corporation or other
entity directly or indirectly controlled by the Corporation to
purchase or redeem any Parity Shares or Junior Shares or any such
warrants, rights, calls or options unless full cumulative,
accrued dividends determined in accordance herewith on the
Convertible Preferred Stock have been paid in full.
(vii) Dividends payable on the Convertible Preferred Stock for
any period shorter than a quarterly dividend period 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 payable.
(d) Liquidation Preference.
(i) In the event of any voluntary or involuntary liquidation,
dissolution or winding-up of affairs of the Corporation, the Holders of
shares of Convertible Preferred Stock then outstanding shall be entitled
to be paid, out of the assets of the Corporation available for
distribution to its shareholders, an amount in cash equal to the
liquidation preference of $50 per share of Convertible Preferred Stock,
plus, without duplication, an
4
5
amount in cash equal to accumulated and unpaid dividends thereon to the
date fixed for liquidation, dissolution or winding-up (including an
amount 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 payment shall be made or any assets distributed
to the holders of any of the Junior Shares including, without
limitation, common stock of the Corporation. Except as provided in the
preceding sentence, Holders of shares of Convertible Preferred Stock
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 Convertible Preferred Stock and all Parity Shares, then the
holders of all such shares shall share equally and ratably in such
distribution of assets in proportion to the full liquidation preference,
including, without duplication, all accrued unpaid dividends, to which
each is entitled.
(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.
(iii) Nothing herein contained shall in any way or under any
circumstances be construed or deemed to require the Board of Directors
to declare, or the Corporation to pay or set apart for payment, any
amounts for the payment of liquidation preference on Convertible
Preferred Stock at any time.
(e) Redemption.
(i) (A) Mandatory Redemption. On March 31, 2010, the
Corporation shall redeem, to the extent of funds legally available
therefor, in the manner provided for in paragraph (e)(ii) hereof, all of
the shares of Convertible Preferred Stock then outstanding at a
redemption price equal to 100% of the liquidation preference per share,
plus, without duplication, an amount in cash equal to all accumulated
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).
(B) Optional Redemption. The Convertible Preferred
Stock shall be redeemable, at any time on or after April 16,
2006, in whole or in part, at the option of the Company, at a
redemption price equal to 100% of the liquidation preference per
share, plus, without duplication, an amount in cash equal to all
accumulated 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).
5
6
(ii) Procedures for Redemption.
(A) At least thirty (30) days and not more than sixty
(60) days prior to the date fixed for any redemption of shares of
Convertible Preferred Stock pursuant to paragraph (e)(i) hereof,
written notice (each, a "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 shares of
Convertible Preferred Stock at such Holder's address as it
appears on the stock books of the Corporation, provided 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 Convertible Preferred Stock to be redeemed except as to
the Holder or Holders to whom the Corporation has failed to give
said notice or except as to the Holder or Holders whose notice
was defective. The Redemption Notice shall state:
(1) The redemption price;
(2) The Redemption Date;
(3) That the Holder is to surrender to the
Corporation, in the manner, at the place or
places and at the price designated, his
certificate or certificates representing the
shares of Convertible Preferred Stock to be
redeemed; and
(4) That dividends on the shares of Convertible
Preferred Stock to be redeemed shall cease to
accumulate on such Redemption Date unless the
Corporation defaults in the payment of the
redemption price.
(B) Each Holder of shares of Convertible 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 redemption
price 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.
(C) On and after the Redemption Date, unless the
Corporation defaults in the payment in full of the applicable
redemption price, dividends on the shares of Convertible
Preferred Stock called for redemption shall cease to accumulate
on the Redemption Date, and all rights of the Holders of redeemed
shares shall terminate with respect thereto on the Redemption
Date, other than the right to receive the redemption price,
without interest; provided, however, that if a notice of
redemption shall have been given as provided in paragraph (ii)(A)
above and
6
7
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 called for
redemption, then, at the close of business on the day on which
such funds are segregated and set apart, the Holders of the
shares to be redeemed shall cease to be shareholders of the
Corporation and shall be entitled only to receive the redemption
price, without interest.
(f) Voting Rights.
(i) The Holders of shares of Convertible Preferred Stock, except
as otherwise required under Washington law or as set forth in paragraphs
(ii), (iii) and (iv) below, shall not be entitled or permitted to vote
on any matter required or permitted to be voted upon by the shareholders
of the Corporation.
(ii)
(A) So long as any shares of Convertible Preferred
Stock are outstanding, the Corporation shall not amend, alter or
repeal any of the provisions of the Corporation's Articles of
Incorporation (including this Certificate of Designations) or the
bylaws of the Corporation so as to affect adversely the specified
rights, powers, preferences, privileges or voting rights of the
Holders of the Convertible Preferred Stock or reduce the time for
any notice which the Holders of the Convertible Preferred Stock
may be entitled without the affirmative vote or consent of
Holders of at least two-thirds of the issued and outstanding
shares of Convertible 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.
(B) Notwithstanding the foregoing, modifications and
amendments of the terms of this Certificate of Designations
contained in paragraph (i) below may be made by the Corporation
with the consent of the Holders of a majority of the outstanding
shares of Convertible Preferred Stock. In addition, the Holders
of a majority of the outstanding shares of Convertible Preferred
Stock, on behalf of all holders of Convertible Preferred Stock,
may waive compliance by the Corporation with the covenant set
forth below in paragraph (i) and may waive any past default under
the Certificate of Designations.
(C) Notwithstanding anything to the contrary contained
herein, (x) the creation, authorization or issuance of any shares
of any Junior Shares, Parity Shares or Senior Shares or (y) the
increase or decrease in the amount of authorized Capital Stock of
any class, including Senior Shares or Parity Shares (other than a
reduction in the number of authorized shares of Preferred Stock
below the number
7
8
thereof then outstanding), shall not require the consent of
Holders of Convertible Preferred Stock and shall not be deemed
to affect adversely the rights, preferences, privileges or
voting rights of Holders of shares of Convertible Preferred
Stock.
(iii) Without the affirmative vote or consent of Holders
of a majority of the issued and outstanding shares of Convertible
Preferred Stock, voting or consenting, as the case may be, as a
separate 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 with 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
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, limited liability
Company, partnership or trust organized and existing under the
laws of the United States or any State thereof or the District of
Columbia; (B) either (1) the Corporation is the surviving or
continuing Person and the outstanding shares of Convertible
Preferred Stock continue to exist as outstanding shares of
Convertible Preferred Stock or are converted into or exchanged
for shares of Capital Stock of an Acquiring Entity, having the
same powers, preferences and relative, participating, optional or
other special rights and the qualifications, limitations or
restrictions thereon that the shares of Convertible Preferred
Stock had immediately prior to such transaction or (2) the shares
of Convertible Preferred Stock shall be converted into or
exchanged for shares of Capital Stock of such successor,
transferee or resulting Person or an Acquiring Entity, 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 shares of Convertible Preferred
Stock had immediately prior to such transaction; (C) immediately
after giving pro forma effect to such transaction, no Voting
Rights Triggering Event shall have occurred or be continuing; and
(D) the Corporation has delivered to the Transfer Agent 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 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
8
9
Corporation, shall be deemed to be the transfer of all or substantially
all of the properties and assets of the Corporation.
Except as specified in this paragraph, the Holders of Convertible
Preferred Stock shall not have voting rights with respect to mergers.
(iv)
(A) If (1) dividends on the Convertible Preferred
Stock are in arrears and unpaid for six or more Dividend Periods
(whether or not consecutive) (a "Dividend Default"); (2) the
Corporation fails to redeem all of the then outstanding shares of
Convertible Preferred Stock on March 31, 2010 or fails otherwise
to discharge any redemption obligation with respect to the
Convertible Preferred Stock; (3) the Corporation breaches or
violates one of the provisions set forth in any paragraphs
(f)(iii) or (i) hereof and the breach or violation continues for
a period of 30 days or more after the Corporation receives notice
thereof specifying the default from the Holders of at least 25%
of the shares of Convertible Preferred Stock then outstanding, or
(4) the Corporation fails to pay at the final stated maturity
(giving effect to any extensions thereof) the principal amount of
any Debt of the Corporation or any Subsidiary of the Corporation,
or the final stated maturity of any such Debt is accelerated, if
the aggregate principal amount of such Debt, together with the
aggregate principal amount of any other such Debt in default for
failure to pay principal at the final stated maturity (giving
effect to any extensions thereof) or that has been accelerated,
aggregates $15,000,000 or more at any time, in each case, after a
10-day period during which such default shall not have been cured
or such acceleration rescinded, then in the case of any of
clauses (1)-(4) the number of directors constituting the Board of
Directors shall be adjusted by the number, if any, necessary to
permit the Holders of the Convertible Preferred Stock, voting
together with any outstanding Parity Shares separately as a
single class, to elect the lesser of two directors and that
number of directors constituting 25% of the members of the Board
of Directors. Each such event described in clauses (1), (2), (3)
and (4) is a "Voting Rights Triggering Event." Holders of a
majority of the issued and outstanding shares of Convertible
Preferred Stock, voting together with any outstanding Parity
Shares separately as a single class, shall have the exclusive
right to elect the lesser of two directors and that number of
directors constituting 25% of the members of the Board of
Directors at a meeting therefor called upon occurrence of such
Voting Rights Triggering Event, and at every subsequent meeting
at which the terms of office of the directors so elected shall
expire (other than as described in (f)(iv)(B) below). The voting
rights provided herein shall be the exclusive remedy at law or in
equity of the Holders of the Convertible Preferred Stock for any
Voting Rights Triggering Event.
9
10
(B) The right of the Holders of Convertible Preferred
Stock to elect members of the Board of Directors as set forth in
subparagraph (f)(iv)(A) above shall continue until such time as
(x) in the event such right arises due to a Dividend Default, all
accumulated dividends that are in arrears on the Convertible
Preferred Stock are paid in full and (y) in all other cases, the
failure, breach or default giving rise to such Voting Rights
Triggering Event is remedied or waived by the Holders of at least
a majority of the shares of Convertible Preferred Stock then
outstanding, at which time (1) the special right of the Holders
of Convertible Preferred Stock so to vote for the election of
directors and (2) the term of office of the directors elected by
the Holders of the Convertible Preferred Stock shall each
terminate and the directors elected by the holders of Voting
Stock other than the Convertible Preferred Stock shall constitute
the entire Board of Directors. At any time after voting power to
elect directors shall have become vested and be continuing in the
Holders of Convertible Preferred Stock pursuant to paragraph
(f)(iv)(A) hereof, or if vacancies shall exist in the offices of
directors elected by the Holders of Convertible Preferred Stock,
a proper officer of the Corporation may, and upon the written
request of he Holders of record of at least twenty-five percent
(25%) of the shares of Convertible Preferred Stock then
outstanding addressed to the Secretary of the Corporation shall,
call a special meeting of the Holders of Convertible Preferred
Stock, for the purpose of electing the directors which such
Holders are entitled to elect. If such meeting shall not be
called by a proper officer of the Corporation within twenty (20)
days after personal service of said written request upon the
Secretary of the Corporation, or within twenty (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
twenty-five percent (25%) of the outstanding shares of
Convertible 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 shareholders of
the Corporation and shall be held at the place for holding the
annual meetings of shareholders. Any Holder of shares of
Convertible Preferred Stock so designated shall have, and the
Corporation shall provide, access to the lists of shareholders to
be called pursuant to the provisions hereof.
(C) At any meeting held for the purpose of electing
directors at which the Holders of Convertible Preferred Stock
voting together with any outstanding shares of Parity Shares as a
separate class shall have the right as described herein to elect
directors, the presence in person or by proxy of the Holders of
at least a majority of the then outstanding shares of Convertible
Preferred Stock and Parity Shares shall be required to constitute
a quorum of such Convertible Preferred Stock and Parity Shares.
10
11
(D) Any vacancy occurring in the office of a director
elected by the Holders of shares of Convertible Preferred Stock
and Parity Shares may be filled by the remaining directors
elected by the Holders of Convertible Preferred Stock and Parity
Shares unless and until such vacancy shall be filled by the
Holders of Convertible Preferred Stock and Parity Shares.
(v) In any case in which the Holders of Convertible Preferred
Stock shall be entitled to vote pursuant to this paragraph (f) or
pursuant to Washington law, each Holder of shares of Convertible
Preferred Stock entitled to vote with respect to such matter shall be
entitled to one vote for each share of Convertible Preferred Stock held.
(vi) The Corporation may voluntarily grant voting rights to the
holders of Convertible Preferred Stock under such terms and conditions
as the Corporation shall determine, provided, however, that such grant
does not affect adversely the then-existing voting rights of such
holders.
(g) Reissuance of Convertible Preferred Stock.
Shares of Convertible Preferred Stock that have been issued and
reacquired in any manner, including shares purchased or redeemed, shall (upon
compliance with any applicable provisions of the laws of Washington) 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 such reacquired shares shall not be reissued as shares of
Convertible Preferred Stock.
(h) Business Day.
If any payment, redemption or exchange shall be required by the
terms hereof to be made on a day that is not a Business Day, such payment,
redemption or exchange shall be made on the immediately succeeding Business Day.
(i) Certain Additional Provisions.
(i) Reports. So long as any shares of Convertible Preferred Stock
are outstanding, the Corporation will provide to the Holders of
Convertible Preferred Stock, within 15 days after it files them with the
Securities and Exchange Commission (or any successor agency performing
similar functions), copies of the annual reports and of the information,
documents and other reports (or copies of such portions of any of the
foregoing as the Commission may by rules and regulation prescribe) which
the Corporation files with the Commission pursuant to Section 13 or
15(d) of the Exchange Act. In the event that the Corporation is no
longer required to furnish such reports to its securityholders pursuant
to the Exchange Act, the Corporation will cause its consolidated
11
12
financial statements, comparable to those which would have been required
to appear in annual or quarterly reports, to be delivered to the Holders
of Convertible Preferred Stock.
(j) Definitions.
As used in this Certificate of Designations, 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.
"Acquired Debt" means, with respect to any specified Person, (i) Debt of
any other Person existing at the time such Person merges with or into or
consolidates with or becomes a Restricted Subsidiary of such specified Person
and (ii) Debt secured by a Lien encumbering any asset acquired by such specified
Person, which Debt was not Incurred in anticipation of, and was outstanding
prior to, such merger, consolidation or acquisition.
"Acquiring Entity" means the entity that is a constituent party to a
transaction covered by paragraph (f)(iii) and that thereafter is the parent
entity of the Corporation or its successor and whose shares of Capital Stock the
holders of Class A Common Stock receive in a transaction in exchange for or in
consideration of their shares of Class A Common Stock.
"Affiliate" of any Person means any other Person directly or indirectly
controlling or controlled by or under direct or indirect common control with
such Person. For the purposes of this definition, "control" when used with
respect to any Person means the power to direct the management and policies of
such Person, directly or indirectly, whether through the ownership of voting
securities, by contract or otherwise; and the terms "controlling" and
"controlled" have meanings correlative to the foregoing.
"Applicable Price" means (i) in the event of a Non-Stock Change in
Control in which the holders of the Class A Common Stock receive only cash, the
amount of cash received by the holder of one share of Class A Common Stock and
(ii) in the event of any other Non-Stock Change in Control or any Common Stock
Change in Control, the average of the Closing Price for the Class A Common Stock
during the 10 Trading Days prior to and including the record date for the
determination of the holders of Class A Common Stock entitled to receive cash,
securities, property or other assets in connection with such Non-Stock Change in
Control or Common Stock Change in Control or, if there is no such record date,
the date upon which the holders of the Class A Common Stock shall have the right
to receive such cash, securities, property or other assets or the date upon
which such Non-Stock Change in Control is deemed to have occurred, as the case
may be, in each case as adjusted in good faith by the Board of Directors to
appropriately reflect any of the events referred to in paragraph (k)(vi).
"Business Day" means each Monday, Tuesday, Wednesday, Thursday and
Friday which is not a day on which banking institutions in the Borough of
Manhattan, The City of New York, New York are authorized or obligated by law or
executive order to close.
12
13
"Capital Lease Obligation" of any Person means the obligation to pay
rent or other payment amounts under a lease of (or other Debt arrangements
conveying the right to use) real or personal property of such Person which is
required to be classified and accounted for as a capital lease or a liability on
the face of a balance sheet of such Person in accordance with generally accepted
accounting principles (a "Capital Lease"). The stated maturity of such
obligation shall be the date of the last payment of rent or any other amount due
under such lease prior to the first date upon which such lease may be terminated
by the lessee without payment of a penalty. The principle amount of such
obligation shall be the capitalized amount thereof that would appear on the face
of a balance sheet of such Person in accordance with generally accepted
accounting principles.
"Capital Stock" of any Person means any and all shares, interests,
participations or other equivalents (however designated) of corporate stock or
other equity participations, including partnership interests, whether general or
limited, of such Person.
"Change in Control" will be deemed to have occurred at such time as (i)
the sale, lease, transfer, conveyance or other disposition (other than by way of
merger or consolidation), in one or a series of related transactions, of all or
substantially all the assets of the Corporation and its Subsidiaries taken as a
whole to any "person" (as such term is used in Section 13(d)(3) of the Exchange
Act), (ii) the adoption of a plan relating to the liquidation or dissolution of
the Corporation, (iii) the consummation of any transaction (including any merger
or consolidation) the result of which is that any Person or any Persons acting
together that would constitute a "group" (a "Group") for purposes of Section
13(d) of the Exchange Act, or any successor provision thereto (other than Eagle
River, Mr. Craig O. McCaw and their respective Affiliates or an underwriter
engaged in a firm commitment underwriting on behalf of the Corporation), shall
beneficially own (within the meaning of Rule 13d-3 under the Exchange Act, or
any successor provision thereto) more than 50% of the aggregate voting power of
all classes of Voting Stock of the Corporation, (iv) neither Mr. Craig O. McCaw
nor any person designated by him to the Corporation as acting on his behalf
shall be a director of the Corporation; or (v) during any period of two
consecutive years, individuals who at the beginning of such period constituted
the Board of Directors (together with any new directors whose election by the
Board of Directors or whose nomination for election by the shareholders of the
Corporation was proposed by a vote of a majority of the directors of the
Corporation 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 Board of
Directors then in office.
"Class A Common Stock" means the Class A Common Stock, par value
$0.022658 per share, of the Corporation.
"Closing Price" means, with respect to the Class A Common Stock of the
Corporation, for any day, the closing sale price (or, if no closing sale price
is reported, the last reported sale price) per share of the Class A Common Stock
as reported by the Nasdaq National Market, or, if the Class A Common Stock is
not so reported, on the principal national securities exchange or
13
14
inter-dealer quotation system on which the Class A Common Stock is listed or
admitted to trading, or if not listed or admitted to trading on any national
securities exchange or inter-dealer quotation system, the average of the closing
bid and asked prices per share in the over-the-counter market as reported by the
National Quotation Bureau or similar organization or as furnished by any New
York Stock Exchange member firm selected from time to time by the Corporation
for that purpose.
"Common Stock" means the Class A Common Stock and the Class B Common
Stock, par value $0.022658 per share, of the Corporation.
"Common Stock Change in Control" means any Change in Control in which
more than 50% of the value (as determined in good faith by the Board of
Directors of the Corporation) of the consideration received by holders of Class
A Common Stock consists of common stock of another company that for each of the
10 consecutive Trading Days referred to in the definition of "Applicable Price"
above has been admitted for listing or admitted for listing subject to notice of
issuance on a national securities exchange or quoted on the Nasdaq National
Market; provided, however, that a Change in Control shall not be a Common Stock
Change in Control unless either (i) the Corporation continues to exist after the
occurrence of such Change in Control and the outstanding shares of Convertible
Preferred Stock continue to exist as outstanding shares of Convertible Preferred
Stock (or are converted into or exchanged for shares of Capital Stock of an
Acquiring Entity, having the same powers, preferences and relative,
participating, optional or other special rights and the qualifications,
limitations or restrictions thereon that the shares of Convertible Preferred
Stock had immediately prior to such transaction), or (ii) not later than the
occurrence of such Change in Control, the outstanding shares of Convertible
Preferred Stock are converted into or exchanged for shares of convertible
preferred stock of a corporation succeeding to the business of the Corporation
or the Acquiring Entity, which convertible preferred stock has powers,
preferences and relative, participating, optional or other rights, and
qualifications, limitations and restrictions, substantially similar to those of
the Convertible Preferred Stock.
"Conversion Agent" means the conversion agent for the Convertible
Preferred Stock designated by the Company from time to time.
"Current Market Price" per Junior Share or any other security at any
date means (i) if the security is not registered under the Exchange Act, (a) the
value of the security, determined in good faith by the Board of Directors of the
Corporation, based on the most recently completed arm's-length transaction
between the Corporation and a person other than an Affiliate of the Corporation
and the closing of which occurs on such date or shall have occurred within the
six-month period preceding such date, or (b) if no such transaction shall have
occurred on such date or within such six-month period, the value of the security
as determined by an independent financial expert (provided that, in the case of
the calculation of Current Market Price for determining the cash value of
fractional shares, any such determination within six months that is, in the good
faith judgment of the Board of Directors of the Corporation, a reasonable
determination, may be utilized) or (ii) (a) if the security is registered under
the Exchange Act, the
14
15
average of the daily market prices of the security for the 20 consecutive
trading days immediately preceding such date, or (b) if the security has been
registered under the Exchange Act for less than 20 consecutive trading days
before such date, then the average of the closing sales prices for all of the
trading days before such date for which closing sales prices are available, in
the case of each of (ii) (a) and (ii) (b), as certified to the Conversion Agent
by the President, any Vice President or the Chief Financial Officer of the
Corporation. The market price for each such trading day shall be: (A) in the
case of a security listed or admitted to trading on any national securities
exchange or quotation system, the closing sales price, regular way, on such day,
or if no sale takes place on such day, the average of the closing bid and asked
prices on such day, (B) in the case of a security not then listed or admitted to
trading on any national securities exchange or quotation system, the last
reported sale price on such day, or if no sale takes place on such day, the
average of the closing bid and asked prices on such day, as reported by a
reputable quotation source designated by the Corporation, (C) in the case of a
security not then listed or admitted to trading on any national securities
exchange or quotation system and as to which no such reported sale price or bid
and asked prices are available, the average of the reported high bid and low
asked prices on such day, as reported by a reputable quotation service, or a
newspaper of general circulation in the Borough of Manhattan, City and State of
New York, customarily published on each Business Day, designated by the
Corporation, or, if there shall be no bid and asked prices on such day, the
average of the high bid and low asked prices, as so reported, on the most recent
day (not more than 30 days prior to the date in question) for which prices have
been so reported and (D) if there are no bid and asked prices reported during
the 30 days prior to the date in question, the Current Market Price shall be
determined as if the securities were not registered under the Exchange Act.
"Debt" means (without duplication), with respect to any Person, whether
recourse is to all or a portion of the assets of such Person and whether or not
contingent, (i) every obligation of such Person for money borrowed, (ii) every
obligation of such Person evidenced by bonds, debentures, notes or other similar
instruments, including any such obligations Incurred in connection with the
acquisition of property, assets or businesses, (iii) every reimbursement
obligation of such Person with respect to letters of credit, bankers'
acceptances or similar facilities issued for the account of such Person, (iv)
every obligation of such Person issued or assumed as the deferred purchase price
of property or services (including securities repurchase agreements but
excluding, trade accounts payable or accrued liabilities arising in the ordinary
course of business which are not overdue or which are being contested in good
faith), (v) every Capital Lease Obligation of such Person, (vi) all Receivables
Sales of such Person, together with any obligation of such Person to pay any
discount, interest, fees, indemnities, penalties, recourse, expenses or other
amounts in connection therewith, (vii) all obligations to redeem Disqualified
Stock issued by such Person, (viii) every obligation under Interest Rate or
Currency Protection Agreements of such Person, and (ix) every obligation of the
type referred to in clauses (i) through (viii) of another Person and all
dividends of another Person the payment of which, in either case, such Person
has Guaranteed. The "amount" or "principal amount" of Debt at any time of
determination as used herein represented by (a) any Debt issued at a price that
is less than the principal amount at maturity thereof, shall be the amount of
the liability in respect thereof
15
16
determined in accordance with generally accepted accounting principles, (b) any
Receivables Sale, shall be the amount of the unrecovered capital or principal
investment of the purchaser (other than the Corporation or a Wholly-Owned
Restricted Subsidiary of the Corporation) thereof, excluding amounts
representative of yield or interest earned on such investment, (c) any
Disqualified Stock, shall be the maximum fixed redemption or repurchase price in
respect thereof, (d) any Capital Lease Obligation, shall be determined in
accordance with the definition thereof, or (e) any Permitted Interest Rate or
Currency Protection Agreement shall be zero. In no event shall Debt include any
liability for taxes.
"Depositary" means, with respect to the shares of Convertible Preferred
Stock issuable or issued in whole or in part in the form of a Global Share
Certificate, DTC for so long as it shall be a clearing agency registered under
the Exchange Act, or such successor (which shall be a clearing agency registered
under the Exchange Act) as the Corporation shall designate from time to time in
an Officer's Certificate delivered to the Transfer Agent.
"Disqualified Stock" of any Person means any Capital Stock of such
Person 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 is redeemable at the option of the holder thereof,
in whole or in part, on or prior to March 31, 2010; provided, however, that any
Convertible Preferred Stock which would not constitute Disqualified Stock but
for provisions thereof giving holders thereof the right to require the
Corporation to repurchase or redeem such Convertible Preferred Stock upon the
occurrence of a Change in Control occurring prior to March 31, 2010 shall not
constitute Disqualified Stock.
"Dividend Payment Date" means March 31, June 30, September 30 and
December 31, of each year.
"Dividend Period" means the Initial Dividend Period, and thereafter,
each Quarterly Dividend Period.
"Dividend Record Date" means March 15, June 15, September 15 and
December 15 of each year.
"DTC" means The Depository Trust Company.
"Eagle River" means Eagle River Investments, L.L.C., a limited liability
company formed under the laws of the State of Washington.
"Exchange Act" means the Securities Exchange Act of 1934, and the rules
and regulations promulgated thereunder.
16
17
"Guarantee" by any Person means any obligation, contingent or otherwise,
of such Person guaranteeing, or having the economic effect of guaranteeing, any
Debt of any other Person (the "primary obligor") in any manner, whether directly
or indirectly, and including, without limitation, any obligation of such Person,
(i) to purchase or pay (or advance or supply funds for the purchase of) such
Debt or to purchase (or to advance or supply funds for the purchase of) any
security for the payment of such Debt, (ii) to purchase property, securities or
services for the purpose of assuring the holder of such Debt of the payment of
such Debt, or (iii) to maintain working capital, equity capital or other
financial statement condition or liquidity of the primary obligor so as to
enable the primary obligor to pay such Debt (and "Guaranteed", "Guaranteeing"
and "Guarantor" shall have meanings correlative to the foregoing); provided,
however, that the Guarantee by any Person shall not include endorsements by such
Person for collection or deposit, in either case, in the ordinary course of
business; and provided further, that the incurrence by a Restricted Subsidiary
of the Corporation of a lien on real or personal property of such Restricted
Subsidiary acquired, constructed or constituting improvements made after the
Issue Date to secure Purchase Money Debt which is Incurred for the construction,
acquisition and improvement of Telecommunications Assets, shall not be deemed to
constitute a Guarantee by such Restricted Subsidiary of any Purchase Money Debt
of the Corporation secured thereby; provided, however, that (a) the net proceeds
of any Debt secured by such a Lien does not exceed 100% of such purchase price
or cost of construction or improvement of the property subject to such Lien; (b)
such Lien attaches to such property prior to, at the time of or within 180 days
after the acquisition, completion of construction or commencement of operation
of such property; and (c) such Lien does not extend to or cover any property (or
identifiable portions thereof) acquired, constructed or constituting
improvements made with the proceeds of such Purchase Money Debt (it being
understood and agreed that all Debt owed to any single lender or group of
lenders or outstanding under any single credit facility shall be considered a
single Purchase Money Debt, whether drawn at one time or from time to time).
"Holder" means a holder of shares of Convertible Preferred Stock as
reflected in the share books of the Corporation.
"Implied Conversion Price" means the quotient obtained by dividing
$50.00 by the Conversion Rate.
"Incur" means, with respect to any Debt or other obligation of any
Person, to create, issue, incur (by conversion, exchange or otherwise), assume,
Guarantee or otherwise become liable in respect of such Debt or other obligation
including by acquisition of Subsidiaries or the recording, as required pursuant
to generally accepted accounting principles or otherwise, of any such Debt or
other obligation on the balance sheet of such Person (and "Incurrence",
"Incurred", "Incurrable" and "Incurring" shall have meanings correlative to the
foregoing): provided, however, that a change in generally accepted accounting
principles that results in an obligation of such Person that exists at such time
becoming Debt shall not be deemed an Incurrence of such Debt and that neither
the accrual of interest nor the accretion of original issue discount shall be
deemed an Incurrence of Debt; provided, further, however, that the Corporation
may elect to treat
17
18
all or any portion of revolving credit debt of the Corporation or a Subsidiary
as being Incurred from and after any date beginning the date the revolving
credit commitment is extended to the Corporation or a Subsidiary, by furnishing
notice thereof to the Trustee or the Transfer Agent, as applicable, and any
borrowings or reborrowings by the Corporation or a Subsidiary under such
commitment up to the amount of such commitment designated by the Corporation as
Incurred shall not be deemed to be new Incurrence of Debt by the Corporation or
such Subsidiary.
"Initial Dividend Period" means the dividend period commencing on the
Issue Date and ending on the first Dividend Payment Date to occur thereafter.
"Interest Rate or Currency Protection Agreement" of any Person means any
forward contract, futures contract, swap, option or other financial agreement or
arrangement (including, without limitation, caps, floors, collars and similar
agreements) relating to, or the value of which is dependent upon, interest rates
or currency exchange rates or indices.
"Issue Date" means the date of original issuance of the Convertible
Preferred Stock.
"Junior Shares" shall have the meaning ascribed to it in paragraph (b)
hereof.
"Lien" means, with respect to any property or assets, any mortgage or
deed of trust, pledge, hypothecation, assignment, Receivables Sale, deposit
arrangement, security interest, lien, charge, easement (other than any easement
not materially impairing usefulness or marketability), encumbrances, preference,
priority or other security agreement or preferential arrangement of any kind or
nature whatsoever on or with respect to such property or assets (including,
without limitation, any conditional sale or other title retention agreement
having substantially the same economic effect as any of the foregoing).
"Non-Stock Change in Control" means any Change in Control other than a
Common Stock Change in Control.
"Officers' Certificate" means a certificate signed by (i) the Chief
Executive Officer, President, an Executive Vice President or a Vice President,
and (ii) the Treasurer, Assistant Treasurer, Secretary or an Assistant
Secretary, of the Corporation and delivered to the Transfer Agent and containing
the following:
(a) a statement that each individual signing such
certificate has read such covenant or condition and the definitions
herein relating thereto;
(b) a brief statement as to the nature and scope of the
examination or investigation upon which the statement or opinions
contained in such certificate or opinion are based;
18
19
(c) a statement that, in the opinion of each such
individual, he has made such examination or investigation as is
necessary to enable him to express an informed opinion as to whether or
not such covenant or condition has been complied with; and
(d) a statement as to whether, in the opinion of each such
individual, such condition or covenant has been complied with.
"Opinion of Counsel" means a written opinion of legal counsel, who may
be counsel for the Corporation and containing the following statements:
(a) a statement that such counsel has read such covenant
or condition and the definitions herein relating thereto;
(b) a brief statement as to the nature and scope of the
examination or investigation upon which the statements or opinions
contained in such certificate or opinion are based;
(c) a statement that, in the opinion of each such
individual, he has made such examination or investigation as is
necessary to enable him to express an informed opinion as to whether or
not such covenant or condition has been complied with; and
(d) a statement as to whether, in the opinion of each such
individual, such condition or covenant has been complied with.
"Parity Shares" shall have the meaning ascribed to it in paragraph (b)
hereof.
"Permitted Interest Rate or Currency Protection Agreement" of any Person
means any Interest Rate or Currency Protection Agreement entered into with one
or more financial institutions in the ordinary course of business that is
designed to protect such Person against fluctuations in interest rates or
currency exchange rates with respect to Debt Incurred and which shall have a
notional amount no greater than the payments due with respect to the Debt being
hedged thereby and not for purposes of speculation.
"Person" means any individual, corporation, partnership, limited
liability company, joint venture, association, joint stock company, trust,
unincorporated organization, government or agency or political subdivision
thereof or any other entity.
"Preferred Stock" of any Person means Capital Stock of such Person of
any class or classes (however designated) that ranks prior, as to the payment of
dividends or as to the distribution of assets upon any voluntary or involuntary
liquidation, dissolution or winding up of such Person, to shares of Capital
Stock of any other class of such Person.
19
20
"Purchase Money Debt" means (i) Acquired Debt Incurred in connection
with the acquisition of Telecommunications Assets and (ii) Debt of the
Corporation or of any Restricted Subsidiary of the Corporation (including,
without limitation, Debt represented by Capital Lease Obligations, Vendor
Financing Facilities, mortgage financings and purchase money obligations)
Incurred for the purpose of financing all or any part of the cost of
construction, acquisition or improvement by the Corporation or any Restricted
Subsidiary of the Corporation or any Joint Venture of any Telecommunications
Assets of the Corporation, any Restricted Subsidiary of the Corporation or any
Joint Venture, and including any related notes, Guarantees, collateral
documents, instruments and agreements executed in connection therewith, as the
same may be amended, supplemented, modified or restated from time to time.
"Purchaser Stock Price" means, with respect to any Common Stock Change
in Control, the average of the per share Closing Prices for the common stock
received as consideration in such Common Stock Change in Control for the 10
consecutive Trading Days prior to and including the record date for the
determination of the holders of Class A Common Stock entitled to receive such
common stock, or if there is no such record date, the date upon which the
holders of the Class A Common Stock shall have the right to receive such common
stock, in each case, as adjusted in good faith by the Board of Directors to
appropriately reflect any of the events referred to in paragraph (k)(vi);
provided, however, that if no such Closing Prices exist, then the Purchaser
Stock Price shall be set at a price determined in good faith by the Board of
Directors of the Corporation..
"Quarterly Dividend Period" shall mean the quarterly period commencing
on each March 31, June 30, September 30 and December 31 and ending on the next
succeeding Dividend Payment Date, respectively.
"Receivables" means receivables, chattel paper, instruments, documents
or intangibles evidencing or relating to the right to payment of money in
respect of the sale of the goods or services.
"Receivables Sale" of any Person means any sale of Receivables of such
Person (pursuant to a purchase facility or otherwise), other than in connection
with a disposition of the business operations of such Person relating thereto or
a disposition of defaulted Receivables for purpose of collection and not as a
financing agreement.
"Redemption Date", with respect to any share of Convertible Preferred
Stock, means the date on which such share of Convertible Preferred Stock is
redeemed by the Corporation.
"Redemption Notice" shall have the meaning ascribed to it in paragraph
(e) hereof.
"Reference Market Price" shall initially mean $23.33, and in the event
of any adjustment to the Conversion Rate other than as a result of a Change in
Control, the Reference Market Price shall also be adjusted so that the ratio of
the Reference Market Price to the Implied Conversion
20
21
Price after giving effect to any such adjustment shall always be the same as the
ratio of $23.33 to $43.67.
"Registration Rights Agreement" means the Registration Rights Agreement
dated as of March 31, 1998 among the Corporation, Smith Barney, Inc. and
Goldman, Sachs & Co. (for the benefit of Holders from time to time).
"Restricted Period Termination Date" means the date that is two years
after the later of the Issue Date or the last date on which the Corporation or
an Affiliate of the Corporation was the owner thereof.
"Restricted Subsidiary" of the Corporation means any Subsidiary, whether
existing on or after the Issue date, other than an Unrestricted Subsidiary.
"Senior Shares" shall have the meaning ascribed to it in paragraph (b)
hereof.
"Subsidiary" of any Person means (i) a corporation more than 50% of the
combined voting power of the outstanding Voting Stock of which is owned,
directly or indirectly, by such Person or by one or more other Subsidiaries of
such Person or by such Person and one or more Subsidiaries thereof or (ii) any
other Person (other than a corporation) in which such Person, or one or more
other Subsidiaries of such Person or such Person and one or more other
Subsidiaries thereof, directly or indirectly, has at least a majority ownership
and power to direct the policies, management and affairs thereof.
"Telecommunications Assets" means all assets, rights (contractual or
otherwise) and properties, whether tangible or intangible, used or intended for
use in connection with a Telecommunications Business."
"Telecommunications Business" means the business of (i) transmitting, or
providing services relating to the transmission of, voice, video or data through
owned or leased transmission facilities, (ii) creating, developing or marketing
communications related network equipment, software and other devices for use in
a Telecommunication Business or (iii) evaluating, participating or pursuing any
other activity or opportunity that is primarily related to those identified in
(i) or (ii) above and shall, in any event, include all businesses in which the
Company or any of its Subsidiaries are engaged on the Issue Date; provided that
the determination of what constitutes a Telecommunications Business shall be
made in good faith by the Board of Directors of the Company, which determination
shall be conclusive.
"Trading Day" means (i) if the Class A Common Stock is admitted to
trading on the Nasdaq National Market or any other system of automated
dissemination of quotations of securities prices, a day on which trades may be
effected through such system; (ii) if the Class A Common Stock is not so
admitted for trading but is listed or admitted for trading on the American Stock
Exchange or any other national securities exchange, a day on which such
21
22
exchange is open for business; or (iii) if the Class A Common Stock is not
listed or admitted for trading on any national securities exchange or admitted
to trading on the Nasdaq National Market or any other system of automated
dissemination of quotation of securities prices, a day on which the Common Stock
is traded regular way in the over-the-counter market and for which a closing bid
and a closing asked price for the Class A Common Stock are available.
"Transfer Agent" means the transfer agent for the Convertible Preferred
Stock designated by the Corporation from time to time.
"Unrestricted Subsidiary" means (1) any Subsidiary of the Corporation
designated as such by the Board of Directors of the Corporation as set forth
below where (a) neither the Corporation nor any of its other Subsidiaries (other
than another Unrestricted Subsidiary) (i) provides credit support for, or
Guarantee of, any Debt of such Subsidiary or any Subsidiary of such Subsidiary
(including any undertaking, agreement or instrument evidencing such Debt) or
(ii) is directly or indirectly liable for any Debt of such Subsidiary or any
Subsidiary of such Subsidiary and (b) no default with respect to any Debt of
such Subsidiary or any Subsidiary of such Subsidiary (including any right which
the holders thereof may have to take enforcement action against such Subsidiary)
would permit (upon notice, lapse of time or both) any holder of any other Debt
of the Corporation and its Restricted Subsidiaries to declare a default on such
other Debt or cause the payment thereof to be accelerated or payable prior to
its final scheduled maturity and (2) any Subsidiary of an Unrestricted
Subsidiary. The Board of Directors of the Corporation may designate any
Subsidiary to be an Unrestricted Subsidiary unless such Subsidiary owns any
Capital Stock of, or owns or holds any Lien on any property of, any other
Subsidiary of the Corporation which is not a Subsidiary of the Subsidiary to be
so designated or otherwise an Unrestricted Subsidiary, provided that either (x)
the Subsidiary to be so designated has total assets of $1,000 or less or (y)
immediately after giving effect to such designation, the Corporation could incur
at least $1.00 of additional Debt pursuant to certain covenants under the
12-1/2% Notes, the 9 % Notes and the 9% Notes. The Board of Directors of the
Corporation may designate any Unrestricted Subsidiary to be a Restricted
Subsidiary, provided that, immediately after giving effect to such designation,
the Corporation could incur at least $1.00 of additional Debt pursuant to
certain covenants under the 12-1/2% Notes, the 9 % Notes and the 9% Notes, as
applicable.
"Vice President", when used with respect to the Corporation means any
vice president, whether or not designated by a number or a word or words added
before or after the title "Vice President".
"Voting Rights Triggering Event" shall have the meaning ascribed to it
in paragraph (f)(iv) hereof.
"Voting Stock" of any Person means Capital Stock of such Person which
ordinarily has voting power for the election of directors (or persons performing
similar functions) of such
22
23
Person, whether at all times or only so long as no senior class of securities
has such voting power by reason of any contingency.
"Wholly-Owned Restricted Subsidiary" of any Person means a Restricted
Subsidiary of such Person 99% or more of the outstanding Capital Stock or other
ownership interests of which (other than directors' qualifying shares) shall at
the time be owned by such Person or by one or more Wholly-Owned Restricted
Subsidiaries of such Person or by such Person and one or more Wholly-Owned
Restricted Subsidiaries of such Person.
(k) Conversion Rights
(i) The Convertible Preferred Stock will be convertible at the
option of the Holder, into shares of Class A Common Stock at any time,
unless previously redeemed or repurchased, at a conversion rate of 1.145
shares of Class A Common Stock per share of the Convertible Preferred
Stock (as adjusted pursuant to the provisions hereof, the "Conversion
Rate") (subject to the adjustments described below). The right to
convert a share of the Convertible Preferred Stock called for redemption
will terminate at the close of business on the Redemption Date for such
share of Convertible Preferred Stock. In addition, at any time from and
after April 15, 2001, through and including April 15, 2006, the
Corporation may elect to cause such conversion right to expire, upon not
less than 30 nor more than 60 days' notice to the holders of shares of
Convertible Preferred Stock, if the Closing Price of the Class A Common
Stock exceeds 120% of the Implied Conversion Price for 20 Trading Days
in any period of 30 consecutive Trading Days, including the last Trading
Day of such period; provided that such conversion right shall expire
only if the Corporation is current in the payment of accrued dividends
on the Convertible Preferred Stock at such expiration date.
(ii) The right of conversion attaching to any shares of
Convertible Preferred Stock may be exercised by the Holder thereof by
delivering the shares to be converted to the office of the Conversion
Agent, accompanied by a duly signed and completed notice of conversion
in form reasonably satisfactory to the Conversion Agent. The conversion
date will be the date on which the shares of Convertible Preferred Stock
and the duly signed and completed notice of conversion are so delivered.
The Person or Persons entitled to receive the Class A Common Stock
issuable upon such conversion shall be treated for all purposes as the
record holder or holders of such Class A Common Stock as of such
conversion date and such Person or Persons will cease to be a record
Holder or record Holders of the Convertible Preferred Stock on that
date. As promptly as practicable on or after the conversion date, the
Corporation will issue and deliver to the Conversion Agent a certificate
or certificates for the number of full shares of Class A Common Stock
issuable upon conversion, with any fractional shares rounded up to full
shares or, at the Corporation's option, payment in cash in lieu of any
fraction of a share, based on the Closing Price of the Class A Common
Stock on the Trading Day preceding the conversion date. Such certificate
or certificates will be delivered by the Conversion
23
24
Agent to the appropriate Holder on a book-entry basis or by mailing
certificates evidencing the additional shares to the Holders at their
respective addresses set forth in the register of Holders maintained by
the Transfer Agent. Any shares of Convertible Preferred Stock
surrendered for conversion during the period from the close of business
on any Record Date to the opening of business on the next succeeding
Dividend Payment Date must be accompanied by payment of an amount equal
to the dividends payable on such Dividend Payment Date on the shares of
Convertible Preferred Stock being surrendered for conversion. In the
case of any shares of Convertible Preferred Stock that have been
converted after any Record Date but before the next Dividend Payment
Date, dividends that are payable on such Dividend Payment Date will be
payable on such Dividend Payment Date notwithstanding such conversion,
and such dividends will be paid to the Holder of such shares of
Convertible Preferred Stock on such Record Date. No other payment or
adjustment for dividends, or for any dividends in respect of shares of
Class A Common Stock, will be made upon conversion. Holders of Class A
Common Stock issued upon conversion will not be entitled to receive any
dividends payable to holders of Class A Common Stock as of any record
time before the close of business on the conversion date.
(iii) All shares of Class A Common Stock delivered upon any
conversion of Convertible Preferred Stock prior to the Restricted Period
Termination Date shall bear a legend substantially in the form of the
legend required to be set forth on the Convertible Preferred Stock and
shall be subject to the restrictions on transfer provided in such
legend.
(iv) The Corporation shall at all times reserve and keep
available out of its authorized and unissued Class A Common Stock,
solely for issuance upon the conversion of the Convertible Preferred
Stock, such number of shares of Class A Common Stock as shall from time
to time be issuable upon the conversion of all the shares of Convertible
Preferred Stock then outstanding. Whenever the Corporation issues shares
of Class A Common Stock upon conversion of shares of Convertible
Preferred Stock and the Corporation has in effect at such time a share
purchase rights agreement under which holders of Class A Common Stock
are issued rights ("Rights") entitling the holders under certain
circumstances to purchase an additional share or shares of stock, the
Corporation will issue, together with each such share of Class A Common
Stock, such number of Rights (which number may be a fraction) as shall
at that time be issuable with a share of Class A Common Stock pursuant
to such share purchase rights agreement. Any shares of Class A Common
Stock issued upon conversion of the Convertible Preferred Stock shall be
duly authorized, validly issued and fully paid and nonassessable and
shall rank pari passu with the other shares of Class A Common Stock
outstanding from time to time. The Conversion Agent shall deliver the
shares of Class A Common Stock received upon conversion of the
Convertible Preferred Stock to the converting Holder free and clear of
all liens, charges, security interests and encumbrances, except for
United States withholding taxes. The Corporation shall use its best
efforts to obtain and keep in force
24
25
such governmental or regulatory permits or other authorizations as may
be required by law, and shall comply with all applicable requirements as
to registration or qualification of the Class A Common Stock (and all
requirements to list the Class A Common Stock issuable upon conversion
of the Convertible Preferred Stock that are at the time applicable), in
order to enable the Corporation to lawfully issue Class A Common Stock
upon conversion of the Convertible Preferred Stock and to lawfully
deliver the Class A Common stock to each Holder upon conversion of the
Convertible Preferred Stock.
(v) The Corporation will pay any and all taxes that may be
payable in respect of the issue or delivery of shares of Class A Common
Stock on conversion of Convertible Preferred Stock. The Corporation
shall not, however, be required to pay any tax which may be payable in
respect of any transfer involved in the issue and delivery of shares of
Class A Common Stock in a name other than that in which the Convertible
Preferred Stock 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 Conversion Agent the amount of any such tax, or has
established to the satisfaction of the Conversion Agent that such tax
has been paid.
(vi) The Conversion Rate shall be subject to adjustment (without
duplication) from time to time as follows:
(1) In case the Corporation shall pay or make a
dividend or other distribution on any class of Capital Stock
of the Corporation payable in shares of Common stock, the
Conversion Rate in effect at the opening of business on the
day following the date fixed for the determination of
shareholders entitled to receive such dividend or other
distribution shall be increased by dividing such Conversion
Rate by a fraction of which the numerator shall be the number
of shares of Common Stock outstanding at the close of business
on the date fixed for such determination and the denominator
shall be the sum of such number of shares and the total number
of shares constituting such dividend or other distribution,
such increase to become effective immediately after the
opening of business on the day following the date fixed for
such determination. If, after any such date fixed for
determination, any dividend or distribution is not in fact
paid, the Conversion Rate shall be immediately readjusted,
effective as of the date the Board of Directors determines not
to pay such dividend or distribution, to the Conversion Rate
that would have been in effect if such determination date had
not been fixed. For the purposes of this paragraph (1), the
number of shares of Common Stock at any time outstanding shall
not include shares held in the treasury of the Corporation but
shall include shares issuable in respect of scrip certificates
issued in lieu of fractions of shares of Common Stock. The
Corporation will not pay any dividend or make any distribution
on shares of Common Stock held in the treasury of the
Corporation.
25
26
(2) In case outstanding shares of Common Stock shall
be subdivided into a greater number of shares of Common Stock,
the Conversion Rate in effect at the opening of business on
the day following the day upon which such subdivision becomes
effective shall be proportionately increased, and, conversely,
in case outstanding shares of Common Stock shall be combined
into a smaller number of shares of Common Stock, the
Conversion Rate in effect at the opening of business on the
day following the day upon which such combination becomes
effective shall be proportionately reduced, such increase or
reduction, as the case may be, to become effective immediately
after the opening of business on the day following the day
upon which such subdivision or combination becomes effective.
(3) In case the Company shall issue rights, options or
warrants to holders of its Common Stock (by reason of such
holder's ownership of such stock) entitling them to subscribe
for or purchase shares of Common Stock at a price per share
less than the Current Market Price per share of the Class A
Common Stock on the date fixed for the determination of
stockholders entitled to receive such rights, options or
warrants (other than any rights, options or warrants that by
their terms will also be issued to any Holder upon conversion
of a share of Convertible Preferred Stock into shares of Class
A Common Stock without any action required by the Corporation
or any other Person), the Conversion Rate in effect at the
opening of business on the day following the date fixed for
such determination shall be increased by dividing such
Conversion Rate by a fraction of which the numerator shall be
the number of shares of Common Stock outstanding at the close
of business on the date fixed for such determination plus the
number of shares of Common Stock which the aggregate of the
offering price of the total number of shares of Common Stock
so offered for subscription or purchase would purchase at such
Current Market Price and the denominator shall be the number
of shares of Common Stock outstanding at the close of business
on the date fixed for such determination plus the number of
shares of Common Stock so offered for such subscription or
purchase, such increase to become effective immediately after
the opening of business on the day following the date fixed
for such determination. If, after any such date fixed for
determination, any such rights, options or warrants are not in
fact issued, the Conversion Rate shall be immediately
readjusted, effective as of the date the Board of Directors
determines not to issue such rights, options or warrants, to
the Conversion Rate that would have been in effect if such
determination date had not been fixed. For the purposes of
this paragraph (3), the number of shares of Common Stock at
any time outstanding shall not include shares held in the
treasury of the Corporation but shall include shares issuable
in respect of scrip certificates issued in lieu of fractions
of shares of Common Stock. The Corporation will not issue any
26
27
rights, options or warrants in respect of shares of Common
Stock held in the treasury of the Corporation.
(4) In case the Corporation shall, by dividend or
otherwise, distribute to holders of its Common Stock evidences
of its indebtedness, shares of any class of Capital Stock, or
other property (including securities, but excluding (i) any
rights, options or warrants referred to in paragraph (3) of
this Section, (ii) any dividend or distribution paid
exclusively in cash, (iii) any dividend or distribution
referred to in paragraph (1) of this paragraph (k)(vi) and
(iv) any merger or consolidation to which paragraph (k)(ix)
applies), the Conversion Rate shall be adjusted so the same
shall equal the rate determined by dividing the Conversion
Rate in effect immediately prior to the close of business on
the date fixed for the determination of stockholders entitled
to receive such distribution by a fraction of which the
numerator shall be the Current Market Price per share of the
Common Stock on the date fixed for such determination less the
then fair market value (as determined by the Board of
Directors, whose determination shall be conclusive) of the
portion of the assets, shares or evidences of indebtedness so
distributed applicable to one share of Common Stock entitled
to such distribution and the denominator shall be such Current
Market Price per share of the Class A Common Stock, such
adjustment to become effective immediately prior to the
opening of business on the day following the date fixed for
the determination of stockholders entitled to receive such
distribution. If, after any such date fixed for determination,
any such distribution is not in fact made, the Conversion Rate
shall be immediately readjusted, effective as of the date of
the Board of Directors determines not to make such
distribution, to the Conversion Rate that would have been in
effect if such determination date had not been fixed.
(5) In case the Corporation shall, by dividend or
otherwise, distribute to holders of its Common Stock cash
(excluding any cash that is distributed upon a merger or
consolidation to which paragraph (k)(ix) applies or as part of
a distribution referred to in paragraph (4) of this paragraph
(k)(vi)) in an aggregate amount that, combined together with
(I) the aggregate amount of any other cash distributions to
all holders of its Common Stock made exclusively in cash
within the 12 months preceding the date of payment of such
distribution and in respect of which no adjustment pursuant to
this paragraph (5) has been made and (II) the aggregate of any
cash plus the fair market value (as determined by the Board of
Directors, whose determination shall be conclusive) of
consideration payable in respect of any tender offer or other
stock repurchase program by the Corporation or any of its
Subsidiaries for all or any portion of the Common Stock
concluded within the 12 months preceding the date of payment
of such distribution and in respect of which no adjustment
pursuant to paragraph (6) of this paragraph (k)(vi) has been
made
27
28
(the "combined cash and tender amount"), exceeds 12.5% of the
product of the Current Market Price per share of the Class A
Common Stock on the date for the determination of holders of
shares of Common Stock entitled to receive such distribution
times the number of shares of Common Stock outstanding on such
date (the "Aggregate Current Market Price"), then, and in each
such case, immediately after the close of business on such
date for determination, the Conversion Rate shall be adjusted
so that the same shall equal the rate determined by dividing
the Conversion Rate in effect immediately prior to the close
of business on the date fixed for determination of the
stockholders entitled to receive such distribution by a
fraction (i) the numerator of which shall be equal to the
Current Market Price per share of the Class A Common Stock on
the date fixed for such determination less an amount equal to
the quotient of (x) the excess of such combined cash and
tender amount over such Aggregate Current Market Price divided
by (y) the number of shares of Common Stock outstanding on
such date for determination and (ii) the denominator of which
shall be equal to the Current Market Price per share of the
Class A Common Stock on such date for determination.
(6) In case a tender offer made by the Corporation or
any Subsidiary for all or any portion of the Common Stock
shall expire and such tender offer (as amended upon the
expiration thereof) shall require the payment to stockholders
(based on the acceptance (up to any maximum specified in the
terms of the tender offer) of Common Stock (as defined below)
of an aggregate consideration having a fair market value (as
determined by the Board of Directors, whose determination
shall be conclusive) that combined together with (I) the
aggregate of the cash plus the fair market value (as
determined by the Board of Directors, whose determination
shall be conclusive) as of the expiration of such tender
offer, of consideration payable in respect of any other tender
offer or other stock repurchase program by the Corporation or
any Subsidiary for all or any portion of the Common Stock
expiring within the 12 months preceding the expiration of such
tender offer and in respect of which no adjustment pursuant to
this paragraph (6) has been made and (II) the aggregate amount
of any cash distributions to all holders of the Corporation's
Common Stock within 12 months preceding the expiration of such
tender offer and in respect of which no adjustment pursuant to
paragraph (5) of this paragraph (k)(vi) has been made (the
"combined tender and cash amount") exceeds 12.5 % of the
product of the Current Market Price per share of the Class A
Common Stock as of the last time (the "Expiration Time")
tenders could have been made pursuant to such tender offer (as
it may be amended) times the number of shares of Common Stock
outstanding (including any tendered shares) as of the
Expiration Time, then, and in each such case, immediately
prior to the opening of business on the day after the
28
29
date of the Expiration Time, the Conversion Rate shall be
adjusted so that the same shall equal the rate determined by
dividing the Conversion Rate immediately prior to close of
business on the date of the Expiration Time by a fraction (i)
the numerator of which shall be equal to (A) the product of
(I) the Current Market Price per share of Common Stock on the
date of the Expiration Time multiplied by (II) the number of
shares of Common Stock outstanding (including any tendered
shares) on the Expiration Time less (B) the combined tender
and cash amount, and (ii) the denominator of which shall be
equal to the product of (A) the Current Market Price per share
of the Class A Common Stock as of the Expiration Time
multiplied by (B) the number of shares of Common Stock
outstanding (including any tendered shares) as of the
Expiration Time less the number of all shares validly tendered
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").
(7) The reclassification of Common Stock into
securities including other than Common Stock (other than any
reclassification upon a consolidation or merger to which
paragraph (k)(ix) applies) shall be deemed to involve (a) a
distribution of such securities other than Common Stock to all
holders of Common Stock (and the effective date of such
reclassification shall be deemed to be "the date fixed for the
determination of stockholders entitled to receive such
distribution" and "the date fixed for such determination"
within the meaning of paragraph (4) of this paragraph (k)(vi),
and (b) a subdivision or combination, as the case may be, of
the number of shares of Common Stock outstanding immediately
prior to such reclassification into the number of shares of
Common Stock outstanding immediately thereafter (and the
effective date of such reclassification shall be deemed to be
"the day upon which such subdivision becomes effective" or
"the day upon which such combination becomes effective", as
the case may be, and "the day upon which such subdivision or
combination becomes effective" within the meaning of paragraph
(3) of this paragraph (k)(vi).
(8) For the purpose of any computation under
paragraphs (2), (4), (5) or (6) of this paragraph (k)(vi), the
Current Market Price per share of Class A Common Stock on any
date shall be calculated by the Company and be based on a
period of Trading Days ending not later than the earlier of
the day in question and the day before the "'ex" date with
respect to the issuance or distribution requiring such
computation. For purposes of this paragraph, the term "'ex"
date", when used with respect to any issuance or distribution,
means the first date on which the Common Stock trades regular
way in the applicable securities market or on the applicable
securities exchange without the right to receive such issuance
or distribution.
29
30
(9) No adjustment in the Conversion Rate shall be
required unless such adjustment (plus any adjustments not
previously made by reason of this paragraph (9)) would require
an increase or decrease of at least one percent (1%) in such
rate; provided, however, that any adjustments which by reason
of this paragraph (9) are not required to be made shall be
carried forward and taken into account in any subsequent
adjustment. All calculations under this paragraph (f) shall be
made to the nearest cent or to the nearest one-hundredth of a
share, as the case may be.
(10) The Corporation may make voluntary increases in
the Conversion Rate, for the remaining term of the Convertible
Preferred Stock or any shorter term, in addition to those
required by paragraphs (1), (2), (3), (4), (5) and (6) of this
paragraph (f)(vi), provided that each such increase is in
effect for at least 20 calendar days.
(vii) Whenever the Conversion Rate is adjusted as herein
provided:
(1) the Corporation shall compute the adjusted
Conversion Rate in accordance with paragraph (f)(vi) and shall
prepare a certificate signed by the Chief Financial Officer of
the Corporation setting forth the adjusted Conversion Rate and
showing in reasonable detail the facts upon which such
adjustment is based, and such certificate shall promptly be
filed with the Conversion Agent; and
(2) upon each such adjustment, a notice stating that
the Conversion Rate has been adjusted and setting forth the
adjusted Conversion Rate shall be required, and as soon as
practicable after it is required, such notice shall be
provided by the Company to all Holders.
The Conversion Agent shall not be under any duty or responsibility with
respect to any such certificate or the information and calculations contained
therein, except to exhibit the same to any Holder of Convertible Preferred Stock
desiring inspection thereof at its office during normal business hours.
(viii) In case:
(a) the Corporation shall declare a dividend (or any other
distribution) on its Class A Common Stock payable (i) otherwise
than exclusively in cash or (ii) exclusively in cash in an amount
that would require any adjustment pursuant to paragraph (f)(vi);
or
30
31
(b) the Corporation shall authorize the granting to
holders of its Class A Common Stock (by reason of such holders'
ownership of such stock) of rights, options or warrants to
subscribe for or purchase any shares of capital stock of any
class or of any other rights; or
(c) of any reclassification of the Class A Common Stock of
the Corporation, or of any consolidation, merger or share
exchange to which the Corporation is a party and for which
approval of any stockholders of the Corporation is required, or
of the conveyance, sale, transfer or lease of all or
substantially all of the assets of the Corporation; or
(d) of the voluntary or involuntary dissolution,
liquidation or winding up of the Corporation;
then the Corporation shall cause to be filed at the office of the Conversion
Agent, and shall cause to be provided to all Holders, at least 20 days (or 10
days in any case specified in clause (a) or (b) above) prior to the applicable
record or effective date hereinafter specified, a notice stating (x) the date on
which a record is to be taken for the purpose of such dividend, distribution,
rights, options or warrants, or, if a record is not to be taken, the date as of
which the holders of Class A Common Stock of record to be entitled to such
dividend, distribution, rights, options or warrants are to be determined or (y)
the date on which such reclassification, consolidation, merger, conveyance,
transfer, sale, lease, dissolution, liquidation or winding up 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, cash or other property deliverable upon such reclassification,
consolidation, merger, conveyance, transfer, sale, lease, dissolution,
liquidation or winding up. Neither the failure to give such notice referred to
in the following paragraph nor any defect therein shall affect the legality or
validity of the proceedings described in clauses (a) through (d) of this
paragraph (f)(vi).
The Company shall cause to be filed at the office of the Conversion
Agent and shall cause to be provided to all Holders, notice of any tender offer
by the Corporation or any Subsidiary for all or any portion of the Class A
Common Stock at or about the time that such notice of tender offer is provided
to the public generally.
(ix) (a) In the event that the Corporation is a party to any transaction
including, without limitation, a merger (other than a merger that does not
result in a reclassification, conversion, exchange or cancellation of Class A
Common Stock), consolidation, sale of all or substantially all of the assets of
the Corporation, recapitalization or reclassification of Class A Common Stock
(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 of Class A
Common Stock) or any compulsory share exchange (each of the foregoing being
referred to as a "Transaction"), in each case, as a result of which shares of
Class A Common Stock shall be converted into the right to receive, or shall be
exchanged for, (i) in the case of any Transaction other than a Transaction
31
32
involving a Common Stock Change in Control (and subject to funds being legally
available for such purpose under applicable law at the time of such conversion),
securities, cash or other property, each share of Convertible Preferred Stock
shall thereafter be convertible solely into the kind and amount of securities,
cash and other property receivable upon the consummation of such Transaction by
a holder of that number of shares of Class A Common Stock into which a share of
Convertible Preferred Stock was convertible immediately prior to such
Transaction (but after giving effect to any adjustment discussed in paragraphs
(b) and (c) relating to Change in Control if such Transaction constitutes a
Change in Control), or (ii) in the case of a Transaction involving a Common
Stock Change in Control, common stock, each share of Convertible Preferred Stock
shall thereafter be convertible solely (in the manner described herein) into
common stock of the kind received by holders of Class A Common Stock (but after
giving effect to any adjustment discussed in paragraphs (b) and (c) relating to
Change in Control if such Transaction constitutes a Change in Control). The
Holders of Convertible Preferred Stock will have no voting rights with respect
to any Transaction described in this section. Shares of Convertible Preferred
Stock issued in a Transaction by the successor transferee or resulting Person or
an Acquiring Entity as provided in paragraph (f)(iii) will be subject to this
paragraph k(ix)(a) and will be convertible solely into the consideration
provided for herein.
(b)If any Change in Control occurs, then the Conversion Rate in
effect will be adjusted immediately after such Change in Control as described in
paragraph (c) below.
(c)For purposes of calculating any adjustment to be made in the
event of a Change in Control, immediately after such Change in Control:
(i) in the case of a Non-Stock Change in Control, the
Conversion Rate will thereupon become the higher of (A) the
Conversion Rate in effect immediately prior to such Non-Stock
Change in Control, but after giving effect to any other prior
adjustments, and (B) a fraction, the numerator of which is the
then-current deemed redemption price per share, which shall be
equal to the product of the liquidation preference per share of
$50.00 and 105.20% in year one, 104.55% in year 2, 103.9% in year
3, 103.25% in year 4, 102.6% in year 5, 101.95% in year 6, 101.3%
in year 7, 100.65% in year 8 and 100.00 in year 9 and thereafter,
respectively and the denominator of which is the greater of the
Applicable Price or the then applicable Reference Market Price;
and
(ii) in the case of a Common Stock Change in Control, the
Conversion Rate in effect immediately prior to such Common Stock
Change in Control, but after giving effect to any other prior
adjustments, will thereupon be adjusted by multiplying such
Conversion Rate by a fraction, of which the numerator will be the
Applicable Price and the denominator will be the Purchaser Stock
Price (as defined); provided, however, that in the event of a
Common Stock Change in Control in which (A) 100% of the value of
the consideration received by a holder of Class A Common Stock is
common stock of the successor, acquiror or other
32
33
third party (and cash, if any, with respect to any fractional
interests) and (B) all the Class A Common Stock (other than
shares of Class A Common Stock for which cash was paid pursuant
to rights of dissent and appraisal) will have been exchanged for,
converted into, or acquired for, common stock (and cash with
respect to fractional interests) of the successor, acquiror or
other third party, the Conversion Rate in effect immediately
prior to such Common Stock Change in Control will thereupon be
adjusted by multiplying such Conversion Rate by the number of
shares of common stock of the successor, acquiror, or other third
party received by a holder of one share of Class A Common Stock
as a result of such Common Stock Change in Control.
(1) Restrictions on Transfer.
(i) Each share of Convertible Preferred Stock shall
contain a legend substantially to the following effect until the date
that is two years after the later of the Issue Date or the last date on
which the Corporation or any Affiliate of the Corporation was the owner
thereof, unless the Corporation determines otherwise:
THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933 (THE "SECURITIES ACT") AND MAY NOT BE OFFERED, SOLD, PLEDGED OR
OTHERWISE TRANSFERRED EXCEPT (1) TO A PERSON WHOM THE SELLER REASONABLY
BELIEVES IS A QUALIFIED INSTITUTIONAL BUYER WITHIN THE MEANING OF RULE
144A UNDER THE SECURITIES ACT PURCHASING FOR ITS OWN ACCOUNT OR FOR THE
ACCOUNT OF A QUALIFIED INSTITUTIONAL BUYER IN A TRANSACTION MEETING THE
REQUIREMENTS OF RULE 144A, (2) IN AN OFFSHORE TRANSACTION COMPLYING WITH
RULE 903 OR RULE 904 OF REGULATION S UNDER THE SECURITIES ACT, (3)
PURSUANT TO AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT
PROVIDED BY RULE 144 THEREUNDER (IF AVAILABLE), OR (4) PURSUANT TO AN
EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT, AND IN EACH
CASE, IN ACCORDANCE WITH ALL APPLICABLE SECURITIES LAWS OF THE STATES OF
THE UNITED STATES.
(m) Book Entry Delivery and Form.
The Convertible Preferred Stock sold will be issued in the form of a
Global Share Certificate. The Global Share Certificate will be deposited with,
or on behalf of, the Depositary and registered in the name of the Depositary or
its nominee. Except as set forth below, the Global Share Certificate may be
transferred, in whole and not in part, only to the Depositary or other nominee
of the Depositary. Holders may hold their beneficial interests in the Global
Share Certificate directly through the Depositary if they have an account with
the Depositary or indirectly through organizations which have accounts with the
Depositary.
33
34
The Convertible Preferred Stock represented by the Global Share
Certificate is exchangeable for certificated Convertible Preferred Stock in
definitive form of like tenor as such Convertible Preferred Stock if (i) the
Depositary notifies the Company that it is unwilling or unable to continue as
Depositary for the Global Share Certificate and a successor is not promptly
appointed or if at any time the Depositary ceases to be a clearing agency
registered under the Exchange Act or (ii) the Company in its discretion at any
time determines not to have all of the Convertible Preferred Stock represented
by the Global Share Certificate. Any Convertible Preferred Stock that is
exchangeable pursuant to the preceding sentence is exchangeable for certificated
Convertible Preferred Stock issuable in authorized denominations and registered
in such names as the Depositary shall direct. Subject to the foregoing, the
Global Share Certificate is not exchangeable, except for a Global Share
Certificate of the same aggregate denomination to be registered in the name of
the Depositary or its nominee.
(n) Amendments Without Consent of Holders.
Without the Consent of any Holders, the Company, when authorized by
Board Resolution may amend this Certificate of Designation to cure any
ambiguity, correct or supplement any provision herein which may be inconsistent
with any other provision herein, make any other provisions with respect to
matters or questions arising under this Certificate of Designation that are not
inconsistent with the provisions of this Certificate of Designation, provided
that such action pursuant to this paragraph (n) shall not adversely affect the
legal rights of the Holders.
34
35
IN WITNESS WHEREOF, said NEXTLINK Communications, Inc. has caused this
Certificate to be signed by R. Bruce Easter, Jr., its Vice President, this 30th
day of March, 1998.
NEXTLINK COMMUNICATIONS, INC.
By /s/ R. BRUCE EASTER, JR.
-----------------------------------------
Name: R. Bruce Easter, Jr.
Title: Vice President
35