STOCK PURCHASE AGREEMENT
dated as of
December 7, 1999
by and between
NEXTLINK Communications, Inc.
and
The Purchasers Listed on the Signature Pages Hereto
STOCK PURCHASE AGREEMENT
STOCK PURCHASE AGREEMENT (this "Agreement"), dated as of December 7, 1999,
by and between NEXTLINK Communications, Inc., a Delaware corporation (the
"Company"), and the entities listed on the signature page hereto under the
caption "Purchasers" (each such entity, a "Purchaser" and collectively, the
"Purchasers").
W I T N E S S E T H :
WHEREAS, upon the terms and subject to the conditions set forth in this
Agreement, the Company wishes to sell to the Purchasers and the Purchasers wish
to purchase from the Company (i) an aggregate of 584,375 shares of the Company's
Series C Preferred Stock, par value $.01 per share (the "Series C Preferred
Stock"), and (ii) an aggregate of 265,625 shares of the Company's Series D
Preferred Stock, par value $.01 per share (the "Series D Preferred Stock" and,
collectively with the Series C Preferred Stock, the "Preferred Shares"); and
WHEREAS, the Purchasers and the Company desire to provide for the purchase
and sale of the Preferred Shares and to establish certain rights and obligations
in connection therewith.
NOW, THEREFORE, in consideration of the premises and the mutual
representations, warranties, covenants and agreements set forth in this
Agreement, the parties hereto agree as follows:
ARTICLE I
ISSUANCE AND SALE OF PREFERRED SHARES
1.1. Issuance, Purchase and Sale. Upon the terms and subject to the
conditions set forth herein, at the Closing (as defined below) the Company shall
sell to the Purchasers and the Purchasers shall purchase from the Company (a) an
aggregate of 584,375 shares of Series C Preferred Stock for an aggregate
purchase price of $584,375,000 in cash and (b) an aggregate of 265,625 shares of
Series D Preferred Stock for an aggregate purchase price of $265,625,000 in cash
(the cash amounts set forth in (a) and (b) being collectively referred to herein
as, the "Purchase Price"). The number of shares of Series C Preferred Stock and
Series D Preferred Stock being acquired by each Purchaser, and the portion of
the Purchase Price payable therefor is set forth opposite such Purchaser's name
on the signature page hereto; provided, that the Purchasers shall have the right
at any time prior to the Closing by delivering written notice to the
Company to reallocate among the Purchasers the Preferred Shares to be purchased
by each Purchaser so long as such reallocation does not change the total number
of Preferred Shares being acquired hereunder or the Purchase Price.
1.2. The Closing; Deliveries. (a) The closing of the purchase and sale of
the Preferred Shares hereunder (the "Closing") shall take place at the offices
of Fried, Frank, Harris, Shriver & Jacobson, One New York Plaza, New York, New
York 10004 at 9:00 a.m. on the fifth business day following the satisfaction or
waiver of the conditions set forth in Article V, but no earlier than January 18,
2000 (other than those conditions that by their nature are to be satisfied at
the Closing, but subject to the satisfaction or waiver of those conditions) or
at such other place, time and/or date as shall be mutually agreed by the Company
and the Purchasers (the date of the Closing, the "Closing Date").
(b) At the Closing, the Company shall deliver to each Purchaser
certificates representing the Preferred Shares being purchased by such
Purchaser, each registered in the name of such Purchaser or its nominee or
designee in such amounts as such Purchaser shall specify to the Company prior to
the Closing. Delivery of such certificates shall be made against receipt by the
Company of the portion of the Purchase Price payable therefor, which shall be
paid by wire transfer to an account designated at least three business days
prior to the Closing Date by the Company. At the Closing, the Company shall pay
the Purchaser of the Series C Preferred Stock a special dividend in the amount
set forth on the signature page hereto under the caption "Amount of Closing
Dividend."
1.3. Capitalized Terms. Capitalized terms not otherwise defined herein
shall have the meanings ascribed to such terms in Section 8.1.
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company hereby represents and warrants to each Purchaser, as of the
date hereof and as of the Closing, as follows:
2.1. Organization; Subsidiaries. (a) The Company is a corporation duly
organized, validly existing and in good standing under the laws of the State of
Delaware and has the requisite corporate power and authority to carry on its
business as it is now being conducted. The Company is duly qualified and
licensed as a foreign corporation to do business, and is in good standing (and
has paid all relevant franchise or analogous taxes), in each jurisdiction where
the character of its assets owned or held under lease or the nature of its
business makes such qualification necessary and where the failure to so
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qualify or be licensed would not individually or in the aggregate reasonably be
expected to have a Material Adverse Effect.
(b) The Company's Annual Report on Form 10-K for the year ended December
31, 1998 (the "1998 10-K") and Schedule 2.1(b) sets forth a complete and correct
list as of the date hereof of each corporation, limited liability company,
partnership, business association or other Person with respect to which the
Company has, directly or indirectly, ownership of or rights with respect to
securities or other interests having the power to elect a majority of such
Person's board of directors or analogous or similar governing body, or otherwise
having the power to direct the management, business or policies of that
corporation, limited liability company, partnership, business association or
other Person which is a "Significant Subsidiary" as defined in Rule 1-02(w) of
Regulation S-X (each, a "Significant Subsidiary" and, collectively, the
"Significant Subsidiaries"). Except as set forth in the 1998 10-K or on Schedule
2.1(b), as of the date hereof (i) the Company owns, either directly or
indirectly through one or more Subsidiaries, all of the capital stock or other
equity interests of the Significant Subsidiaries free and clear of all liens,
charges, claims, security interests, restrictions, options, proxies, voting
trusts or other encumbrances ("Encumbrances") and (ii) there are no outstanding
subscription rights, options, warrants, convertible or exchangeable securities
or other rights of any character whatsoever relating to issued or unissued
capital stock or other equity interests of any Significant Subsidiary, or any
Commitments of any character whatsoever relating to issued or unissued capital
stock or other equity interests of any Significant Subsidiary or pursuant to
which any Significant Subsidiary is or may become bound to issue or grant
additional shares of its capital stock or other equity interests or related
subscription rights, options, warrants, convertible or exchangeable securities
or other rights, or to grant preemptive rights. Except for any Subsidiaries
which are not Significant Subsidiaries and except as set forth in the 1998 10-K
or on Schedule 2.1(b), as of the date hereof the Company does not own, directly
or indirectly, any interest in any corporation, limited liability company,
partnership, business association or other Person.
2.2. Due Authorization. The Company has all right, corporate power and
authority to enter into this Agreement and each of the other Transaction
Documents to which it is a party and to consummate the transactions contemplated
hereby and thereby. The execution and delivery by the Company of this Agreement
and each of the other Transaction Documents to which it is a party, the
issuance, sale and delivery of the Preferred Shares by the Company and the
compliance by the Company with each of the provisions of this Agreement and each
of the other Transaction Documents to which it is a party (including the
reservation and issuance of the Shares upon conversion of the Preferred Stock
and the consummation by the Company of the transactions contemplated hereby and
thereby) (a) are within the corporate power and authority of the Company, and
(b) have been duly authorized by all requisite corporate action of the Company.
This Agreement has been, and each of the other Transaction Documents to which
the
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Company is a party when executed and delivered by the Company will be, duly and
validly executed and delivered by the Company, and this Agreement constitutes,
and each of such other Transaction Documents when executed and delivered by the
Company will constitute, a valid and binding agreement of the Company
enforceable against the Company in accordance with its terms, except as such
enforcement is limited by bankruptcy, insolvency and other similar laws
affecting the enforcement of creditors' rights generally and for limitations
imposed by general principles of equity. The Shares have been validly reserved
for issuance, and upon issuance, will be duly authorized and validly issued and
outstanding, fully paid, and nonassessable. The terms, designations, powers,
preferences and relative participation, optional and other special rights,
qualifications, limitations and restrictions of the Series C Preferred Stock and
the Series D Preferred Stock will be as set forth in the Certificate of
Designation for the Series C Preferred Stock and the Certificate of Designation
for the Series D Preferred Stock (the "Certificates of Designation"), the forms
of which are attached to this Agreement as Exhibits 2.2A and 2.2B. The Preferred
Shares issued to the Purchasers in accordance with the terms of the Certificates
of Designation, when issued and delivered in accordance with the terms of this
Agreement, will be duly authorized and validly issued and outstanding, fully
paid and nonassessable free and clear of any Encumbrances and not subject to the
preemptive or other similar rights of any stockholders of the Company.
2.3. Capitalization. As of the date hereof, the authorized capital stock of
the Company consists of (a) 400,000,000 shares of Class A Common Stock, par
value $0.02 per share (the "Class A Common Stock"), of which, 74,571,080 shares
were issued and outstanding as of December 1, 1999, with any increase since that
date being attributable solely to the exercise of outstanding employee stock
options listed on Schedule 2.3; (b) 60,000,000 shares of Class B Common Stock,
par value $0.02 per share (the "Class B Common Stock", and together with the
Class A Common Stock, the "Common Stock"), of which, 58,746,550 shares are
issued and outstanding; and (c) 25,000,000 shares of Preferred Stock, par value
$0.01 per share, of which (i) 8,324,904 shares are issued and outstanding as 14%
Senior Exchangeable Redeemable Preferred Shares (the "14% Preferred Stock") and
(ii) 4,000,000 shares are issued and outstanding as 6-1/2% Cumulative
Convertible Preferred Stock (the "6 1/2% Preferred Stock" and, collectively with
the 14% Preferred Stock, the "Existing Preferred Stock"). As of the date hereof,
the Shares would constitute approximately 7.28 percent of the Company's fully
diluted common equity (determined on the basis of all outstanding equity and
equity equivalents without giving effect to the exercise price thereof) as of
the Closing Date. All of the issued and outstanding shares of Common Stock and
Existing Preferred Stock have been duly authorized and are validly issued and
outstanding, fully paid and nonassessable. No shares of capital stock of the
Company are entitled to preemptive or similar rights. Except as set forth on
Schedule 2.3, as of the date hereof, there are no outstanding subscription
rights, options, warrants, convertible or exchangeable securities or other
rights of any character whatsoever relating to issued or unissued capital stock
of the Company, or any Commitments of any character whatsoever
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relating to issued or unissued capital stock of the Company or pursuant to which
the Company or any of the Subsidiaries is or may become bound to issue or grant
additional shares of its capital stock or related subscription rights, options,
warrants, convertible or exchangeable securities or other rights, or to grant
preemptive rights. Except as set forth on Schedule 2.3, as of the date hereof,
(i) the Company has not agreed to register any securities under the Securities
Act or under any state securities law or granted registration rights to any
Person or entity and (ii) there are no voting trusts, stockholders agreements,
proxies or other Commitments or understandings in effect to which the Company is
a party or of which it has Knowledge with respect to the voting or transfer of
any of the outstanding shares of Common Stock or Existing Preferred Stock. To
the extent that any options, warrants or any of the other rights described above
are outstanding, neither the issuance and sale of the Preferred Shares nor any
issuance of Shares upon conversion thereof will result in an adjustment of the
exercise or conversion price or number of shares issuable upon the exercise or
conversion of any such options, warrants or other rights.
2.4. SEC Reports. The Company has timely filed all proxy statements,
reports and other documents required to be filed by it under the Exchange Act
and made available to the Purchasers complete copies of all annual reports,
quarterly reports, proxy statements and other reports filed by the Company under
the Exchange Act, each as filed with the SEC (collectively, the "SEC Reports").
Each SEC Report was on the date of its filing, in compliance in all material
respects with the requirements of its respective report form and the Exchange
Act and did not, on the date of filing, contain any untrue statement of a
material fact or omit to state a material fact required to be stated therein or
necessary to make the statements therein, in the light of the circumstances
under which they were made, not misleading.
2.5. Financial Statements. The consolidated financial statements of the
Company (including any related schedules and/or notes) included in the SEC
Reports, have been prepared in accordance with United States generally accepted
accounting principles ("GAAP") consistently followed throughout the periods
involved (except as may be indicated in the notes thereto) and fairly present in
accordance with GAAP the consolidated financial condition, results of
operations, cash flows and changes in stockholders' equity of the Company and
the Subsidiaries as of the respective dates thereof and for the respective
periods then ended (in each case subject, as to interim statements, to the
absence of footnotes and as permitted by Form 10-Q and subject to changes
resulting from year-end adjustments, none of which are material in amount or
effect). Except as set forth on Schedule 2.5 or disclosed in the SEC Reports,
neither the Company nor any Subsidiary has any liability or obligation (whether
accrued, absolute, contingent, unliquidated or otherwise, whether known or
unknown, whether due or to become due and regardless of when asserted), except
(i) liabilities and obligations in the respective amounts reflected or reserved
against in the audited consolidated balance sheet of the Company and the
Subsidiaries as of December 31, 1998 (the "1998 Balance
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Sheet") or (ii) liabilities and obligations incurred in the ordinary course of
business since December 31, 1998 which individually or in the aggregate would
not reasonably be expected to have a Material Adverse Effect.
2.6. Absence of Certain Changes. Except as set forth on Schedule 2.6 or as
disclosed in the SEC Reports, since December 31, 1998 neither the Company nor
any of the Subsidiaries has (a) suffered any change, event or development or
series of changes, events or developments which individually or in the aggregate
has had or would reasonably be expected to have a Material Adverse Effect or an
adverse effect on the ability of the Company to perform its obligations under
this Agreement or any of the Transaction Documents to which it is a party or (b)
been the subject of any Litigation or threatened or commenced investigation by a
Governmental Entity that would reasonably be expected to have a Material Adverse
Effect.
2.7. Litigation. (a) Except as set forth on Schedule 2.7(a) or as disclosed
in the SEC Reports, there is no claim, action, suit, investigation or proceeding
("Litigation") pending or, to the Knowledge of the Company, threatened against
the Company or any of the Subsidiaries or involving any of their respective
properties or assets by or before any court, arbitrator or other Governmental
Entity which (i) in any manner challenges or seeks to prevent, enjoin, alter or
materially delay the transactions contemplated by this Agreement or (ii) if
resolved adversely to the Company or a Subsidiary would reasonably be expected
to have a Material Adverse Effect.
(b) Except as set forth on Schedule 2.7(b) or as disclosed in the SEC
Reports, neither the Company nor any of the Subsidiaries is in default under or
in breach of any order, judgment or decree of any court, arbitrator or other
Governmental Entity, and neither the Company nor any of the Subsidiaries is a
party or subject to any order, judgment or decree of any court, arbitrator or
other Governmental Entity which in either case would reasonably be expected to
have a Material Adverse Effect.
2.8. Consents, No Violations. Except as set forth on Schedule 2.8, neither
the execution, delivery or performance by the Company of this Agreement or any
of the other Transaction Documents to which it is a party nor the consummation
of the transactions contemplated hereby or thereby will (a) conflict with, or
result in a breach or a violation of, any provision of the certificate of
incorporation or by-laws or other organizational documents of the Company or any
of the Subsidiaries including, without limitation, any of the provisions of the
Certificates of Designation for the Existing Preferred Stock; (b) constitute,
with or without notice or the passage of time or both, a breach, violation or
default, create an Encumbrance, or give rise to any right of termination,
modification, cancellation, prepayment, suspension, limitation, revocation or
acceleration, under (i) any Law or (ii) any provision of any agreement or other
instrument to which the Company or any of the Subsidiaries is a party or
pursuant to which any of them or any of their assets or properties is subject,
except, with respect to the matters set
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forth in this clause (ii), for breaches, violations, defaults, Encumbrances, or
rights of termination, modification, cancellation, prepayment, suspension,
limitation, revocation or acceleration, which, individually or in the aggregate,
would not reasonably be expected to result in a Material Adverse Effect or
adversely affect the ability of the Company to perform its obligations under
this Agreement or any of the Transaction Documents to which it is a party; or
(c) except for the filings of the Certificates of Designation with the Secretary
of State of the State of Delaware or any required filing under the HSR Act, the
Exchange Act or the Securities Act, require any consent, approval or
authorization of, notification to, filing with, or exemption or waiver by, any
Governmental Entity or any other Person on the part of the Company or any of the
Subsidiaries. Without limiting the generality of the foregoing (i) no consent or
other approval of the holders of the Existing Preferred Stock is required in
connection with the consummation of the transactions contemplated hereby or the
performance by the Company of any of its obligations under this Agreement or any
of the Transaction Documents to which it is a party, (ii) the issuance of the
Preferred Shares or any Shares upon conversion thereof will not result in any
anti-dilution or other adjustment to the conversion price or the number of
shares of Class A Common Stock issuable upon conversion of the 6-1/2% Preferred
Stock or (iii) the holders of the Existing Preferred Stock will not be entitled
to exercise any voting rights as a result of any of the provisions contained in
this Agreement or any other Transaction Documents. Neither the Company nor any
of the Subsidiaries is a party to any agreement or bound by the terms of any
instrument or security which would prevent the Company from paying cash
dividends on the Series C Preferred Stock on a current basis in its current or
currently anticipated financial position.
2.9. Y2K. Each system of the Company and the Subsidiaries, including,
without limitation, software, hardware, databases or embedded control systems,
that constitutes any part of, or is used in connection with the use, operation
or enjoyment of, any tangible or intangible assets or property of the Company or
any of the Subsidiaries, whether used by the Company or any of the Subsidiaries
individually or forming part of the procedure or services sold or furnished to
others (collectively, a "System"), (a) has been modified to the extent necessary
to enable it to operate from and after January 1, 2000, without error arising
from the creation, recognition, acceptance, calculation, display, storage,
retrieval, accessing, comparison, sorting, manipulation, processing or other use
of dates or date-based, date-dependent or date-related data, including but not
limited to century recognition, day-of-the-week recognition, leap years, date
values and interfaces of data functionalities and (b) will not be adversely
affected by the advent of the year 2000, the advent of the twenty-first century
or the transition from the twentieth century through the year 2000 and into the
twenty-first century (collectively, items (a) and (b) are referred to herein as
"Year 2000 Compliant") except, in either case, as would not reasonably be
expected to have a Material Adverse Effect. Except as would not reasonably be
expected to have a Material Adverse Effect, neither the Company nor any of the
Subsidiaries has received notice, or otherwise based on third party information
available to the Company or any of the Subsidiaries, has any reason to believe,
that any
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System receives data from or communicates with any component or system external
to itself (whether or not such component or system is the Company's or any of
the Subsidiaries') that is not itself expected to be Year 2000 Compliant prior
to December 31, 1999. Neither the Company nor any Subsidiary has any reason to
believe that it may incur material expenses arising from or relating to the
failure of any of its Systems as a result of not being Year 2000 Compliant and
the Company and the Subsidiaries have requested and received assurances from
each third party whose systems failure would reasonably be expected to have a
Material Adverse Effect that such systems are Year 2000 Compliant.
2.10. Compliance with Laws. Except as set forth on Schedule 2.10 or as
disclosed in the SEC Reports, the Company and the Subsidiaries are in compliance
in all material respects with all Laws, and neither the Company nor any
Subsidiary has received any notice of any alleged violation of Law applicable to
it that could reasonably be expected to have a Material Adverse Effect. The
Company holds all material licenses, franchise permits, consents, registrations,
certificates, and other governmental or regulatory permits, authorizations or
approvals required for the operation of the business as presently conducted and
for the ownership, lease or operation of the Company's and its Subsidiaries'
properties (collectively, "Licenses"). Except as set forth on Schedule 2.10, the
Company and the Subsidiaries have all Licenses, and all of such Licenses are
valid and in full force and effect, and the Company and the Subsidiaries have
duly performed and are in compliance in all material respects with all of their
obligations under such Licenses.
2.11. Commitments. Schedule 2.11 sets forth a complete and correct list as
of the date hereof of each contract, agreement, understanding, arrangement and
commitment of any nature whatsoever, whether written or oral, including all
amendments thereof and supplements thereto ("Commitments") of the following
types to which the Company or any Subsidiary is a party or by or to which the
Company or any Subsidiary or any of their properties may be bound or subject:
(i) Commitments containing covenants purporting to limit the freedom of the
Company or any Subsidiary to compete in any line of business in any geographic
area or to hire any individual or group of individuals that could individually
or in the aggregate have a Material Adverse Effect; (ii) written Commitments
relating to planned or in process capital expenditures in excess of $20,000,000;
(iii) Commitments relating to indentures, mortgages, promissory notes, loan
agreements, guarantees, letters of credit or other agreements or instruments of
the Company or any Subsidiary involving amounts in excess of $10,000,000; (iv)
written Commitments relating to the acquisition or disposition of any operating
business or the capital stock of any Person in each case having a purchase price
in excess of $1 million that has not been consummated or that has been
consummated but contains representations, warranties, covenants, guarantees,
indemnities or other obligations that remain in effect; (v) Commitments in
respect of any joint venture, partnership or other similar arrangement, but not
including any subsidiaries; (vi) except for performance
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bonds, Commitments with any Governmental Entity involving payments by the
Company or any subsidiaries in excess of $1,000,000 and (vii) Commitments
relating to interconnection agreements with local carriers, Commitments with
resellers and material Commitments with customers in each case involving
payments in 1999, or reasonably expected to involve payments in 2000, in each
case in excess of $1,000,000.
2.12. Brokers or Finders. Except for Salomon Smith Barney Inc., whose fees
will be paid by the Company, upon the consummation of the transactions
contemplated by this Agreement, no agent, broker, investment banker or other
Person is or will be entitled to any broker's or finder's fee or any other
commission or similar fee from the Company or any of the Subsidiaries in
connection with any of the transactions contemplated by this Agreement or the
other Transaction Documents.
2.13. Section 203 of the DGCL; Takeover Statute. The Board of Directors has
taken all actions necessary or advisable so that the restrictions contained in
Section 203 of the DGCL applicable to a "business combination" (as defined in
such Section) will not apply to the execution, delivery or performance of this
Agreement or any of the other Transaction Documents or the consummation of the
transactions contemplated hereby or thereby. The execution, delivery and
performance of this Agreement or any of the other Transaction Documents and the
consummation of the transactions contemplated hereby or thereby will not cause
to be applicable to the Company any "fair price," "moratorium," "control share
acquisition" or other similar antitakeover statute or regulation enacted under
state or federal laws.
2.14. Offering of Preferred Shares. Neither the Company nor any Person
acting on its behalf has taken or will take any action (including, without
limitation, any offering of any securities of the Company under circumstances
which would require, under the Securities Act, the integration of such offering
with the offering and sale of the Preferred Shares) which might reasonably be
expected to subject the offering, issuance or sale of the Preferred Shares to
the registration requirements of Section 5 of the Securities Act.
2.15. Network Assets. Schedule 2.15 sets forth a complete and correct list,
as of September 30, 1999, of the markets in which the Company owns network
assets and related equipment, a brief description of the network in place in
each such market (including the ownership thereof) and the kind of switch
(including the ownership thereof) in each such market.
2.16. Disclosure. Neither this Agreement nor any other Transaction
Document, nor any schedule or exhibit hereto or thereto, nor any certificate
furnished to the Purchasers by or on behalf of the Company in connection with
the transactions contemplated hereby and thereby, when read in conjunction with
the 1998 10-K and the SEC Reports filed at any time after the 1998 10-K was
filed with the SEC, contains any
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untrue statement of a material fact or omits to state a material fact necessary
in order to make the statements contained herein or therein not misleading (for
purposes of the preceding sentence, any preliminary document or written
information shall be disregarded if a final or updated version of such document
or written information was delivered to the Purchasers by the Company prior to
the date hereof). The financial forecasts furnished by the Company to the
Purchasers are based upon assumptions deemed reasonable by the Company, but do
not give effect to the Pending Transactions referred to in Schedule 4.1, it
being understood that actual results may differ from such forecasts and such
differences may be material. As of the date hereof there is no fact or
information relating to the Company and/or any of its Subsidiaries that, to the
Company's Knowledge, would reasonably be expected to be material to the Company
and its Subsidiaries and that has not been described in the SEC Reports or
otherwise disclosed to the Purchasers.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE PURCHASERS
Each Purchaser hereby represents and warrants to the Company, severally and
not jointly, as of the date hereof and as of the Closing, as follows:
3.1. Acquisition for Investment. Such Purchaser is acquiring the Preferred
Shares, for its own account, for investment and not with a view to the
distribution thereof within the meaning of the Securities Act.
3.2. Restricted Securities. Such Purchaser understands that (i) the
Preferred Shares and the Shares have not been registered under the Securities
Act or any state securities laws by reason of their issuance by the Company in a
transaction exempt from the registration requirements thereof and (ii) the
Preferred Shares and any Shares issued upon conversion thereof may not be sold
or otherwise disposed of unless such sale or disposition is registered under the
Securities Act and applicable state securities laws or such sale or other
disposition is exempt from registration thereunder.
3.3. No Brokers or Finders. No agent, broker, investment banker or other
Person is or will be entitled to any broker's or finder's fee or any other
commission or similar fee from the Purchasers in connection with the
transactions contemplated by this Agreement or the other Transaction Documents.
3.4. Accredited Investor. Such Purchaser is an "accredited investor" (as
defined in Rule 501(a) under the Securities Act). Such Purchaser has sufficient
knowledge and experience in financial and business matters so as to be capable
of evaluating the merits and risks of its investment in the Preferred Shares and
is capable of bearing the economic risks of such investment.
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3.5 Organization. Such Purchaser is a limited partnership duly organized,
validly existing and in good standing under the laws of the State of Delaware
and has the requisite power and authority to carry on its business as it is now
being conducted.
3.6. Due Authorization. Such Purchaser has all right, power and authority
to enter into this Agreement and the other Transaction Documents to which it is
a party and to consummate the transactions contemplated hereby and thereby. The
execution and delivery by such Purchaser of this Agreement and the other
Transaction Documents to which it is a party and the consummation by such
Purchaser of the transactions contemplated hereby and thereby (a) are within the
power and authority of such Purchaser and (b) have been duly authorized by all
necessary action on the part of such Purchaser. This Agreement constitutes, and
each of the other Transaction Documents to which it is a party will constitute
upon execution and delivery by such Purchaser, a valid and binding agreement of
such Purchaser enforceable against such Purchaser in accordance with their
respective terms, except as such enforcement is limited by bankruptcy,
insolvency and other similar laws affecting the enforcement of creditors' rights
generally and for limitations imposed by general principles of equity.
3.7. Consents, No Violations. Neither the execution, delivery or
performance by such Purchaser of this Agreement and the other Transaction
Documents to which it is a party nor the consummation of the transactions
contemplated hereby or thereby will (a) conflict with, or result in a breach or
a violation of, any provision of the organizational documents of such Purchaser;
(b) constitute, with or without notice or the passage of time or both, a breach,
violation or default, create an Encumbrance, or give rise to any right of
termination, modification, cancellation, prepayment, suspension, limitation,
revocation or acceleration, under (i) any Law, or (ii) any Commitment of such
Purchaser, or to which such Purchaser or any of its assets or properties is
subject, except, with respect to the matters set forth in clause (ii), for
breaches, violations, defaults, Encumbrances, or rights of termination,
modification, cancellation, prepayment, suspension, limitation, revocation or
acceleration, which, individually or in the aggregate, would not have a material
adverse effect on the ability of such Purchaser to consummate the transactions
contemplated hereby; or (c) except for any required filing under the HSR Act,
require any consent, approval or authorization of, notification to, filing with,
or exemption or waiver by, any Governmental Entity or any other Person on the
part of the Purchaser.
3.8. Availability of Funds. Such Purchaser has available sufficient funds
to pay its portion of the Purchase Price.
3.9. Litigation. There is no Litigation pending or, to the knowledge of
such Purchaser, threatened against such Purchaser or any of its Affiliates or
involving any of its properties or assets by or before any court, arbitrator or
other Governmental Entity
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which in any manner challenges or seeks to prevent, enjoin, alter or materially
delay the transactions contemplated by this Agreement.
ARTICLE IV
COVENANTS
4.1. Conduct of Business by the Company Pending the Closing. The Company
covenants and agrees that, except as set forth in Schedule 4.1, during the
period from the date of this Agreement and continuing until the earlier of the
termination of this Agreement or the Closing, unless the Purchasers otherwise
agree in writing, the Company shall, and shall cause each of the Subsidiaries
to, (i) conduct its business only in the ordinary course and consistent with
past practice; (ii) use reasonable best efforts to preserve and maintain its
assets and properties and its relationships with its customers, suppliers,
advertisers, distributors, agents, officers and employees and other Persons with
which it has significant business relationships; (iii) use reasonable best
efforts to maintain all of the material assets it owns or uses in the ordinary
course of business consistent with past practice; (iv) use reasonable best
efforts to preserve the goodwill and ongoing operations of its business; (v)
maintain its books and records in the usual, regular and ordinary manner, on a
basis consistent with past practice; and (vi) comply in all material respects
with applicable Laws. Except as expressly contemplated by this Agreement or as
set forth on Schedule 4.1, between the date of this Agreement and the Closing,
the Company shall not, and shall cause each of the Subsidiaries not to, do any
of the following without the prior written consent of the Purchaser:
(a) (i) issue any debt securities, (ii) incur any additional indebtedness,
(iii) assume, grant, guarantee or endorse, or make any other accommodation or
arrangement making the Company or any Subsidiary responsible for, any
liabilities or other obligations of any other Person or (iv) make any loans,
advances or capital contributions to, or investments in, any Person;
(b) change any method of accounting or accounting practice used by the
Company or any Subsidiary, other than such changes required by GAAP;
(c) repurchase, redeem or otherwise acquire or exchange any share of Common
Stock or other equity interests other than in accordance with the terms of the
Existing Preferred Stock and Class B Common Stock; except for issuances of Class
A Common Stock pursuant to the exercise of options to purchase Class A Common
Stock outstanding on the date hereof and listed on Schedule 2.3 or options
issued in compliance with this clause (c), issue or sell any additional shares
of the capital stock of, or other equity interests in, the Company or any
Subsidiary, or securities convertible into or exchangeable for such shares or
other equity interests, or issue or grant any subscription
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rights, options, warrants or other rights of any character relating to shares of
such capital stock, such other equity interests or such securities, other than
options to purchase Class A Common Stock granted after the date hereof in the
ordinary course of business under the Company's existing stock option plans; or,
except for dividends required to be paid on the Existing Preferred Stock,
declare, set aside, make or pay any dividend, or make any distribution, in
respect of any shares of capital stock of the Company;
(d) amend the Company's or any Subsidiary's charter or by-laws or other
organizational documents except with respect to the filing of the Certificates
of Designation;
(e) take any action that is reasonably likely to result in (i) any of the
representations and warranties set forth in Article II becoming false or
inaccurate in any material respect as of the Closing Date or (ii) any of the
conditions to the obligations of the Purchasers set forth in Section 5.2 not
being satisfied; or
(f) agree to take any of the actions restricted by this Section 4.1.
4.2. Press Releases; Interim Public Filings. The Company shall, and shall
cause each Subsidiary to, deliver to the Purchasers complete and correct copies
of all press releases and public filings made between the date hereof and the
Closing Date, and, to the extent any such press releases refer to the Purchasers
or their Affiliates, shall give the Purchasers the reasonable opportunity to
review and comment on such releases and filings (on a strictly confidential
basis until such information is released), in each case prior to release in the
form in which it will be issued.
4.3. HSR Act. Each of the Purchasers and the Company shall cooperate in
making filings under the HSR Act and shall use its reasonable best efforts to
take, or cause to be taken, all actions necessary, proper or advisable to
consummate and make effective as promptly as practicable the transactions
contemplated by this Agreement, including using its reasonable best efforts to
resolve such objections, if any, as the Antitrust Division of the Department of
Justice or the Federal Trade Commission or state antitrust enforcement or other
Governmental Entities may assert under antitrust Laws with respect to the
transactions contemplated hereby.
4.4. Consents; Approvals. The Company shall use its reasonable best efforts
to obtain all consents, waivers, exemptions, approvals, authorizations or orders
(collectively, "Consents") required in connection with the transactions
contemplated by this Agreement or any of the other Transaction Documents
(including, without limitation (i) all Consents required to avoid any breach,
violation, default, encumbrance or right of termination, modification,
cancellation, prepayment, suspension, limitation, revocation or acceleration of
any material agreement or instrument to which the Company or any Significant
Subsidiary is a party or by which any of their material assets are bound, (ii)
all Consents pursuant to the Company's or any Subsidiary's financing documents,
including
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without limitation, all indentures and credit agreements of the Company or any
Subsidiary, and (iii) all United States and foreign governmental and regulatory
rulings and approvals). The Company also shall use its reasonable best efforts
to obtain all necessary state securities laws or blue sky permits and approvals
required to carry out the transactions contemplated hereby and shall furnish all
information as may be reasonably requested in connection with any such action.
4.5. Listing. The Company shall use its reasonable best efforts to continue
to have its Class A Common Stock listed on the NASDAQ National Market System
(the "NMS") or a national securities exchange for so long as any Preferred
Shares or any Shares are outstanding. Prior to the Closing, the Company shall
prepare and submit to the NMS a listing application covering the shares of Class
A Common Stock issuable upon conversion of the Preferred Shares and shall obtain
approval for the listing of such shares, subject to official notice of issuance.
4.6. Board Representation; VCOC. (a) Section 9(b)(i) of the Certificate of
Designation for the Series C Preferred Stock provides that the holders of Series
C Preferred Stock shall be entitled to elect one director to the Board of
Directors subject to the terms set forth therein. In addition, Section 9(b)(i)
of the Certificate of Designation for the Series D Preferred Stock provides that
the holders of Series D Preferred Stock shall be entitled to elect one director
to the Board of Directors subject to the terms set forth therein. Accordingly,
subject to the Certificate of Designation for the Series C Preferred Stock, the
holders of Series C Preferred Stock shall be entitled to designate for election
to the Board of Directors one person and, subject to the Certificate of
Designation for the Series D Preferred Stock, the holders of Series D Preferred
Stock shall be entitled to designate for election to the Board of Directors one
person (collectively, the "Purchasers' Directors"). Prior to the Closing, the
Company will take all action necessary for the Purchasers' Directors to be
elected to the Board of Directors. Thereafter, in connection with any annual
meeting of stockholders at which the term of a Purchaser Director is to expire,
the Company will take all necessary action to cause a Purchaser Director to be
nominated and use its reasonable best efforts to cause such Purchaser Director
to be elected to the Board of Directors. In the event a vacancy shall exist in
the office of a Purchaser Director, the Purchasers shall be entitled to
designate a successor and the Board of Directors shall elect such successor and,
in connection with the meeting of stockholders of the Company next following
such election, nominate such successor for election as director by the
stockholders and use its reasonable best efforts to cause the successor to be
elected. The Company shall furnish the Purchasers' Directors with such financial
and operating data and other information with respect to the business and
properties of the Company as the Purchasers' Directors may reasonably request.
The Company shall permit each of the Purchasers' Directors to discuss the
affairs, finances and accounts of the Company with, and to make proposals and
furnish advice with respect thereto, the principal officers of the Company.
Notwithstanding anything contained in this Section 4.6 to the contrary, the
provisions of the Certificates of
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Designation shall govern the rights of holders of Preferred Shares to elect
directors (including any Purchasers' Directors) and the rights of holders of
Preferred Shares to designate non-voting board observers.
(b) The rights set forth in Section 4.6(a) are intended to satisfy the
requirement of contractual management rights for purposes of qualifying each of
the Purchaser's ownership interests in the Company as venture capital
investments for purposes of the Department of Labor's "plan assets" regulations,
and in the event such rights are not satisfactory for such purpose as to any
such Purchaser, the Company and such Purchaser shall reasonably cooperate in
good faith to agree upon mutually satisfactory management rights which satisfy
such regulations.
(c) The Company shall promptly reimburse the Purchasers' Directors for all
reasonable expenses incurred by them in connection with their attendance at
meetings and any other activities undertaken in their capacity as directors
consistent with the policies of the Company in effect on the date hereof or as
such policies may be modified and generally applied to the Company's Board of
Directors.
4.7. Certificates of Designation. The Company shall, prior to or
concurrently with the Closing, cause the Certificates of Designation, to be
filed with the Secretary of State of the State of Delaware.
4.8. Cooperation. Each of the Purchasers and the Company agrees to use its
reasonable best efforts to take, or cause to be taken, all such further actions
as shall be necessary to make effective and consummate the transactions
contemplated by this Agreement.
4.9. Access to Property; Records. Between the date hereof and the Closing
the Company shall afford the Purchasers and their employees, counsel,
accountants, partners, members, investors, and other authorized representatives
reasonable access, upon notice, during normal business hours, to the assets,
properties, offices and other facilities, Commitments and books and records of
the Company and of the Subsidiaries, and to the outside auditors of the Company
and their work papers relating to the Company and the Subsidiaries. All such
information shall be held in confidence in accordance with the terms of the
Confidentiality Agreement. The parties hereto agree that no investigation by the
Purchasers or their representatives shall affect or limit the scope of the
representations and warranties of the Company contained in this Agreement or in
any other Transaction Document delivered pursuant hereto or limit the liability
for breach of any such representation or warranty.
4.10. Reserve Shares. The Company will at all times reserve and keep
available, solely for issuance and delivery upon conversion of the Preferred
Shares, the number of shares of Class A Common Stock from time to time issuable
upon conversion of all shares of the Preferred Shares at the time outstanding.
All shares of Class A
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Common Stock issuable upon conversion of the Preferred Shares shall be duly
authorized and, when issued upon such conversion or exercise, shall be validly
issued, fully paid and nonassessable.
4.11. Use of Proceeds. The proceeds received by the Company hereunder shall
be used by the Company as set forth on Schedule 4.11.
4.12. Incurrence of Debt. The Company agrees that at such time as the
Standard & Poor's rating of the Company's senior unsecured debt obligations
falls below CCC+ and for such period of time as such down-grade continues, the
Company will not, and will not permit any of its Subsidiaries to, incur any
Indebtedness not permitted by the Indenture, dated as of November 17, 1999
between the Company and United States Trust Company of New York, as Trustee (the
"Indenture"), relating to its 10 1/2% Senior Notes due 2009, and any successor
Indenture relating to Exchange Notes to be issued in exchange therefor
(capitalized terms being used in this Section 4.12 as defined in the Indenture).
4.13. Dividends. The Company agrees that it shall pay cash dividends on the
Series C Preferred Stock on a current basis so long as it is not precluded from
doing so under its debt instruments, the terms of its Existing Preferred Stock
or other Commitments or Law. In furtherance thereof, the Company agrees to use
its reasonable best efforts to pay such dividends, including, without
limitation, using its best efforts to refrain from entering into any agreements
which would preclude (based on the Company's financial position and anticipated
financial position at that time) such payments, to seek a waiver under any
agreements which would prevent such payments at any time and to take whatever
actions are necessary, including revaluing assets, to create surplus for the
purpose of paying such dividends. Without limiting the generality of the
foregoing, the Company agrees that it shall be a breach of this covenant if the
final executed version of its proposed senior credit facility to be syndicated
by Goldman, Sachs & Co. (the "Senior Credit Facility"), based on the Company's
financial position and anticipated financial position on the date of execution
of such final version, would prevent the Company from paying cash dividends on
the Series C Preferred Stock.
4.14 Right of First Purchase. (a) Subject to the terms and conditions
specified in this Section 4.14, the Company hereby grants to the Purchasers a
right of first purchase with respect to certain issuances by the Company after
the Closing of any Senior Capital Stock (as hereinafter defined) as provided in
this Section 4.14.
(b) For purposes of this Section 4, the term "Senior Capital Stock" shall
mean shares of any capital stock of the Company having a preference relative to
the Class A Common Stock with respect to dividends or upon liquidation,
distribution or winding up of the Company, whether now authorized or not, and
any rights, options or warrants to purchase such capital stock, and securities
of any type that are, or may become, convertible into such capital stock;
provided, however, that nothing contained in this
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Section 4.14 shall be construed as permitting the Company to authorize or issue
any Senior Capital Stock in contravention of any of the provisions of this
Agreement or the other Transaction Documents, including the Certificates of
Designation.
(c) In the event the Company proposes to issue any Senior Capital Stock
(other than in a public offering registered under the Securities Act or an
offering pursuant to Rule 144A thereunder which contemplates a subsequent
registration, or other than a Strategic Senior Capital Stock Issuance), the
Company shall first make an offering of such Senior Capital Stock to each of the
Purchasers in accordance with the following provisions:
(i) The Company shall deliver a notice by certified mail (the "Notice") to
each of the Purchasers stating (a) its bona fide intention to issue such Senior
Capital Stock, (b) the amount of such Senior Capital Stock to be issued, (c) the
price, if any, for which it proposes to issue such Senior Capital Stock and the
other terms of the proposed issuance thereof, (d) the designation and all of the
terms and provisions of the Senior Capital Stock proposed to be issued and (e) a
statement as to the number of days from receipt of such Notice (which shall not
be less than 5 calendar days) within which each Purchaser must respond to such
Notice.
(ii) Within 5 calendar days after receipt of the Notice (or by such later
date as is specified in the Notice), each of the Purchasers may elect to
purchase, at the price and on the terms specified in the Notice, all but not
less than all of such Senior Capital Stock. Notwithstanding anything to the
contrary set forth in clause (c)(i) above, the conversion price of any such
Senior Capital Stock to which the Purchasers' right of election applies and
which is convertible into shares of Class A Common Stock shall be an amount per
share no more than 115% of the closing sales price of the Class A Common Stock
on the NASDAQ National Market System (or on the principal securities exchange or
market on which the Class A Common Stock is then listed or traded) on the date
the Purchasers elect to purchase any such Senior Capital Stock unless the
Purchasers shall have waived such right. The closing of the purchases shall
occur as promptly as practicable after all elections to purchase shall have been
made (or all rights to make such elections shall have lapsed) and all consents
or governmental approvals or filings required to be obtained or made in
connection therewith (if any) shall have been obtained or made.
(d) If any portions of the Senior Capital Stock referred to in the Notice
are not elected to be purchased by the Purchasers as provided above, the Company
may, during the 180-day period following the expiration of the period provided
above, offer the remaining unsubscribed Senior Capital Stock to any person or
persons at a price not less than, and upon terms no more favorable to the
offeree than, those specified in the Notice. If the Company does not enter into
an agreement for the sale of the Capital Stock within such period, or if such
agreement is not consummated within 180 days of the execution thereof, the right
of first purchase provided hereunder shall be deemed to be revived with
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respect to such Senior Capital Stock and such Senior Capital Stock shall not be
issued unless first reoffered to the Purchasers in accordance herewith. Any
issuance of Senior Capital Stock by the Company without first giving the
Purchasers the rights described in this Section 4 shall be null and void and of
no force and effect.
4.15 Restrictions on Transfer and Conversion. The Purchasers will not,
prior to the earliest of (a) the first anniversary of the Closing Date, (b) the
occurrence of a Change of Control (as defined in the Certificates of
Designation) or (c) the breach by the Company in any material respect of any
covenant or agreement contained in this Agreement or in any other Transaction
Document (each of the foregoing, a "Termination Event"), sell, transfer, assign,
convey, gift, mortgage, pledge, encumber, hypothecate, or otherwise dispose of,
directly or indirectly, ("Transfer") any of the Preferred Shares or the Shares
except for (i) Transfers between and among the Purchasers and their Affiliates
provided such Transfer is done in accordance with the transfer restrictions
applicable to the Preferred Shares or the Shares under federal and state
securities laws and the Affiliate transferee agrees to be bound by the
restrictions applicable to such Preferred Shares or the Shares, including
without limitation the agreements set forth in this Section 4.15, and (ii)
Transfers (w) required to comply with applicable Law, (x) pursuant to a bona
fide tender or exchange offer made pursuant to a merger or other agreement
approved by the Board of Directors to acquire securities of the Company, (y)
following any stock merger or other business combination transaction to which
the Company is a party if such stock merger or other business combination
results in a Change of Control and (z) pursuant to any cash merger, or other
business combination transaction to which the Company is a party or involved in
which the Class A Common Stock of the Company's stockholders is exchanged for
cash upon consummation of such merger or other business combination.
Notwithstanding any other provision of this Section 4.15, no Purchaser shall
avoid the provisions of this Section 4.15 by making one or more transfers to one
or more Affiliates and then disposing of all or any portion of such Purchaser's
interest in any such Affiliate. Nothing contained herein shall be deemed to
limit the ability of the limited partners in the Purchasers from transferring,
directly or indirectly, their limited partnership interests in the Purchasers or
the general partners of the Purchasers from transferring, directly or
indirectly, up to 15% of the equity interests in the Purchasers at any time or
from time to time. Notwithstanding anything to the contrary contained in the
Certificates of Designation, each Purchaser agrees that it may not exercise any
conversion rights with respect to the Preferred Shares until the occurrence of a
Termination Event. The Company agrees that, in connection with any proposed
transaction that would, if consummated, result in a Change of Control, the
Purchasers may provide the Company with a notice of their intention to exercise
their conversion rights with respect to the Preferred Shares the effectiveness
of which is conditional upon the consummation of the transaction resulting in
such Change of Control. In addition to the Transfer restrictions described
above, the Purchasers will not, prior to the fifth anniversary of the Closing,
without the prior written consent of the Company, Transfer any of the Preferred
Shares to any Person (or any controlled Affiliate of such Person) that is
engaged in a business that
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competes with any business conducted by the Company on the date of the proposed
Transfer.
4.16 Standstill Agreement. (a) During the period commencing on the date
hereof and ending on the earlier of (i) the fifth anniversary of the Closing
Date (the "Standstill Period") or (ii) the date these provisions terminate as
provided herein, except as (x) specifically permitted by this Agreement or (y)
specifically approved in writing in advance by the Board of Directors of the
Company, the Purchasers shall not, and shall cause any Affiliates controlled by
them to not, in any manner, directly or indirectly:
(i) acquire, or offer or agree to acquire, or become the beneficial
owner of or obtain any rights in respect of any capital stock of the
Company, except, for any shares of Class A Common Stock that may be
issuable upon the conversion of the Preferred Shares or otherwise as
permitted pursuant to this Agreement, provided, that the foregoing
limitation shall not prohibit the acquisition of securities of the Company
or any of its successors issued as dividends or as a result of stock splits
and similar reclassifications or received in a consolidation, merger or
other business combination in respect of, in exchange for or upon
conversion of Preferred Shares or Shares held by the Purchasers or any of
their Affiliates at the time of such dividend, split or reclassification,
consolidation or merger or business combination;
(ii) solicit proxies or consents or become a "participant" in a
"solicitation" (as such terms are defined or used in Regulation 14A under
the Exchange Act) of proxies or consents with respect to any voting
securities of the Company or any of its successors or initiate or become a
participant in any stockholder proposal or "election contest" (as such term
is defined or used in Rule 14a-11 under the Exchange Act) with respect to
the Company or any of its successors or induce others to initiate the same,
or otherwise seek to advise or influence any person with respect to the
voting of any voting securities of the Company or any of its successors
(except for activities undertaken by the Purchasers or the Purchasers'
Directors in connection with solicitations by the Board of Directors);
(iii) publicly or privately propose, encourage, solicit or participate
in the solicitation of any person or entity to acquire, offer to acquire or
agree to acquire, by merger, tender offer, purchase or otherwise, the
Company or a substantial portion of its assets or more than 5% of the
outstanding capital stock (except in connection with the registration of
securities pursuant to the Registration Rights Agreement); and
(iv) directly or indirectly join in or in any way participate in a
pooling agreement, syndicate, voting trust or other arrangement with
respect to the Company's voting securities or otherwise act in concert with
any other Person (other
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than Affiliates), for the purpose of acquiring, holding, voting or
disposing of the Company's securities.
(b) Nothing contained in this Section 4.16 shall be deemed to restrict the
manner in which the Purchasers' Directors participate in deliberations or
discussions of the Board of Directors.
(c) The standstill provisions set forth herein shall terminate on the
earliest of (i) the last day of the Standstill Period, (ii) the occurrence of a
Change of Control, (iii) upon any breach by the Company in any material respect
of any covenant or agreement contained in this Agreement or in any Transaction
Document, or (iv) upon the filing of a voluntary bankruptcy petition by the
Company or on the 60th day following the filing of an involuntary bankruptcy
petition against the Company if such petition is not discharged with prejudice
during such 60-day period.
4.17 Business Combinations with Affiliates. For so long as the Purchasers
are holders of any Preferred Shares and a Purchaser Director is a member of the
Board of Directors, the Company shall not, authorize or engage in, either in one
or a series of related transactions, any purchase or sale of stock, any purchase
or sale of assets, any merger, consolidation or other business combination
transaction, in each case valued in excess of $50 million, with or involving
Craig O. McCaw, Wendy P. McCaw or any of his or her Affiliates other than the
Company or the Subsidiaries ("Affiliated Parties") unless any such transaction
is approved and authorized by a special committee of the Board of Directors,
consisting of at least one Purchaser Director and other disinterested directors
(within the meaning of Section 144 of the Delaware General Corporation Law)
constituted for the purpose of negotiating, evaluating, approving and
authorizing the Company to engage in any such transaction. The provisions of
this Section 4.17 shall also apply to transactions between Affiliated Parties
and the Company's Subsidiaries on the same basis as they apply to transactions
between Affiliated Parties and the Company.
ARTICLE V
CONDITIONS
5.1. Conditions to Obligations of the Purchasers and the Company. The
respective obligations of the Purchasers and the Company to consummate the
transactions contemplated hereby are subject to the satisfaction or waiver at or
prior to the Closing of each of the following conditions:
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(a) No statute, rule or regulation or order of any court or administrative
agency shall be in effect which prohibits the consummation of the transactions
contemplated hereby; and
(b) Any waiting period (and any extension thereof) under the HSR Act
applicable to this Agreement and the transactions contemplated hereby shall have
expired or been terminated.
5.2. Conditions to Obligations of the Purchasers. The obligations of the
Purchasers to consummate the transactions contemplated hereby shall be subject
to the satisfaction or waiver at or prior to the Closing of each of the
following conditions:
(a) Each of the representations and warranties of the Company contained in
this Agreement shall be true and correct when made and as of the Closing (except
to the extent such representations and warranties are affected by agreement to
or consummation of any of the pending transactions listed on Schedule 4.1 or
made as of a particular date, in which case such representations and warranties
shall have been true and correct in all material respects as of such date),
except for failures to be true and correct which individually or in the
aggregate would not reasonably be expected to have a Material Adverse Effect;
(b) The Company shall have performed, satisfied and complied in all
material respects with all of its covenants and agreements set forth in this
Agreement to be performed, satisfied and complied with prior to or at the
Closing;
(c) The Company shall have delivered to the Purchasers an officer's
certificate certifying as to the Company's compliance with the conditions set
forth in clauses (a) and (b) of this Section 5.2;
(d) The Company shall have executed and delivered a Registration Rights
Agreement in the form of Exhibit 5.2(d) hereto (the "Registration Rights
Agreement"), and the Registration Rights Agreement shall be in full force and
effect;
(e) The Certificates of Designation shall have been duly filed with the
Secretary of State of the State of Delaware in accordance with the laws of the
State of Delaware and the Certificates of Designation shall be in full force and
effect;
(f) The Shares issuable upon conversion of the Preferred Shares shall have
been duly authorized and reserved for issuance and such Shares shall have been
approved for listing on the NMS, subject to official notice of issuance;
(g) The Company shall have entered into a binding agreement to acquire all
of the equity interest it does not currently own in Internext, LLC, and the
terms of
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such agreement shall be consistent with the term sheet previously delivered to
the Purchasers;
(h) The Purchasers shall have received an opinion of Willkie Farr &
Gallagher, outside counsel to the Company, with respect to the due
incorporation, due authorization, validity of the Preferred Shares, securities
act exemption and the valid and binding nature of this Agreement, the
Registration Rights Agreement and the Certificates of Designation;
(i) The Company shall not have entered into any agreement or become bound
by the terms of any instrument or security, including without limitation, the
Senior Credit Facility, which would prevent the Company from paying cash
dividends on the Series C Preferred Stock on a current basis; and
(j) There shall not have occurred (i) any event, circumstances, condition,
fact, effect, or other matter which has had or would reasonably be expected to
have a material adverse effect (x) on the business, assets, financial condition,
prospects, or results of operations of the Company and its Subsidiaries taken as
a whole or (y) on the ability of the Company and such Subsidiaries to perform on
a timely basis any material obligation under this Agreement or to consummate the
transactions contemplated hereby; or (ii) any material disruption of or material
adverse change in financial, banking or capital market conditions.
5.3. Conditions to Obligations of the Company. The obligations of the
Company to consummate the transactions contemplated hereby shall be subject to
the satisfaction or waiver at or prior to the Closing of each of the following
conditions:
(a) Each of the representations and warranties of the Purchasers contained
in this Agreement shall be true and correct when made and as of the Closing
(except to the extent such representations and warranties are made as of a
particular date, in which case such representations and warranties shall have
been true and correct in all material respects as of such date), except for
failures to be true and correct which individually or in the aggregate would not
have a material adverse effect on the ability of the Purchasers to consummate
the transactions contemplated hereby;
(b) The Purchasers shall have performed, satisfied and complied in all
material respects with all of their covenants and agreements set forth in this
Agreement to be performed, satisfied and complied with prior to or at the
Closing Date;
(c) The Purchasers shall have delivered to the Company an officer's
certificate certifying as to the Purchasers' compliance with the conditions set
forth in clauses (a) and (b) of this Section 5.3; and
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(d) The Purchasers, the Purchaser Directors and the Company shall have
entered into the Confidentiality Agreement, in the form attached hereto as
Exhibit 5.3(d).
(e) The Company shall have received an opinion reasonably acceptable to the
Company from Fried, Frank, Harris, Shriver & Jacobson, outside counsel to the
Purchasers, with respect to non-contravention, due formation, due authorization,
and the valid and binding nature of this Agreement and the Registration Rights
Agreement.
ARTICLE VI
TERMINATION
6.1. Termination. This Agreement may be terminated at any time prior to the
Closing:
(a) by mutual written agreement of the Company and the Purchasers; or
(b) by either the Purchasers or the Company if the Closing shall not have
been consummated on or before April 30, 2000 (provided that the right to
terminate this Agreement under this Section 6.1(b) shall not be available to any
party whose failure to fulfill any obligation under this Agreement has been the
cause of or resulted in the failure of the Closing to occur on or before such
date); or
(c) by either the Purchasers or the Company if a court of competent
jurisdiction or governmental, regulatory or administrative agency or commission
shall have issued a nonappealable final order, decree or ruling or taken any
other action having the effect of permanently restraining, enjoining or
otherwise prohibiting the transactions contemplated by this Agreement; or
(d) by the Purchasers, if they determine in their sole discretion, that any
of the representations and warranties of the Company contained in Section 2.9 is
untrue or inaccurate in any respect.
6.2. Effect of Termination. In the event of the termination of this
Agreement pursuant to Section 6.1, this Agreement shall forthwith become void
and there shall be no liability on the part of any party hereto (or any
stockholder, director, officer, partner, employee, agent, consultant or
representative of such party) except as set forth in this Section 6.2, provided
that nothing contained in this Agreement shall relieve any party from liability
for any breach of this Agreement and provided further that Sections 8.2, 8.3,
8.13, 8.14 and 8.15 shall survive termination of this Agreement.
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ARTICLE VII
INDEMNIFICATION
7.1. Survival. The representations and warranties of the parties hereto
contained in this Agreement or in any of the other Transaction Documents shall
expire on the 18-month anniversary of the Closing Date, except that the
representations and warranties set forth in Sections 2.1(a), 2.2, 2.3, 3.5 and
3.6 shall survive indefinitely. After the expiration of such periods, any claim
by a party hereto based upon any such representation or warranty shall be of no
further force and effect, except to the extent a party has asserted a claim in
accordance with this Article VII for breach of any such representation or
warranty prior to the expiration of such period, in which event any
representation or warranty to which such claim relates shall survive with
respect to such claim until such claim is resolved as provided in this Article
VII. The covenants and agreements of the parties hereto contained in this
Agreement in any of the other Transaction Documents shall survive the Closing
until performed in accordance with their terms.
7.2. Indemnification. (a) The Company shall indemnify, defend and hold
harmless the Purchasers, their Affiliates, and their respective officers,
directors, partners, members, employees, agents, representatives, successors and
assigns (each a "Purchasers Indemnified Person") from and against all Losses
incurred or suffered by a Purchaser Indemnified Person (whether incurred or
suffered directly or indirectly through ownership of capital stock of the
Company or otherwise) arising from (i) the breach of any of the representations
or warranties made by the Company in this Agreement or any other Transaction
Document or (ii) the breach of any covenant or agreement made by the Company in
this Agreement or any other Transaction Document. Notwithstanding the foregoing,
(A) no claim may be made against the Company for indemnification pursuant to
Section 7.2(a)(i) unless the aggregate liability of the Company exceeds $8.5
million, and the Company shall then only be liable for Losses in excess of such
amount and (B) the Company's maximum liability for indemnification pursuant to
Section 7.2(a)(i) shall not exceed $212.5 million.
(b) The Purchasers shall indemnify, defend and hold harmless the Company,
its Affiliates, and their respective officers, directors, partners, members,
employees, agents, representatives, successors and assigns (each a "Company
Indemnified Person") from and against all Losses incurred or suffered by a
Company Indemnified Person arising from (i) the breach of any of the
representations or warranties made by the Purchasers in this Agreement or any
other Transaction Document or (ii) the breach of any covenant or agreement made
by the Purchasers in this Agreement or any other Transaction Document.
Notwithstanding the foregoing, (A) no claim may be made against the Purchasers
for indemnification pursuant to Section 7.2(b)(i) unless the aggregate liability
of the Purchasers exceeds $8.5 million, and the Purchasers shall then
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only be liable for Losses in excess of such amount and (B) the Purchasers'
maximum liability for indemnification pursuant to Section 7.2(b)(i) shall not
exceed $212.5 million.
(c) A party seeking indemnification under this Section 7.2 shall, promptly
upon becoming aware of the facts indicating that a claim for indemnification may
be warranted and in any event prior to the end of the applicable survival period
under Section 7.1, give to the party from whom indemnification is being sought a
notice of claim relating to such Loss (a "Claim Notice"). Each Claim Notice
shall specify the nature of the claim, the applicable provision(s) of this
Agreement or other instrument under which the claim for indemnity arises, and,
if possible, the amount or the estimated amount thereof. No failure or delay in
giving a Claim Notice (so long as the same is given prior to expiration of the
representation or warranty upon which the claim is based) and no failure to
include any specific information relating to the claim (such as the amount or
estimated amount thereof) or any reference to any provision of this Agreement or
other instrument under which the claim arises shall affect the obligation of the
party from whom indemnification is sought.
7.3. Inspections; No Other Representations. The Purchasers are informed and
sophisticated purchasers, and have undertaken such investigation and have been
provided with and have evaluated such documents and information as they deem
necessary to enable them to make an informed decision with respect to the
execution, delivery and performance of this Agreement. Each Purchaser will
undertake prior to the Closing such further investigation and request such
additional documents and information as it deems necessary. Each Purchaser
agrees to accept the Preferred Shares based upon its own inspection, examination
and determination with respect thereto as to all matters, and without reliance
upon any express or implied representations or warranties of any nature made by
or on behalf or imputed to the Company, except as expressly set forth in this
Agreement. Without limiting the generality of the foregoing, each Purchaser
acknowledges that the Company makes no representation or warranty with respect
to any projections, estimates or budgets delivered to or made available to
Purchasers of future revenues, future results of operations (or any component
thereof), future cash flows or future financial condition (or any component
thereof) of the Company and its Subsidiaries or the future business and
operations of the Company and the Subsidiaries except as expressly set forth in
this Agreement.
7.4. Exclusivity. Except as specifically set forth in this Agreement and
except in the case of fraud, effective as of the Closing, each party hereby
waives any rights and claims such party may have against the other party hereto,
whether in law or in equity, relating to any breach of any representation or
warranty by any party hereunder. After the Closing, Sections 7.1, 7.2(a) and
7.2(b) will provide the exclusive remedy for any misrepresentation or breach of
warranty, except in the case of fraud.
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ARTICLE VIII
MISCELLANEOUS
8.1. Defined Terms; Interpretations. The following terms, as used herein,
shall have the following meanings:
"1998 Balance Sheet" shall have the meaning ascribed thereto in Section
2.5.
"Affiliate" shall have the meaning ascribed to such term in Rule 12b-2 of
the General Rules and Regulations under the Exchange Act.
"Agreement" shall have the meaning ascribed thereto in the preamble.
"Board of Directors" shall mean the Board of Directors of the Company.
"Certificates of Designation" shall have the meaning ascribed thereto in
Section 2.2.
"Claim Notice" shall have the meaning ascribed thereto in Section 7.2(c).
"Closing" shall have the meaning ascribed thereto in Section 1.2(a).
"Closing Date" shall have the meaning ascribed thereto in Section 1.2(a).
"Commitments" shall have the meaning ascribed thereto in Section 2.11.
"Common Stock" shall have the meaning ascribed thereto in Section 2.3 and
shall include, as the context may require, Class A Common Stock, Class B Common
Stock and all Common Stock now or hereafter authorized to be issued, and any and
all securities of any kind whatsoever of the Company which may be exchanged for
or converted into Common Stock, and any and all securities of any kind
whatsoever of the Company which may be issued on or after the date hereof in
respect of in exchange for, or upon conversion of shares of Common Stock
pursuant to a merger, consolidation, stock split, stock dividend,
recapitalization of the Company or otherwise.
"Company" shall have the meaning ascribed thereto in the preamble.
"Company Indemnified Person" shall have the meaning ascribed thereto in
Section 7.2(b).
"Confidentiality Agreement" shall have the meaning ascribed thereto in
Section 8.7.
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"Consents" shall have the meaning ascribed thereto in Section 4.4.
"DGCL" shall mean the Delaware General Corporation Law.
"Encumbrances" shall have the meaning ascribed thereto in Section 2.1(b).
"ERISA" shall mean the Employee Retirement Income Securities Act of 1974,
as amended.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as amended,
or any successor federal statute, and the rules and regulations of the SEC
thereunder, all as the same shall be in effect at the time. Reference to a
particular section of the Securities Exchange Act of 1934, as amended, shall
include reference to the comparable section, if any, of any such successor
federal statute.
"Existing Preferred Stock" shall have the meaning ascribed thereto in
Section 2.3.
"14% Preferred Stock" shall have the meaning ascribed thereto in Section
2.3.
"GAAP" shall have the meaning ascribed thereto in Section 2.5.
"Governmental Entity" shall mean any supernational, national, foreign,
federal, state or local judicial, legislative, executive, administrative or
regulatory body or authority.
"HSR Act" shall mean the Hart-Scott-Rodino Antitrust Improvements Act of
1976, as amended, and the rules and regulations thereunder.
"Knowledge", with respect to the Company, shall mean the knowledge of
Daniel F. Akerson, Craig O. McCaw, Steven W. Hooper, Kathleen H. Iskra, Peter
Campbell, Gary Begeman, Douglas Carter, Noelle Beams, R. Gerard Salemme, Dan
Gonzales, David Goesling, Dennis O'Connell, Robert Hopkins and Dennis Weibling,
and the knowledge that any of the foregoing persons would have after due and
reasonable inquiry and investigation.
"Laws" shall include all foreign, federal, state, and local laws, statutes,
ordinances, rules, regulations, orders, judgments, decrees and bodies of law.
"Licenses" shall have the meaning ascribed thereto in Section 2.10.
"Litigation" shall have the meaning ascribed thereto in Section 2.7.
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"Losses" shall mean each and all of the following items: claims, losses,
(including, without limitation, losses of earnings) liabilities, obligations,
payments, damages (actual or punitive but not consequential), charges,
judgments, fines, penalties, amounts paid in settlement, costs and expenses
(including, without limitation, interest which may be imposed in connection
therewith, costs and expenses of investigation, actions, suits, proceedings,
demands, assessments and fees, expenses and disbursements of counsel,
consultants and other experts).
"Material Adverse Effect" shall mean a material adverse effect on the
properties, business, prospects, operations, results of operations, earnings,
assets, liabilities or condition (financial or otherwise) of the Company and its
Subsidiaries taken as a whole.
"Person" shall mean any individual, firm, corporation, limited liability
company, partnership, company or other entity, and shall include any successor
(by merger or otherwise) of such entity.
"Preferred Shares" shall have the meaning ascribed thereto in the recitals.
"Purchase Price" shall have the meaning ascribed thereto in Section 1.1.
"Purchasers" shall have the meaning ascribed thereto in the preamble.
"Purchasers Indemnified Person" shall have the meaning ascribed thereto in
Section 7.2(a).
"Registration Rights Agreement" shall have the meaning ascribed thereto in
Section 5.2(d).
"SEC" shall mean the Securities and Exchange Commission.
"SEC Reports" shall have the meaning ascribed thereto in Section 2.4.
"Securities Act" shall mean the Securities Act of 1933, as amended, or any
successor federal statute, and the rules and regulations of the SEC thereunder,
all as the same shall be in effect at the time. Reference to a particular
section of the Securities Act shall include reference to the comparable section,
if any, of such successor federal statute.
"Series C Preferred Stock" shall have the meaning ascribed thereto in the
recitals.
"Series D Preferred Stock" shall have the meaning ascribed thereto in the
recitals.
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"6 1/2%" Preferred Stock" shall have the meaning ascribed thereto in
Section 2.3.
"Shares" shall mean the shares of Class A Common Stock initially issuable
upon conversion of Preferred Shares.
"Significant Subsidiaries" shall have the meaning ascribed thereto in
Section 2.1(b).
"Strategic Investor" shall mean any Person directly engaged in a related or
complementary business to the business engaged in by the Company and/or any of
the Subsidiaries if, at the time such Strategic Investor acquires Senior Capital
Stock, a significant business or technological relationship between the Company
and such Person is contemplated pursuant to a written agreement.
"Strategic Senior Capital Stock Issuance" shall mean the issuance of any
Senior Capital Stock to a Strategic Investor.
"Subsidiaries" shall mean the collective reference to the Significant
Subsidiaries and all other direct or indirect subsidiaries of the Company.
"Transaction Documents" shall mean this Agreement, the Certificates of
Designation, the Registration Rights Agreement and all other contracts,
agreements, schedules, certificates and other documents being delivered pursuant
to or in connection with this Agreement or such other documents or the
transactions contemplated hereby or thereby.
8.2. Fees and Expenses. At the Closing, the Company shall pay, or reimburse
the Purchasers for, all reasonable costs and expenses incurred by the Purchasers
in connection with the negotiation, execution, delivery, performance and
consummation of this Agreement and the transactions contemplated hereby; but in
no event shall the Company pay or reimburse the Purchasers for such costs and
expenses in an amount in excess of $1,500,000. The Company shall pay its own
expenses incurred in connection with the negotiation, execution, delivery,
performance and consummation of this Agreement and the transactions contemplated
hereby.
8.3. Public Announcements. The Purchasers and the Company shall consult
with each other before issuing any press release with respect to this Agreement
or the transactions contemplated hereby and neither shall issue any such press
release or make any such public statement without the prior consent of the
other, which consent shall not be unreasonably withheld; provided, however, that
a party may, without the prior consent of the other party, issue such press
release or make such public statement as may upon the advice of counsel be
required by Law if it has used all reasonable efforts to consult with the other
party prior thereto.
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8.4. Restrictive Legends. No Preferred Shares or Shares may be transferred
without registration under the Securities Act and applicable state securities
laws unless counsel to the Company shall advise the Company that such transfer
may be effected without such registration. Each certificate representing any of
the foregoing shall bear legends in substantially the following form:
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933 OR THE SECURITIES LAWS OF ANY STATE AND
MAY NOT BE SOLD OR OTHERWISE DISPOSED OF EXCEPT PURSUANT TO AN EFFECTIVE
REGISTRATION STATEMENT UNDER SUCH ACT AND APPLICABLE STATE SECURITIES LAWS
OR AN APPLICABLE EXEMPTION TO THE REGISTRATION REQUIREMENTS OF SUCH ACT OR
SUCH LAWS.
THE SALE, PLEDGE, TRANSFER, ASSIGNMENT OR OTHER DISPOSITION OF THE SHARES
REPRESENTED BY THIS CERTIFICATE IS RESTRICTED BY AND SUBJECT TO THE
PROVISIONS OF A STOCK PURCHASE AGREEMENT DATED AS OF DECEMBER 7, 1999, A
COPY OF WHICH IS AVAILABLE UPON REQUEST FOR INSPECTION AT THE OFFICES OF
THE CORPORATION. ANY SUCH REQUEST SHOULD BE ADDRESSED TO THE SECRETARY OF
THE CORPORATION.
8.5. Further Assurances. At any time or from time to time after the
Closing, the Company, on the one hand, and the Purchasers, on the other hand,
agree to cooperate with each other, and at the request of the other party, to
execute and deliver any further instruments or documents and to take all such
further action as the other party may reasonably request in order to evidence or
effectuate the consummation of the transactions contemplated hereby or by the
other Transaction Documents and to otherwise carry out the intent of the parties
hereunder or thereunder.
8.6. Successors and Assigns. This Agreement shall bind and inure to the
benefit of the Company and the Purchasers and the respective successors,
permitted assigns, heirs and personal representatives of the Company and the
Purchasers, provided that the Company may not assign its rights or obligations
under this Agreement to any Person without the prior written consent of the
Purchasers, and provided further that the Purchasers may not assign their rights
or obligations under this Agreement to any Person (other than an Affiliate)
without the prior written consent of the Company, which consent
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shall not be unreasonably withheld or delayed. In addition, and whether or not
any express assignment has been made, the provisions of this Agreement which are
for the Purchasers' benefit as purchasers or holders of Preferred Stock or
Shares are also for the benefit of, and enforceable by, any subsequent holder of
such Preferred Stock or Shares.
8.7. Entire Agreement. This Agreement and the other Transaction Documents
contain the entire agreement between the parties with respect to the subject
matter hereof and supersede all prior and contemporaneous arrangements or
understandings with respect thereto; provided that the Confidentiality Agreement
between the parties (or their Affiliates) will remain in full force and effect
in accordance with its terms (the "Confidentiality Agreement").
8.8. Notices. All notices, requests, consents and other communications
hereunder to any party shall be deemed to be sufficient if contained in a
written instrument delivered in person or sent by telecopy, nationally
recognized overnight courier or first class registered or certified mail, return
receipt requested, postage prepaid, addressed to such party at the address set
forth below or such other address as may hereafter be designated in writing by
such party to the other parties:
(i) if to the Company, to:
NEXTLINK Communications, Inc.
1505 Farm Credit Drive
McLean, VA 22102
Attn: Gary Begeman, Esq.
with a copy to:
Willkie Farr & Gallagher
787 Seventh Avenue
New York, NY 10019
Attn: Bruce R. Kraus, Esq.
(ii) if to the Purchasers, to:
c/o Forstmann Little & Co.
767 Fifth Avenue
New York, NY 10153
Attention: Sandra J. Horbach
with a copy to:
Fried, Frank, Harris, Shriver & Jacobson
One New York Plaza
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New York, NY 10004
Telecopy: (212) 859-8587
Attention: Robert C. Schwenkel, Esq.
All such notices, requests, consents and other communications shall be
deemed to have been given or made if and when delivered personally or by
overnight courier to the parties at the above addresses or sent by electronic
transmission, with confirmation received, to the telecopy numbers specified
above (or at such other address or telecopy number for a party as shall be
specified by like notice).
8.9. Amendments. The terms and provisions of this Agreement may be modified
or amended, or any of the provisions hereof waived, temporarily or permanently,
in a writing executed and delivered by the Company and the Purchasers. No waiver
of any of the provisions of this Agreement shall be deemed to or shall
constitute a waiver of any other provision hereof (whether or not similar). No
delay on the part of any party in exercising any right, power or privilege
hereunder shall operate as a waiver thereof.
8.10. Counterparts. This Agreement may be executed in any number of
counterparts, and each such counterpart hereof shall be deemed to be an original
instrument, but all such counterparts together shall constitute but one
agreement.
8.11. Headings. The headings of the sections of this Agreement have been
inserted for convenience of reference only and shall not be deemed to be a part
of this Agreement.
8.12. Nouns and Pronouns. Whenever the context may require, any pronouns
used herein shall include the corresponding masculine, feminine or neuter forms,
and the singular form of names and pronouns shall include the plural and vice
versa.
8.13. GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK WITHOUT GIVING EFFECT TO THE
PRINCIPLES OF CONFLICTS OF LAW.
8.14. Submission to Jurisdiction. Each of the parties hereto hereby
irrevocably and unconditionally consents to submit to the exclusive jurisdiction
of the courts of the State of New York and of the United States of America, in
each case located in the County of New York, for any Litigation arising out of
or relating to this Agreement or the other Transaction Documents and the
transactions contemplated hereby and thereby (and agrees not to commence any
Litigation relating hereto or thereto except in such courts), and further agrees
that service of any process, summons, notice or document by U.S. registered mail
to its respective address set forth in this Agreement shall be
-32-
effective service of process for any Litigation brought against it in any such
court. Each of the parties hereto hereby irrevocably and unconditionally waives
any objection to the laying of venue of any Litigation arising out of this
Agreement or the transactions contemplated hereby in the courts of the State of
New York or the United States of America, in each case located in the County of
New York, hereby further irrevocably and unconditionally waives and agrees not
to plead or claim in any such court that any such Litigation brought in any such
court has been brought in an inconvenient forum.
8.15. WAIVER OF JURY TRIAL. THE COMPANY AND THE PURCHASERS HEREBY WAIVE ANY
RIGHT THEY MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY ACTION, PROCEEDING OR
LITIGATION DIRECTLY OR INDIRECTLY ARISING OUT OF, UNDER OR IN CONNECTION WITH
THIS AGREEMENT OR THE OTHER TRANSACTION DOCUMENTS.
8.16. Severability. Whenever possible, each provision of this Agreement
shall be interpreted in such manner as to be effective and valid, but if any
provision of this Agreement is held to be invalid or unenforceable in any
respect, such invalidity or unenforceability shall not render invalid or
unenforceable any other provision of this Agreement.
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IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement as
of the date first above written.
Purchasers
- ----------
FORSTMANN LITTLE & CO. EQUITY PARTNERSHIP VI, L.P.
By: /s/ Sandra Horbach
------------------------------
Number of Series C Number of Series D
Preferred Shares Preferred Shares Purchase Price
---------------- ---------------- --------------
0 265,625 $265,625,000
FORSTMANN LITTLE & CO. SUBORDINATED DEBT AND EQUITY
MANAGEMENT BUYOUT PARTNERSHIP VII, L.P.
By: /s/ Sandra Horbach
------------------------------
Number of Series C Number of Series D Amount of
Preferred Shares Preferred Shares Purchase Price Closing Dividend
---------------- ---------------- -------------- ----------------
584,375 0 $584,375,000 $8,765,180
NEXTLINK COMMUNICATIONS, INC.
By: /s/ Daniel F. Akerson
------------------------------
Name: Daniel F. Akerson
Title: Chairman and Chief Executive
Officer
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EXHIBIT 2.2A
------------
NEXTLINK COMMUNICATIONS, INC.
CERTIFICATE OF DESIGNATION OF THE POWERS, PREFERENCES AND
RELATIVE, PARTICIPATING, OPTIONAL AND OTHER SPECIAL RIGHTS OF
SERIES C CUMULATIVE CONVERTIBLE PARTICIPATING PREFERRED STOCK
AND QUALIFICATIONS, LIMITATIONS AND RESTRICTIONS THEREOF
Pursuant to Section 151 of the
General Corporation Law of the State of Delaware
NEXTLINK Communications, Inc. (the "Corporation"), a corporation organized
and existing under the General Corporation Law of the State of Delaware, does
hereby certify that, pursuant to authority conferred upon the board of directors
of the Corporation (the "Board of Directors") by the Corporation's Certificate
of Incorporation, as amended (the "Certificate of Incorporation"), and pursuant
to the provisions of Section 151 of the General Corporation Law of the State of
Delaware, said Board of Directors is authorized to issue Preferred Stock of the
Corporation in one or more series and the Board of Directors has duly approved
and adopted the following resolution on [January __, 2000] (the "Resolution"):
RESOLVED that, pursuant to the authority vested in the Board of
Directors by its Certificate of Incorporation, the Board of Directors
hereby creates, authorizes and provides for the issuance of a series of the
preferred stock of the Corporation, par value $.01 per share (such
preferred stock designated as the "Series C Cumulative Convertible
Participating Preferred Stock"), consisting of 584,375 shares and having
the powers, designation, preferences, relative, participating, optional and
other special rights and the qualifications, limitations and restrictions
thereof that are set forth in the Certificate of Incorporation and in this
Resolution as follows:
1. Number and Designation. 584,375 shares of the Preferred Stock of the
Corporation shall constitute a series designated as "Series C Cumulative
Convertible Participating Preferred Stock" (the "Series C Preferred Stock").
2. Definitions. Unless the context otherwise requires, when used herein the
following terms shall have the meaning indicated.
"Board of Directors" means the Board of Directors of the Corporation.
"Business Day" means any day except Saturday, Sunday and any day which
shall be a legal holiday or a day on which banking institutions in New York
City, New York generally are authorized or required by law or other governmental
actions to close.
"Capital Stock" means, with respect to any person, any and all shares,
interests, participations, rights in, or other equivalents (however designated
and whether voting and/or non-voting) of such person's capital stock, whether
outstanding on the Issue Date or issued after the Issue Date, and any and all
rights (other than any evidence of indebtedness), warrants or options
exchangeable for or convertible into such capital stock.
"Change of Control" will be deemed to have occurred at such time as any of
the following occur: (i) any person or any persons acting together that would
constitute a "group" for purposes of Section 13(d) of the Exchange Act, or any
successor provision thereto (other than Eagle River, Craig O. McCaw, Wendy P.
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, (ii) 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 (iii) from and after the date on which the Corporation
has redeemed indefeasibly or defeased in full its obligations in respect of its
12-1/2% Senior Notes due April 15, 2006 or defeased the covenants applicable
thereto in accordance with their terms, 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 any shares of the Corporation's Class A Common
Stock, par value $.02 per share, now or hereafter authorized to be issued, and
any and all securities of any kind whatsoever of the Corporation which may be
exchanged for or converted into Class A Common Stock, any and all securities of
any kind whatsoever of the Corporation which may be issued on or after the date
hereof in respect of, in exchange for, or upon conversion of shares of Class A
Common Stock pursuant to a merger, consolidation, stock split, stock dividend,
recapitalization of the Corporation or otherwise.
"Common Stock" means the Corporation's Class A Common Stock, the
Corporation's Class B Common Stock, par value $.02 per share, and any other
common stock of the Corporation.
"Current Market Price" means the average of the daily Market Prices of the
Common Stock for ten consecutive trading days immediately preceding the date for
which such value is to be computed.
"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, as amended, or
any successor statute, and the rules and regulations promulgated thereunder.
"Issue Date" means the original date of issuance of shares of Series C
Preferred Stock.
"Liquidation Preference" with respect to a share of Series C Preferred
Stock means, as at any date, the sum of (i) $1,000.00 plus (ii) any Special
Amount with respect to such
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share plus (iii) an amount equal to any accrued and unpaid Preferred Dividends
(as defined in paragraph 4(a) below) with respect to such share from the last
Dividend Payment Date through such date.
"Market Price" means, with respect to the Common Stock, on any given day,
(i) the price of the last trade, as reported on the Nasdaq National Market, not
identified as having been reported late to such system, or (ii) if the Common
Stock is so traded, but not so quoted, the average of the last bid and ask
prices, as those prices are reported on the Nasdaq National Market, or (iii) if
the Common Stock is not listed or authorized for trading on the Nasdaq National
Market or any comparable system, the average of the closing bid and asked prices
as furnished by two members of the National Association of Securities Dealers,
Inc. selected from time to time by the Corporation for that purpose. If the
Common Stock is not listed and traded in a manner that the quotations referred
to above are available for the period required hereunder, the Market Price per
share of Common Stock shall be deemed to be the fair value per share of such
security as determined in good faith by the Board of Directors of the
Corporation.
"Net Realizable FMV" means, with respect to a share of Common Stock, if
calculable, the amount of gross proceeds net of underwriters' discounts,
commissions or other selling expenses received by or to be received by the
holder in connection with the sale of such share of Common Stock on a when
issued basis or immediately after the conversion or, in all other cases, an
amount equal to 97% of the Current Market Price of the Common Stock.
"Preference Amount" with respect to a share of Series C Preferred Stock
means, as at any date, the sum of (i) $727.273 plus (ii) any Special Amount,
whether or not declared, with respect to such share plus (iii) an amount equal
to any accrued and unpaid Preferred Dividends with respect to such share from
the last Dividend Payment Date through such date.
"Series D Designation" means the Certificate of Designation for the Series
D Preferred Stock.
"Series D Preferred Stock" means the Series D Convertible Participating
Preferred Stock, par value $.01 per share, of the Corporation.
"Special Amount" with respect to a share of Series C Preferred Stock shall
mean all dividends and other amounts which have become payable in respect of
such share under paragraph 4(a) but which have not been paid. The Special Amount
with respect to any such share shall be reduced by the amount of any such
dividends and other amounts actually paid in respect of such share under
paragraph 4(c).
"Voting Stock" means, with respect to any person, the Capital Stock of any
class or kind ordinarily having the power to vote for the election of directors
or other members of the governing body of such person.
3. Rank. (a) The Series C Preferred Stock and Series D Preferred Stock each
will, with respect to dividend rights and rights on liquidation, winding-up and
dissolution, rank (i) senior to the Corporation's 6-1/2% Cumulative Convertible
Preferred Stock, par value $.01
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per share, all classes of Common Stock and to each other class of Capital Stock
of the Corporation or series of Preferred Stock of the Corporation established
hereafter by the Board of Directors of the Corporation the terms of which do not
expressly provide that such class or series ranks senior to, or on a parity
with, the Series C Preferred Stock and Series D Preferred Stock as to dividend
rights and rights on liquidation, winding-up and dissolution of the Corporation
(collectively referred to, together with all classes of Common Stock of the
Corporation, as "Junior Securities"); (ii) on a parity with each class of
Capital Stock of the Corporation or series of Preferred Stock of the Corporation
established hereafter by the Board of Directors of the Corporation, the terms of
which expressly provide that such class or series will rank on a parity with the
Series C Preferred Stock and Series D Preferred Stock as to dividend rights and
rights on liquidation, winding-up and dissolution (collectively referred to as
"Parity Securities"); and (iii) junior to the Corporation's 14% Senior
Exchangeable Redeemable Preferred Shares, par value $.01 per share (the "Senior
Exchangeable Redeemable Preferred Shares"), and to each class of Capital Stock
of the Corporation or series of Preferred Stock of the Corporation established
hereafter by the Board of Directors of the Corporation in accordance with
Section 9(d) hereof, the terms of which expressly provide that such class or
series will rank senior to the Series C Preferred Stock and Series D Preferred
Stock as to dividend rights and rights on liquidation, winding-up and
dissolution of the Corporation (collectively referred to as "Senior
Securities"); provided that the relative powers, rights and preferences of the
Series C Preferred Stock and Series D Preferred Stock vis-a-vis the other shall
be as set forth herein and in the Series D Designation.
(b) The respective definitions of Junior Securities, Parity Securities and
Senior Securities shall also include any warrants, rights or options or other
securities exercisable or exchangeable for or convertible into any of the Junior
Securities, Parity Securities and Senior Securities, as the case may be.
(c) The Series C Preferred Stock shall be subject to the creation of Junior
Securities and Parity Securities and, to the extent permitted by Section 9(d),
Senior Securities.
4. Dividends. (a) The holders of shares of Series C Preferred Stock shall
be entitled to receive with respect to each share of Series C Preferred Stock,
when, as and if declared by the Board of Directors, out of funds legally
available for the payment of dividends, dividends per annum equal to $54.5455
per share in cash (the "Preferred Dividend"). Preferred Dividends shall accrue
and shall be cumulative whether or not declared from the Issue Date and shall be
payable quarterly in arrears on March 31, June 30, September 30 and December 31
of each year (unless such day is not a Business Day, in which event such
dividends shall be payable on the next succeeding Business Day) (each such date
being a "Dividend Payment Date" and each such quarterly period being a "Dividend
Period"), commencing on March 31, 2000. Each such dividend shall be payable to
the holders of record of shares of the Series C Preferred Stock as they appear
on the stock register of the Corporation at the close of business on the
corresponding Record Date. As used herein, the term "Record Date" means, with
respect to the dividend payable on March 31, June 30, September 30 and December
31, respectively, of each year, the preceding March 15, June 15, September 15
and December 15, or such other date, not more than 60 days or less than 10 days
preceding the payment dates thereof, as shall be fixed as the record date by the
Board of Directors.
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(b) The amount of Preferred Dividends payable for each full Dividend Period
for each outstanding share of Series C Preferred Stock shall be computed by
dividing $54.5455 by four. The amount of Preferred Dividends payable on the
initial Dividend Payment Date, or in respect of any period shorter or longer
than a full Dividend Period, on the Series C Preferred Stock shall be computed
on the basis of twelve 30-day months and a 360-day year. No interest, or sum or
money in lieu of interest, shall be payable in respect of any dividend payment
or payments on the Series C Preferred Stock that may be in arrears.
(c) Accrued and unpaid Special Amounts for any past Dividend Periods may be
declared and paid on any subsequent Dividend Payment Date, to holders of record
on the corresponding Record Date.
(d) So long as any shares of the Series C Preferred Stock are outstanding,
no dividend, except as described in the last sentence of Section 4(e) below and
except as described in the next succeeding sentence, shall be declared or paid
or set apart for payment on any Parity Securities, nor shall any Parity
Securities be redeemed, purchased or otherwise acquired for any consideration
(or any moneys be paid to or made available for a sinking fund for the
redemption of any shares of any such stock) by the Corporation, directly or
indirectly (except by conversion into or exchange for Parity Securities or
Junior Securities), unless in each case all Special Amounts have been or
contemporaneously are declared and paid or declared and a sum sufficient for the
payment thereof is set apart for such payment on the Series C Preferred Stock
for all Dividend Periods terminating on or prior to the date of payment of the
dividend on, or the date of redemption, purchase, or acquisition for
consideration of, such Parity Securities. When Special Amounts are not paid in
full or a sum sufficient for such payment is not set apart, as aforesaid, all
Special Amounts and additional amounts declared upon shares of the Series C
Preferred Stock and all dividends and additional amounts declared upon any other
Parity Securities shall be declared ratably in proportion to the respective
amounts of Special Amounts and additional amounts accumulated and unpaid on the
Series C Preferred Stock and dividends and additional amounts accumulated and
unpaid on such Parity Securities.
(e) So long as any shares of the Series C Preferred Stock are outstanding,
no dividends shall be declared or paid or set apart for payment and no other
distribution shall be declared or made upon Junior Securities, nor shall any
Junior Securities be redeemed, purchased or otherwise acquired (any such
dividend, distribution, redemption, purchase or acquisition being hereinafter
referred to as a "Junior Securities Distribution") for any consideration (or any
moneys be paid to or made available for a sinking fund for the redemption of any
shares of any such stock) by the Corporation, directly or indirectly (except by
conversion into or exchange for Junior Securities), unless in each case (i) all
Special Amounts and additional amounts on all outstanding shares of the Series C
Preferred Stock and accrued and unpaid dividends and additional amounts on any
other Parity Securities shall have been paid or set apart for payment for all
past Dividend Periods with respect to the Series C Preferred Stock and all past
dividend periods with respect to such Parity Securities and (ii) sufficient
funds shall have been paid or set apart for the payment of the dividend for the
current Dividend Period with respect to the Series C Preferred Stock and the
current dividend period with respect to such Parity Securities. Notwithstanding
anything in this Certificate of Designation to the contrary, the Corporation may
declare and pay dividends on Parity Stock which are payable solely in additional
shares of, or by the increase in the liquidation
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value of, Parity Stock or on Junior Stock which are payable in additional shares
of, or by the increase in the liquidation value of, Junior Stock, as applicable,
or repurchase, redeem or otherwise acquire Junior Stock in exchange for Junior
Stock, and Parity Stock in exchange for Parity Stock or Junior Stock.
(f) So long as any shares of Series C Preferred Stock are outstanding, if
the Corporation pays a dividend in cash, securities or other property on the
Common Stock then at the same time the Corporation shall declare and pay a
dividend on each share of Series C Preferred Stock in an amount equal to the
Series C Per Share Participation Amount. The "Series C Per Share Participation
Amount" means, as at any date, 37.5% of the amount of dividends that would be
paid with respect to the Series C Preferred Stock and Series D Preferred Stock
taken together if converted into Common Stock on the date established as the
record date with respect to such dividend on the Common Stock divided by the
number of shares of Series C Preferred Stock then outstanding.
5. Liquidation Preference. (a) In the event of any liquidation, dissolution
or winding-up of the Corporation, whether voluntary or involuntary, after
payment or distribution of the assets of the Corporation (whether capital or
surplus) shall be made to or set apart for the holders of Senior Securities, and
before any payment or distribution of the assets of the Corporation (whether
capital or surplus) shall be made to or set apart for the holders of Junior
Securities, the holders of the shares of Series C Preferred Stock and Series D
Preferred Stock taken together shall be entitled to receive an amount in cash
equal to the greater of (x) the aggregate Liquidation Preferences (as set forth
herein and in the Series D Designation) of the shares of Series C Preferred
Stock and Series D Preferred Stock as of the date of liquidation, or (y) the
aggregate amount that would have been received with respect to the shares of
Series C Preferred Stock and Series D Preferred Stock if such stock had been
converted to Common Stock immediately prior to such liquidation, dissolution or
winding-up. If, upon any liquidation, dissolution or winding-up of the
Corporation, the assets of the Corporation, or proceeds thereof, shall be
insufficient to pay in full the aforesaid amounts under clause (x) of the
preceding sentence and liquidating payments on all Parity Securities, then such
assets, or proceeds thereof, shall (i) be distributed among the shares of Series
C Preferred Stock and the Series D Preferred Stock taken together and all such
other Parity Securities ratably in accordance with the respective amounts that
would be payable on such shares of Preferred Stock and any such other Parity
Securities if all amounts payable thereon were paid in full and (ii) the amount
distributable under clause (i) to the Series C Preferred Stock and Series D
Preferred Stock taken together, shall first be distributed to the Series C
Preferred Stock until it has received an amount equal to the aggregate
Preference Amounts of all Series C Preferred Stock outstanding as of the date of
liquidation and thereafter 37.5% to the Series C Preferred Stock and 62.5% to
the Series D Preferred Stock. If, upon any liquidation, dissolution or
winding-up of the Corporation, the assets of the Corporation, or proceeds
thereof, distributable to the Series C Preferred Stock and Series D Preferred
Stock taken together shall be sufficient to pay in full the aforesaid amounts
under clause (x) of the first sentence of this subsection 5(a) then such amount
shall first be distributed to the Series C Preferred Stock until it has received
an amount equal to the aggregate Preference Amounts of all Series C Preferred
Stock outstanding as of the date of liquidation and thereafter 37.5% to the
Series C Preferred Stock and 62.5% to the Series D Preferred Stock. Any amounts
distributed with respect to the Series C Preferred Stock pursuant to this
paragraph 5(a) shall be allocated pro
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rata among the shares of Series C Preferred Stock. For the purposes of this
paragraph 5, 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 other entities shall be deemed to be a
liquidation, dissolution or winding-up of the Corporation.
(b) Subject to the rights of the holders of any Parity Securities, after
payment shall have been made in full to the holders of the Series C Preferred
Stock and the Series D Preferred Stock taken together, as provided in this
paragraph 5, any other series or class or classes of Junior Securities shall,
subject to the respective terms and provisions (if any) applying thereto, be
entitled to receive any and all assets remaining to be paid or distributed, and
the holders of the Series C Preferred Stock, Series D Preferred Stock and any
Parity Securities shall not be entitled to share therein.
6. Redemption. (a) The Series C Preferred Stock shall not be redeemable by
the Corporation prior to the later of (i) the fifth anniversary of the Issue
Date and (ii) the date on which the Corporation has redeemed indefeasibly or
defeased in full its obligations in respect of its 12-1/2% Senior Notes due
April 15, 2006 or defeased the covenants applicable thereto in accordance with
their terms (the "Redemption Trigger Date"). On and after the Redemption Trigger
Date, to the extent the Corporation shall have funds legally available for such
payment, and subject to the rights of the holders pursuant to Section 8 hereof,
the Corporation may redeem at its option shares of Series C Preferred Stock, at
any time in whole or from time to time in part, at a redemption price per share
equal to the Liquidation Preference as of the date fixed for redemption, without
interest; provided that the Corporation shall only be entitled to redeem shares
of the Series C Preferred Stock if shares of the Series D Preferred Stock are
also redeemed on a proportional basis based on the percentage of each series of
shares outstanding at such time.
(b) To the extent the Corporation shall have funds legally available
therefor, during the 180-day period commencing on the tenth anniversary of the
Issue Date, the holders of the Series C Preferred Stock shall have the right to
cause the Corporation to redeem at any time in whole or from time to time in
part outstanding shares of Series C Preferred Stock, if any, at a redemption
price per share in cash equal to the Liquidation Preference, without interest;
provided that upon any such election the Corporation shall be required to redeem
a proportional amount of the Series D Preferred Stock.
(c) Shares of Series C Preferred Stock which have been issued and
reacquired by the Corporation in any manner, including shares purchased or
redeemed, shall (upon compliance with any applicable provisions of the laws of
the State of Delaware) be retired and have the status of authorized and unissued
shares of the class of Preferred Stock undesignated as to series and may be
redesignated and reissued as part of any series of the Preferred Stock; provided
that no such issued and reacquired shares of Series C Preferred Stock shall be
reissued or sold as Series C Preferred Stock.
(d) If the Corporation is unable or shall fail to discharge its obligation
to redeem outstanding shares of Series C Preferred Stock pursuant to paragraph
6(b) (the "Mandatory Redemption Obligation"), the Mandatory Redemption
Obligation shall be discharged
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as soon as the Corporation is able to discharge such Mandatory Redemption
Obligation. If and so long as any Mandatory Redemption Obligation with respect
to the Series C Preferred Stock shall not be fully discharged, the Corporation
shall not (i) directly or indirectly, redeem, purchase, or otherwise acquire any
Parity Security or discharge any mandatory or optional redemption, sinking fund
or other similar obligation in respect of any Parity Securities or (ii) declare
or make any Junior Securities Distribution, or, directly or indirectly,
discharge any mandatory or optional redemption, sinking fund or other similar
obligation in respect of any Junior Securities.
7. Procedure for Redemption. (a) In the event that fewer than all the
outstanding shares of Series C Preferred Stock are to be redeemed, in the case
of Section 6(a), the number of shares to be redeemed shall be determined by the
Board of Directors and the shares to be redeemed shall be selected pro rata
(with any fractional shares being rounded to the nearest whole shares).
Notwithstanding anything in Section 6 to the contrary, the Corporation shall
only redeem shares of Series C Preferred Stock pursuant to Section 6(a) or 6(b)
on a proportional basis based on the percentage of each series of shares
outstanding at such time.
(b) In the event the Corporation shall redeem shares of Series C Preferred
Stock pursuant to Section 6(a), notice of such redemption shall be given by
first class mail, postage prepaid, mailed not less than 30 days nor more than 60
days prior to the redemption date, to each holder of record of the shares to be
redeemed at such holder's address as the same appears on the stock register of
the Corporation; provided that neither the failure to give such notice nor any
defect therein shall affect the validity of the giving of notice for the
redemption of any share of Series C Preferred Stock to be redeemed except as to
the holder to whom the Corporation has failed to give said notice or except as
to the holder whose notice was defective. Each such notice shall state: (i) the
redemption date; (ii) the number of shares of Series C Preferred Stock to be
redeemed and, if fewer than all the shares held by such holder are to be
redeemed, the number of shares to be redeemed from such holder; (iii) the
redemption price; (iv) the place or places where certificates for such shares
are to be surrendered for payment of the redemption price; and (v) that
dividends on the shares to be redeemed will cease to accrue on such redemption
date.
(c) Notice having been mailed as aforesaid, if applicable, from and after
the redemption date, dividends on the shares of Series C Preferred Stock so
called for redemption shall cease to accrue, and all rights of the holders
thereof as stockholders of the Corporation (except the right to receive from the
Corporation the redemption price and except the right to convert shares so
called for redemption prior to the close of business on the date immediately
preceding the date fixed for such redemption) shall cease. Upon surrender in
accordance with said notice, if applicable, of the certificates for any shares
so redeemed (properly endorsed or assigned for transfer, if the Board of
Directors shall so require and the notice shall so state), such shares shall be
redeemed by the Corporation at the redemption price aforesaid. In case fewer
than all the shares represented by any such certificate are redeemed, a new
certificate shall be issued representing the unredeemed shares without cost to
the holder thereof.
8. Conversion. (a) (i) Subject to the provisions of this Section 8, the
holders of shares of Series C Preferred Stock shall have the right, at any time
in whole and from time to time in part, at such holders' option, to convert any
or all outstanding shares (and fractional
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shares) of Series C Preferred Stock held by such holders into fully paid and
non-assessable shares of Class A Common Stock; provided that upon the exercise
by any holder of Series C Preferred Stock of this conversion option, a
proportional amount, based on the percentage of each series of shares
outstanding, of the Series D Preferred Stock shall automatically convert in
accordance with the terms of the Series D Designation. At any time and from time
to time the outstanding shares of Series C Preferred Stock and Series D
Preferred Stock taken together shall be convertible into a number of shares of
Class A Common Stock (the "Aggregate Conversion Shares") equal to the aggregate
Liquidation Preferences of the shares of the Series C Preferred Stock and the
Series D Preferred Stock as set forth herein and in the Series D Designation as
of the date of conversion divided by $63.25, subject to adjustment from time to
time pursuant to paragraph 8(g) hereof (the "Conversion Price"). The Series C
Preferred Stock outstanding as at any date shall be convertible into a number of
shares of Class A Common Stock (the "Aggregate Series C Conversion Shares")
equal to the sum of (A) the aggregate Preference Amounts with respect to all
outstanding shares of Series C Preferred Stock divided by the Net Realizable FMV
of a share of Class A Common Stock at the time of conversion plus (B) .375 times
the excess, if any, of the Aggregate Conversion Shares over the number
determined pursuant to clause (A). Each share of Series C Preferred Stock being
converted shall convert into a number of shares of Class A Common Stock equal to
the Aggregate Series C Conversion Shares divided by the number of shares of
Series C Preferred Stock then outstanding. Notwithstanding any call for
redemption pursuant to Section 6(a), the right to convert shares so called for
redemption shall terminate at the close of business on the date immediately
preceding the date fixed for such redemption unless the Corporation shall
default in making payment of the amount payable upon such redemption.
(ii) In the case of any partial conversion of Series C Preferred Stock by
the holders thereof, selection of the Series D Preferred Stock for automatic
conversion will be made by the Corporation in compliance with the requirements
of the principal national securities exchange, if any, on which the Series D
Preferred Stock is listed, or if the Series D Preferred Stock is not listed on a
national securities exchange, on a pro rata basis, by lot or such other method
as the Corporation, in its sole discretion, shall deem fair and appropriate;
provided, however, that the Corporation may redeem all the shares held by
holders of fewer than 5 shares of Series D Preferred Stock (or all of the shares
held by the holders who would hold less than 5 shares of Series D Preferred
Stock as a result of such redemption) as may be determined by the Corporation.
(b) (i) In order to exercise the conversion privilege, the holder of the
shares of Series C Preferred Stock to be converted shall surrender the
certificate representing such shares at the principal executive offices of the
Corporation, with a written notice of election to convert completed and signed,
specifying the number of shares to be converted. Unless the shares issuable on
conversion are to be issued in the same name as the name in which such shares of
Series C Preferred Stock are registered, each share surrendered for conversion
shall be accompanied by instruments of transfer, in form satisfactory to the
Corporation, duly executed by the holder or the holder's duly authorized
attorney, and an amount sufficient to pay any transfer or similar tax.
(ii) As promptly as practicable after the surrender by the holder of the
certificates for shares of Series C Preferred Stock as aforesaid, the
Corporation shall issue and
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shall deliver to such holder, or on the holder's written order to the holder's
transferee, (x) a certificate or certificates for the whole number of shares of
Class A Common Stock issuable upon the conversion of such shares in accordance
with the provisions of this paragraph 8, (y) any cash adjustment required
pursuant to Section 8(f), and (z) in the event of a conversion in part, a
certificate or certificates for the whole number of shares of Series C Preferred
Stock not being so converted.
(iii) Each conversion of shares of Series C Preferred Stock pursuant to
paragraph 8(a) shall be deemed to have been effected immediately prior to the
close of business on the date on which the certificates for shares of Series C
Preferred Stock shall have been surrendered and such notice received by the
Corporation as aforesaid, and the person in whose name or names any certificate
or certificates for shares of Class A Common Stock shall be issuable upon such
conversion shall be deemed to have become the holder of record of the shares of
Class A Common Stock represented thereby at such time on such date and such
conversion shall be into a number of whole shares of Class A Common Stock in
respect of the shares of Series C Preferred Stock being converted as determined
in accordance with this Section 8 at such time on such date. All shares of Class
A Common Stock delivered upon conversion of the Series C Preferred Stock will
upon delivery be duly and validly issued and fully paid and non-assessable, free
of all liens and charges and not subject to any preemptive rights. Upon the
surrender of certificates representing the shares of Series C Preferred Stock to
be converted, the shares to be so converted shall no longer be deemed to be
outstanding and all rights of a holder with respect to such shares surrendered
for conversion shall immediately terminate except the right to receive the Class
A Common Stock and other amounts payable pursuant to this paragraph 8 and a
certificate or certificates representing the shares of Series C Preferred Stock
not converted.
(c) (i) Upon delivery to the Corporation by a holder of shares of Series C
Preferred Stock of a notice of election to convert, the right of the Corporation
to redeem such shares of Series C Preferred Stock shall terminate, regardless of
whether a notice of redemption has been mailed as aforesaid.
(ii) If a holder of Series C Preferred Stock delivers to the Corporation a
certificate therefor and a notice of election to convert, the Series C Preferred
Stock to be converted shall cease to accrue dividends pursuant to paragraph 4
but shall continue to be entitled to receive pro rata dividends for the period
from the last Dividend Payment Date to the date of delivery of the notice of
election to convert in preference to and in priority over any dividends on any
Junior Securities.
(iii) Except as provided above and in paragraph 8(g), the Corporation shall
make no payment or adjustment for accrued and unpaid dividends on shares of
Series C Preferred Stock, whether or not in arrears, on conversion of such
shares or for dividends theretofore paid on the shares of Class A Common Stock.
(d) (i) The Corporation covenants that it will at all times reserve and
keep available, free from preemptive rights, such number of its authorized but
unissued shares of Class A Common Stock as shall be required for the purpose of
effecting conversions of the Series C Preferred Stock.
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(ii) Prior to the delivery of any securities which the Corporation shall be
obligated to deliver upon conversion of the Series C Preferred Stock, the
Corporation shall comply with all applicable federal and state laws and
regulations which require action to be taken by the Corporation.
(e) The Corporation will pay any and all documentary stamp or similar issue
or transfer taxes payable in respect of the issue or delivery of shares of Class
A Common Stock on conversion of the Series C Preferred Stock pursuant hereto;
provided that the Corporation shall not be required to pay any tax which may be
payable in respect of any transfer involved in the issue or delivery of shares
of Class A Common Stock in a name other than that of the holder of the Series C
Preferred Stock to be converted and no such issue or delivery shall be made
unless and until the person requesting such issue or delivery has paid to the
Corporation the amount of any such tax or has established, to the satisfaction
of the Corporation, that such tax has been paid.
(f) In connection with the conversion of any shares of Series C Preferred
Stock, no fractions of shares of Class A Common Stock shall be required to be
issued to the holder of such shares of Series C Preferred Stock, but in lieu
thereof the Corporation shall pay a cash adjustment in respect of such
fractional interest in an amount equal to such fractional interest multiplied by
the Market Price per share of Class A Common Stock on the business day next
preceding the business day on which such shares of Series C Preferred Stock are
deemed to have been converted.
(g) (i) In case the Corporation shall at any time after the Issue Date (A)
declare a dividend or make a distribution on Common Stock payable in Common
Stock (other than dividends or distributions payable to holders of the Series C
Preferred Stock including dividends paid as contemplated by Section 4(f)), (B)
subdivide or split the outstanding Common Stock, (C) combine or reclassify the
outstanding Common Stock into a smaller number of shares, (D) issue any shares
of its Capital Stock in a reclassification of Common Stock (including any such
reclassification in connection with a consolidation or merger in which the
Corporation is the continuing corporation), or (E) consolidate with, or merge
with or into, any other person, the Conversion Price in effect at the time of
the record date for such dividend or distribution or on the effective date of
such subdivision, split, combination, consolidation, merger or reclassification
shall be adjusted so that the conversion of the Series C Preferred Stock after
such time shall entitle the holder to receive the aggregate number of shares of
Common Stock or other securities of the Corporation (or other securities into
which such shares of Common Stock have been converted, exchanged, combined,
consolidated, merged or reclassified pursuant to clause 8(g)(i)(C), 8(g)(i)(D)
or 8(g)(i)(E) above) which, if the Series C Preferred Stock had been converted
immediately prior to such time, such holder would have owned upon such
conversion and been entitled to receive by virtue of such dividend,
distribution, subdivision, split, combination, consolidation, merger or
reclassification. Such adjustment shall be made successively whenever an event
listed above shall occur.
(ii) In case the Corporation shall issue or sell any Common Stock (or
rights, options, warrants or other securities convertible into or exercisable or
exchangeable for shares of Common Stock) without consideration or for a
consideration per share (or having a conversion, exchange or exercise price per
share) less than the Current Market Price on the date
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of such issuance (or, in the case of convertible or exchangeable or exercisable
securities, less than the Current Market Price as of the date of issuance of the
rights, options, warrants or other securities in respect of which shares of
Common Stock were issued) then, and in each such case, the Conversion Price
shall be reduced to an amount determined by multiplying (A) the Conversion Price
in effect on the day immediately prior to such date by (B) a fraction, the
numerator of which shall be the sum of (1) the number of shares of Common Stock
outstanding immediately prior to such sale or issuance multiplied by the then
applicable Current Market Price (such Current Market Price, the "Adjustment
Price") and (2) the aggregate consideration receivable by the Corporation for
the total number of shares of Common Stock so issued (or into or for which the
rights, options, warrants or other securities are convertible, exercisable or
exchangeable), and the denominator of which shall be the sum of (x) the total
number of shares of Common Stock outstanding immediately prior to such sale or
issue and (y) the number of additional shares of Common Stock issued (or into or
for which the rights, options, warrants or other securities may be converted,
exercised or exchanged), multiplied by the Adjustment Price. In case any portion
of the consideration to be received by the Corporation shall be in a form other
than cash, the fair market value of such noncash consideration shall be utilized
in the foregoing computation. Such fair market value shall be determined in good
faith by the Board of Directors.
(iii) In case the Corporation shall fix a record date for the issuance on a
pro rata basis of rights, options or warrants to the holders of its Common Stock
or other securities entitling such holders to subscribe for or purchase shares
of Common Stock (or securities convertible into or exercisable or exchangeable
for shares of Common Stock) at a price per share of Common Stock (or having a
conversion, exercise or exchange price per share of Common Stock, in the case of
a security convertible into, or exerciseable or exchangeable for, shares of
Common Stock) less than the Current Market Price on such record date, the
maximum number of shares of Common Stock issuable upon exercise of such rights,
options or warrants (or conversion of such convertible securities) shall be
deemed to have been issued and outstanding as of such record date and the
Conversion Price shall be adjusted pursuant to paragraph 8(g)(ii) hereof, as
though such maximum number of shares of Common Stock had been so issued for an
aggregate consideration payable by the holders of such rights, options, warrants
or other securities prior to their receipt of such shares of Common Stock. In
case any portion of such consideration shall be in a form other than cash, the
fair market value of such noncash consideration shall be determined as set forth
in paragraph 8(g)(ii) hereof. Such adjustment shall be made successively
whenever such record date is fixed; and in the event that such rights, options
or warrants are not so issued or expire in whole or in part unexercised, or in
the event of a change in the number of shares of Common Stock to which the
holders of such rights, options or warrants are entitled (other than pursuant to
adjustment provisions therein comparable to those contained in this paragraph
8(g)), the Conversion Price shall again be adjusted as follows: (A) in the event
that all of such rights, options or warrants expire unexercised, the Conversion
Price shall be the Conversion Price that would then be in effect if such record
date had not been fixed; (B) in the event that less than all of such rights,
options or warrants expire unexercised, the Conversion Price shall be adjusted
pursuant to paragraph 8(g)(ii) to reflect the maximum number of shares of Common
Stock issuable upon exercise of such rights, options or warrants that remain
outstanding (without taking into effect shares of Common Stock issuable upon
exercise of rights, options or warrants that have lapsed or expired); and (C) in
the event of a change in the number of shares of
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Common Stock to which the holders of such rights, options or warrants are
entitled, the Conversion Price shall be adjusted to reflect the Conversion Price
which would then be in effect if such holder had initially been entitled to such
changed number of shares of Common Stock. Notwithstanding anything herein to the
contrary, no further adjustment to the Conversion Price shall be made upon the
issuance or sale of Common Stock upon the exercise of any rights, options or
warrants to subscribe for or purchase Common Stock, if any adjustment in the
Conversion Price was made or required to be made upon the record date for the
issuance or sale of such rights, options or warrants under this clause
8(g)(iii). Notwithstanding anything herein to the contrary, no adjustment in the
Conversion Price shall be made under this clause 8(g)(iii) to the extent the
holders of Series C Preferred Stock participate in any such distribution in
accordance with Section 4(f) hereof.
(iv) In case the Corporation shall fix a record date for the making of a
distribution to all holders of any class of Common Stock (including any such
distribution made in connection with a consolidation or merger in which the
Corporation is the continuing corporation) of evidences of indebtedness, assets
or other property, the Conversion Price to be in effect after such record date
shall be determined by multiplying the Conversion Price in effect immediately
prior to such record date by a fraction, (A) the numerator of which shall be the
Conversion Price immediately prior to such distributions less the fair market
value (determined as set forth in paragraph 8(g)(ii) hereof) of the portion of
the assets, other property or evidence of indebtedness so to be distributed
which is applicable to one share of Common Stock and (B) the denominator of
which shall be the Conversion Price immediately prior to such distributions.
Such adjustments shall be made successively whenever such a record date is
fixed; and in the event that such distribution is not so made, the Conversion
Price shall again be adjusted to be the Conversion Price which would then be in
effect if such record date had not been fixed. An adjustment to the Conversion
Price also shall be made in respect of dividends and distributions paid
exclusively in cash to all holders of any class of Common Stock (excluding any
dividend or distribution in connection with the liquidation, dissolution or
winding-up of the Corporation, whether voluntary or involuntary, and any cash
that is distributed upon a merger, consolidation or other transaction for which
an adjustment pursuant to paragraph 8(g)(i) is made) where the sum of (1) all
such cash dividends and distributions made within the preceding 12 months in
respect of which no adjustment has been made and (2) any cash and the fair
market value (determined as set forth in paragraph 8(g)(ii) hereof) of other
consideration paid in respect of any repurchases of Common Stock by the
Corporation or any of its subsidiaries within the preceding 12 months in respect
of which no adjustment has been made, exceeds 2% of the Corporation's market
capitalization (being the product of the then Current Market Price of the Common
Stock times the aggregate number of shares of Common Stock then outstanding on
the record date for such distribution). The Conversion Price to be in effect
after such adjustment shall be determined by subtracting from the Conversion
Price in effect prior to such adjustment an amount equal to the quotient of (A)
the sum of clause (1) and clause (2) above and (B) the number of shares of
Common Stock outstanding on the date such adjustment is to be determined.
Notwithstanding anything herein to the contrary, no adjustment in the Conversion
Price shall be made under this clause 8(g)(iv) to the extent the holders of
Series C Preferred Stock participate in any such distribution in accordance with
Section 4(f) hereof.
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(v) No adjustment to the Conversion Price pursuant to (a) paragraphs
8(g)(ii), 8(g)(iii) or 8(g)(iv) above shall be required unless such adjustment
would require an increase or decrease of at least $.50 in the Conversion Price
or (b) paragraph 8(g)(ii) above shall be required with respect to rights,
options, warrants or other securities outstanding on the Issue Date or issued
pursuant to the Company's employee benefit plans in effect on the Issue Date or
reserved for issuance thereunder as of the Issue Date or stock options granted
after the Issue Date pursuant to any stock option plans adopted by the Board of
Directors so long as such options have an exercise price not less than the
Market Price on the day preceding such grant; provided, however, that any
adjustments which by reason of paragraph 8(g)(v)(a) are not required to be made
shall be carried forward and taken into account in any subsequent adjustment.
All calculations under this paragraph 8(g) shall be made to the nearest four
decimal points.
(vi) In the event that, at any time as a result of the provisions of this
paragraph 8(g), a holder of Series C Preferred Stock upon subsequent conversion
shall become entitled to receive any shares of Capital Stock of the Corporation
other than Common Stock, the number of such other shares so receivable upon
conversion of Series C Preferred Stock shall thereafter be subject to adjustment
from time to time in a manner and on terms as nearly equivalent as practicable
to the provisions contained herein.
(vii) If, as a result of the operation of paragraphs 8(g)(ii), 8(g)(iii) or
8(g)(iv) above and corresponding provisions in the Series D Designation, the
cumulative number of shares of Class A Common Stock issued or issuable upon
conversion of the Series C Preferred Stock and Series D Preferred Stock, after
giving effect to (x) the adjustments described in such paragraphs and
corresponding provisions in the Series D Designation and (y) all prior
conversions of the Series C Preferred Stock and Series D Preferred Stock, would
equal or exceed a number (the "Threshold Number") equal to 20% of the
outstanding shares of Class A Common Stock as of the Issue Date and if the
Company receives a written opinion of its outside counsel that the issuance of
such shares in excess of the Threshold Number would violate the rules of the
Nasdaq National Market or any other exchange on which the Class A Common Stock
is then quoted or traded, then until and unless the Corporation obtains the
approval of its common stockholders for the issuance of any such shares of Class
A Common Stock in excess of the Threshold Number, the holders shall only be
entitled to exercise their conversion rights with respect to a maximum number of
Series C and Series D Preferred Stock that would not result in an amount of
shares of Class A Common Stock being issued in excess of the Threshold Number,
but in any case, the Conversion Price shall be adjusted as provided in such
paragraphs. If, as a result of the operation of the preceding sentence, the
conversion rights of the holders of Series C Preferred Stock are limited by
operation thereof because appropriate stockholder approval has not been
obtained, the Corporation agrees for the benefit of the holders of Series C
Preferred Stock and Series D Preferred Stock to use its reasonable best efforts
to seek, as promptly as reasonably practicable, the requisite approval of its
common stockholders (and shall seek such approval as often as necessary to
obtain such approval), and will recommend to its stockholders that they vote in
favor of a resolution providing for such approval, for the amount of shares of
Class A Common Stock that would be issued or issuable upon conversion in full of
all outstanding Series C and Series D Preferred Stock. Notwithstanding anything
to the contrary set forth above, the holders of Series C Preferred Stock and
Series D Preferred Stock shall be entitled to exercise such holders' conversion
rights in full (after giving effect to any and all anti-dilution adjustments
resulting from
-14-
operation of paragraphs 8(g)(ii), 8(g)(iii) or 8(g)(iv)) in connection with any
merger, consolidation or other transaction in which such Series C Preferred
Stock, Series D Preferred Stock or Class A Common Stock is being converted into
or exchanged for cash, securities or other property in connection with such
merger, consolidation or other transaction. In the event that the Corporation
elects to redeem the shares of Series C Preferred Stock and Series D Preferred
Stock at a time when the holders' right to convert such shares into Class A
Common Stock is limited as provided in this paragraph (g), and such holders seek
to exercise such conversion rights prior to the date fixed for redemption in
accordance with this Section 8 (the "Redemption Date"), then if the total number
of shares of Class A Common Stock issued or issuable upon conversion of such
shares, after giving effect to any adjustments provided under the first sentence
of this section (the "Cumulative Number"), would exceed the Threshold Number,
the holders shall be entitled to convert such number of shares of Series C
Preferred Stock and Series D Preferred Stock into a number of shares of Class A
Common Stock up to the Threshold Number, and with respect to the balance of such
shares, the Corporation shall cancel such shares and shall pay the holders in
lieu thereof an amount in cash equal to (a)(i) the Cumulative Number minus (ii)
the Threshold Number multiplied by (b) the Market Price per share of Class A
Common Stock on the business day next preceding the business day which is deemed
the Redemption Date.
(h) All adjustments pursuant to this paragraph 8 shall be notified to the
holders of the Series C Preferred Stock and such notice shall be accompanied by
a schedule of computations of the adjustments.
9. Voting Rights. (a) The holders of record of shares of Series C Preferred
Stock shall be entitled to vote on an as-converted basis (calculated in
accordance with Section 8(a) as of the close of trading on the last trading day
of the most recently ended fiscal quarter of the Corporation) with the Common
Stock as a single class on all matters presented to the holders of the Common
Stock for vote, except as hereinafter provided in this Section 9 or as otherwise
provided by law. So long as the provisions of Section 9(b)(i) entitle the
holders of Series C Preferred Stock to designate the Series C Designee (as
defined below), the holders of Series C Preferred Stock shall not be entitled to
vote as to the election of other directors of the Corporation.
(b) (i) On the Issue Date, the Board of Directors shall cause the total
number of directors then constituting the whole Board of Directors to be
increased by two and the holders of the outstanding shares of Series C Preferred
Stock shall be entitled to designate one director (the "Series C Designee") for
election to the Board of Directors of the Corporation and, voting separately as
a series, shall have the exclusive right to vote for the election of such
designee to the Board of Directors; and the holders of the outstanding shares of
Series D Preferred Stock shall be entitled to designate one director (the
"Series D Designee") for election to the Board of Directors of the Corporation
and, voting separately as a series, shall have the exclusive right to vote for
the election of such designee to the Board of Directors; provided that,
notwithstanding the foregoing, after the Issue Date, (i) the holders of the
outstanding shares of the Series C Preferred Stock shall continue to be entitled
to designate the Series C Designee for election to the Board of Directors and,
voting separately as a series, shall continue to have the exclusive right to
vote for the election of the Series C Designee to the Board of Directors, and
the holders of the outstanding shares of the Series D Preferred Stock shall
continue to be entitled to
-15-
designate the Series D Designee for election to the Board of Directors and,
voting separately as a series, shall continue to have the exclusive right to
vote for the election of the Series D Designee to the Board of Directors, in
each case, for as long as, and only for as long as, at least 40% of the
aggregate number of shares of Series C Preferred Stock issued on the Issue Date
and of shares of Series D Preferred Stock issued on the original date of
issuance of the Series D Preferred Stock (such aggregate number of shares of
Series C Preferred Stock and Series D Preferred Stock being referred to herein
as the "Total C and D Shares") remains outstanding; (ii) the entitlement of the
holders of outstanding shares of Series C Preferred Stock to designate one
director for election to the Board of Directors, and the exclusive right of the
holders of outstanding shares of Series C Preferred Stock to vote, separately as
a series, for the election of the Series C Designee to the Board of Directors,
shall cease immediately upon less than 40% of the Total C and D Shares being
outstanding, and the holders of the outstanding shares of the Series C Preferred
Stock shall be entitled to designate one board observer (the "Series C Board
Observer"), for as long as, and only for as long as any shares of Series C
Preferred Stock issued on the Issue Date are outstanding; (iii) immediately upon
no shares of Series C Preferred Stock issued on the Issue Date being
outstanding, the entitlement of the holders of outstanding shares of Series C
Preferred Stock to designate the Series C Board Observer, and the rights of the
Series C Observer, shall cease; and (iv) immediately upon less than 40% but more
than 20% of the Total C and D Shares being outstanding, the Board of Directors
shall cause the total number of directors then constituting the whole Board of
Directors to be decreased by one, and the term of office of the Series C
Designee shall terminate. The Series C Designee may be removed with or without
cause by the holders of the shares of Series C Preferred Stock. The "Series C
Board Observer" means a person who shall not be a member of the Board of
Directors and who shall have the rights as agreed to with the Corporation,
provided that such rights shall satisfy the requirement of contractual
management rights for purposes of the Department of Labor's "plan assets"
regulation.
(ii) If and whenever six quarterly dividends payable on the Series C
Preferred Stock have not been paid in full or if the Corporation shall have
failed to discharge its Mandatory Redemption Obligation or the Corporation shall
have failed to comply with Section 9(d) hereof, the total number of directors
then constituting the whole Board of Directors automatically shall be increased
by one and the holders of outstanding shares of Series C Preferred Stock, voting
separately as a single series, shall be entitled to elect one additional
director to serve on the Board of Directors at any annual meeting of
stockholders or special meeting held in place thereof, or at a special meeting
of the holders of the Series C Preferred Stock called as hereinafter provided.
Whenever all arrears in dividends and Special Amounts on the Series C Preferred
Stock then outstanding shall have been paid and dividends thereon for the
current quarterly dividend period shall have been paid or declared and set apart
for payment, or the Company shall have fulfilled its Mandatory Redemption
Obligation, as the case may be, then the right of the holders of outstanding
shares of Series C Preferred Stock to elect such additional director shall cease
(but subject always to the same provisions for the vesting of such voting rights
in the case of any similar future arrearage in six quarterly dividends or
failure to fulfill any Mandatory Redemption Obligation), and the term of office
of any person elected as director by the holders of outstanding shares of Series
C Preferred Stock pursuant to this subparagraph (b)(ii) shall forthwith
terminate and the total number of directors then constituting the whole Board of
Directors automatically
-16-
shall be reduced by one. At any time after voting power to elect one additional
director shall have become vested and be continuing in the holders of
outstanding shares of Series C Preferred Stock pursuant to this subparagraph
(b)(ii), or if a vacancy shall exist in the office of a director elected by the
holders of outstanding shares of Series C Preferred Stock pursuant to this
subparagraph (b)(ii), a proper officer of the Corporation may, and upon the
written request of the holders of record of at least twenty-five percent (25%)
of the shares of Series C Preferred Stock then outstanding addressed to the
Secretary of the Corporation shall, call a special meeting of the holders of
Series C Preferred Stock, for the purpose of electing the one additional
director which such holders are entitled to elect pursuant to this subparagraph
(b)(ii). 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 Series C 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
meeting of stockholders of the Corporation and shall be held at the place for
holding the annual meetings of stockholders. Any holder of Series C Preferred
Stock so designated shall have, and the Corporation shall provide, access to the
lists of stockholders to be called pursuant to the provisions hereof.
(c) Without the written consent of holders of a majority of the outstanding
shares of Series C Preferred Stock or the affirmative vote of holders of a
majority of the outstanding shares of Series C Preferred Stock at a meeting of
the holders of Series C Preferred Stock called for such purpose, the Corporation
will not amend, alter or repeal any provision of the Restated Certificate of
Incorporation or this Certificate of Designation so as to adversely affect the
preferences, rights or powers of the Series C Preferred Stock or to authorize
the issuance of, or to issue any, additional shares of Series C Preferred Stock;
provided that any such amendment that changes any dividend or other amount
payable on or the liquidation preference of the Series C Preferred Stock shall
require the written consent of holders of two-thirds of the outstanding shares
of Series C Preferred Stock or the affirmative vote of holders of two-thirds of
the outstanding shares of Series C Preferred Stock at a meeting of the holders
of Series C Preferred Stock called for such purpose.
(d) Without the written consent of holders of a majority of the outstanding
shares of Series C Preferred Stock or the affirmative vote of holders of a
majority of the outstanding shares of Series C Preferred Stock at a meeting of
such holders called for such purpose, the Corporation will not create, authorize
or issue any (i) Parity Securities or (ii) Senior Securities except Senior
Securities issued in accordance with paragraph (f)(ii) of the Certificate of
Designation for the Senior Exchangeable Redeemable Preferred Shares as in effect
on December 3, 1999.
(e) Subject to the provisions of Sections 8 and 10 hereof, the Corporation
may, without the consent of any holder of Series C Preferred Stock, consolidate
with or merge with or into, or convey, transfer or lease all or substantially
all its assets as an entirety to, any Person, provided that: (1) the successor,
transferee or lessee (if not the Corporation) is organized
-17-
and existing under the laws of the United States of America or any State thereof
or the District of Columbia and the Series C Preferred Stock shall be converted
into or exchanged for and shall become shares of, or interests in, such
successor, transferee or lessee, having in respect of such successor,
transferee, or lessee substantially the same powers, preferences and relative,
participating, optional or other special rights and the qualifications,
limitations or restrictions thereof, that the Series C Preferred Stock has
immediately prior to such transaction; and (2) the Corporation delivers to the
transfer agent an officers' certificate and an opinion of counsel stating that
such consolidation, merger, conveyance, transfer or lease complies with this
Certificate of Designation. In the event of any consolidation or merger or
conveyance, transfer or lease of all or substantially all of the assets of the
Corporation that is permitted pursuant to this paragraph (e), the successor
resulting from such consolidation or into which the Corporation is merged or the
transferee or lessee to which such conveyance, transfer or lease is made, will
succeed to, and be substituted for, and may exercise every right and power of,
the Corporation with respect to the Series C Preferred Stock (or the shares or
interests into, or for which, the Series C Preferred Stock is converted or
exchanged), and thereafter, except in the case of a lease, the predecessor (if
still in existence) shall be released from its obligations and covenants with
respect to the Series C Preferred Stock.
(f) In exercising the voting rights set forth in this paragraph 9, each
share of Series C Preferred Stock shall have one vote per share. Except as
otherwise required by applicable law or as set forth herein, the shares of
Series C Preferred Stock shall not have any relative, participating, optional or
other special voting rights and powers and the consent of the holders thereof
shall not be required for the taking of any corporate action.
10. Change of Control. (a) Within thirty days of a Change of Control (the
date of such occurrence being the "Change of Control Date"), the Corporation
shall notify the holders of the Series C Preferred Stock of such occurrence and
shall be required to make an offer (the "Offer to Purchase") to each holder of
shares of Series C Preferred Stock (subject to the rights of the holders
pursuant to Section 8 hereof) to repurchase such holder's shares of Series C
Preferred Stock, or such portion thereof as may be determined by such holder, at
a price per share in cash equal to 101% of the Liquidation Preference plus,
without duplication, an amount in cash equal to all accumulated and unpaid
dividends per share (including an amount in cash equal to a prorated dividend
for the period from the last Dividend Payment Date through such date); provided
that if any holders of Series C Preferred Stock tender their shares pursuant to
the Offer to Purchase, the Corporation shall be required to purchase a
proportional amount of the Series D Preferred Stock.
(b) The Offer to Purchase must take place on a Business Day (the "Change of
Control Payment Date") not later than 30 days following the Change of Control
Date. On the Change of Control Payment Date, the Corporation shall (A) accept
for payment the Series C Preferred Stock validly tendered pursuant to the Offer
to Purchase, (B) pay to the holders of shares so accepted the purchase price
therefor in cash and (C) cancel and retire each surrendered certificate. Unless
the Corporation defaults in the payment for the Series C Preferred Stock
tendered pursuant to the Offer to Purchase, dividends will cease to accrue with
respect to the Series C Preferred Stock tendered and all rights of holders of
such tendered shares will terminate, except for the right to receive payment
therefor.
-18-
(c) The Corporation will comply with any securities laws and regulations,
to the extent such laws and regulations are applicable to the repurchase of the
Series C Preferred Stock in connection with an Offer to Purchase.
(d) Notwithstanding anything to the contrary contained in this Section 10,
the Company will not repurchase or redeem any such stock pursuant to this
Section 10 until it has repurchased or repaid all outstanding debt obligations
pursuant to rights triggered pursuant to the terms thereof resulting from the
Change of Control in question.
11. Reports. So long as any of the Series C Preferred Stock is outstanding,
in the event the Corporation is not required to file quarterly and annual
financial reports with the Securities and Exchange Commission pursuant to
Section 13 or Section 15(d) of the Exchange Act, the Corporation will furnish
the holders of the Series C Preferred Stock with reports containing the same
information as would be required in such reports.
12. General Provisions. (a) The term "person" as used herein means any
corporation, limited liability company, partnership, trust, organization,
association, other entity or individual.
(b) The term "outstanding", when used with reference to shares of stock,
shall mean issued shares, excluding shares held by the Corporation or a
subsidiary of the Corporation.
(c) The headings of the sections, paragraphs, subparagraphs, clauses and
subclauses of this Certificate of Designation are for convenience of reference
only and shall not define, limit or affect any of the provisions hereof.
-19-
IN WITNESS WHEREOF, said NEXTLINK Communications, Inc. has caused this
Certificate of Designations to be signed by ______________, its ____________
this ____ day of January, 2000.
NEXTLINK COMMUNICATIONS, INC.
By: ______________________________
Name: Daniel F. Akerson
Title: Chairman and Chief Executive
Officer
-20-
EXHIBIT 2.2B
------------
NEXTLINK COMMUNICATIONS, INC.
CERTIFICATE OF DESIGNATION OF THE POWERS, PREFERENCES AND
RELATIVE, PARTICIPATING, OPTIONAL AND OTHER SPECIAL RIGHTS OF
SERIES D CONVERTIBLE PARTICIPATING PREFERRED STOCK AND
QUALIFICATIONS, LIMITATIONS AND RESTRICTIONS THEREOF
Pursuant to Section 151 of the
General Corporation Law of the State of Delaware
NEXTLINK Communications, Inc. (the "Corporation"), a corporation organized
and existing under the General Corporation Law of the State of Delaware, does
hereby certify that, pursuant to authority conferred upon the board of directors
of the Corporation (the "Board of Directors") by the Corporation's Certificate
of Incorporation, as amended (the "Certificate of Incorporation"), and pursuant
to the provisions of Section 151 of the General Corporation Law of the State of
Delaware, said Board of Directors is authorized to issue Preferred Stock of the
Corporation in one or more series and the Board of Directors has duly approved
and adopted the following resolution on [January __, 2000] (the "Resolution"):
RESOLVED that, pursuant to the authority vested in the Board of
Directors by its Certificate of Incorporation, the Board of Directors
hereby creates, authorizes and provides for the issuance of a series of
preferred stock of the Corporation, par value $.01 per share (such
preferred stock designated as the "Series D Convertible Participating
Preferred Stock"), consisting of 265,625 shares and having the powers,
designation, preferences, relative, participating, optional and other
special rights and the qualifications, limitations and restrictions thereof
that are set forth in the Restated Certificate of Incorporation and in this
Resolution as follows:
1. Number and Designation. 265,625 shares of the Preferred Stock of the
Corporation shall constitute a series designated as "Series D Convertible
Participating Preferred Stock" (the "Series D Preferred Stock").
2. Definitions. Unless the context otherwise requires, when used herein the
following terms shall have the meaning indicated.
"Board of Directors" means the Board of Directors of the Corporation.
"Business Day" means any day except Saturday, Sunday and any day which
shall be a legal holiday or a day on which banking institutions in New York
City, New York generally are authorized or required by law or other governmental
actions to close.
"Capital Stock" means, with respect to any person, any and all shares,
interests, participations, rights in, or other equivalents (however designated
and whether voting and/or non-voting) of such person's capital stock, whether
outstanding on the Issue Date or issued after the Issue Date, and any and all
rights (other than any evidence of indebtedness), warrants or options
exchangeable for or convertible into such capital stock.
"Change of Control" will be deemed to have occurred at such time as any of
the following occur: (i) any person or any persons acting together that would
constitute a "group" for purposes of Section 13(d) of the Exchange Act, or any
successor provision thereto (other than Eagle River, Craig O. McCaw, Wendy P.
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, (ii) 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 (iii) from and after the date on which the Corporation has
redeemed indefeasibly or defeased in full its obligations in respect of its
12-1/2% Senior Notes due April 15, 2006 or defeased the covenants applicable
thereto in accordance with their terms, 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 Corporation's Class A Common Stock, par
value $.02 per share, now or hereafter authorized to be issued, and any and all
securities of any kind whatsoever of the Corporation which may be exchanged for
or converted into Class A Common Stock, any and all securities of any kind
whatsoever of the Corporation which may be issued on or after the date hereof in
respect of, in exchange for, or upon conversion of shares of Class A Common
Stock pursuant to a merger, consolidation, stock split, stock dividend,
recapitalization of the Corporation or otherwise.
"Common Stock" means the Corporation's Class A Common Stock, the
Corporation's Class B Common Stock, par value $.02 per share, and any other
common stock of the Corporation.
"Current Market Price" means the average of the daily Market Prices of the
Common Stock for ten consecutive trading days immediately preceding the date for
which such value is to be computed.
"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, as amended, or
any successor statute, and the rules and regulations promulgated thereunder.
"Issue Date" means the original date of issuance of shares of Series D
Preferred Stock.
-2-
"Liquidation Preference" with respect to a share of Series D Preferred
Stock means, as at any date, $1,000.00 plus an amount equal to any accrued and
unpaid dividends with respect to such share through such date.
"Market Price" means, with respect to the Common Stock, on any given day,
(i) the price of the last trade, as reported on the Nasdaq National Market, not
identified as having been reported late to such system, or (ii) if the Common
Stock is so traded, but not so quoted, the average of the last bid and ask
prices, as those prices are reported on the Nasdaq National Market, or (iii) if
the Common Stock is not listed or authorized for trading on the Nasdaq National
Market or any comparable system, the average of the closing bid and asked prices
as furnished by two members of the National Association of Securities Dealers,
Inc. selected from time to time by the Corporation for that purpose. If the
Common Stock is not listed and traded in a manner that the quotations referred
to above are available for the period required hereunder, the Market Price per
share of Common Stock shall be deemed to be the fair value per share of such
security as determined in good faith by the Board of Directors of the
Corporation.
"Net Realizable FMV" means, with respect to a share of Common Stock, if
calculable, the amount of gross proceeds net of underwriters' discounts,
commissions or other selling expenses received by or to be received by the
holder in connection with the sale of such share of Common Stock on a when
issued basis or immediately after the conversion or, in all other cases, an
amount equal to 97% of the Current Market Price of the Common Stock.
"Series C Designation" means the Certificate of Designation for the Series
C Preferred Stock.
"Series C Preferred Stock" means the Series C Cumulative Convertible
Participating Preferred Stock, par value $.01 per share, of the Corporation.
"Voting Stock" means, with respect to any person, the Capital Stock of any
class or kind ordinarily having the power to vote for the election of directors
or other members of the governing body of such person.
3. Rank. (a) The Series C Preferred Stock and Series D Preferred Stock each
will, with respect to dividend rights and rights on liquidation, winding-up and
dissolution, rank (i) senior to the Corporation's 6-1/2% Cumulative Convertible
Preferred Stock, par value $.01 per share, all classes of Common Stock and to
each other class of Capital Stock of the Corporation or series of Preferred
Stock of the Corporation established hereafter by the Board of Directors of the
Corporation the terms of which do not expressly provide that such class or
series ranks senior to, or on a parity with, the Series C Preferred Stock and
Series D Preferred Stock as to dividend rights and rights on liquidation,
winding-up and dissolution of the Corporation (collectively referred to,
together with all classes of Common Stock of the Corporation, as "Junior
Securities"); (ii) on a parity with each class of Capital Stock of the
Corporation or series of Preferred Stock of the Corporation established
hereafter by the Board of Directors of the Corporation, the terms of which
expressly provide that such class or series will rank on a parity with the
Series C Preferred Stock and Series D Preferred Stock as to dividend rights and
rights on liquidation, winding-up and dissolution (collectively referred to as
"Parity Securities"); and (iii)
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junior to the Corporation's 14% Senior Exchangeable Redeemable Preferred Shares,
par value $.01 per share (the "Senior Exchangeable Redeemable Preferred
Shares"), and to each class of Capital Stock of the Corporation or series of
Preferred Stock of the Corporation established hereafter by the Board of
Directors of the Corporation in accordance with Section 9(d) hereof, the terms
of which expressly provide that such class or series will rank senior to the
Series C Preferred Stock and Series D Preferred Stock as to dividend rights and
rights on liquidation, winding-up and dissolution of the Corporation
(collectively referred to as "Senior Securities"); provided that the relative
powers, rights and preferences of the Series C Preferred Stock and Series D
Preferred Stock vis-a-vis the other shall be as set forth herein and in the
Series C Designation.
(b) The respective definitions of Junior Securities, Parity Securities and
Senior Securities shall also include any warrants, rights, options or other
securities exercisable or exchangeable for or convertible into any of the Junior
Securities, Parity Securities and Senior Securities, as the case may be.
(c) The Series D Preferred Stock shall be subject to the creation of Junior
Securities and Parity Securities and, to the extent permitted by Section 9(d),
Senior Securities.
4. Dividends. So long as any shares of Series D Preferred Stock are
outstanding, if the Corporation pays a dividend in cash, securities or other
property on the Common Stock then at the same time the Corporation shall declare
and pay a dividend on each share of Series D Preferred Stock an amount equal to
the Series D Per Share Participation Amount. The "Series D Per Share
Participation Amount" means, as at any date, 62.5% of the amount of dividends
that would be paid with respect to the Series C Preferred Stock and Series D
Preferred Stock taken together if converted into Common Stock on the date
established as the record date with respect to such dividend on the Common Stock
divided by the number of shares of Series D Preferred Stock then outstanding.
5. Liquidation Preference. (a) In the event of any liquidation, dissolution
or winding-up of the Corporation, whether voluntary or involuntary, after any
payment or distribution of the assets of the Corporation (whether capital or
surplus) shall be made to or set apart for the holders of Senior Securities, and
before any payment or distribution of the assets of the Corporation (whether
capital or surplus) shall be made to or set apart for the holders of Junior
Securities, the holders of the shares of Series C Preferred Stock and Series D
Preferred Stock taken together shall be entitled to receive an amount in cash
equal to the greater of (x) the aggregate Liquidation Preferences (as set forth
herein and in the Series C Designation) of the shares of Series C Preferred
Stock and Series D Preferred Stock as of the date of liquidation, or (y) the
aggregate amount that would have been received with respect to the shares of
Series C Preferred Stock and Series D Preferred Stock if such stock had been
converted to Common Stock immediately prior to such liquidation, dissolution or
winding-up. If, upon any liquidation, dissolution or winding-up of the
Corporation, the assets of the Corporation, or proceeds thereof, shall be
insufficient to pay in full the aforesaid amounts under clause (x) of the
preceding sentence and liquidating payments on all Parity Securities, then such
assets, or proceeds thereof, shall (i) be distributed among the shares of Series
C Preferred Stock and the Series D Preferred Stock taken together and all such
other Parity Securities ratably in accordance with the respective amounts
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that would be payable on such shares of Preferred Stock and any such other
Parity Securities if all amounts payable thereon were paid in full and (ii) the
amount distributable under clause (i) to the Series C Preferred Stock and Series
D Preferred Stock taken together, shall first be distributed to the Series C
Preferred Stock until it has received an amount equal to the aggregate
Preference Amounts (as defined in the Series C Designation) of all Series C
Preferred Stock outstanding as of the date of liquidation and thereafter 37.5%
to the Series C Preferred Stock and 62.5% to the Series D Preferred Stock. If,
upon any liquidation, dissolution or winding-up of the Corporation, the assets
of the Corporation, or proceeds thereof, distributable to the Series C Preferred
Stock and Series D Preferred Stock taken together shall be sufficient to pay in
full the aforesaid amounts under clause (x) of the first sentence of this
subsection 5(a) then such amount shall first be distributed to the Series C
Preferred Stock until it has received an amount equal to the aggregate
Preference Amounts (as defined in the Series C Designation) of all Series C
Preferred Stock outstanding as of the date of liquidation and thereafter 37.5%
to the Series C Preferred Stock and 62.5% to the Series D Preferred Stock. Any
amounts distributed with respect to the Series D Preferred Stock pursuant to
this paragraph 5(a) shall be allocated pro rata among the shares of Series D
Preferred Stock. For the purposes of this paragraph 5, 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 other entities shall be deemed to be a liquidation, dissolution or
winding-up of the Corporation.
(b) Subject to the rights of the holders of any Parity Securities, after
payment shall have been made in full to the holders of the Series C Preferred
Stock and the Series D Preferred Stock taken together, as provided in this
paragraph 5, any other series or class or classes of Junior Securities shall,
subject to the respective terms and provisions (if any) applying thereto, be
entitled to receive any and all assets remaining to be paid or distributed, and
the holders of the Series D Preferred Stock, Series C Preferred Stock and any
Parity Securities shall not be entitled to share therein.
6. Redemption. (a) The Series D Preferred Stock shall not be redeemable by
the Corporation prior to the later of (i) the fifth anniversary of the Issue
Date and (ii) the date on which the Corporation has redeemed indefeasibly or
defeased in full its obligations in respect of its 12-1/2% Senior Notes due
April 15, 2006 or defeased the covenants applicable thereto in accordance with
their terms (the "Redemption Trigger Date"). On and after the Redemption Trigger
Date, to the extent the Corporation shall have funds legally available for such
payment, and subject to the rights of the holders pursuant to Section 8 hereof,
the Corporation may redeem at its option shares of Series D Preferred Stock, at
any time in whole or from time to time in part, at a redemption price per share
equal to the Liquidation Preference as of the date fixed for redemption, without
interest; provided that the Corporation shall only be entitled to redeem shares
of the Series D Preferred Stock if shares of the Series C Preferred Stock are
also redeemed on a proportional basis based on the percentage of each series of
shares outstanding at such time.
(b) Pursuant to the Series C Designation, to the extent the Corporation
shall have funds legally available therefor, during the 180-day period
commencing on the tenth anniversary of the Issue Date, the holders of the Series
C Preferred Stock shall have the right to cause the Corporation to redeem at any
time in whole or from time to time in part outstanding
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shares of Series C Preferred Stock, if any, at a redemption price per share in
cash equal to the Liquidation Preference (as set forth in the Series C
Designation), without interest; provided that upon any such election the
Corporation shall be required to redeem a proportional amount of the Series D
Preferred Stock.
(c) Shares of Series D Preferred Stock which have been issued and
reacquired by the Corporation in any manner, including shares purchased or
redeemed, shall (upon compliance with any applicable provisions of the laws of
the State of Delaware) be retired and have the status of authorized and unissued
shares of the class of Preferred Stock undesignated as to series and may be
redesignated and reissued as part of any series of the Preferred Stock; provided
that no such issued and reacquired shares of Series D Preferred Stock shall be
reissued or sold as Series D Preferred Stock.
(d) If the Corporation is unable or shall fail to discharge its obligation
to redeem outstanding shares of Series C Preferred Stock and Series D Preferred
Stock pursuant to paragraph 6(b) (the "Mandatory Redemption Obligation"), the
Mandatory Redemption Obligation shall be discharged as soon as the Corporation
is able to discharge such Mandatory Redemption Obligation. If and so long as any
Mandatory Redemption Obligation with respect to the Series C Preferred Stock and
Series D Preferred Stock shall not be fully discharged, the Corporation shall
not (i) directly or indirectly, redeem, purchase, or otherwise acquire any
Parity Security or discharge any mandatory or optional redemption, sinking fund
or other similar obligation in respect of any Parity Securities or (ii) declare
or make any Junior Securities Distribution (as defined in the Series C
Designation), or, directly or indirectly, discharge any mandatory or optional
redemption, sinking fund or other similar obligation in respect of any Junior
Securities.
7. Procedure for Redemption. (a) In the event that fewer than all the
outstanding shares of Series D Preferred Stock are to be redeemed, in the case
of Section 6(a), the number of shares to be redeemed shall be determined by the
Board of Directors and the shares to be redeemed shall be selected pro rata
(with any fractional shares being rounded to the nearest whole shares).
Notwithstanding anything in Section 6 to the contrary, the Corporation shall
only redeem shares of Series D Preferred Stock pursuant to Section 6(a) or 6(b)
on a proportional basis based on the percentage of each series of shares
outstanding at such time.
(b) In the event the Corporation shall redeem shares of Series D Preferred
Stock pursuant to Section 6(a), notice of such redemption shall be given by
first class mail, postage prepaid, mailed not less than 30 days nor more than 60
days prior to the redemption date, to each holder of record of the shares to be
redeemed at such holder's address as the same appears on the stock register of
the Corporation; provided that neither the failure to give such notice nor any
defect therein shall affect the validity of the giving of notice for the
redemption of any share of Series D Preferred Stock to be redeemed except as to
the holder to whom the Corporation has failed to give said notice or except as
to the holder whose notice was defective. Each such notice shall state: (i) the
redemption date; (ii) the number of shares of Series D Preferred Stock to be
redeemed and, if fewer than all the shares held by such holder are to be
redeemed, the number of shares to be redeemed from such holder; (iii) the
redemption price; (iv) the place or places where certificates for such shares
are to be surrendered for payment of the
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redemption price; and (v) that dividends on the shares to be redeemed will cease
to accrue on such redemption date.
(c) Notice having been mailed as aforesaid, if applicable, from and after
the redemption date, dividends on the shares of Series D Preferred Stock so
called for redemption shall cease to accrue, and all rights of the holders
thereof as stockholders of the Corporation (except the right to receive from the
Corporation the redemption price and except the right to convert shares so
called for redemption prior to the close of business on the date immediately
preceding the date fixed for such redemption) shall cease. Upon surrender in
accordance with said notice, if applicable, of the certificates for any shares
so redeemed (properly endorsed or assigned for transfer, if the Board of
Directors shall so require and the notice shall so state), such shares shall be
redeemed by the Corporation at the redemption price aforesaid. In case fewer
than all the shares represented by any such certificate are redeemed, a new
certificate shall be issued representing the unredeemed shares without cost to
the holder thereof.
8. Conversion. (a) (i) Pursuant to the provisions of the Series C
Designation, the holders of shares of Series C Preferred Stock have the right,
at any time in whole and from time to time in part, at such holders' option, to
convert any or all outstanding shares (and fractional shares) of Series C
Preferred Stock held by such holders into fully paid and non-assessable shares
of Class A Common Stock. Upon the exercise by any holder of Series C Preferred
Stock of its conversion option, a proportional amount, based on the percentage
of each series of shares outstanding, of the Series D Preferred Stock shall
automatically convert into fully paid and non-assessable shares of Class A
Common Stock, subject to the provisions of this Section 8. At any time and from
time to time the outstanding shares of Series C Preferred Stock and Series D
Preferred Stock taken together shall be convertible into a number of shares of
Class A Common Stock (the "Aggregate Conversion Shares") equal to the aggregate
Liquidation Preferences of the shares of the Series C Preferred Stock and the
Series D Preferred Stock as set forth herein and in the Series C Designation as
of the date of conversion divided by $63.25, subject to adjustment from time to
time pursuant to paragraph 8(g) hereof (the "Conversion Price"). The Series D
Preferred Stock outstanding as at any date shall be convertible into a number of
shares of Class A Common Stock (the "Aggregate Series D Conversion Shares")
equal to .625 times the excess, if any, of (A) the Aggregate Conversion Shares
over (B) the aggregate Preference Amounts (as defined in the Series C
Designation) with respect to all outstanding shares of Series C Preferred Stock
divided by the Net Realizable FMV of a share of Class A Common Stock at the time
of conversion. Each share of Series D Preferred Stock being converted shall
convert into a number of shares of Class A Common Stock equal to the Aggregate
Series D Conversion Shares divided by the number of shares of Series D Preferred
Stock then outstanding. Notwithstanding any call for redemption pursuant to
Section 6(a), the holders' right to convert shares so called for redemption
shall terminate at the close of business on the date immediately preceding the
date fixed for such redemption unless the Corporation shall default in making
payment of the amount payable upon such redemption.
(ii) In the case of any partial conversion of Series C Preferred Stock by
the holders thereof, selection of the Series D Preferred Stock for automatic
conversion will be made by the Corporation in compliance with the requirements
of the principal national securities exchange, if any, on which the Series D
Preferred Stock is listed, or if the Series D Preferred
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Stock is not listed on a national securities exchange, on a pro rata basis, by
lot or such other method as the Corporation, in its sole discretion, shall deem
fair and appropriate; provided, however, that the Corporation may redeem all the
shares held by holders of fewer than 5 shares of Series D Preferred Stock (or
all of the shares held by the holders who would hold less than 5 shares of
Series D Preferred Stock as a result of such redemption) as may be determined by
the Corporation. The Corporation shall provide prompt written notice (including
the number of shares so converted) of the automatic conversion of shares of
Series D Preferred Stock pursuant to this paragraph 8 to the holders of record
of the shares so converted.
(b) (i) Promptly upon receipt of notice of automatic conversion of shares
of Series D Preferred Stock pursuant to paragraph 8(a) (including the number of
shares to be so converted), the holder of the shares of Series D Preferred Stock
so converted shall surrender the certificate representing such shares at the
principal executive offices of the Corporation. Unless the shares issuable on
conversion are to be issued in the same name as the name in which such shares of
Series D Preferred Stock are registered, each certificate so surrendered shall
be accompanied by instruments of transfer, in form satisfactory to the
Corporation, duly executed by the holder or the holder's duly authorized
attorney, and an amount sufficient to pay any transfer or similar tax.
(ii) As promptly as practicable after the surrender by the holder of the
certificates for shares of Series D Preferred Stock as aforesaid, the
Corporation shall issue and shall deliver to such holder, or on the holder's
written order to the holder's transferee, (x) a certificate or certificates for
the whole number of shares of Class A Common Stock issuable upon the conversion
of such shares in accordance with the provisions of this paragraph 8, (y) any
cash adjustment required pursuant to Section 8(f), and (z) in the event of a
conversion in part, a certificate or certificates for the whole number of shares
of Series D Preferred Stock not being so converted.
(iii) Each conversion of shares of Series D Preferred Stock pursuant to
paragraph 8(a) shall be deemed to have been effected immediately prior to the
close of business on the date on which the certificates for shares of Series C
Preferred Stock shall have been surrendered and the notice of election to
convert received by the Corporation in accordance with the procedures set forth
in Section 8 of the Series C Designation, and the person in whose name or names
any certificate or certificates for shares of Class A Common Stock shall be
issuable upon such conversion shall be deemed to have become the holder of
record of the shares of Class A Common Stock represented thereby at such time on
such date and such conversion shall be into a number of whole shares of Class A
Common Stock in respect of the shares of Series D Preferred Stock being
converted as determined in accordance with this Section 8 at such time on such
date. All shares of Class A Common Stock delivered upon conversion of the Series
D Preferred Stock will upon delivery be duly and validly issued and fully paid
and non-assessable, free of all liens and charges and not subject to any
preemptive rights. Upon automatic conversion of shares of Series D Preferred
Stock, the shares so converted shall no longer be deemed to be outstanding and
all rights of a holder with respect to such converted shares shall immediately
terminate except the right to receive the Class A Common Stock and other amounts
payable pursuant to this paragraph 8 and a certificate or certificates
representing the shares of Series D Preferred Stock not converted.
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(c) (i) Upon delivery to the Corporation by a holder of shares of Series C
Preferred Stock of a notice of election to convert, the right of the Corporation
to redeem the applicable shares of Series D Preferred Stock shall terminate,
regardless of whether a notice of redemption has been mailed as aforesaid.
(ii) If a holder of Series C Preferred Stock delivers to the Corporation a
certificate therefor and a notice of election to convert, the Series D Preferred
Stock to be converted shall cease to accrue dividends pursuant to paragraph 4.
(iii) Except as provided above and in paragraph 8(g), the Corporation shall
make no payment or adjustment for accrued and unpaid dividends on shares of
Series D Preferred Stock, whether or not in arrears, on conversion of such
shares or for dividends theretofore paid on the shares of Class A Common Stock.
(d) (i) The Corporation covenants that it will at all times reserve and
keep available, free from preemptive rights, such number of its authorized but
unissued shares of Class A Common Stock as shall be required for the purpose of
effecting conversions of the Series D Preferred Stock.
(ii) Prior to the delivery of any securities which the Corporation shall be
obligated to deliver upon conversion of the Series D Preferred Stock, the
Corporation shall comply with all applicable federal and state laws and
regulations which require action to be taken by the Corporation.
(e) The Corporation will pay any and all documentary stamp or similar issue
or transfer taxes payable in respect of the issue or delivery of shares of Class
A Common Stock on conversion of the Series D Preferred Stock pursuant hereto;
provided that the Corporation shall not be required to pay any tax which may be
payable in respect of any transfer involved in the issue or delivery of shares
of Class A Common Stock in a name other than that of the holder of the Series D
Preferred Stock to be converted and no such issue or delivery shall be made
unless and until the person requesting such issue or delivery has paid to the
Corporation the amount of any such tax or has established, to the satisfaction
of the Corporation, that such tax has been paid.
(f) In connection with the conversion of any shares of Series D Preferred
Stock, no fractions of shares of Class A Common Stock shall be required to be
issued to the holder of such shares of Series D Preferred Stock, but in lieu
thereof the Corporation shall pay a cash adjustment in respect of such
fractional interest in an amount equal to such fractional interest multiplied by
the Market Price per share of Class A Common Stock on the business day next
preceding the business day on which such shares of Series D Preferred Stock are
deemed to have been converted.
(g) (i) In case the Corporation shall at any time after the Issue Date (A)
declare a dividend or make a distribution on Common Stock payable in Common
Stock (other than dividends or distributions payable to holders of the Series D
Preferred Stock including dividends paid as contemplated by Section 4(f)), (B)
subdivide or split the outstanding Common Stock, (C) combine or reclassify the
outstanding Common Stock into a smaller number of shares,
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(D) issue any shares of its Capital Stock in a reclassification of Common Stock
(including any such reclassification in connection with a consolidation or
merger in which the Corporation is the continuing corporation), or (E)
consolidate with, or merge with or into, any other person, the Conversion Price
in effect at the time of the record date for such dividend or distribution or on
the effective date of such subdivision, split, combination, consolidation,
merger or reclassification shall be adjusted so that the conversion of the
Series D Preferred Stock after such time shall entitle the holder to receive the
aggregate number of shares of Common Stock or other securities of the
Corporation (or other securities into which such shares of Common Stock have
been converted, exchanged, combined, consolidated, merged or reclassified
pursuant to clause 8(g)(i)(C), 8(g)(i)(D) or 8(g)(i)(E) above) which, if the
Series D Preferred Stock had been converted immediately prior to such time, such
holder would have owned upon such conversion and been entitled to receive by
virtue of such dividend, distribution, subdivision, split, combination,
consolidation, merger or reclassification. Such adjustment shall be made
successively whenever an event listed above shall occur.
(ii) In case the Corporation shall issue or sell any Common Stock (or
rights, options, warrants or other securities convertible into or exercisable or
exchangeable for shares of Common Stock) without consideration or for a
consideration per share (or having a conversion, exchange or exercise price per
share) less than the Current Market Price on the date of such issuance (or, in
the case of convertible or exchangeable or exercisable securities, less than the
Current Market Price as of the date of issuance of the rights, options, warrants
or other securities in respect of which shares of Common Stock were issued)
then, and in each such case, the Conversion Price shall be reduced to an amount
determined by multiplying (A) the Conversion Price in effect on the day
immediately prior to such date by (B) a fraction, the numerator of which shall
be the sum of (1) the number of shares of Common Stock outstanding immediately
prior to such sale or issuance multiplied by the then applicable Current Market
Price (such Current Market Price, the "Adjustment Price") and (2) the aggregate
consideration receivable by the Corporation for the total number of shares of
Common Stock so issued (or into or for which the rights, options, warrants or
other securities are convertible, exercisable or exchangeable), and the
denominator of which shall be the sum of (x) the total number of shares of
Common Stock outstanding immediately prior to such sale or issue and (y) the
number of additional shares of Common Stock issued (or into or for which the
rights, options, warrants or other securities may be converted, exercised or
exchanged), multiplied by the Adjustment Price. In case any portion of the
consideration to be received by the Corporation shall be in a form other than
cash, the fair market value of such noncash consideration shall be utilized in
the foregoing computation. Such fair market value shall be determined in good
faith by the Board of Directors.
(iii) In case the Corporation shall fix a record date for the issuance on a
pro rata basis of rights, options or warrants to the holders of its Common Stock
or other securities entitling such holders to subscribe for or purchase shares
of Common Stock (or securities convertible into or exercisable or exchangeable
for shares of Common Stock) at a price per share of Common Stock (or having a
conversion, exercise or exchange price per share of Common Stock, in the case of
a security convertible into, or exerciseable or exchangeable for, shares of
Common Stock) less than the Current Market Price on such record date, the
maximum number of shares of Common Stock issuable upon exercise of such rights,
options or warrants (or conversion of such convertible securities) shall be
deemed to have been issued and outstanding as
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of such record date and the Conversion Price shall be adjusted pursuant to
paragraph 8(g)(ii) hereof, as though such maximum number of shares of Common
Stock had been so issued for an aggregate consideration payable by the holders
of such rights, options, warrants or other securities prior to their receipt of
such shares of Common Stock. In case any portion of such consideration shall be
in a form other than cash, the fair market value of such noncash consideration
shall be determined as set forth in paragraph 8(g)(ii) hereof. Such adjustment
shall be made successively whenever such record date is fixed; and in the event
that such rights, options or warrants are not so issued or expire in whole or in
part unexercised, or in the event of a change in the number of shares of Common
Stock to which the holders of such rights, options or warrants are entitled
(other than pursuant to adjustment provisions therein comparable to those
contained in this paragraph 8(g)), the Conversion Price shall again be adjusted
as follows: (A) in the event that all of such rights, options or warrants expire
unexercised, the Conversion Price shall be the Conversion Price that would then
be in effect if such record date had not been fixed; (B) in the event that less
than all of such rights, options or warrants expire unexercised, the Conversion
Price shall be adjusted pursuant to paragraph 8(g)(ii) to reflect the maximum
number of shares of Common Stock issuable upon exercise of such rights, options
or warrants that remain outstanding (without taking into effect shares of Common
Stock issuable upon exercise of rights, options or warrants that have lapsed or
expired); and (C) in the event of a change in the number of shares of Common
Stock to which the holders of such rights, options or warrants are entitled, the
Conversion Price shall be adjusted to reflect the Conversion Price which would
then be in effect if such holder had initially been entitled to such changed
number of shares of Common Stock. Notwithstanding anything herein to the
contrary, no further adjustment to the Conversion Price shall be made upon the
issuance or sale of Common Stock upon the exercise of any rights, options or
warrants to subscribe for or purchase Common Stock, if any adjustment in the
Conversion Price was made or required to be made upon the record date for the
issuance or sale of such rights, options or warrants under this clause
8(g)(iii). Notwithstanding anything herein to the contrary, no adjustment in the
Conversion Price shall be made under this clause 8(g)(iii) to the extent the
holders of Series D Preferred Stock participate in any such distribution in
accordance with Section 4 hereof.
(iv) In case the Corporation shall fix a record date for the making of a
distribution to all holders of any class of Common Stock (including any such
distribution made in connection with a consolidation or merger in which the
Corporation is the continuing corporation) of evidences of indebtedness, assets
or other property, the Conversion Price to be in effect after such record date
shall be determined by multiplying the Conversion Price in effect immediately
prior to such record date by a fraction, (A) the numerator of which shall be the
Conversion Price immediately prior to such distribution less the fair market
value (determined as set forth in paragraph 8(g)(ii) hereof) of the portion of
the assets, other property or evidence of indebtedness so to be distributed
which is applicable to one share of Common Stock, and (B) the denominator of
which shall be the Conversion Price immediately prior to such distribution. Such
adjustments shall be made successively whenever such a record date is fixed; and
in the event that such distribution is not so made, the Conversion Price shall
again be adjusted to be the Conversion Price which would then be in effect if
such record date had not been fixed. An adjustment to the Conversion Price also
shall be made in respect of dividends and distributions paid exclusively in cash
to all holders of Common Stock (excluding any dividend or distribution in
connection with the liquidation, dissolution or winding-up of the Corporation,
whether voluntary
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or involuntary, and any cash that is distributed upon a merger, consolidation or
other transaction for which an adjustment pursuant to paragraph 8(g)(i) is made)
where the sum of (1) all such cash dividends and distributions made within the
preceding 12 months in respect of which no adjustment has been made and (2) any
cash and the fair market value (determined as set forth in paragraph 8(g)(ii)
hereof)of other consideration paid in respect of any repurchases of Common Stock
by the Corporation or any of its subsidiaries within the preceding 12 months in
respect of which no adjustment has been made, exceeds 2% of the Corporation's
market capitalization (being the product of the then Current Market Price of the
Common Stock times the aggregate number of shares of Common Stock then
outstanding on the record date for such distribution). The Conversion Price to
be in effect after such adjustment shall be determined by subtracting from the
Conversion Price in effect prior to such adjustment an amount equal to the
quotient of (A) the sum of clause (1) and clause (2) above and (B) the number of
shares of Common Stock outstanding on the date such adjustment is to be
determined. Notwithstanding anything herein to the contrary, no adjustment in
the Conversion Price shall be made under this clause 8(g)(iv) to the extent the
holders of Series D Preferred Stock participate in any such distribution in
accordance with Section 4 hereof.
(v) No adjustment to the Conversion Price pursuant to (a) paragraphs
8(g)(ii), 8(g)(iii) or 8(g)(iv) above shall be required unless such adjustment
would require an increase or decrease of at least $.50 in the Conversion Price
or (b) paragraph 8(g)(ii) above shall be required with respect to rights,
options, warrants or other securities outstanding on the Issue Date or issued
pursuant to the Company's employee benefit plans in effect on the Issue Date or
reserved for issuance thereunder as of the Issue Date or stock options granted
after the Issue Date pursuant to any stock option plans adopted by the Board of
Directors so long as such options have an exercise price not less than the
Market Price on the day preceding such grant; provided, however, that any
adjustments which by reason of this paragraph 8(g)(v)(a) are not required to be
made shall be carried forward and taken into account in any subsequent
adjustment. All calculations under this paragraph 8(g) shall be made to the
nearest four decimal points.
(vi) In the event that, at any time as a result of the provisions of this
paragraph 8(g), a holder of Series D Preferred Stock upon subsequent conversion
shall become entitled to receive any shares of Capital Stock of the Corporation
other than Common Stock, the number of such other shares so receivable upon
conversion of Series D Preferred Stock shall thereafter be subject to adjustment
from time to time in a manner and on terms as nearly equivalent as practicable
to the provisions contained herein.
(vii) If, as a result of the operation of paragraphs 8(g)(ii), 8(g)(iii) or
8(g)(iv) above and corresponding provisions in the Series C Designation, the
cumulative number of shares of Class A Common Stock issued or issuable upon
conversion of the Series C Preferred Stock and Series D Preferred Stock, after
giving effect to (x) the adjustments described in such paragraphs and
corresponding provisions in the Series C Designation and (y) all prior
conversions of Series C Preferred Stock and Series D Preferred Stock, would
equal or exceed a number (the "Threshold Number") equal to 20% of the
outstanding shares of Class A Common Stock as of the Issue Date and if the
Company receives a written opinion of its outside counsel that the issuance of
such shares in excess of the Threshold Number would violate the rules of the
Nasdaq National Market or any other exchange on which the Class A Common Stock
is then quoted or traded,
-12-
then until and unless the Corporation obtains the approval of its common
stockholders for the issuance of any such shares of Class A Common Stock in
excess of the Threshold Number, the holders shall only be entitled to exercise
their conversion rights with respect to a maximum number of Series C and Series
D Preferred Stock that would not result in an amount of shares of Class A Common
Stock being issued in excess of the Threshold Number, but in any case, the
Conversion Price shall be adjusted as provided in such paragraphs. If, as a
result of the operation of the preceding sentence, the conversion rights of the
holders of Series D Preferred Stock are limited by operation thereof because
appropriate stockholder approval has not been obtained, the Corporation agrees
for the benefit of the holders of Series C Preferred Stock and Series D
Preferred Stock to use its reasonable best efforts to seek, as promptly as
reasonably practicable, the requisite approval of its common stockholders (and
shall seek such approval as often as necessary to obtain such approval), and
will recommend to its stockholders that they vote in favor of a resolution
providing for such approval, for the amount of shares of Class A Common Stock
that would be issued or issuable upon conversion in full of all outstanding
Series C and Series D Preferred Stock. Notwithstanding anything to the contrary
set forth above, the holders of Series C Preferred Stock and Series D Preferred
Stock shall be entitled to exercise such holders' conversion rights in full
(after giving effect to any and all anti-dilution adjustments resulting from
operation of paragraphs 8(g)(ii), 8(g)(iii) or 8(g)(iv)) in connection with any
merger, consolidation or other transaction in which such Series C Preferred
Stock, Series D Preferred Stock or Class A Common Stock is being converted into
or exchanged for cash, securities or other property in connection with such
merger, consolidation or other transaction. In the event that the Corporation
elects to redeem the shares of Series C Preferred Stock and Series D Preferred
Stock at a time when the holders' right to convert such shares into Class A
Common Stock is limited as provided in this paragraph (g), and such holders seek
to exercise such conversion rights prior to the date fixed for redemption in
accordance with this Section 8 (the "Redemption Date"), then if the total number
of shares of Class A Common Stock issued or issuable upon conversion of such
shares, after giving effect to any adjustments provided under the first sentence
of this section (the "Cumulative Number"), would exceed the Threshold Number,
the holders shall be entitled to convert such number of shares of Series C
Preferred Stock and Series D Preferred Stock into a number of shares of Class A
Common Stock up to the Threshold Number, and with respect to the balance of such
shares, the Corporation shall cancel such shares and shall pay the holders in
lieu thereof an amount in cash equal to (a)(i) the Cumulative Number minus (ii)
the Threshold Number multiplied by (b) the Market Price per share of Class A
Common Stock on the business day next preceding the business day which is deemed
the Redemption Date.
(h) All adjustments pursuant to this paragraph 8 shall be notified to the
holders of the Series D Preferred Stock and such notice shall be accompanied by
a schedule of computations of the adjustments.
9. Voting Rights. (a) The holders of record of shares of Series D Preferred
shall be entitled to vote on an as-converted basis (calculated in accordance
with Section 8(a) as of the close of trading on the last trading day of the most
recently ended fiscal quarter of the Corporation) with the Common Stock as a
single class on all matters presented to the holders of the Common Stock for
vote, except as hereinafter provided in this Section 9 or as otherwise provided
by law. So long as the provisions of Section 9(b)(i) entitle the holders of
Series D Preferred Stock to designate the Series D Designee (as defined below),
the holders of Series D
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Preferred Stock shall not be entitled to vote as to the election of other
directors of the Corporation.
(b) (i) On the Issue Date, the Board of Directors shall cause the total
number of directors then constituting the whole Board of Directors to be
increased by two and the holders of the outstanding shares of Series C Preferred
Stock shall be entitled to designate one director (the "Series C Designee") for
election to the Board of Directors of the Corporation and, voting separately as
a series, shall have the exclusive right to vote for the election of such
designee to the Board of Directors, and the holders of the outstanding shares of
Series D Preferred Stock shall be entitled to designate one director (the
"Series D Designee") for election to the Board of Directors of the Corporation
and, voting separately as a series, shall have the exclusive right to vote for
the election of such designee to the Board of Directors; provided that,
notwithstanding the foregoing, after the Issue Date, (i) the holders of the
outstanding shares of Series C Preferred Stock shall continue to be entitled to
designate the Series C Designee for election to the Board of Directors and,
voting separately as a series, shall continue to have the exclusive right to
vote for the election of the Series C Designee to the Board of Directors, and
the holders of the outstanding shares of the Series D Preferred Stock shall
continue to be entitled to designate the Series D Designee for election to the
Board of Directors and, voting separately as a series, shall continue to have
the exclusive right to vote for the election of the Series D Designee to the
Board of Directors, in each case, for as long as, and only for as long as, at
least 40% of the aggregate number of shares of Series C Preferred Stock issued
on the original date of issuance of the Series C Preferred Stock and of shares
of Series D Preferred Stock issued on the Issue Date (such aggregate number of
shares of Series C Preferred Stock and Series D Preferred Stock being referred
to herein as the "Total C and D Shares") remains outstanding; (ii) the
entitlement of the holders of outstanding shares of Series D Preferred Stock to
designate one director for election to the Board of Directors, and the exclusive
right of the holders of outstanding shares of Series D Preferred Stock to vote,
separately as a series, for the election of such designee to the Board of
Directors, shall cease immediately upon 20% or less of the Total C and D Shares
being outstanding, and the holders of the outstanding shares of Series D
Preferred Stock shall be entitled to designate one board observer (the "Series D
Board Observer"), for as long as, and only for as long as, 20% or less (but at
least one share of Series D Preferred Stock) of the Total C and D Shares remains
outstanding; (iii) immediately upon no shares of Series D Preferred Stock issued
on the Series D Issue Date being outstanding, the entitlement of the holders of
outstanding shares of Series D Preferred Stock to designate the Series D Board
Observer, and the rights of such Board Observer, shall cease; and (iv)
immediately upon 20% or less of the Total C and D Shares being outstanding, the
Board of Directors shall cause the total number of directors then constituting
the whole Board of Directors to be decreased by one, and the term of office of
the Series D Designee shall terminate. The Series D Designee may be removed with
or without cause by the holders of the shares of Series D Preferred Stock. The
"Series D Board Observer" means a person who shall not be a member of the Board
of Directors and who shall have the rights as agreed to with the Corporation,
provided that such rights shall satisfy the requirement of contractual
management rights for purposes of the Department of Labor's "plan assets"
regulation.
(ii) If and whenever the Corporation shall have failed to discharge its
Mandatory Redemption Obligation or the Corporation shall have failed to comply
with Section
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9(d) hereof, the total number of directors then constituting the whole Board of
Directors automatically shall be increased by one and the holders of outstanding
shares of Series D Preferred Stock, voting separately as a single series, shall
be entitled to elect one additional director to serve on the Board of Directors
at any annual meeting of stockholders or special meeting held in place thereof,
or at a special meeting of the holders of the Series D Preferred Stock called as
hereinafter provided. Whenever the Corporation shall have fulfilled its
Mandatory Redemption Obligation, then the right of the holders of the
outstanding shares of the Series D Preferred Stock to elect such additional
director shall cease (but subject always to the same provisions for the vesting
of such voting rights in the case of any future failure to fulfill any Mandatory
Redemption Obligation), and the term of office of any person elected as director
by the holders of outstanding shares of Series D Preferred Stock pursuant to
this subparagraph (b)(ii) shall forthwith terminate and the total number of
directors then constituting the whole Board of Directors automatically shall be
reduced by one. At any time after voting power to elect one additional director
shall have become vested and be continuing in the holders of outstanding shares
of Series D Preferred Stock pursuant to this subparagraph (b)(ii), or if a
vacancy shall exist in the office of a director elected by the holders of
outstanding shares of Series D Preferred Stock pursuant to this subparagraph
(b)(ii), a proper officer of the Corporation may, and upon the written request
of the holders of record of at least twenty-five percent (25%) of the shares of
Series D Preferred Stock then outstanding addressed to the Secretary of the
Corporation shall, call a special meeting of the holders of Series D Preferred
Stock, for the purpose of electing the one additional director which such
holders are entitled to elect pursuant to this subparagraph (b)(ii). 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 Series D 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 meeting of stockholders of the
Corporation and shall be held at the place for holding the annual meetings of
stockholders. Any holder of Series D Preferred Stock so designated shall have,
and the Corporation shall provide, access to the lists of stockholders to be
called pursuant to the provisions hereof.
(c) Without the written consent of holders of a majority of the outstanding
shares of Series D Preferred Stock or the affirmative vote of holders of a
majority of the outstanding shares of Series D Preferred Stock at a meeting of
the holders of Series D Preferred Stock called for such purpose, the Corporation
will not amend, alter or repeal any provision of the Restated Certificate of
Incorporation or this Certificate of Designation so as to adversely affect the
preferences, rights or powers of the Series D Preferred Stock or to authorize
the issuance of, or to issue any, additional shares of Series D Preferred Stock;
provided that any such amendment that changes any dividend or other amount
payable on or the liquidation preference of the Series D Preferred Stock shall
require the written consent of holders of two-thirds of the outstanding shares
of Series D Preferred Stock or the affirmative vote of holders of two-thirds of
the outstanding shares of Series D Preferred Stock at a meeting of the holders
of Series D Preferred Stock called for such purpose.
-15-
(d) Without the written consent of holders of a majority of the outstanding
shares of Series D Preferred Stock or the affirmative vote of holders of a
majority of the outstanding shares of Series D Preferred Stock at a meeting of
such holders called for such purpose, the Corporation will not create, authorize
or issue any (i) Parity Securities or (ii) Senior Securities except Senior
Securities issued in accordance with paragraph (f)(ii) of the Certificate of
Designation for the Senior Exchangeable Redeemable Preferred Shares as in effect
on December 3, 1999.
(e) Subject to the provisions of Sections 8 and 10 hereof, the Corporation
may, without the consent of any holder of Series D Preferred Stock, consolidate
with or merge with or into, or convey, transfer or lease all or substantially
all its assets as an entirety to, any Person, provided that: (1) the successor,
transferee or lessee (if not the Corporation) is organized and existing under
the laws of the United States of America or any State thereof or the District of
Columbia and the Series D Preferred Stock shall be converted into or exchanged
for and shall become shares of, or interests in, such successor, transferee or
lessee, having in respect of such successor, transferee, or lessee substantially
the same powers, preferences and relative, participating, optional or other
special rights and the qualifications, limitations or restrictions thereof, that
the Series D Preferred Stock has immediately prior to such transaction; and (2)
the Corporation delivers to the transfer agent an officers' certificate and an
opinion of counsel stating that such consolidation, merger, conveyance, transfer
or lease complies with this Certificate of Designation. In the event of any
consolidation or merger or conveyance, transfer or lease of all or substantially
all of the assets of the Corporation that is permitted pursuant to this
paragraph (e), the successor resulting from such consolidation or into which the
Corporation is merged or the transferee or lessee to which such conveyance,
transfer or lease is made, will succeed to, and be substituted for, and may
exercise every right and power of, the Corporation with respect to the Series D
Preferred Stock (or shares or interests into, or for which, the Series D
Preferred Stock is converted or exchanged), and thereafter, except in the case
of a lease, the predecessor (if still in existence) shall be released from its
obligations and covenants with respect to the Series D Preferred Stock.
(f) In exercising the voting rights set forth in this paragraph 9, each
share of Series D Preferred Stock shall have one vote per share. Except as
otherwise required by applicable law or as set forth herein, the shares of
Series D Preferred Stock shall not have any relative, participating, optional or
other special voting rights and powers and the consent of the holders thereof
shall not be required for the taking of any corporate action.
10. Change of Control. (a) Pursuant to the Series C Designation, within
thirty days of a Change of Control (the date of such occurrence being the
"Change of Control Date"), the Corporation shall notify the holders of the
Series C Preferred Stock of such occurrence and shall be required to make an
offer (the "Offer to Purchase") to each holder of shares of Series C Preferred
Stock (subject to the rights of the holders pursuant to Section 8 hereof) to
repurchase such holder's shares of Series C Preferred Stock, or such portion
thereof as may be determined by such holder, at a price per share in cash equal
to 101% of the Liquidation Preference plus, without duplication, an amount in
cash equal to all accumulated and unpaid dividends per share (including an
amount in cash equal to a prorated dividend for the period from the last
Dividend Payment Date through such date); provided that if any holders of Series
C Preferred Stock tender their
-16-
shares pursuant to the Offer to Purchase, the Corporation shall be required to
purchase a proportional amount of the Series D Preferred Stock.
(b) The Offer to Purchase must take place on a Business Day (the "Change of
Control Payment Date") not later than 30 days following the Change of Control
Date. On the Change of Control Payment Date, the Corporation shall (A) accept
for payment any Series D Preferred Stock required to be purchased, (B) pay to
the holders of shares so accepted the purchase price therefor in cash and (C)
cancel and retire each surrendered certificate. Unless the Corporation defaults
in the payment for the Series D Preferred Stock required to be purchased
pursuant to Section 10(a) hereof, dividends will cease to accrue with respect to
the Series D Preferred Stock purchased and all rights of holders of such
tendered shares will terminate, except for the right to receive payment
therefor.
(c) The Corporation will comply with any securities laws and regulations,
to the extent such laws and regulations are applicable to the repurchase of the
Series D Preferred Stock in connection with an Offer to Purchase.
(d) Notwithstanding anything to the contrary contained in this Section 10,
the Company will not repurchase or redeem any such stock pursuant to this
Section 10 until it has repurchased or repaid all outstanding debt obligations
pursuant to rights triggered pursuant to the terms thereof resulting from the
Change of Control in question.
11. Reports. So long as any of the Series D Preferred Stock is outstanding,
in the event the Corporation is not required to file quarterly and annual
financial reports with the Securities and Exchange Commission pursuant to
Section 13 or Section 15(d) of the Exchange Act, the Corporation will furnish
the holders of the Series D Preferred Stock with reports containing the same
information as would be required in such reports.
12. General Provisions. (a) The term "person" as used herein means any
corporation, limited liability company, partnership, trust, organization,
association, other entity or individual.
(b) The term "outstanding", when used with reference to shares of stock,
shall mean issued shares, excluding shares held by the Corporation or a
subsidiary of the Corporation.
(c) The headings of the sections, paragraphs, subparagraphs, clauses and
subclauses of this Certificate of Designation are for convenience of reference
only and shall not define, limit or affect any of the provisions hereof.
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IN WITNESS WHEREOF, said NEXTLINK Communications, Inc. has caused this
Certificate of Designations to be signed by _____________, its ______________
this _____ day of January, 2000.
NEXTLINK COMMUNICATIONS, INC.
By: ______________________________
Name: Daniel F. Akerson
Title: Chairman and Chief Executive
Officer
-18-
EXHIBIT 5.2(d)
--------------
REGISTRATION RIGHTS AGREEMENT
Dated as of ________ ___, 2000
between
NEXTLINK Communications, Inc.
and
The Purchasers Listed on the Signature Pages Hereto
REGISTRATION RIGHTS AGREEMENT, dated as of _______ __, 2000 between
NEXTLINK Communications, Inc., a Delaware corporation (the "Company") and the
entities listed on the signature pages hereto under the caption "Purchasers"
(each a "Purchaser" and, collectively, the "Purchasers").
The Company and the Purchasers have entered it into a Securities Purchase
Agreement (the "Purchase Agreement") dated as of December 7, 1999 pursuant to
which simultaneously herewith, the Purchasers are purchasing (i) an aggregate of
584,375 shares of the Company's Series C Preferred Stock, par value $0.01 per
share (the "Series C Preferred Stock") and (ii) an aggregate of 265,625 shares
of the Company's Series D Preferred Stock, par value $0.01 per share (the
"Series D Preferred Stock" and, collectively with the Series C Preferred Stock,
the "Preferred Shares").
As part of, and as consideration for, the acquisition of the Preferred
Shares by the Purchasers from the Company on the date hereof and from time to
time hereafter, the Company hereby grants to the Purchasers certain registration
and other rights with respect to its shares of Class A Common Stock as more
fully set forth herein.
Accordingly, the parties hereto agree as follows:
1. Definitions. As used herein, unless the context otherwise requires, the
following terms have the following respective meanings:
"Certificate of Incorporation" means the Certificate of Incorporation of
the Company, as it may be amended or restated hereafter from time to time.
"Commission" means the Securities and Exchange Commission or any other
Federal agency at the time administering the Securities Act.
"Common Stock" means any shares of Class A Common Stock, par value $0.01
per share, of the Company, now or hereafter authorized to be issued, and any and
all securities of any kind whatsoever of the Company which may be exchanged for
or converted into Common Stock, any and all securities of any kind whatsoever of
the Company which may be issued on or after the date hereof in respect of, in
exchange for, or upon conversion of shares of Common Stock pursuant to a merger,
consolidation, stock split, stock dividend, recapitalization of the Company or
otherwise.
"Exchange Act" means the Securities Exchange Act of 1934, as amended, or
any similar Federal statute, and the rules and regulations of the Commission
thereunder, all as the same shall be in effect at the time. Reference to a
particular section of the Exchange Act shall include a reference to the
comparable section, if any, of any such similar Federal statute.
"Person" means a corporation, an association, a partnership, an
organization, a business, a trust, an individual, or any other entity or
organization, including a government or political subdivision or an
instrumentality or agency thereof.
"Registrable Securities" means (i) any shares of Common Stock issued or
issuable upon the conversion of any Preferred Shares held by the Purchasers and
(ii) any shares of Common Stock issued with respect to the Common Stock referred
to in clause (i) by way of a stock dividend, stock split or reverse stock split
or in connection with a combination of shares, recapitalization, merger,
consolidation or otherwise. As to any particular Registrable Securities, such
securities shall cease to be Registrable Securities (a) when a registration
statement with respect to the sale of such securities shall have become
effective under the Securities Act and such securities shall have been disposed
of in accordance with such registration statement, (b) when such securities
shall have been otherwise transferred, new certificates for them not bearing a
legend restricting further transfer shall have been delivered by the Company and
subsequent public distribution of them shall not require registration of them
under the Securities Act, (c) when such securities are eligible for sale under
Rule 144(k) or any successor provision, or (d) when such securities shall have
been sold as permitted by, and in compliance with, the Securities Act.
"Registration Expenses" means all expenses incident to the registration and
disposition of the Registrable Securities pursuant to Section 2 hereof,
including, without limitation, all registration, filing and applicable national
securities exchange fees, all fees and expenses of complying with state
securities or blue sky laws (including fees and disbursements of counsel to the
underwriters or the Purchasers in connection with "blue sky" qualification of
the Registrable Securities and determination of their eligibility for investment
under the laws of the various jurisdictions), all word processing, duplicating
and printing expenses, all messenger and delivery expenses, the fees and
disbursements of counsel for the Company and of its independent public
accountants, including the expenses of "cold comfort" letters or any special
audits required by, or incident to, such registration, all fees and
disbursements of underwriters (other than underwriting discounts and
commissions), all transfer taxes, and all fees and expenses of counsel to the
Purchasers; provided, however, that Registration Expenses shall exclude, and the
Purchasers shall pay, underwriting discounts and commissions in respect of the
Registrable Securities being registered.
"Securities Act" means the Securities Act of 1933, as amended, or any
similar Federal statute, and the rules and regulations of the Commission
thereunder, all as the same shall be in effect at the time. References to a
particular section of the Securities Act shall include a reference to the
comparable section, if any, of any such similar Federal statute.
-2-
2. Registration Under Securities Act, etc.
2.1 Registration on Request.
(a) Request. At any time or from time to time after the Purchasers are
permitted to transfer Registrable Securities pursuant to Section 4.15 of the
Purchase Agreement, the Purchasers shall have the right to require the Company
to effect the registration under the Securities Act of all or part of the
Registrable Securities, by delivering a written request therefor to the Company
specifying the number of shares of Registrable Securities and the intended
method of distribution. The Company shall (i) use its reasonable best efforts to
effect the registration under the Securities Act (including by means of a shelf
registration pursuant to Rule 415 under the Securities Act if so requested in
such request and if the Company is then eligible to use such a registration) of
the Registrable Securities which the Company has been so requested to register
by the Purchasers, for distribution in accordance with the intended method of
distribution set forth in the written request delivered by the Purchasers, such
registration to be effected as expeditiously as possible (but in any event
within 90 days of receipt of a written request), and (ii) if requested by the
Purchasers, use its reasonable best efforts to obtain acceleration of the
effective date of the registration statement relating to such registration.
(b) Registration of Other Securities. Whenever the Company shall effect a
registration pursuant to this Section 2.1 in connection with an underwritten
offering by the Purchasers of Registrable Securities, no securities other than
Registrable Securities shall be included among the securities covered by such
registration if inclusion of such other securities would result in a request by
the managing underwriters for a reduction in the number of Registrable
Securities requested to be so registered, except as required by the terms of
registration rights agreements in effect on the date hereof.
(c) Registration Statement Form. Registrations under this Section 2.1 shall
be on such appropriate registration form of the Commission as, subject to clause
(a)(i) above, shall be selected by the Company and as shall be reasonably
acceptable to the Purchasers. The Company agrees to include in any such
registration statement all information which, in the opinion of counsel to the
Purchasers and counsel to the Company, is necessary or desirable to be included
therein.
(d) Expenses. The Company shall pay all Registration Expenses in connection
with any registration requested pursuant to this Section 2.1.
(e) Effective Registration Statement. A registration requested pursuant to
this Section 2.1 shall not be deemed to have been effected (including for
purposes of paragraph (h) of this Section 2.1) (i) unless a registration
statement with respect thereto has become effective and has been kept
continuously
-3-
effective for a period of at least 365 days (or such shorter period which shall
terminate when all the Registrable Securities covered by such registration
statement have been sold pursuant thereto), (ii) if after it has become
effective, such registration is interfered with by any stop order, injunction or
other order or requirement of the Commission or other governmental agency or
court for any reason not attributable to the Purchasers and has not thereafter
become effective, or (iii) if the conditions to closing specified in the
underwriting agreement, if any, entered into in connection with such
registration are not satisfied or waived.
(f) Selection of Underwriters. The underwriters of each underwritten
offering of the Registrable Securities so to be registered shall be selected by
the Purchasers, subject to the Company's approval, which approval shall not be
unreasonably withheld.
(g) Right to Withdraw. If the managing underwriter of any underwritten
offering shall advise the Purchasers that the Registrable Securities covered by
the registration statement cannot be sold in such offering within a price range
acceptable to the Purchasers, then the Purchasers shall have the right to notify
the Company in writing that they have determined that the registration statement
be abandoned or withdrawn, in which event the Company shall abandon or withdraw
such registration statement. In the event of such abandonment or withdrawal,
such request shall not be counted for purposes of the requests for registration
to which the Purchasers are entitled pursuant to this Section 2.1, and the
Purchasers shall pay, or reimburse the Company for, all Registration Expenses
related thereto.
(h) Limitations on Registration on Request. The Purchasers shall be
entitled to require the Company to effect, and the Company shall be required to
effect, three registrations in the aggregate pursuant to this Section 2.1.
(i) Postponement. The Company shall be entitled once in any six-month
period to postpone for a reasonable period of time (but not exceeding 60 days)
(the "Postponement Period") the filing of any registration statement required to
be prepared and filed by it pursuant to this Section 2.1 if the Company
determines, in its reasonable judgment, that such registration and offering
would materially interfere with any material financing, corporate reorganization
or other material transaction involving the Company or any subsidiary, or would
require premature disclosure thereof, and promptly gives the Purchasers written
notice of such determination, containing a general statement of the reasons for
such postponement (which the Purchasers shall maintain in strict confidence in
accordance with the Confidentiality Agreement (as defined in the Purchase
Agreement)) and an approximation of the anticipated delay. If the Company shall
so postpone the filing of a registration statement, (i) the Company shall use
its reasonable best efforts to limit the delay to as short a period as is
practicable and (ii) the Purchasers shall have the right to withdraw the request
for registration by giving written
-4-
notice to the Company at any time and, in the event of such withdrawal, such
request shall not be counted for purposes of the requests for registration to
which the Purchasers are entitled pursuant to this Section 2.1.
(j) Shelf Registration. If the Purchasers request that the Company effect a
registration of Registrable Securities by means of shelf registration pursuant
to Rule 415 under the Securities Act (a "Shelf Registration Statement"), in
addition to the other requirements contained herein, the Company shall, at its
cost, use its reasonable best efforts to keep the Shelf Registration Statement
continuously effective in order to permit the Prospectus forming part thereof to
be usable by the Purchasers until such time as all the Registrable Securities
covered by the Shelf Registration Statement have been sold pursuant to the Shelf
Registration Statement or cease to be outstanding (the "Effectiveness Period");
provided, however, that the Effectiveness Period in respect of the Shelf
Registration Statement shall be extended to the extent required to permit
dealers to comply with the applicable prospectus delivery requirements under the
Securities Act and as otherwise provided herein.
2.2 Incidental Registration.
(a) Right to Include Registrable Securities. If the Company at any time
proposes to register any of its securities for the account of any other
stockholder under the Securities Act by registration on Form S-1, S-2 or S-3 or
any successor or similar form(s) (except registrations on any such Form or
similar form(s) solely for registration of securities in connection with an
employee benefit plan or dividend reinvestment plan or a merger or consolidation
or incidental to an issuance of securities under Rule 144A under the Securities
Act), it will each such time give prompt written notice to the Purchasers of its
intention to do so and of the Purchasers' rights under this Section 2.2. At any
time or from time to time after the Purchasers are permitted to transfer
Registrable Securities pursuant to Section 4.15 of the Purchase Agreement, upon
the written request of the Purchasers (which request shall specify the maximum
number of Registrable Securities intended to be disposed of by the Purchasers),
made as promptly as practicable and in any event within 30 days after the
receipt of any such notice (10 days if the Company states in such written notice
or gives telephonic notice to the Purchasers, with written confirmation to
follow promptly thereafter, stating that (i) such registration will be on Form
S-3 and (ii) such shorter period of time is required because of a planned filing
date), the Company shall use its reasonable best efforts to effect the
registration under the Securities Act of all Registrable Securities which the
Company has been so requested to register by the Purchasers; provided, however,
that if, at any time after giving written notice of its intention to register
any securities and prior to the effective date of the registration statement
filed in connection with such registration, the Company shall determine for any
reason not to register or to delay registration of such securities, the Company
shall give written notice of such determination and its reasons therefor (which
the Purchasers will hold in strict confidence
-5-
in accordance with the Confidentiality Agreement) to the Purchasers and (i) in
the case of a determination not to register, shall be relieved of its obligation
to register any Registrable Securities in connection with such registration (but
not from any obligation of the Company to pay the Registration Expenses in
connection therewith), without prejudice, however, to the rights of the
Purchasers to request that such registration be effected as a registration under
Section 2.1 and (ii) in the case of a determination to delay registering, shall
be permitted to delay registering any Registrable Securities, for the same
period as the delay in registering such other securities. No registration
effected under this Section 2.2 shall relieve the Company of its obligation to
effect any registration upon request under Section 2.1. The Company will pay all
Registration Expenses in connection with any registration of Registrable
Securities requested pursuant to this Section 2.2.
(b) Right to Withdraw. The Purchasers shall have the right to withdraw its
request for inclusion of its Registrable Securities in any registration
statement pursuant to this Section 2.2 at any time prior to the execution of an
underwriting agreement with respect thereto by giving written notice to the
Company of its request to withdraw.
(c) Priority in Incidental Registrations. If the managing underwriter of
any underwritten offering shall inform the Company by letter of its belief that
the number of Registrable Securities requested to be included in such
registration, when added to the number of other securities to be offered in such
registration, would materially adversely affect such offering, then the Company
shall include in such registration, to the extent of the number and type which
the Company is so advised can be sold in (or during the time of) such offering
without so materially adversely affecting such offering (the "Section 2.2 Sale
Amount") and to the fullest extent permitted by the terms of applicable
registration rights agreements in effect on the date hereof, the securities
proposed by the other stockholders triggering such incidental registration, the
Registrable Securities requested by the Purchasers to be included in such
registration pursuant to Section 2.2(a) and any other securities of the Company
requested to be included in such registration by any other holder having the
right to include securities on a pro rata basis (in an amount in the aggregate
equal to the Section 2.2 Sale Amount), based on the pro rata amount of shares of
Common Stock held, or obtainable by exercise or conversion of other securities
of the Company, by the Purchasers or such holder.
(d) Plan of Distribution. Any participation by holders of Registrable
Securities in a registration by the Company shall be in accordance with the
Company's plan of distribution, provided that the Purchasers shall in
consultation with the Company have the right to select a co-managing
underwriter.
2.3 Registration Procedures. If and whenever the Company is required to use
its reasonable best efforts to effect the registration of any Registrable
-6-
Securities under the Securities Act as provided in Sections 2.1 and 2.2 hereof,
the Company shall as expeditiously as possible:
(a) prepare and file with the Commission as soon as practicable the
requisite registration statement to effect such registration (and shall
include all financial statements required by the Commission to be filed
therewith) and thereafter use its reasonable best efforts to cause such
registration statement to become effective; provided, however, that before
filing such registration statement (including all exhibits) or any
amendment or supplement thereto or comparable statements under securities
or blue sky laws of any jurisdiction, the Company shall as promptly as
practicable furnish such documents to the Purchasers and each underwriter,
if any, participating in the offering of the Registrable Securities and
their respective counsel, which documents will be subject to the review and
comments of the Purchasers, each underwriter and their respective counsel;
and provided, further, however, that the Company may discontinue any
registration of its securities which are not Registrable Securities at any
time prior to the effective date of the registration statement relating
thereto;
(b) notify the Purchasers of the Commission's requests for amending or
supplementing the registration statement and the prospectus, and prepare
and file with the Commission such amendments and supplements to such
registration statement and the prospectus used in connection therewith as
may be necessary to keep such registration statement effective and to
comply with the provisions of the Securities Act with respect to the
disposition of all Registrable Securities covered by such registration
statement for such period as shall be required for the disposition of all
of such Registrable Securities in accordance with the intended method of
distribution thereof; provided, that except with respect to any such
registration statement filed pursuant to Rule 415 under the Securities Act,
such period need not exceed 365 days;
(c) furnish, without charge, to the Purchasers and each underwriter
such number of conformed copies of such registration statement and of each
such amendment and supplement thereto (in each case including all
exhibits), such number of copies of the prospectus contained in such
registration statement (including each preliminary prospectus and any
summary prospectus) and any other prospectus filed under Rule 424 under the
Securities Act, in conformity with the requirements of the Securities Act,
and such other documents, as the Purchasers and such underwriters may
reasonably request;
-7-
(d) use its reasonable best efforts (i) to register or qualify all
Registrable Securities and other securities covered by such registration
statement under such securities or blue sky laws of such States of the
United States of America where an exemption is not available and as the
Purchasers or any managing underwriter shall reasonably request, (ii) to
keep such registration or qualification in effect for so long as such
registration statement remains in effect, and (iii) to take any other
action which may be reasonably necessary or advisable to enable the
Purchasers to consummate the disposition in such jurisdictions of the
securities to be sold by the Purchasers, except that the Company shall not
for any such purpose be required to qualify generally to do business as a
foreign corporation in any jurisdiction wherein it would not but for the
requirements of this subsection (d) be obligated to be so qualified or to
consent to general service of process in any such jurisdiction;
(e) use its reasonable best efforts to cause all Registrable
Securities covered by such registration statement to be registered with or
approved by such other federal or state governmental agencies or
authorities as may be necessary in the opinion of counsel to the Company
and counsel to the Purchasers to consummate the disposition of such
Registrable Securities;
(f) furnish to the Purchasers and each underwriter, if any,
participating in the offering of the securities covered by such
registration statement, a signed counterpart of (i) an opinion of counsel
for the Company, and (ii) a "comfort" letter signed by the independent
public accountants who have certified the Company's or any other entity's
financial statements included or incorporated by reference in such
registration statement, covering substantially the same matters with
respect to such registration statement (and the prospectus included
therein) and, in the case of the accountants' comfort letter, with respect
to events subsequent to the date of such financial statements, as are
customarily covered in opinions of issuer's counsel and in accountants'
comfort letters delivered to the underwriters in underwritten public
offerings of securities (and dated the dates such opinions and comfort
letters are customarily dated) and, in the case of the legal opinion, such
other legal matters;
(g) promptly notify the Purchasers and each managing underwriter, if
any, participating in the offering of the securities covered by such
registration statement (i) when such registration statement, any
pre-effective amendment, the prospectus or any prospectus supplement
related thereto or post-effective amendment to such registration statement
has been filed, and, with respect to such registration statement or any
post-effective amendment, when the same has become effective; (ii) of any
request by the Commission
-8-
for amendments or supplements to such registration statement or the
prospectus related thereto or for additional information; (iii) of the
issuance by the Commission of any stop order suspending the effectiveness
of such registration statement or the initiation of any proceedings for
that purpose; (iv) of the receipt by the Company of any notification with
respect to the suspension of the qualification of any of the Registrable
Securities for sale under the securities or blue sky laws of any
jurisdiction or the initiation of any proceeding for such purpose; (v) at
any time when a prospectus relating thereto is required to be delivered
under the Securities Act, upon discovery that, or upon the happening of any
event as a result of which, the prospectus included in such registration
statement, as then in effect, includes an untrue statement of a material
fact or omits to state any material fact required to be stated therein or
necessary to make the statements therein not misleading, in the light of
the circumstances under which they were made, and in the case of this
clause (v), at the request of the Purchasers promptly prepare and furnish
to the Purchasers and each managing underwriter, if any, participating in
the offering of the Registrable Securities, a reasonable number of copies
of a supplement to or an amendment of such prospectus as may be necessary
so that, as thereafter delivered to the purchasers of such securities, such
prospectus shall not include an untrue statement of a material fact or omit
to state a material fact required to be stated therein or necessary to make
the statements therein not misleading in the light of the circumstances
under which they were made; and (vi) at any time when the representations
and warranties of the Company contemplated by Section 2.4(a) or (b) hereof
cease to be true and correct;
(h) otherwise comply with all applicable rules and regulations of the
Commission, and make available to its security holders, as soon as
reasonably practicable, an earnings statement covering the period of at
least twelve months beginning with the first full calendar month after the
effective date of such registration statement, which earnings statement
shall satisfy the provisions of Section 11(a) of the Securities Act and
Rule 158 promulgated thereunder, and promptly furnish to the Purchasers a
copy of any amendment or supplement to such registration statement or
prospectus;
(i) provide and cause to be maintained a transfer agent and registrar
(which, in each case, may be the Company) for all Registrable Securities
covered by such registration statement from and after a date not later than
the effective date of such registration;
(j) (i) use its reasonable best efforts to cause all Registrable
Securities covered by such registration statement to be listed on the
NASDAQ "national market system" or the principal securities exchange on
-9-
which similar securities issued by the Company are then listed (if any), if
the listing of such Registrable Securities is then permitted under the
rules of such exchange, or (ii) if no similar securities are then so
listed, use its reasonable best efforts to (x) cause all such Registrable
Securities to be listed on a national securities exchange or (y) failing
that, secure designation of all such Registrable Securities as a NASDAQ
"national market system security" within the meaning of Rule 11Aa2-1 of the
Commission or (z) failing that, to secure NASDAQ authorization for such
shares and, without limiting the generality of the foregoing, to arrange
for at least two market makers to register as such with respect to such
shares with the National Association of Securities Dealers, Inc.;
(k) deliver promptly to counsel to the Purchasers and each
underwriter, if any, participating in the offering of the Registrable
Securities, copies of all correspondence between the Commission and the
Company, its counsel or auditors and all memoranda relating to discussions
with the Commission or its staff with respect to such registration
statement;
(l) use its reasonable best efforts to obtain the withdrawal of any
order suspending the effectiveness of the registration statement;
(m) provide a CUSIP number for all Registrable Securities, no later
than the effective date of the registration statement; and
(n) in connection with any underwritten public offering, make
available its senior executive officers, directors and chairman and
otherwise provide reasonable assistance to the underwriters (taking into
account the needs of the Company's business) in their marketing of
Registrable Securities.
The Company may require the Purchasers to furnish the Company such information
regarding the Purchasers and the distribution of the Registrable Securities as
the Company may from time to time reasonably request in writing.
The Purchasers agrees that upon receipt of any notice from the Company of
the happening of any event of the kind described in paragraph (g)(iii) or (v) of
this Section 2.3, the Purchasers will, to the extent appropriate, discontinue
their disposition of Registrable Securities pursuant to the registration
statement relating to such Registrable Securities until, in the case of
paragraph (g)(v) of this Section 2.3, their receipt of the copies of the
supplemented or amended prospectus contemplated by paragraph (g)(v) of this
Section 2.3 and, if so directed by the Company, will deliver to the Company (at
the Company's expense) all copies, other than permanent file copies, then in
their possession, of the prospectus relating to such Registrable Securities
current at the time of receipt of such notice. If the disposition by the
Purchasers of their securities is discontinued
-10-
pursuant to the foregoing sentence, the Company shall extend the period of
effectiveness of the registration statement by the number of days during the
period from and including the date of the giving of notice to and including the
date when the Purchasers shall have received copies of the supplemented or
amended prospectus contemplated by paragraph (g)(v) of this Section 2.3; and, if
the Company shall not so extend such period, the Purchasers' request pursuant to
which such registration statement was filed shall not be counted for purposes of
the requests for registration to which the Purchasers are entitled pursuant to
Section 2.1 hereof.
2.4 Underwritten Offerings.
(a) Requested Underwritten Offerings. If requested by the underwriters for
any underwritten offering by the Purchasers pursuant to a registration requested
under Section 2.1, the Company shall enter into a customary underwriting
agreement (in the form of underwriting agreement used at such time by the
managing underwriter(s)) with a managing underwriter or underwriters selected by
the Purchasers. Such underwriting agreement shall be satisfactory in form and
substance to the Purchasers and shall contain such representations and
warranties by, and such other agreements on the part of, the Company and such
other terms as are generally prevailing in agreements of the managing
underwriter(s), including, without limitation, their customary provisions
relating to indemnification and contribution. The Purchasers shall be party to
such underwriting agreement and may, at their option, require that any or all of
the representations and warranties by, and the other agreements on the part of,
the Company to and for the benefit of such underwriters shall also be made to
and for the benefit of the Purchasers and that any or all of the conditions
precedent to the obligations of such underwriters under such underwriting
agreement be conditions precedent to the obligations of the Purchasers.
(b) Incidental Underwritten Offerings. In the case of a registration
pursuant to Section 2.2 hereof, if the Company shall have determined to enter
into any underwriting agreements in connection therewith, all of the Registrable
Securities to be included in such registration shall be subject to such
underwriting agreements. The Purchasers may, at their option, require that any
or all of the representations and warranties by, and the other agreements on the
part of, the Company to and for the benefit of such underwriters shall also be
made to and for the benefit of the Purchasers and that any or all of the
conditions precedent to the obligations of such underwriters under such
underwriting agreement be conditions precedent to the obligations of the
Purchasers.
2.5 Preparation; Reasonable Investigation. In connection with the
preparation and filing of each registration statement under the Securities Act
pursuant to this Agreement, the Company will give the Purchasers, their
underwriters, if any, and their respective counsel, accountants and other
representatives and agents the opportunity
-11-
to participate in the preparation of such registration statement, each
prospectus included therein or filed with the Commission, and each amendment
thereof or supplement thereto, and give each of them such access to its books
and records and such opportunities to discuss the business of the Company with
its officers and employees and the independent public accountants who have
certified its financial statements, and supply all other information reasonably
requested by each of them, as shall be necessary or appropriate, in the opinion
of the Purchasers and such underwriters' respective counsel, to conduct a
reasonable investigation within the meaning of the Securities Act.
2.6 Indemnification.
(a) Indemnification by the Company. The Company agrees that in the event of
any registration of any securities of the Company under the Securities Act, the
Company shall, and hereby does, indemnify and hold harmless the Purchasers,
their respective directors, officers, members, partners, agents and affiliates
and each other Person who participates as an underwriter in the offering or sale
of such securities and each other Person, if any, who controls the Purchasers or
any such underwriter within the meaning of the Securities Act, against any
losses, claims, damages, or liabilities, joint or several, to which the
Purchasers or any such director, officer, member, partner, agent or affiliate or
underwriter or controlling person may become subject under the Securities Act or
otherwise, insofar as such losses, claims, damages or liabilities, joint or
several (or actions or proceedings, whether commenced or threatened, in respect
thereof), arise out of or are based upon (i) any untrue statement or alleged
untrue statement of any material fact contained in any registration statement
under which such securities were registered under the Securities Act, any
preliminary prospectus, final prospectus or summary prospectus contained
therein, or any amendment or supplement thereto, (ii) any omission or alleged
omission to state therein a material fact required to be stated therein or
necessary to make the statements therein in light of the circumstances in which
they were made not misleading, or (iii) any violation by the Company of any
federal, state or common law rule or regulation applicable to the Company and
relating to action required of or inaction by the Company in connection with any
such registration, and the Company shall reimburse the Purchasers and each such
director, officer, member, partner, agent or affiliate, underwriter and
controlling Person for any legal or any other expenses reasonably incurred by
them in connection with investigating or defending any such loss, claim,
liability, action or proceeding; provided that the Company shall not be liable
in any such case to the Purchasers or any such director, officer, member,
partner, agent, affiliate, or controlling person to the extent that any such
loss, claim, damage, liability (or action or proceeding in respect thereof) or
expense arises out of or is based upon an untrue statement or alleged untrue
statement or omission or alleged omission made in such registration statement,
any such preliminary prospectus, final prospectus, summary prospectus, amendment
or supplement in reliance upon and in conformity with written information
furnished to the Company through an instrument duly executed by or on behalf of
the Purchasers, specifically stating that it is for use in the preparation
-12-
thereof. Such indemnity shall remain in full force regardless of any
investigation made by or on behalf of the Purchasers or any such director,
officer, member, partner, agent, affiliate, underwriter or controlling Person
and shall survive the transfer of such securities by the Purchasers.
(b) Indemnification by the Purchasers. As a condition to including any
Registrable Securities in any registration statement, the Company shall have
received an undertaking reasonably satisfactory to it from the Purchasers so
including any Registrable Securities to indemnify and hold harmless (in the same
manner and to the same extent as set forth in paragraph (a) of this Section 2.6)
the Company, and each director of the Company, each officer of the Company and
each other Person, if any, who controls the Company within the meaning of the
Securities Act, with respect to any statement or alleged statement in or
omission or alleged omission from such registration statement, any preliminary
prospectus, final prospectus or summary prospectus contained therein, or any
amendment or supplement thereto, but only to the extent such statement or
alleged statement or omission or alleged omission was made in reliance upon and
in conformity with written information furnished to the Company through an
instrument duly executed by the Purchasers specifically stating that it is for
use in the preparation of such registration statement, preliminary prospectus,
final prospectus, summary prospectus, amendment or supplement; provided,
however, that the liability of such indemnifying party under this Section 2.6(b)
shall be limited to the amount of proceeds (net of expenses and underwriting
discounts and commissions) received by such indemnifying party in the offering
giving rise to such liability. Such indemnity shall remain in full force and
effect, regardless of any investigation made by or on behalf of the Company or
any such director, officer or controlling Person and shall survive the transfer
of such securities by the Purchasers.
(c) Notices of Claims, etc. Promptly after receipt by an indemnified party
of notice of the commencement of any action or proceeding involving a claim
referred to in the preceding subsections of this Section 2.6, such indemnified
party shall, if a claim in respect thereof is to be made against an indemnifying
party, give written notice to the latter of the commencement of such action or
proceeding; provided, however, that the failure of any indemnified party to give
notice as provided herein shall not relieve the indemnifying party of its
obligations under the preceding subsections of this Section 2.6, except to the
extent that the indemnifying party is actually prejudiced by such failure to
give notice, and shall not relieve the indemnifying party from any liability
which it may have to the indemnified party otherwise than under this Section
2.6. In case any such action or proceeding is brought against an indemnified
party, the indemnifying party shall be entitled to participate therein and,
unless in the opinion of outside counsel to the indemnified party a conflict of
interest between such indemnified and indemnifying parties may exist in respect
of such claim, to assume the defense thereof, jointly with any other
indemnifying party similarly notified to the extent that it may wish, with
counsel reasonably satisfactory to such indemnified party; provided, however,
that if the
-13-
defendants in any such action or proceeding include both the indemnified party
and the indemnifying party and if in the opinion of outside counsel to the
indemnified party there may be legal defenses available to such indemnified
party and/or other indemnified parties which are different from or in addition
to those available to the indemnifying party, the indemnified party or parties
shall have the right to select separate counsel to defend such action or
proceeding on behalf of such indemnified party or parties, provided, however,
that the indemnifying party shall be obligated to pay for only one counsel and
one local counsel for all indemnified parties. After notice from the
indemnifying party to such indemnified party of its election so to assume the
defense thereof and approval by the indemnified party of such counsel, the
indemnifying party shall not be liable to such indemnified party for any legal
expenses subsequently incurred by the latter in connection with the defense
thereof other than reasonable costs of investigation (unless the first proviso
in the preceding sentence shall be applicable). No indemnifying party shall be
liable for any settlement of any action or proceeding effected without its
written consent. No indemnifying party shall, without the consent of the
indemnified party, consent to entry of any judgment or enter into any settlement
which does not include as an unconditional term thereof the giving by the
claimant or plaintiff to such indemnified party of a release from all liability
in respect to such claim or litigation.
(d) Contribution. If the indemnification provided for in this Section 2.6
shall for any reason be held by a court to be unavailable to an indemnified
party under subsection (a) or (b) hereof in respect of any loss, claim, damage
or liability, or any action in respect thereof, then, in lieu of the amount paid
or payable under subsection (a) or (b) hereof, the indemnified party and the
indemnifying party under subsection (a) or (b) hereof shall contribute to the
aggregate losses, claims, damages and liabilities (including legal or other
expenses reasonably incurred in connection with investigating the same), (i) in
such proportion as is appropriate to reflect the relative fault of the
indemnifying party on the one hand, and the indemnified party on the other,
which resulted in such loss, claim, damage or liability, or action in respect
thereof, with respect to the statements or omissions which resulted in such
loss, claim, damage or liability, or action in respect thereof, as well as any
other relevant equitable considerations, or (ii) if the allocation provided by
clause (i) above is not permitted by applicable law or if the allocation
provided in this clause (ii) provides a greater amount to the indemnified party
than clause (i) above, in such proportion as shall be appropriate to reflect not
only the relative fault but also the relative benefits received by the
indemnifying party and the indemnified party from the offering of the securities
covered by such registration statement as well as any other relevant equitable
considerations. The parties hereto agree that it would not be just and equitable
if contributions pursuant to this Section 2.6(d) were to be determined by pro
rata allocation or by any other method of allocation which does not take into
account the equitable considerations referred to in the preceding sentence of
this Section 2.6(d). No Person guilty of fraudulent misrepresentation (within
the meaning of Section 11(f) of the Securities Act) shall be entitled to
contribution from any Person who was not guilty of such fraudulent
misrepresentation. In addition, no
-14-
Person shall be obligated to contribute hereunder any amounts in payment for any
settlement of any action or claim effected without such Person's consent, which
consent shall not be unreasonably withheld. Notwithstanding anything in this
subsection (d) to the contrary, no indemnifying party (other than the Company)
shall be required to contribute any amount in excess of the proceeds (net of
expenses and underwriting discounts and commissions) received by such party from
the sale of the Registrable Securities in the offering to which the losses,
claims, damages or liabilities of the indemnified parties relate.
(e) Other Indemnification. Indemnification and contribution similar to that
specified in the preceding subsections of this Section 2.6 (with appropriate
modifications) shall be given by the Company and the Purchasers with respect to
any required registration or other qualification of securities under any
federal, state or blue sky law or regulation of any governmental authority other
than the Securities Act. The indemnification agreements contained in this
Section 2.6 shall be in addition to any other rights to indemnification or
contribution which any indemnified party may have pursuant to law or contract
and shall remain operative and in full force and effect regardless of any
investigation made by or on behalf of any indemnified party and shall survive
the transfer of any of the Registrable Securities by the Purchasers.
(f) Indemnification Payments. The indemnification and contribution required
by this Section 2.6 shall be made by periodic payments of the amount thereof
during the course of the investigation or defense, as and when bills are
received or expense, loss, damage or liability is incurred.
2.7 Unlegended Certificates. In connection with the offering of any
Registrable Securities registered pursuant to this Section 2, the Company shall
(i) facilitate the timely preparation and delivery to the Purchasers and the
underwriters, if any, participating in such offering, of unlegended certificates
representing ownership of such Registrable Securities being sold in such
denominations and registered in such names as requested by the Purchasers or
such underwriters and (ii) instruct any transfer agent and registrar of such
Registrable Securities to release any stop transfer orders with respect to any
such Registrable Securities.
2.8 Manner of Sale. So long as the Purchasers own in excess of 2.5% of the
fully diluted Common Stock (after giving effect to the exercise of all
outstanding options, warrants and other rights to purchase Common Stock whether
or not such options, warrants or other rights are then exercisable (the
"Threshold Amount")), the Purchasers agree that, except as provided below or
except with the written consent of the Company (which consent shall not be
unreasonably withheld), the Purchasers shall sell or otherwise effectuate a
distribution of Registrable Securities only (i) pursuant to one or more firm
commitment underwritten public offerings or (ii) in one or more block trades.
Notwithstanding anything to the contrary set forth above, at any time while the
-15-
Purchasers own an amount of Common Stock in excess of the Threshold Amount, the
Purchasers shall have the right to effectuate a distribution of Registrable
Securities in any other manner, including pursuant to a Shelf Registration
Statement, if in the opinion of a nationally recognized investment banker
selected by the Company and the Purchasers, distributions of Registrable
Securities made in the manner proposed by the Purchasers would not adversely
affect the market for the Common Stock. Nothing contained herein shall be deemed
to restrict the Purchasers from transferring any of the Common Stock at any time
in accordance with the terms of the Purchase Agreement.
2.9 No Required Sale. Nothing in this Agreement shall be deemed to create
an independent obligation on the part of the Purchasers to sell any Registrable
Securities pursuant to any effective registration statement.
3. Rule 144. The Company shall take all actions reasonably necessary to
enable holders of Registrable Securities to sell such securities without
registration under the Securities Act within the limitation of the exemptions
provided by (i) Rule 144, or (ii) any similar rule or regulation hereafter
adopted by the Commission including, without limiting the generality of the
foregoing, filing on a timely basis all reports required to be filed by the
Exchange Act. Upon the request of the Purchasers, the Company will deliver to
such holder a written statement as to whether it has complied with such
requirements.
4. Amendments and Waivers. This Agreement may be amended, modified or
supplemented only by written agreement of the party against whom enforcement of
such amendment, modification or supplement is sought.
5. [INTENTIONALLY OMITTED].
6. Notice. All notices and other communications hereunder shall be in
writing and, unless otherwise provided herein, shall be deemed to have been
given when received by the party to whom such notice is to be given at its
address set forth below, or such other address for the party as shall be
specified by notice given pursuant hereto:
(a) If to the Purchasers, to:
c/o Forstmann Little & Co.
767 Fifth Avenue
New York, NY 10153
Attention: Sandra J. Horbach
-16-
With a copy to:
Fried, Frank, Harris, Shriver & Jacobson
One New York Plaza
New York, New York 10004
Attention: Robert C. Schwenkel, Esq.
(b) If to the Company, to it at:
NEXTLINK Communications, Inc.
1505 Farm Credit Drive
McLean, VA 22102
Attn: Gary Begeman, Esq.
with a copy to:
Willkie Farr & Gallagher
787 Seventh Avenue
New York, NY 10019
Attn: Bruce R. Kraus, Esq.
7. Assignment; Third Party Beneficiaries. This Agreement shall be binding
upon and inure to the benefit of and be enforceable by the parties hereto and
their respective successors and permitted assigns. This Agreement may not be
assigned by the Company, without the prior written consent of the Purchasers.
The Purchasers may, at their election, at any time or from time to time, assign
their rights under this Agreement, in whole or in part, to any purchaser or
other transferee of shares of Common Stock held by them; provided, however, that
any rights to withdraw shares from inclusion in a registration statement
pursuant to Section 2 shall be made only by the Purchasers for themselves and
all such purchasers and transferees; and provided further, that no such
assignment will increase the total number of registrations pursuant to Section
2.1 or underwritten offerings the Company is required to effect hereunder.
8. Remedies. The parties hereto agree that money damages or other remedy at
law would not be sufficient or adequate remedy for any breach or violation of,
or a default under, this Agreement by them and that, in addition to all other
remedies available to them, each of them shall be entitled to an injunction
restraining such breach, violation or default or threatened breach, violation or
default and to any other equitable relief, including without limitation specific
performance, without bond or other security being required. In any action or
proceeding brought to enforce any provision of this Agreement (including the
indemnification provisions thereof), the successful party shall be entitled to
recover reasonable attorneys' fees in addition to its costs and expenses and any
other available remedy.
-17-
9. No Inconsistent Agreements. The Company will not, on or after the date
of this Agreement, enter into any agreement with respect to its securities which
is inconsistent with the rights granted to the Purchasers in this Agreement or
otherwise conflicts with the provisions hereof. The Company further represents
and warrants that the rights granted to the Purchasers hereunder do not in any
way conflict with and are not inconsistent with any other agreements to which
the Company is a party or by which it is bound.
10. Descriptive Headings. The descriptive headings of the several sections
and paragraphs of this Agreement are inserted for reference only and shall not
control or otherwise affect the meaning hereof.
11. Governing Law. This Agreement shall be construed and enforced in
accordance with, and the rights and obligations of the parties hereto shall be
governed by, the laws of the State of New York, without giving effect to the
conflicts of law principles thereof. Each of the parties hereto hereby
irrevocably and unconditionally consents to submit to the exclusive jurisdiction
of the courts of the State of New York and the United States of America located
in the County of New York for any action or proceeding arising out of or
relating to this Agreement and the transactions contemplated hereby (and agrees
not to commence any action or proceeding relating thereto except in such
courts), and further agrees that service of any process, summons, notice or
document by U.S. registered mail to its respective address set forth in Section
6 hereof shall be effective service of process for any action or proceeding
brought against it in any such court. Each of the parties hereto hereby
irrevocably and unconditionally waives any objection to the laying of venue of
any action or proceeding arising out of this Agreement or the transactions
contemplated hereby in the courts of the State of New York or the United States
of America located in the County of New York, and hereby further irrevocably and
unconditionally waives and agrees not to plead or claim in any such court that
any such action or proceeding brought in any such court has been brought in an
inconvenient forum.
12. Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be deemed an original, but all such
counterparts shall together constitute one and the same instrument.
13. Invalidity of Provision. The invalidity or unenforceability of any
provision of this Agreement in any jurisdiction shall not affect the validity or
enforceability of the remainder of this Agreement in that jurisdiction or the
validity or enforceability of this Agreement, including that provision, in any
other jurisdiction. If any restriction or provision of this Agreement is held
unreasonable, unlawful or unenforceable in any respect, such restriction or
provision shall be interpreted, revised or applied in a manner that renders it
lawful and enforceable to the fullest extent possible under law.
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14. Further Assurances. Each party hereto shall do and perform or cause to
be done and performed all further acts and things and shall execute and deliver
all other agreements, certificates, instruments, and documents as any other
party hereto reasonably may request in order to carry out the intent and
accomplish the purposes of this Agreement and the consummation of the
transactions contemplated hereby.
15. Entire Agreement; Effectiveness. This Agreement constitutes the entire
agreement, and supersedes all prior agreements and understandings, oral and
written, between the parties hereto with respect to the subject matter hereof.
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IN WITNESS WHEREOF, the parties have caused this Agreement to be executed
and delivered by their respective officers thereunto duly authorized.
NEXTLINK COMMUNCATIONS, INC.
By: ______________________________
Name: Daniel F. Akerson
Title: Chairman and Chief Executive
Officer
FORSTMANN LITTLE & CO. EQUITY
PARTNERSHIP VI, L.P.
By: ______________________________
FORSTMANN LITTLE & CO.
SUBORDINATED DEBT AND EQUITY
MANAGEMENT BUYOUT PARTNERSHIP VII, L.P.
By: ______________________________
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EXHIBIT 5.3(d)
--------------
CONFIDENTIALITY AGREEMENT
This Confidentiality Agreement (this "Agreement") is dated as of _________
__, 2000 between NEXTLINK Communications, Inc., a Delaware corporation
("NEXTLINK"), with offices located at 1505 Farm Credit Drive, McLean, VA 22102,
and Forstmann Little & Co. Equity Partnership VI, L.P. and Forstmann Little &
Co. Subordinated Debt and Equity Management Buyout Partnership VII, L.P., each a
Delaware limited partnership (together, "Investor"), with offices located at 767
Fifth Avenue, New York, NY 10153. (NEXTLINK and Investor sometimes are
collectively referred to herein as the "Parties" and individually as a "Party".)
RECITALS
A. Investor has purchased shares of NEXTLINK's Series C Cumulative
Convertible Participating Preferred Stock and Series D Convertible Participating
Preferred Stock (collectively, the "Preferred Stock") pursuant to that certain
Stock Purchase Agreement, dated as of December 7, 1999 (the "Purchase
Agreement"), between NEXTLINK and Investor (the "Investment").
B. Pursuant to the terms of the Purchase Agreement and the certificates of
designation for the Preferred Stock (the "Certificates of Designation"),
Investor is entitled to designate certain directors and/or observers to the
Board of Directors of NEXTLINK (together, "Investor Designees") and is provided
certain informational rights with respect to NEXTLINK.
C. Investor and/or certain of its affiliates also hold certain interests in
McLeodUSA Incorporated ("McLeod"), a competitor of NEXTLINK.
D. Investor has agreed to enter into this Agreement in consideration for,
and as a condition to, NEXTLINK's agreement to sell to Investor the Preferred
Stock and provide Investor with the rights described in clause B above.
AGREEMENT
NEXTLINK and Investor hereby agree as follows:
1. Confidential Information. As used in this Agreement, subject to Section
3 below, "Confidential Information" means all information of NEXTLINK and its
subsidiaries that is not generally known to the public, whether of a technical,
business or other nature (including, without limitation, trade secrets, know-how
and information relating to its technology, customers, business plans,
promotional and marketing activities, finances and other business affairs), that
is disclosed by or on behalf of NEXTLINK to Investor, the Investor Designees or
Investor's Personnel (as defined below).
2. Use of Confidential Information. Investor, except as expressly provided
in this Agreement, shall not disclose Confidential Information to anyone without
NEXTLINK's prior written consent. Investor shall not use, or permit others to
use, Confidential Information for any purpose other than monitoring its
Investment and taking actions in connection therewith. Investor shall take all
reasonable measures to avoid disclosure, dissemination or unauthorized use of
Confidential Information, including, at a minimum, those measures it takes to
protect its own confidential information of a similar nature. Investor shall not
reverse-engineer, decompile, or disassemble any hardware or software provided or
disclosed to it and shall not remove, overprint or deface any notice of
copyright, trademark, logo, legend or other notice of ownership from any
originals or copies of Confidential Information it obtains from NEXTLINK.
3. Exceptions. The provisions of Section 2 shall not apply to any
information that (i) is or becomes publicly available without breach of this
Agreement; (ii) can be shown by documentation to have been known to Investor
without confidentiality restrictions at the time of its receipt from NEXTLINK;
(iii) is rightfully received from a third party who Investor has no reason to
believe did not acquire or disclose such information by a wrongful or tortious
act, or in breach of a confidentiality restriction; or (iv) can be shown by
documentation to have been independently developed by Investor without reference
to any Confidential Information.
4. Investor Personnel. Investor shall restrict the possession, knowledge
and use of Confidential Information to its partners, employees, agents,
attorneys, accountants, representatives and entities controlled by it
(collectively, "Personnel") who have a need to know Confidential Information in
connection with the Investment; provided, that, in no event shall Confidential
Information be provided to any Investor Personnel who, by virtue of their
affiliation with Investor or otherwise, are directors of McLeod or otherwise are
responsible for Investor's McLeod investment or have duties (other than of an
administrative type) with respect thereto ("Disqualified Personnel"). Investor's
Personnel (other than Disqualified Personnel) shall have access to Confidential
Information only to the extent they require such access for legitimate business
purposes. Investor shall ensure that its Personnel comply with this Agreement
and shall be responsible for any improper use or disclosure of Confidential
Information by its Personnel. Investor further agrees, as a condition to
designating any Investor Designee under the Certificates of Designation, to
deliver the agreement of such Investor Designee to be bound by the terms of this
Agreement in the form attached hereto. Investor agrees to document and implement
internal procedures reasonably calculated to ensure compliance with this Section
4, to monitor compliance with such procedures periodically, and to disclose such
procedures and the results of such compliance monitoring to NEXTLINK on request.
Investor will not designate any Disqualified Personnel to serve on the board of
directors of NEXTLINK.
5. Disclosures to Governmental Entities. If, in the opinion of its counsel,
Investor becomes legally obligated to disclose Confidential Information to a
governmental entity, Investor shall give NEXTLINK prompt written notice
sufficient to allow NEXTLINK to seek a protective order or other appropriate
remedy, and shall, to the extent practicable, consult with NEXTLINK in an
attempt to agree on the form, content and timing of such disclosure. Investor
shall disclose
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only such information as is required, in the opinion of its counsel, and shall
use its best efforts to obtain confidential treatment for any Confidential
Information that is so disclosed.
6. Ownership of Confidential Information. All Confidential Information
shall remain the exclusive property of NEXTLINK, and Investor shall have no
rights, by license or otherwise, to use the Confidential Information except as
expressly provided herein. No patent, copyright, trademark or other proprietary
right is licensed, granted or otherwise conveyed by this Agreement with respect
to Confidential or other information.
7. Return of Confidential Information. Investor promptly shall return or
destroy, and verify in writing its destruction of, all tangible material
embodying Confidential Information (in any form and including, without
limitation, all summaries, copies and excerpts of Confidential Information and
all electronic media or records containing or derived from Confidential
Information) upon the earlier of (i) the transfer or other disposition of the
Preferred Stock by Investor (other than to an affiliate), and (ii) NEXTLINK's
written request.
8. Injunctive Relief. Investor acknowledges that disclosure or use of
Confidential Information in violation of this Agreement could cause irreparable
harm to NEXTLINK for which monetary damages may be difficult to ascertain or be
an inadequate remedy. Investor therefore agrees that NEXTLINK shall have the
right, in addition to its other rights and remedies, to seek and obtain
injunctive relief for any violation of this Agreement.
9. Cumulative Obligations. Each Party's obligations hereunder are in
addition to, and not exclusive of, any and all of its other obligations and
duties to the other Party, whether express, implied, in fact or in law.
10. Entire Agreement; Amendment. This Agreement, together with the Purchase
Agreement, the Certificates of Designation and the General Nondisclosure
Agreement, dated as of November 24, 1999, among the Parties or their affiliates,
constitute the entire agreement between the Parties relating to the matters
discussed herein and may be amended or modified only with the mutual written
consent of the Parties.
11. Scope; Termination. This Agreement is intended to cover Confidential
Information disclosed by NEXTLINK both prior and subsequent to the date hereof.
This Agreement automatically shall terminate at the end of the two year period
following the later of (a) the transfer or other disposition of all the
Preferred Stock by Investor (other than to an affiliate) and (b) the date on
which no Investor Designees or other Investor Personnel are directors on and/or
observers to the Board of Directors of NEXTLINK.
12. Nonwaiver. Any failure by either Party to enforce the other Party's
strict performance of any provision of this Agreement shall not constitute a
waiver of its right to subsequently enforce such provision or any other
provision of this Agreement.
13. Governing Law; Etc. This Agreement shall be governed by internal laws
of the State of New York, without reference to its choice of law rules, and may
be executed in counterpart copies. Any action arising out of or related to this
Agreement shall be brought in
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the State of New York or of the United States of America for the Southern
District of New York, and Investor consents to the jurisdiction and venue of
such courts. The prevailing party in any such action shall be entitled to
recover its reasonable attorney's fees and costs incurred in any such action or
on appeal. If a provision of this Agreement is held invalid under any applicable
law, such invalidity shall not affect any other provision of this Agreement that
can be given effect without the invalid provision. Further, all terms and
conditions of this Agreement shall be deemed enforceable to the fullest extent
permissible under applicable law, and when necessary, the court is requested to
reform any and all terms or conditions to give them such effect.
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In witness whereof, the Parties have executed this Agreement on the date
first written above.
NEXTLINK COMMUNICATIONS, INC.
By: ______________________________
Name: Daniel F. Akerson
Title: Chairman and Chief
Executive Officer
FORSTMANN LITTLE & CO. EQUITY PARTNERSHIP VI, L.P.
By: ______________________________
Name:
Title:
FORSTMANN LITTLE & CO. SUBORDINATED DEBT AND
EQUITY MANAGEMENT BUYOUT PARTNERSHIP VII, L.P.
By: ______________________________
Name:
Title:
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Investor Designee
Reference is made to the Confidentiality Agreement, dated as of _______ __,
2000 (the "Confidentiality Agreement"), among NEXTLINK Communications, Inc. and
Forstmann Little & Co. Equity Partnership VI, L.P. and Forstmann Little & Co.
Subordinated Debt and Equity Management Buyout Partnership VII, L.P. (together,
"Investor"). The undersigned Investor Designee (as defined in the
Confidentiality Agreement) hereby agrees to be bound by the terms of the
Confidentiality Agreement as if the undersigned were the Investor thereunder.
_____________________________
Name: