CERTIFICATE OF DESIGNATION OF THE POWERS,
PREFERENCES AND RELATIVE, PARTICIPATING,
OPTIONAL AND OTHER SPECIAL RIGHTS OF 14% SENIOR
EXCHANGEABLE REDEEMABLE PREFERRED SHARES AND
QUALIFICATIONS, LIMITATIONS AND RESTRICTIONS THEREOF
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Pursuant to Section 23B.06.020 of the
Business Corporation Act of the State of Washington
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NEXTLINK Communications Merger, Inc. (the "Corporation"), a corporation
organized and existing under the Business Corporation Act of the State of
Washington, does hereby certify that, pursuant to authority conferred upon the
board of directors of the Corporation (the "Board of Directors") by its Articles
of Incorporation, as amended (hereinafter referred to as the "Articles of
Incorporation"), and pursuant to the provisions of Section 23B.06.020 of the
Business Corporation Act of the State of Washington, said Board of Directors, at
a meeting thereof on January 27, 1997, duly approved and adopted the following
resolution (the "Resolution"):
RESOLVED, that, pursuant to the authority vested in the Board of
Directors by its Articles of Incorporation, the Board of Directors does
hereby create, authorize and provide for the issuance of 14% Senior
Exchangeable Redeemable Preferred Shares, par value $.01 per share, with a
stated value of $50 per share, in an amount not to exceed 11,700,000
shares, having the designations, preferences, relative, participating,
optional and other special rights and the qualifications, limitations and
restrictions thereof that are set forth in the Articles of Incorporation
and in this Resolution as follows:
(a) DESIGNATION.
There is hereby created out of the authorized and unissued
Preferred Shares of the Corporation a class of Preferred Shares
designated as the "14% Senior Exchangeable Redeemable Preferred
Shares." The number of shares constituting such class shall not
exceed 11,700,000 and are referred to as the "Senior Exchangeable
Redeemable Preferred Shares." The liquidation preference of the
Senior Exchangeable Redeemable Preferred Shares shall be $50 per
share. The Senior Exchangeable Redeemable Preferred Shares shall
consist of the Original Shares and the Exchange Shares.
(b) RANKING.
The Senior Exchangeable Redeemable Preferred Shares shall, with
respect to dividends and distributions upon liquidation, winding-up
and dissolution of the Corporation, rank (i) senior to each class of
Capital Stock of the Corporation (including, without limitation, the
Corporation's Class A Common Stock, par value $.01 per share
and the Class B Common Stock, par value $.01 per share) outstanding or
hereafter created the terms of which do not expressly provide that it
ranks senior to, or on a parity with, the Senior Exchangeable
Redeemable Preferred Shares as to dividends and distributions upon
liquidation, winding-up and dissolution of the Corporation
(collectively referred to as "Junior Shares"); (ii) on a parity with
any class of Capital Stock of the Corporation or series of Preferred
Shares of the Corporation hereafter created the terms of which
expressly provide that such class or series will rank on a parity with
the Senior Exchangeable Redeemable Preferred Shares as to dividends
and distributions upon liquidation, winding-up and dissolution
(collectively referred to as "Parity Shares"); PROVIDED that any such
Parity Shares that were not issued in compliance with paragraph
(f)(ii)(A) hereof shall be deemed to be Junior Shares and not Parity
Shares; and (iii) junior to each class of Capital Stock of the
Corporation or series of Preferred Shares of the Corporation hereafter
created that has been issued in compliance with paragraph (f)(ii)(B)
hereof and the terms of which expressly provide that such class or
series will rank senior to the Senior Exchangeable Redeemable
Preferred Shares as to dividends and distributions upon liquidation,
winding-up and dissolution of the Corporation (collectively referred
to as "Senior Shares").
(c) DIVIDENDS.
(i) (A) Beginning on the Issue Date, the Holders of the
outstanding Senior Exchangeable Redeemable Preferred Shares
shall be entitled to receive, when, as and if declared by the
Board of Directors, out of funds legally available therefor,
distributions in the form of dividends on each Senior
Exchangeable Redeemable Preferred Shares, at a rate PER ANNUM
equal to 14% of the liquidation preference per share of the
Senior Exchangeable Redeemable Preferred Shares, payable
quarterly. No interest shall be payable in respect to any
dividends that may be in arrears. All dividends shall be
cumulative, whether or not earned or declared, on a daily basis
from their date of issuance and shall be payable quarterly in
arrears on each Dividend Payment Date, commencing on the first
Dividend Payment Date after the Issue Date. Dividends may be
paid at the Corporation's option on any Dividend Payment Date
occurring on or before February 1, 2002 either in cash or by
issuing additional fully paid and nonassessable Senior
Exchangeable Redeemable Preferred Shares with an aggregate
liquidation preference equal to the amount of such dividends.
After February 1, 2002, dividends shall be paid only in cash.
Each dividend shall be payable to the Senior Exchangeable
Redeemable Preferred Shares held by Holders of record as they
appear on the share books of the Corporation on the Dividend
Record Date immediately preceding the related Dividend Payment
Date. Dividends shall cease to accumulate in respect of the
Senior Exchangeable Redeemable Preferred Shares on the Exchange
Date or on the date of their earlier redemption unless the
Corporation shall have failed to issue the appropriate aggregate
principal amount of Exchange Notes in respect of the Senior
Exchangeable Redeemable Preferred Shares on such Exchange Date or
shall have failed to pay the relevant redemption price on the
date fixed for redemption.
(B) In the event that (1) the Corporation has not filed the
registration statement relating to the Exchange Offer (or, if
applicable, the registration statement relating to
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the shelf registration of the Senior Exchangeable Redeemable
Preferred Shares for resale by holders contemplated by the
Registration Rights Agreement (the "Resale Registration")) on or
before the 45th day after the Issue Date, (2) such registration
statement (or, if applicable, the Resale Registration) has not
become effective on or before the 120th day after the Issue Date,
(3) the Exchange Offer has not been consummated within
30 Business Days following the initial effective date of the
registration statement relating to the Exchange Offer or (4) any
registration statement required by the Registration Rights
Agreement is filed and declared effective but shall thereafter
cease to be effective (except as specifically permitted therein)
without being succeeded immediately by an additional registration
statement filed and declared effective (any such event referred
to in clauses (1) through (4), a "Registration Default"), then
additional dividends will accrue (in addition to the stated
dividends on the Senior Exchangeable Redeemable Preferred Shares)
at the rate of 0.25% PER ANNUM on the liquidation preference of
the Senior Exchangeable Redeemable Preferred Shares for the
period from and including the occurrence of the Registration
Default until such time as no Registration Default is in effect.
Such additional dividends (the "Special Dividends") will be
payable quarterly in arrears on each regular Dividend Payment
Date in accordance with the provisions of this paragraph (c).
For each 90-day period that the Registration Default continues,
the PER ANNUM rate of such Special Dividends will increase by an
additional 0.25%; PROVIDED that such rate shall in no event
exceed 1.0% PER ANNUM in the aggregate. At such time as the
Registration Default is no longer in effect, the dividend rate on
the Senior Exchangeable Redeemable Preferred Shares shall be the
rate stated in paragraph (c)(i)(A) hereof and no further Special
Dividends will accrue unless and until another Registration
Default shall occur.
(ii) All dividends paid with respect to the Senior
Exchangeable Redeemable Preferred Shares pursuant to paragraph
(c)(i) shall be paid PRO RATA to the Holders entitled thereto.
(iii) Nothing herein contained shall in any way or under
any circumstances be construed or deemed to require the Board of
Directors to declare, or the Corporation to pay or set apart for
payment, any dividends on the Senior Exchangeable Redeemable
Preferred Shares at any time.
(iv) Dividends on account of arrears for any past
Dividend Period and dividends in connection with any mandatory
redemption pursuant to paragraph (e)(ii) may be declared and paid
at any time, without reference to any regular Dividend Payment
Date, to Holders of record on such date, not more than forty-five
(45) days prior to the payment thereof, as may be fixed by the
Board of Directors of the Corporation.
(v) No full dividends shall be declared by the Board of
Directors or paid or set apart for payment by the Corporation on
any Parity Shares for any period unless full cumulative dividends
have been or contemporaneously are declared and paid in full, or
declared and, if payable in cash, a sum in cash set apart
sufficient for such payment, on the Senior Exchangeable
Redeemable Preferred Shares for all Dividend Periods terminating
on
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or prior to the date of payment of such full dividends on such
Parity Shares. If full dividends are not so paid, all dividends
declared upon the Senior Exchangeable Redeemable Preferred Shares
and any other Parity Shares shall be declared PRO RATA so that
the amount of dividends declared per share on the Senior
Exchangeable Redeemable Preferred Shares and such Parity Shares
shall in all cases bear to each other the same ratio that accrued
dividends per share on the Senior Exchangeable Redeemable
Preferred Shares and such Parity Shares bear to each other.
(vi) (A) Holders of the Senior Exchangeable Redeemable
Preferred Shares shall be entitled to receive the dividends
provided for in paragraph (c)(i) hereof in preference to and in
priority over any dividends upon any of the Junior Shares.
(B) No dividends may be paid or set apart for such
payment on Junior Shares (except dividends on Junior Shares
payable in additional Junior Shares) if full cumulative dividends
have not been paid in full on the Senior Exchangeable Redeemable
Preferred Shares. So long as any Senior Exchangeable Redeemable
Preferred Shares are outstanding, the Corporation shall not make
any payment on account of, or set apart for payment money for a
sinking or other similar fund for, the purchase, redemption or
other retirement of, any Parity Shares or Junior Shares, or any
warrants, rights, calls or options to purchase any Parity Shares
or Junior Shares, whether in cash, obligations or shares of the
Corporation or other property, and shall not permit any
corporation or other entity directly or indirectly controlled by
the Corporation to purchase or redeem any Parity Shares or Junior
Shares or any such warrants, rights, calls or options unless full
cumulative dividends determined in accordance herewith on the
Senior Exchangeable Redeemable Preferred Shares have been paid in
full.
(vii) Dividends payable on the Senior Exchangeable
Redeemable Preferred Shares for any period shorter than a
quarterly dividend period shall be computed on the basis of a
360-day year of twelve 30-day months and the actual number of
days elapsed in the period for which payable.
(d) LIQUIDATION PREFERENCE
(i) In the event of any voluntary or involuntary
liquidation, dissolution or winding-up of affairs of the
Corporation, the Holders of Senior Exchangeable Redeemable
Preferred Shares then outstanding shall be entitled to be paid,
out of the assets of the Corporation available for distribution
to its shareholders, an amount in cash equal to the liquidation
preference of $50 per Senior Exchangeable Redeemable Preferred
Share, plus, without duplication, an amount in cash equal to
accumulated and unpaid dividends thereon to the date fixed for
liquidation, dissolution or winding-up (including an amount equal
to a prorated dividend for the period from the last Dividend
Payment Date to the date fixed for liquidation, dissolution or
winding-up) before any payment shall be made or any assets
distributed to the holders of any of the Junior Shares including,
without limitation, common stock of the Corporation. Except as
provided in the preceding sentence, Holders of Senior
Exchangeable Redeemable Preferred Shares shall not be entitled to
any
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distribution in the event of any liquidation, dissolution or
winding-up of the affairs of the Corporation. If the assets of
the Corporation are not sufficient to pay in full the liquidation
payments payable to the Holders of outstanding Senior
Exchangeable Redeemable Preferred Shares and all Parity Shares,
then the holders of all such shares shall share equally and
ratably in such distribution of assets in proportion to the full
liquidation preference, including, without duplication, all
accrued and unpaid dividends, to which each is entitled.
(ii) For the purposes of this paragraph (d), neither the
sale, conveyance, exchange or transfer (for cash, shares of
stock, securities or other consideration) of all or substantially
all of the property or assets of the Corporation nor the
consolidation or merger of the Corporation with or into one or
more entities shall be deemed to be a liquidation, dissolution or
winding-up of the affairs of the Corporation.
(e) REDEMPTION.
(i) SPECIAL MANDATORY REDEMPTION. If the merger of the
Corporation and NEXTLINK Communications, L.L.C. pursuant to the
Agreement and Plan of Merger dated January 23, 1997, between the
Corporation and NEXTLINK Communications, L.L.C. has not been
consummated on or prior to February 28, 1997, the Corporation
shall redeem promptly from any source of funds legally available
therefor, in the manner provided for in paragraph (e)(iii)
hereof, all of the Senior Exchangeable Redeemable Preferred
Shares, at a price equal to 100% of the liquidation preference
thereof plus, without duplication, an amount in cash equal to all
accumulated and unpaid dividends per share through and including
the Redemption Date (the "Special Mandatory Redemption Price").
(ii) MANDATORY REDEMPTION. On February 1, 2009, the
Corporation shall redeem, to the extent of funds legally
available therefor, in the manner provided for in paragraph
(e)(iii) hereof, all of the Senior Exchangeable Redeemable
Preferred Shares then outstanding at a redemption price equal to
100% of the liquidation preference per share, plus, without
duplication, an amount in cash equal to all accumulated and
unpaid dividends per share (including an amount equal to a
prorated dividend for the period from the Dividend Payment Date
immediately prior to the Redemption Date to the Redemption Date)
(the "Mandatory Redemption Price").
(iii) PROCEDURES FOR REDEMPTION. (A) At least (x) five
(5) days and not more than seven (7) days prior to the date fixed
for any redemption of the Senior Exchangeable Preferred Shares
pursuant to paragraph (e)(i) and (y) thirty (30) days and not
more than sixty (60) days prior to the date fixed for any
redemption of the Senior Exchangeable Redeemable Preferred Shares
pursuant to paragraph (e)(ii) hereof, written notice (each, a
"Redemption Notice") shall be given by first class mail, postage
prepaid, to each Holder of record on the record date fixed for
such redemption of the Senior Exchangeable Redeemable Preferred
Shares at such Holder's address as it appears on the stock books
of the Corporation, PROVIDED that no failure to give such notice
nor any deficiency therein shall affect the validity of the
procedure
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for the redemption of any Senior Exchangeable Redeemable
Preferred Shares to be redeemed except as to the Holder or
Holders to whom the Corporation has failed to give said notice or
except as to the Holder or Holders whose notice was defective.
The Redemption Notice shall state:
(1) whether the redemption is pursuant to paragraph (e)(i)
or (e)(ii) hereof;
(2) the Special Mandatory Redemption Price or the Mandatory
Redemption Price, as the case may be;
(3) the Redemption Date;
(4) that the Holder is to surrender to the Corporation, in
the manner, at the place or places and at the price designated,
his certificate or certificates representing the Senior
Exchangeable Redeemable Preferred Shares to be redeemed; and
(5) that dividends on the Senior Exchangeable Redeemable
Preferred Shares to be redeemed shall cease to accumulate on such
Redemption Date unless the Corporation defaults in the payment of
the Special Mandatory Redemption Price or the Mandatory
Redemption Price, as the case may be.
(B) Each Holder of Senior Exchangeable Redeemable
Preferred Shares shall surrender the certificate or certificates
representing such Senior Exchangeable Redeemable Preferred Shares
to the Corporation, duly endorsed (or otherwise in proper form
for transfer, as determined by the Corporation), in the manner
and at the place designated in the Redemption Notice, and on the
Redemption Date the full Special Mandatory Redemption Price or
Mandatory Redemption Price, as the case may be, for such shares
shall be payable in cash to the Person whose name appears on such
certificate or certificates as the owner thereof, and each
surrendered certificate shall be canceled and retired.
(C) On and after the Redemption Date, unless the
Corporation defaults in the payment in full of the applicable
redemption price, dividends on the Senior Exchangeable Redeemable
Preferred Shares called for redemption shall cease to accumulate
on the Redemption Date, and all rights of the Holders of redeemed
shares shall terminate with respect thereto on the Redemption
Date, other than the right to receive the Special Mandatory
Redemption Price or the Mandatory Redemption Price, as the case
may be, without interest; PROVIDED, HOWEVER, that if a notice of
redemption shall have been given as provided in paragraph
(iii)(A) above and the funds necessary for redemption (including
an amount in respect of all dividends that will accrue to the
Redemption Date) shall have been irrevocably deposited in trust
for the equal and ratable benefit for the Holders of the shares
called for redemption, then, at the close of business on the day
on which such funds are segregated and set apart, the Holders of
the shares to be redeemed shall cease to be shareholders of the
Corporation and shall be entitled only to receive the Special
Redemption Price or the Mandatory Redemption Price, as the case
may be, without interest.
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(f) VOTING RIGHTS.
(i) The Holders of Senior Exchangeable Redeemable Preferred
Shares, except as otherwise required under Washington law or as set
forth in paragraphs (ii), (iii) and (iv) below, shall not be entitled
or permitted to vote on any matter required or permitted to be voted
upon by the shareholders of the Corporation.
(ii) (A) So long as any Senior Exchangeable Redeemable
Preferred Shares are outstanding, the Corporation shall not
authorize or issue any Parity Shares (other than additional
Senior Exchangeable Redeemable Preferred Shares issued as
dividends on the Senior Exchangeable Redeemable Preferred Shares
in accordance with the terms hereof and Exchange Shares) without
the affirmative vote or consent of Holders of at least a majority
of the then outstanding Senior Exchangeable Redeemable Preferred
Shares, voting or consenting, as the case may be, as a separate
class, given in person or by proxy, either in writing or by
resolution adopted at an annual or special meeting, if after
giving effect to the issuance of such Parity Shares, the
aggregate liquidation preference of the outstanding Parity Shares
(other than (i) the Senior Exchangeable Redeemable Preferred
Shares originally issued on the Issue Date, (ii) additional
Senior Exchangeable Redeemable Preferred Shares issued as
dividends in accordance with the terms hereof on the Senior
Exchangeable Redeemable Preferred Shares originally issued on the
Issue Date and additional Senior Exchangeable Redeemable
Preferred Shares issued as dividends on the Senior Exchangeable
Redeemable Preferred Shares in accordance with the terms hereof
and (iii) any Exchange Shares) would exceed the sum of (x) $50
million and (y) the aggregate amount of gross proceeds received
after the Issue Date and on or prior to the date of issuance of
such Parity Shares from the issuance of Qualified Junior Shares.
(B) So long as any Senior Exchangeable Redeemable Preferred
Shares are outstanding, the Corporation shall not authorize any
class of Senior Shares without the affirmative vote or consent of
Holders of at least two-thirds of the outstanding Senior
Exchangeable Redeemable Preferred Shares, voting or consenting,
as the case may, as a separate class, given in person or by
proxy, either in writing or by resolution adopted at an annual or
special meeting.
(C) So long as any Senior Exchangeable Redeemable Preferred
Shares are outstanding, the Corporation shall not amend, alter or
repeal any of the provisions of the Corporation's Articles of
Incorporation (including this Certificate of Designations) or the
by-laws of the Corporation so as to affect adversely the
specified rights, powers, preferences, privileges or voting
rights of the holders of Senior Exchangeable Redeemable Preferred
Shares or reduce the time for any notice which the holders of the
Senior Exchangeable Redeemable Preferred Shares may be entitled
without the affirmative vote or consent of Holders of at least
two-thirds of the issued and outstanding Senior Exchangeable
Redeemable Preferred Shares, voting or consenting, as the case
may be, as one class, given in person or by proxy, either in
writing or by resolution adopted at an annual or special meeting.
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(D) Notwithstanding the foregoing, modifications and
amendments of the terms of this Certificate of Designations
contained in paragraphs (h) and (l) below may be made by the
Corporation with the consent of the Holders of a majority of the
outstanding Senior Exchangeable Redeemable Preferred Shares;
PROVIDED, HOWEVER, that no such modification or amendment may,
without the consent of the Holder of each outstanding Senior
Exchangeable Redeemable Preferred Share affected thereby
following the mailing of any Offer to Purchase and until the
Expiration Date of that Offer to Purchase, modify any Offer to
Purchase for the Senior Exchangeable Redeemable Preferred Shares
required by paragraph (h) hereof in a manner materially adverse
to the holders of outstanding Senior Exchangeable Redeemable
Preferred Shares. In addition, the holders of a majority of the
outstanding Senior Exchangeable Redeemable Preferred Shares, on
behalf of all holders of Senior Exchangeable Redeemable Preferred
Shares, may waive compliance by the Corporation with the
covenants described below in paragraphs (h) and (l) and may waive
any past default under the Certificate of Designations, except a
default arising from failure to purchase any Senior Exchangeable
Redeemable Preferred Shares tendered pursuant to an Offer to
Purchase.
(E) Prior to the exchange of Senior Exchangeable Redeemable
Preferred Shares for Exchange Notes, the Corporation shall not
amend or modify the form of the Indenture for the Exchange Notes
as it exists on the Issue Date (the "Indenture") (except as
expressly provided therein in respect of amendments that may be
made without the consent of Holders of Exchange Notes) without
the affirmative vote or consent of Holders of at least a majority
of the Senior Exchangeable Redeemable Preferred Shares then
outstanding, voting or consenting, as the case may be, as one
class, given in person or by proxy, either in writing or by
resolution adopted at an annual or special meeting.
(F) Except as set forth in paragraphs (f)(ii)(A),(f)(ii)(B)
and (f)(ii)(C) above, (x) the creation, authorization or issuance
of any shares of any Junior Shares, Parity Shares or Senior
Shares or (y) the increase or decrease in the amount of
authorized Capital Stock of any class, including Senior Shares or
Parity Shares, shall not require the consent of Holders of Senior
Exchangeable Redeemable Preferred Shares and shall not be deemed
to affect adversely the rights, preferences, privileges or voting
rights of Holders of Senior Exchangeable Redeemable Preferred
Shares.
(G) Notwithstanding the foregoing, at any time following a
Covenant Amendment, the Corporation may, at its election and
without the consent of any Holder of Senior Exchangeable
Redeemable Preferred Shares, amend the Corporation's Articles of
Incorporation (including this Certificate of Designations) to add
provisions making the Senior Exchangeable Redeemable Preferred
Shares redeemable at the option of the Corporation (subject to
contractual and other restrictions with respect thereto and the
legal availability of funds therefor) as follows:
(x) at any time on or after February 1, 2002, in whole or
in part, at the option of the Corporation, at the redemption
prices (expressed in percentages of the liquidation
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preference thereof) set forth below, plus, without duplication,
an amount in cash equal to all accumulated and unpaid dividends
to the Redemption Date (including an amount in cash equal to a
prorated dividend for the period from the Dividend Payment Date
immediately prior to the Redemption Date), if redeemed during the
12-month period beginning February 1 of each of the years set
forth below:
YEAR PERCENTAGE
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2002 107.00%
2003 105.25
2004 103.50
2005 101.75
2006 and thereafter 100.00
In the event of redemption of only a portion of the then
outstanding Senior Exchangeable Redeemable Preferred Shares, the
Corporation shall effect such redemption on a PRO RATA basis.
(y) prior to February 1, 2000, in part, in an amount not to
exceed 35% of the initial aggregate liquidation preference of the
Senior Exchangeable Redeemable Preferred Shares originally issued
out of the net cash proceeds of one or more Qualifying Events
(other than any Qualifying Event that results in a Change of
Control) at a redemption price of 114.0% of the liquidation
preference thereof plus, without duplication, an amount in cash
equal to all accumulated and unpaid dividends to the redemption
date (including an amount in cash equal to a prorated dividend
for the period from the Dividend Payment Date immediately prior
to the Redemption Date); PROVIDED, HOWEVER, that after any such
redemption, the aggregate liquidation preference of the Senior
Exchangeable Redeemable Preferred Shares outstanding must equal
at least 65% of the Senior Exchangeable Redeemable Preferred
Shares issued on the Issue Date. Any such redemption shall occur
on or prior to 60 days after the receipt by the Corporation of
the proceeds of such Qualifying Event.
(iii) Without the affirmative vote or consent of Holders of
a majority of the issued and outstanding Senior Exchangeable
Redeemable Preferred Shares, voting or consenting, as the case
may be, as a separate class, given in person or by proxy, either
in writing or by resolution adopted at an annual or special
meeting, the Corporation shall not, in a single transaction or
series of related transactions, consolidate with or merge with or
into, or sell, assign, transfer, lease, convey or otherwise
dispose of all or substantially all of its assets to, another
Person or adopt a plan of liquidation unless: (A) either (1) the
Corporation is the surviving or continuing Person or (2) the
Person (if other than the Corporation) formed by such
consolidation or into which the Corporation is merged or the
Person that acquires by conveyance, transfer or lease the
properties and assets of the Corporation substantially as an
entirety or in the case of a plan of liquidation, the Person to
which assets of the Corporation have been transferred, shall be a
corporation, limited liability Corporation, partnership or trust
organized and existing under the laws of the United States or any
State thereof or the District of Columbia; (B) the Senior
Exchangeable Redeemable Preferred Shares shall be converted into
or exchanged for and shall become
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shares of Capital Stock of such successor, transferee or
resulting Person, having in respect of such successor, transferee
or resulting Person, having the same powers, preferences and
relative, participating, optional or other special rights and the
qualifications, limitations or restrictions thereon, that the
Senior Exchangeable Redeemable Preferred Shares had immediately
prior to such transaction; (C) immediately after giving pro forma
effect to such transaction, no Voting Rights Triggering Event
shall have occurred or be continuing; and (D) the Corporation has
delivered to the Transfer Agent prior to the consummation of the
proposed transaction an Officers' Certificate and an Opinion of
Counsel, each stating that such consolidation, merger or transfer
complies with the terms hereof and that all conditions precedent
herein relating to such transaction have been satisfied.
For purposes of the foregoing, the transfer (by lease,
assignment, sale or otherwise, in a single transaction or series
of related transactions) of all or substantially all of the
properties or assets of one or more Subsidiaries of the
Corporation, the Capital Stock of which constitutes all or
substantially all of the properties and assets of the
Corporation, shall be deemed to be the transfer of all or
substantially all of the properties and assets of the
Corporation.
(iv) (A) If (1) dividends on the Senior
Exchangeable Redeemable Preferred Shares are in arrears and
unpaid (and, if after February 1, 2002, such dividends are
not paid in cash) for six or more Dividend Periods (whether
or not consecutive) (a "Dividend Default"); (2) the
Corporation fails to redeem all of the then outstanding
Senior Exchangeable Redeemable Preferred Shares on February
1, 2009 or fails otherwise to discharge any redemption
obligation with respect to the Senior Exchangeable
Redeemable Preferred Shares; (3) the Corporation fails to
make an Offer to Purchase (whether pursuant to the terms of
paragraph (h)(i) or otherwise) following a Change of Control
if such Offer to Purchase is required by paragraph (h)
hereof or fails to purchase Senior Exchangeable Redeemable
Preferred Shares from Holders who elect to have such shares
purchased pursuant to the Offer to Purchase; (4) the
Corporation breaches or violates one of the provisions set
forth in any paragraphs (f)(iii) or (1) hereof and the
breach or violation continues for a period of 30 days or
more after the Corporation receives notice thereof
specifying the default from the Holders of at least 25% of
the Senior Exchangeable Redeemable Preferred Shares then
outstanding, or (5) the Corporation fails to pay at the
final stated maturity (giving effect to any extensions
thereof) the principal amount of any Debt of the Corporation
or any Subsidiary of the Corporation, or the final stated
maturity of any such Debt is accelerated, if the aggregate
principal amount of such Debt, together with the aggregate
principal amount of any other such Debt in default for
failure to pay principal at the final stated maturity
(giving effect to any extensions thereof) or that has been
accelerated, aggregates $15,000,000 or more at any time, in
each case, after a 10-day period during which such default
shall not have been cured or such acceleration rescinded,
then in the case of any of clauses (1)-(5) the number of
directors constituting the Board of Directors shall be
adjusted by the number, if any, necessary to permit the
Holders of the Senior Exchangeable Redeemable Preferred
Shares, voting together with any outstanding Parity Shares
separately as a single class, to elect the lesser of two
directors and that number of directors constituting 25% of
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the members of the Board of Directors. Each such event
described in clauses (1), (2), (3), (4) and (5) is a "Voting
Rights Triggering Event." Holders of a majority of the
issued and outstanding Senior Exchangeable Redeemable
Preferred Shares, voting together with any outstanding
Parity Shares separately as a single class, shall have the
exclusive right to elect the lesser of two directors and
that number of directors constituting 25% of the members of
the Board of Directors at a meeting therefor called upon
occurrence of such Voting Rights Triggering Event, and at
every subsequent meeting at which the terms of office of the
directors so elected (other than as described in (f)(iv)(B)
below). The voting rights provided herein shall be the
exclusive remedy at law or in equity of the holders of the
Senior Exchangeable Redeemable Preferred Shares for any
Voting Rights Triggering Event.
(B) The right of the Holders of Senior
Exchangeable Redeemable Preferred Shares to elect members of
the Board of Directors as set forth in subparagraph
(f)(iv)(A) above shall continue until such time as (x) in
the event such right arises due to a Dividend Default, all
accumulated dividends that are in arrears on the Senior
Exchangeable Redeemable Preferred Shares are paid in full
(and, in the case of dividends payable after February 1,
2002, paid in cash) and (y) in all other cases, the failure,
breach or default giving rise to such Voting Rights
Triggering Event is remedied or waived by the holders of at
least a majority of the Senior Exchangeable Redeemable
Preferred Shares then outstanding, at which time (1) the
special right of the Holders of Senior Exchangeable
Redeemable Preferred Shares so to vote for the election of
directors and (2) the term of office of the directors
elected by the Holders of the Senior Exchangeable Redeemable
Preferred Shares shall each terminate and the directors
elected by the holders of Voting Stock other than the Senior
Exchangeable Redeemable Preferred Shares shall constitute
the entire Board of Directors. At any time after voting
power to elect directors shall have become vested and be
continuing in the Holders of Senior Exchangeable Redeemable
Preferred Shares pursuant to paragraph (f)(iv)(A) hereof, or
if vacancies shall exist in the offices of directors elected
by the Holders of Senior Exchangeable Redeemable Preferred
Shares, 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 Senior Exchangeable
Redeemable Preferred Shares then outstanding addressed to
the Secretary of the Corporation shall, call a special
meeting of the Holders of Senior Exchangeable Redeemable
Preferred Shares, for the purpose of electing the directors
which such Holders are entitled to elect. If such meeting
shall not be called by a proper officer of the Corporation
within twenty (20) days after personal service of said
written request upon the Secretary of the Corporation, or
within twenty (20) days after mailing the same within the
United States by certified mail, addressed to the Secretary
of the Corporation at its principal executive offices, then
the Holders of record of at least twenty-five percent (25%)
of the outstanding Senior Exchangeable Redeemable Preferred
Shares may designate in writing one of their number to call
such meeting at the expense of the Corporation, and such
meeting may be called by the Person so designated upon the
notice required for the annual meetings of shareholders of
the Corporation and shall be held at the place for holding
the annual meetings of shareholders. Any Holder of Senior
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Exchangeable Redeemable Preferred Shares so designated shall
have, and the Corporation shall provide, access to the lists
of shareholders to be called pursuant to the provisions
hereof.
(C) At any meeting held for the purpose of
electing directors at which the Holders of Senior
Exchangeable Redeemable Preferred Shares voting together
with any outstanding shares of Parity Shares as a separate
class shall have the right as described herein to elect
directors, the presence in person or by proxy of the Holders
of at least a majority of the then outstanding Senior
Exchangeable Redeemable Preferred Shares and Parity Shares
shall be required to constitute a quorum of such Senior
Exchangeable Redeemable Preferred Shares and Parity Shares.
(D) Any vacancy occurring in the office of a
director elected by the Holders of Senior Exchangeable
Redeemable Preferred Shares and Parity Shares may be filled
by the remaining directors elected by the Holders of Senior
Exchangeable Redeemable Preferred Shares and Parity Shares
unless and until such vacancy shall be filled by the Holders
of Senior Exchangeable Redeemable Preferred Shares and
Parity Shares.
(v) In any case in which the Holders of Senior
Exchangeable Redeemable Preferred Shares shall be entitled
to vote pursuant to this paragraph (f) or pursuant to
Washington law, each Holder of Senior Exchangeable
Redeemable Preferred Shares entitled to vote with respect to
such matter shall be entitled to one vote for each share of
Senior Exchangeable Redeemable Preferred Shares held.
(g) EXCHANGE.
(i) REQUIREMENTS. The outstanding Senior Exchangeable
Redeemable Preferred Shares are exchangeable as a whole but not in
part, at the option of the Corporation at any time on any Dividend
Payment Date for the Corporation's 14% Senior Subordinated Notes due
2009 (the "Exchange Notes") to be substantially in the form set forth
in the Indenture, a copy of which is on file with the secretary of the
Corporation and the Transfer Agent, PROVIDED that any such exchange
may only be made if on or prior to the date of such exchange (A) the
Corporation has paid all accumulated dividends on the Senior
Exchangeable Redeemable Preferred Shares (including the dividends
payable on the date of exchange) and there shall be no contractual
impediment to such exchange and (B) immediately after giving effect to
such exchange, no Default or Event of Default (as defined in the
Indenture) would exist under the Indenture and no default or event of
default would exist under the Existing Indenture. The exchange rate
shall be $1.00 principal amount of Exchange Notes for each $1.00 of
the aggregate liquidation preference of Senior Exchangeable Redeemable
Preferred Shares, including, to the extent necessary, Exchange Notes
in principal amounts less than $1,000.
(ii) PROCEDURE FOR EXCHANGE. (A) At least thirty (30)
days and not more than sixty (60) days prior to the date fixed
for exchange, written notice (the "Exchange Notice") shall be
given by first class mail, postage prepaid, to each Holder of
record on the record date fixed for such exchange of the Senior
Exchangeable Redeemable
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Preferred Shares at such Holder's address as the same appears on the
share books of the Corporation, PROVIDED that no failure to give such
notice nor any deficiency therein shall affect the validity of the
procedure for the exchange of any Senior Exchangeable Redeemable
Preferred Shares to be exchanged except as to the Holder or Holders to
whom the Corporation has failed to give said notice or except as to
the Holder or Holders whose notice was defective. The Exchange Notice
shall state:
(1) the Exchange Date;
(2) that the Holder is to surrender to the Corporation, in the
manner and at the place or places designated, his certificate or
certificates representing the Senior Exchangeable Redeemable Preferred
Shares to be exchanged;
(3) that dividends on the Senior Exchangeable Redeemable
Preferred Shares to be exchanged shall cease to accrue on such
Exchange Date whether or not certificates for Senior Exchangeable
Redeemable Preferred Shares are surrendered for exchange on such
Exchange Date unless the Corporation shall default in the delivery of
Exchange Notes; and
(4) that interest on the Exchange Notes shall accrue from the
Exchange Date whether or not certificates for Senior Exchangeable
Redeemable Preferred Shares are surrendered for exchange on such
Exchange Date.
(B) On or before the Exchange Date, each Holder of Senior
Exchangeable Redeemable Preferred Shares shall surrender the
certificate or certificates representing such Senior Exchangeable
Redeemable Preferred Shares, in the manner and at the place designated
in the Exchange Notice. The Corporation shall cause the Exchange
Notes to be executed on the Exchange Date and, upon surrender in
accordance with the Exchange Notice of the certificates for any Senior
Exchangeable Redeemable Preferred Shares so exchanged, duly endorsed
(or otherwise in proper form for transfer, as determined by the
Corporation), such shares shall be exchanged by the Corporation into
Exchange Notes. The Corporation shall pay interest on the Exchange
Notes at the rate and on the dates specified therein from the Exchange
Date.
(C) If notice has been mailed as aforesaid, and if before the
Exchange Date specified in such notice (1) the Indenture shall have
been duly executed and delivered by the Corporation and the trustee
thereunder and (2) all Exchange Notes necessary for such exchange
shall have been duly executed by the Corporation and delivered to the
trustee under the Indenture with irrevocable instructions to
authenticate the Exchange Notes necessary for such exchange, then the
rights of the Holders of Senior Exchangeable Redeemable Preferred
Shares so exchanged as shareholders of the Corporation shall cease
(except the right to receive Exchange Notes, an amount in cash equal
to the amount of accrued and unpaid dividends to the Exchange Date),
and the Person or Persons entitled to receive the Exchange Notes
issuable upon exchange shall be treated for all purposes as the
registered Holder or Holders of such Exchange Notes as of the Exchange
Date.
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(iii) NO EXCHANGE IN CERTAIN CASES. Notwithstanding the
foregoing provisions of this paragraph (g), the Corporation shall not
be entitled to exchange the Senior Exchangeable Redeemable Preferred
Shares for Exchange Notes if such exchange, or any term or provision
of the Indenture or the Exchange Notes, or the performance of the
Corporation's obligations under the Indenture or the Exchange Notes,
shall materially violate or conflict with any applicable law or if, at
the time of such exchange, the Corporation is insolvent or if it would
be rendered insolvent by such exchange.
(h) CHANGE OF CONTROL.
(i) Within 30 days following a Change of Control (the date of
such occurrence being the "Change of Control Date"), the Corporation
shall notify the Holders of the Senior Exchangeable Redeemable
Preferred Shares in writing of such occurrence and shall make an Offer
to Purchase all of the then outstanding Senior Exchangeable Redeemable
Preferred Shares at a purchase price of 101% of the liquidation
preference thereof 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 Dividend
Payment Date immediately prior to the Payment Date to the Payment
Date).
(ii) The Corporation will comply with any securities laws and
regulations, to the extent such laws and regulations are applicable to
the repurchase of the Senior Exchangeable Redeemable Preferred Shares
in connection with an Offer to Purchase.
(iii) On the Payment Date the Corporation shall (A) accept for
payment the Senior Exchangeable Redeemable Preferred Shares 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 Senior Exchangeable Redeemable
Preferred Shares tendered pursuant to the Offer to Purchase, dividends
will cease to accrue with respect to the Senior Exchangeable
Redeemable Preferred Shares tendered and all rights of Holders of such
tendered shares will terminate, except for the right to receive
payment therefor, on the Payment Date.
(v) Notwithstanding the foregoing, the Corporation will not
repurchase or redeem any Senior Exchangeable Redeemable Preferred
Shares pursuant to the provisions of this paragraph prior to the
Corporation's repurchase of such Senior Notes as are required to be
repurchased pursuant to the Existing Indenture.
(i) CONVERSION OR EXCHANGE.
The Holders of Senior Exchangeable Redeemable Preferred Shares
shall not have any rights hereunder to convert such shares into or
exchange such shares for shares of any other class or classes or of
any other series of any class or classes of Capital Stock of the
Corporation.
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(j) REISSUANCE OF SENIOR EXCHANGEABLE REDEEMABLE PREFERRED SHARES.
Senior Exchangeable Redeemable Preferred Shares that have been
issued and reacquired in any manner, including shares purchased or
redeemed or exchanged, shall (upon compliance with any applicable
provisions of the laws of Washington) have the status of authorized
and unissued shares of Preferred Shares undesignated as to series and
may be redesignated and reissued as part of any series of Preferred
Shares, other than Senior Exchangeable Redeemable Preferred Shares.
(k) BUSINESS DAY.
If any payment, redemption or exchange shall be required by the
terms hereof to be made on a day that is not a Business Day, such
payment, redemption or exchange shall be made on the immediately
succeeding Business Day.
(l) CERTAIN ADDITIONAL PROVISIONS.
(i) LIMITATION ON CONSOLIDATED DEBT. The Corporation may not,
and may not permit any Restricted Subsidiary of the Corporation to,
Incur any Debt unless either (a) the ratio of (i) the aggregate
consolidated principal amount of Debt of the Corporation outstanding
as of the most recent available quarterly or annual balance sheet,
after giving pro forma effect to the Incurrence of such Debt and any
other Debt Incurred since such balance sheet date and the receipt and
application of the proceeds thereof to (ii) Consolidated Cash Flow
Available for Fixed Charges for the four full fiscal quarters next
preceding the Incurrence of such Debt for which consolidated financial
statements are available, determined on a pro forma basis as if any
such Debt had been Incurred and the proceeds thereof had been applied
at the beginning of such four fiscal quarters, would be less than 5.5
to 1 for such four-quarter periods ending on or prior to December 31,
1999 and 5.0 to 1 for such periods ending thereafter, or (b) the
Corporation's Consolidated Capital Ratio as of the most recent
available quarterly or annual balance sheet, after giving pro forma
effect to the Incurrence of such Debt and any other Debt Incurred
since such balance sheet date and the receipt and application of the
proceeds thereof, is less than 2.0 to 1.
Notwithstanding the foregoing limitation, the Corporation and any
Restricted Subsidiary may Incur the following:
(A) Debt under any one or more Bank Credit Agreements or Vendor
Financing Facilities in an aggregate principal amount at any one time
not to exceed $125 million, and any renewal, extension, refinancing or
refunding thereof in an amount which, together with any principal
amount remaining outstanding or available under all Bank Credit
Agreements and Vendor Financing Facilities of the Corporation and its
Restricted Subsidiaries, plus the amount of any premium required to be
paid in connection with such refinancing pursuant to the terms of any
Bank Credit Agreement so refinanced plus the amount of expenses
incurred in connection with such refinancing, does not exceed the
aggregate principal amount outstanding or available
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under all such Bank Credit Agreements and Vendor Financing Facilities
of the Corporation and its Restricted Subsidiaries immediately prior
to such renewal, extension, refinancing or refunding;
(B) Purchase Money Debt Incurred to finance the construction,
acquisition or improvement of Telecommunications Assets, PROVIDED that
the net proceeds of such Purchase Money Debt do not exceed 80% of the
cost of construction, acquisition or improvement price of the
applicable Telecommunications Assets;
(C) Debt owed by the Corporation to any Wholly-Owned Restricted
Subsidiary of the Corporation or Debt owed by a Restricted Subsidiary
of the Corporation to the Corporation or another Wholly-Owned
Restricted Subsidiary of the Corporation; PROVIDED, HOWEVER, that upon
either (x) the transfer or other disposition by such Wholly-Owned
Restricted Subsidiary or the Corporation of any Debt so permitted to a
Person other than the Corporation or another Wholly-Owned Restricted
Subsidiary of the Corporation or (y) the issuance (other than
directors' qualifying shares), sale, lease, transfer or other
disposition of shares of Capital Stock (including by consolidation or
merger) of such Wholly-Owned Restricted Subsidiary to a Person other
than the Corporation or another such Wholly-Owned Restricted
Subsidiary, the provisions of this clause (C) shall no longer be
applicable to such Debt and such Debt shall be deemed to have been
Incurred at the time of such transfer or other disposition;
(D) Debt Incurred to renew, extend, refinance or refund (each, a
"refinancing") Debt (1) referred to in clause (F) below or (2)
Incurred pursuant to the preceding paragraph or clause (B) of this
paragraph in an aggregate principal amount not to exceed the aggregate
principal amount of and accrued interest on the Debt so refinanced
plus the amount of any premium required to be paid in connection with
such refinancing pursuant to the terms of the Debt so refinanced or
the amount of any premium reasonably determined by the Corporation as
necessary to accomplish such refinancing by means of a tender offer or
privately negotiated repurchase, plus the amount of expenses of the
Corporation incurred in connection with such refinancing; PROVIDED,
HOWEVER, that, the refinancing Debt by its terms, or by the terms of
any agreement or instrument pursuant to which such Debt is issued, (x)
does not provide for payments of principal of such Debt at the stated
maturity thereof or by way of a sinking fund applicable thereto or by
way of any mandatory redemption, defeasance, retirement or repurchase
thereof by the Corporation (including any redemption, retirement or
repurchase which is contingent upon events or circumstances, but
excluding any retirement required by virtue of acceleration of such
Debt upon any event of default thereunder), in each case prior to the
time the same are required by the terms of the Debt being refinanced
and (y) does not permit redemption or other retirement (including
pursuant to an offer to purchase made by the Corporation) of such Debt
at the option of the holder thereof prior to the final stated maturity
of the Debt being refinanced, other than a redemption or other
retirement at the option of the holder of such Debt (including
pursuant to an offer to purchase made by the Corporation) which is
conditioned upon a change substantially similar to the provisions of
paragraph (h) above or which is pursuant to provisions substantially
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similar to the provisions of Section 1013 of the Existing Indenture as
in effect on the Issue Date (whether or not the Existing Notes are
outstanding or the Existing Indenture is in effect);
(E) Debt consisting of Permitted Interest Rate and Currency
Protection Agreements;
(F) Debt outstanding at the Issue Date;
(G) Subordinated Debt invested by (a) a group of employees of
the Corporation, which includes the Chief Executive Officer of the
Corporation, who own, directly or indirectly, through an employee
stock ownership plan or arrangement, shares of the Corporation's
Capital Stock or (b) any other Person that controls the Corporation
(i) on the Issue Date or (ii) after a Change of Control, PROVIDED that
the Corporation is not in default with respect to its obligations
under paragraph (h) above;
(H) Debt consisting of performance and other similar bonds and
reimbursement obligations Incurred in the ordinary course of business
securing the performance of contractual, franchise or license
obligations of the Corporation or a Restricted Subsidiary, or in
respect of a letter of credit obtained to secure such performance; and
(I) Debt not otherwise permitted to be Incurred pursuant to
clauses (A) through (H) above, which, together with any other
outstanding Debt Incurred pursuant to this clause (I), has an
aggregate principal amount (or, in the case of Debt issued at a
discount, an accreted amount (determined in accordance with generally
accepted accounting principles) at the time of Incurrence) not in
excess of $10 million at any time outstanding.
For purposes of determining compliance with this paragraph
(l)(i), in the event that an item of Debt meets the criteria of more than
one of the types of Debt the Corporation is permitted to Incur pursuant to
the foregoing clauses (A) through (I), the Corporation shall have the
right, in its sole discretion, to classify such item of Debt and shall only
be required to include the amount and type of such Debt under the clause
permitting the Debt as so classified. For purposes of determining any
particular amount of Debt under this covenant, Guarantees or Liens with
respect to letters of credit supporting Debt otherwise included in the
determination of a particular amount shall not be included.
(ii) REPORTS. So long as any Senior Exchangeable Redeemable
Preferred Shares are outstanding, the Corporation will provide to the
holders of Senior Exchangeable Redeemable Preferred Shares, within 15 days
after it files them with the Securities and Exchange Commission (or any
successor agency performing similar functions), copies of the annual
reports and of the information, documents and other reports (or copies of
such portions of any of the foregoing as the Commission may by rules and
regulation prescribe) which the Corporation files with the Commission
pursuant to Section 13 or 15(d) of the Exchange Act. In the event that the
Corporation is no longer required to furnish such reports to its
securityholders pursuant to the Exchange Act, the Corporation will cause
its
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consolidated financial statements, comparable to those which would have
been required to appear in annual or quarterly reports, to be delivered to
the Holders of Senior Exchangeable Redeemable Preferred Shares.
(m) DEFINITIONS.
As used in this Certificate of Designations, the following terms shall
have the following meanings (with terms defined in the singular having
comparable meanings when used in the plural and VICE VERSA), unless the
context otherwise requires. Any reference in any of the following terms to
any term in or provision of the Existing Indenture shall refer to such term
or provision as in effect on the Issue Date and as may be amended in
accordance with the terms of the Existing Indenture (whether or not the
Existing Notes are outstanding or the Existing Indenture is in effect):
"Acquired Debt" means, with respect to any specified Person, (i) Debt
of any other Person existing at the time such Person merges with or into or
consolidates with or becomes a Restricted Subsidiary of such specified
Person and (ii) Debt secured by a Lien encumbering any asset acquired by
such specified Person, which Debt was not Incurred in anticipation of, and
was outstanding prior to, such merger, consolidation or acquisition.
"Affiliate" of any specified Person means any other Person directly or
indirectly controlling or controlled by or under direct or indirect common
control with such specified Person. For the purposes of this definition,
"control" when used with respect to any specified Person means the power to
direct the management and policies of such Person, directly or indirectly,
whether through the ownership of voting securities, by contract or
otherwise; and the terms "controlling" and "controlled" have meanings
correlative to the foregoing.
"Asset Disposition" by any Person means any transfer, conveyance,
sale, lease or other disposition by such Person or any of its Restricted
Subsidiaries (including a consolidation or merger or other sale of any such
Restricted Subsidiary with, into or to another Person in a transaction in
which such Restricted Subsidiary ceases to be a Restricted Subsidiary of
the specified Person, but excluding a disposition by a Restricted
Subsidiary of such Person to such Person or a Wholly-Owned Restricted
Subsidiary of such Person or by such Person to a Wholly-Owned Restricted
Subsidiary of such Person) of (i) shares of Capital Stock or other
ownership interests of a Restricted Subsidiary of such Person (other than
as permitted by the provisions of Section 1008 of the Existing Indenture or
pursuant to a transaction in compliance with Section 801 of the Existing
Indenture), (ii) substantially all of the assets of such Person or any of
its Restricted Subsidiaries representing a division or line of business
(other than as part of a Permitted Investment (as defined in the Existing
Indenture)) or (iii) other assets or rights of such Person or any of its
Restricted Subsidiaries other than (A) in the ordinary course of business
or (B) that constitutes a Restricted Payment (as defined in the Existing
Indenture) which is permitted by the provisions of Section 1009 of the
Existing Indenture; PROVIDED that a transaction described in clause (i),
(ii) and (iii) shall constitute an Asset Disposition
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only if the aggregate consideration for such transfer, conveyance, sale,
lease or other disposition is equal to $5 million or more in any 12-month
period.
"Bank Credit Agreement" means any one or more credit agreements (which
may include or consist of revolving credits) between the Corporation or any
Restricted Subsidiary of the Corporation and one or more banks or other
financial institutions providing financing for the business of the
Corporation and its Restricted Subsidiaries.
"Board of Directors" shall have the meaning ascribed to it in the
first paragraph of this Resolution.
"Business Day" means each Monday, Tuesday, Wednesday, Thursday and
Friday which is not a day on which banking institutions in The Borough of
Manhattan, The City of New York, New York are authorized or obligated by
law or executive order to close.
"Capital Lease Obligation" of any Person means the obligation to pay
rent or other payment amounts under a lease of (or other Debt arrangements
conveying the right to use) real or personal property of such Person which
is required to be classified and accounted for as a capital lease or a
liability on the face of a balance sheet of such Person in accordance with
generally accepted accounting principles (a "Capital Lease"). The stated
maturity of such obligation shall be the date of the last payment of rent
or any other amount due under such lease prior to the first date upon which
such lease may be terminated by the lessee without payment of a penalty.
The principal amount of such obligation shall be the capitalized amount
thereof that would appear on the face of a balance sheet of such Person in
accordance with generally accepted accounting principles.
"Capital Stock" of any Person means any and all shares, interests,
participations or other equivalents (however designated) of corporate stock
or other equity participations, including partnership interests, whether
general or limited, of such Person.
"Change of Control" will be deemed to have occurred at such time as
either (a) any Person or any Persons acting together that would constitute
a "group" (a "Group") for purposes of Section 13(d) of the Exchange Act, or
any successor provision thereto (other than Eagle River, Mr. Craig O. McCaw
and their respective Affiliates or an underwriter engaged in a firm
commitment underwriting on behalf of the Corporation), shall beneficially
own (within the meaning of Rule 13d-3 under the Exchange Act, or any
successor provision thereto) more than 50% of the aggregate voting power of
all classes of Voting Stock of the Corporation; (b) 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 (c) 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.
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"Change of Control Date" shall have the meaning ascribed to it in
paragraph (h)(i) hereof.
"Consolidated Capital Ratio" of any Person as of any date means the
ratio of (i) the aggregate consolidated principal amount of Debt of such
Person then outstanding to (ii) the aggregate consolidated Capital Stock
(other than Disqualified Stock) and paid-in capital (other than in respect
of Disqualified Stock) of such Person as of such date.
"Consolidated Cash Flow Available for Fixed Charges" for any period
means the Consolidated Net Income of the Corporation and its Restricted
Subsidiaries for such period increased by the sum of (i) Consolidated
Interest Expense of the Corporation and its Restricted Subsidiaries for
such period, plus (ii) Consolidated Income Tax Expense of the Corporation
and its Restricted Subsidiaries for such period, plus (iii) the
consolidated depreciation and amortization expense included in the income
statement of the Corporation and its Restricted Subsidiaries for such
period, plus (iv) any non-cash expense related to the issuance to employees
of the Corporation or any Restricted Subsidiary of the Corporation of
options to purchase Capital Stock of the Corporation or such Restricted
Subsidiary, plus (v) any charge related to any premium or penalty paid in
connection with redeeming or retiring any Debt prior to its stated
maturity; PROVIDED, HOWEVER, that there shall be excluded therefrom the
Consolidated Cash Flow Available for Fixed Charges (if positive) of any
Restricted Subsidiary of the Corporation (calculated separately for such
Restricted Subsidiary in the same manner as provided above for the
Corporation) that is subject to a restriction which prevents the payment of
dividends or the making of distributions to the Corporation or another
Restricted Subsidiary of the Corporation to the extent of such restriction.
"Consolidated Income Tax Expense" for any period means the
consolidated provision for income taxes of the Corporation and its
Restricted Subsidiaries for such period calculated on a consolidated basis
in accordance with generally accepted accounting principles.
"Consolidated Interest Expense" means for any period the consolidated
interest expense included in a consolidated income statement (excluding
interest income) of the Corporation and its Restricted Subsidiaries for
such period calculated on a consolidated basis in accordance with generally
accepted accounting principles, including without limitation or duplication
(or, to the extent not so included, with the addition of), (i) the
amortization of Debt discounts; (ii) any payments or fees with respect to
letters of credit, bankers' acceptances or similar facilities; (iii) fees
with respect to interest rate swap or similar agreements or foreign
currency hedge, exchange or similar agreements; (iv) Preferred Stock
dividends of the Corporation and its Restricted Subsidiaries (other than
dividends paid in shares of Preferred Stock that is not Disqualified Stock)
declared and paid or payable; (v) accrued Disqualified Stock dividends of
the Corporation and its Restricted Subsidiaries, whether or not declared or
paid; (vi) interest on Debt guaranteed by the Corporation and its
Restricted Subsidiaries; and (vii) the portion of any Capital Lease
Obligation paid during such period that is allocable to interest expense.
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"Consolidated Net Income" for any period means the consolidated net
income (or loss) of the Corporation and its Restricted Subsidiaries for
such period determined on a consolidated basis in accordance with generally
accepted accounting principles; PROVIDED that there shall be excluded
therefrom (i) the net income (or loss) of any Person acquired by the
Corporation or a Restricted Subsidiary of the Corporation in a
pooling-of-interests transaction for any period prior to the date of such
transaction, (ii) the net income (or loss) of any Person that is not a
Restricted Subsidiary of the Corporation except to the extent of the amount
of dividends or other distributions actually paid to the Corporation or a
Restricted Subsidiary of the Corporation by such Person during such period,
(iii) gains or losses on Asset Dispositions by the Corporation or its
Restricted Subsidiaries, (iv) all extraordinary gains and extraordinary
losses, (v) the cumulative effect of changes in accounting principles, (vi)
non-cash gains or losses resulting from fluctuations in currency exchange
rates, (vii) any non-cash gain or loss realized on the termination of any
employee pension benefit plan and (viii) the tax effect of any of the items
described in clauses (i) through (vii) above.
"corporation" means a corporation, association, company, limited
liability company, joint-stock company or business trust.
"Covenant Amendment" means either (i) the defeasance, extinguishment
or amendment of certain covenants of the Existing Indenture that would
cause the Senior Exchangeable Redeemable Preferred Shares to be deemed
Disqualified Stock (under the Existing Indenture) if the provisions of
paragraph (f)(G)(x) and (y) were a part of this Certificate of
Designations, and include, but are not limited to, the definition of
Disqualified Stock (under the Existing Indenture) or (ii) defeasance or
extinguishment of the Existing Indenture in its entirety.
"Debt" means (without duplication), with respect to any Person,
whether recourse is to all or a portion of the assets of such Person and
whether or not contingent, (i) every obligation of such Person for money
borrowed, (ii) every obligation of such Person evidenced by bonds,
debentures, notes or other similar instruments, including any such
obligations Incurred in connection with the acquisition of property, assets
or businesses, (iii) every reimbursement obligation of such Person with
respect to letters of credit, bankers' acceptances or similar facilities
issued for the account of such Person, (iv) every obligation of such Person
issued or assumed as the deferred purchase price of property or services
(including securities repurchase agreements but excluding trade accounts
payable or accrued liabilities arising in the ordinary course of business
which are not overdue or which are being contested in good faith), (v)
every Capital Lease Obligation of such Person, (vi) all Receivables Sales
of such Person, together with any obligation of such Person to pay any
discount, interest, fees, indemnities, penalties, recourse, expenses or
other amounts in connection therewith, (vii) all obligations to redeem
Disqualified Stock issued by such Person, (viii) every obligation under
Interest Rate and Currency Protection Agreements of such Person and (ix)
every obligation of the type referred to in clauses (i) through (viii) of
another Person and all dividends of another Person the payment of which, in
either case, such Person has Guaranteed. The "amount" or "principal amount"
of Debt at any time of determination as used herein represented by (a) any
Debt issued at a price
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that is less than the principal amount at maturity thereof, shall be the
amount of the liability in respect thereof determined in accordance with
generally accepted accounting principles, (b) any Receivables Sale, shall
be the amount of the unrecovered capital or principal investment of the
purchaser (other than the Corporation or a Wholly-Owned Restricted
Subsidiary of the Corporation) thereof, excluding amounts representative of
yield or interest earned on such investment, (c) any Disqualified Stock,
shall be the maximum fixed redemption or repurchase price in respect
thereof, (d) any Capital Lease Obligation, shall be determined in
accordance with the definition thereof, or (e) any Permitted Interest Rate
or Currency Protection Agreement, shall be zero. In no event shall Debt
include any liability for taxes.
"Disqualified Stock" of any Person means any Capital Stock of such
Person which, by its terms (or by the terms of any security into which it
is convertible or for which it is exchangeable), or upon the happening of
any event, matures or is mandatorily redeemable, pursuant to a sinking fund
obligation or otherwise, or is redeemable at the option of the holder
thereof, in whole or in part, on or prior to February 1, 2009; PROVIDED,
HOWEVER, that any Preferred Stock which would not constitute Disqualified
Stock but for provisions thereof giving holders thereof the right to
require the Corporation to repurchase or redeem such Preferred Stock upon
the occurrence of a Change of Control occurring prior to February 1, 2009
shall not constitute Disqualified Stock if the change of control provisions
applicable to such Preferred Stock are no more favorable to the holders of
such Preferred Stock than the provisions contained in paragraph (h) hereof
and such Preferred Stock specifically provides that the Corporation will
not repurchase or redeem any such stock pursuant to such provisions prior
to the Corporation's repurchase of such Senior Exchangeable Redeemable
Preferred Shares as are required to be purchased pursuant to paragraph (h)
hereof.
"Dividend Payment Date" means February 1, May 1, August 1 and November
1, of each year.
"Dividend Period" means the Initial Dividend Period and, thereafter,
each Quarterly Dividend Period.
"Dividend Record Date" means January 15, April 15, July 15 and October
15 of each year.
"Eagle River" means Eagle River Investments, L.L.C., a limited
liability company formed under the laws of the State of Washington.
"Exchange Act" means the Securities Exchange Act of 1934, and the
rules and regulations promulgated thereunder.
"Exchange Date" means the date on which Senior Exchangeable Redeemable
Preferred Shares are exchanged by the Corporation for Exchange Notes.
"Exchange Notes" shall have the meaning ascribed to it in paragraph
(g)(i) hereof.
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"Exchange Notice" shall have the meaning ascribed to it in paragraph
(g)(ii) hereof.
"Exchange Offer" means the exchange offer contemplated by the
Registration Rights Agreement.
"Exchange Shares" means any Senior Exchangeable Redeemable Preferred
Shares issued in exchange for an Original Share or Original Shares pursuant
to the Exchange Offer or otherwise registered under the Securities Act and
any Senior Exchangeable Redeemable Preferred Shares with respect to which
the next preceding Predecessor Shares of such Senior Exchangeable
Redeemable Preferred Shares was an Exchange Share, and their Successor
Shares.
"Existing Notes" means the Corporation's $350,000,000 aggregate
principal amount of 12 1/2% Senior Notes due April 15, 2006, as the same
may be modified or amended from time to time.
"Existing Indenture" means the Indenture governing the Existing Notes
as such Indenture may be amended or supplemented from time to time in
accordance with the terms thereof.
"Guarantee" by any Person means any obligation, contingent or
otherwise, of such Person guaranteeing, or having the economic effect of
guaranteeing, any Debt of any other Person (the "primary obligor") in any
manner, whether directly or indirectly, and including, without limitation,
any obligation of such Person, (i) to purchase or pay (or advance or supply
funds for the purchase or payment of) such Debt or to purchase (or to
advance or supply funds for the purchase of) any security for the payment
of such Debt, (ii) to purchase property, securities or services for the
purpose of assuring the holder of such Debt of the payment of such Debt, or
(iii) to maintain working capital, equity capital or other financial
statement condition or liquidity of the primary obligor so as to enable the
primary obligor to pay such Debt (and "Guaranteed", "Guaranteeing" and
"Guarantor" shall have meanings correlative to the foregoing); PROVIDED,
HOWEVER, that the Guarantee by any Person shall not include endorsements by
such Person for collection or deposit, in either case, in the ordinary
course of business; and PROVIDED, FURTHER, that the incurrence by a
Restricted Subsidiary of the Corporation of a lien permitted under clause
(iv) of the second paragraph of Section 1011 of the Existing Indenture
shall not be deemed to constitute a Guarantee by such Restricted Subsidiary
of any Purchase Money Debt of the Corporation secured thereby.
"Holder" means a holder of Senior Exchangeable Redeemable Preferred
Shares as reflected in the share books of the Corporation.
"Incur" means, with respect to any Debt or other obligation of any
Person, to create, issue, incur (by conversion, exchange or otherwise),
assume, Guarantee or otherwise become liable in respect of such Debt or
other obligation including by acquisition of Subsidiaries or the recording,
as required pursuant to generally accepted
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accounting principles or otherwise, of any such Debt or other obligation on
the balance sheet of such Person (and "Incurrence", "Incurred",
"Incurrable" and "Incurring" shall have meanings correlative to the
foregoing); PROVIDED, HOWEVER, that a change in generally accepted
accounting principles that results in an obligation of such Person that
exists at such time becoming Debt shall not be deemed an Incurrence of such
Debt and that neither the accrual of interest nor the accretion of original
issue discount shall be deemed an Incurrence of Debt; PROVIDED, FURTHER,
HOWEVER, that the Corporation may elect to treat all or any portion of
revolving credit debt of the Corporation or a Subsidiary as being incurred
from and after any date beginning the date the revolving credit commitment
is extended to the Corporation or a Subsidiary, by furnishing notice
thereof to the Transfer Agent, and any borrowings or reborrowings by the
Corporation or a Subsidiary under such commitment up to the amount of such
commitment designated by the Corporation as Incurred shall not be deemed to
be new Incurrences of Debt by the Corporation or such Subsidiary.
"Initial Dividend Period" means the dividend period commencing on the
Issue Date and ending on the first Dividend Payment Date to occur
thereafter.
"Initial Purchaser" means Merrill Lynch, Pierce, Fenner & Smith
Incorporated or Toronto Dominion Securities (USA) Inc.
"Interest Rate or Currency Protection Agreement" of any Person means
any forward contract, futures contract, swap, option or other financial
agreement or arrangement (including, without limitation, caps, floors,
collars and similar agreements) relating to, or the value of which is
dependent upon, interest rates or currency exchange rates or indices.
"Investment" by any Person means any direct or indirect loan, advance
or other extension of credit or capital contribution (by means of transfers
of cash or other property to others or payments for property or services
for the account or use of others, or otherwise) to, or purchase or
acquisition of Capital Stock, bonds, notes, debentures or other securities
or evidence of Debt issued by, any other Person, including any payment on a
Guarantee of any obligation of such other Person, but excluding any loan,
advance or extension of credit to an employee of the Corporation or any of
its Restricted Subsidiaries in the ordinary course of business, accounts
receivable and other commercially reasonable extensions of trade credit.
"Issue Date" means the date of original issuance of the Senior
Exchangeable Redeemable Preferred Shares.
"Joint Venture" means a corporation, partnership or other entity
engaged in one or more Telecommunications Businesses as to which the
Corporation (directly or through one or more Restricted Subsidiaries)
exercises managerial control and in which the Corporation owns (i) a 50% or
greater interest, or (ii) a 40% or greater interest, together with options
or other contractual rights, exercisable not more than seven years after
the
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Corporation's initial Investment in such Joint Venture, to increase its
interest to not less than 50%.
"Junior Shares" shall have the meaning ascribed to it in paragraph (b)
hereof.
"Lien" means, with respect to any property or assets, any mortgage or
deed of trust, pledge, hypothecation, assignment, Receivables Sale, deposit
arrangement, security interest, lien, charge, easement (other than any
easement not materially impairing usefulness or marketability),
encumbrance, preference, priority or other security agreement or
preferential arrangement of any kind or nature whatsoever on or with
respect to such property or assets (including, without limitation, any
conditional sale or other title retention agreement having substantially
the same economic effect as any of the foregoing).
"Mandatory Redemption Price" shall have the meaning ascribed to it in
paragraph (e)(ii) hereof.
"Offer to Purchase" means a written offer (the "Offer") sent by the
Corporation by first class mail, postage prepaid, to each Holder at his
address appearing in the records of the Corporation on the date of the
Offer offering to purchase any and all of the Senior Exchangeable
Redeemable Preferred Shares at the purchase price specified in such Offer
(as determined pursuant to this Certificate of Designations). Unless
otherwise required by applicable law, the Offer shall specify an expiration
date (the "Expiration Date") of the Offer to Purchase which shall be,
subject to any contrary requirements of applicable law, not less than 30
days or more than 60 days after the date of such Offer and a settlement
date (the "Payment Date") for purchase of Senior Exchangeable Redeemable
Preferred Shares within five Business Days after the Expiration Date. The
Corporation shall notify the Transfer Agent at least 15 Business Days (or
such shorter period as is acceptable to the Transfer Agent) prior to the
mailing of the Offer of the Corporation's obligation to make an Offer to
Purchase, and the Offer shall be mailed by the Corporation or, at the
Corporation's request, by the Transfer Agent in the name and at the expense
of the Corporation. The Offer shall contain information concerning the
business of the Corporation and its Subsidiaries which the Corporation in
good faith believes will enable such Holders to make an informed decision
with respect to the Offer to Purchase (which at a minimum will include (i)
the most recent annual and quarterly financial statements and "Management's
Discussion and Analysis of Financial Condition and Results of Operations"
contained in the documents required to be filed with the Securities and
Exchange Commission or provided to the Transfer Agent pursuant to this
Certificate of Designations (which requirements may be satisfied by
delivery of such documents together with the Offer), (ii) a description of
material developments in the Corporation's business subsequent to the date
of the latest of such financial statements referred to in clause (i)
(including a description of the events requiring the Corporation to make
the Offer to Purchase), (iii) if applicable, appropriate pro forma
financial information concerning the Offer to Purchase and the events
requiring the Corporation to make the Offer to Purchase and (iv) any other
information required by applicable law to be included therein). The Offer
shall contain all instructions and materials necessary to enable such
Holders to
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tender Senior Exchangeable Redeemable Preferred Shares pursuant to the
Offer to Purchase. The Offer shall also state:
(a) the paragraph of this Certificate of Designations pursuant
to which the Offer to Purchase is being made;
(b) the Expiration Date and the Payment Date;
(c) the purchase price to be paid by the Corporation for each
Senior Exchangeable Redeemable Preferred Shares accepted for payment
(as specified pursuant to this Certificate of Designations) (the
"Purchase Price");
(d) that the Holder may tender all or any portion of the Senior
Exchangeable Redeemable Preferred Shares registered in the name of
such Holder;
(e) the place or places where Senior Exchangeable Redeemable
Preferred Shares are to be surrendered for tender pursuant to the
Offer to Purchase;
(f) that dividends on any Senior Exchangeable Redeemable
Preferred Share not tendered or tendered but not purchased by the
Corporation pursuant to the Offer to Purchase will continue to accrue;
(g) that on the Payment Date the Purchase Price will become due
and payable upon each Senior Exchangeable Redeemable Preferred Share
being accepted for payment pursuant to the Offer to Purchase and that
dividends thereon shall cease to accrue on and after the Purchase
Date;
(h) that each Holder electing to tender a Senior Exchangeable
Redeemable Preferred Share pursuant to the Offer to Purchase will be
required to surrender such Senior Exchangeable Redeemable Preferred
Share at the place or places specified in the Offer prior to the close
of business on the Expiration Date (such Senior Exchangeable
Redeemable Preferred Share being, if the Corporation or the Transfer
Agent so requires, duly endorsed by, or accompanied by a written
instrument of transfer in form satisfactory to the Corporation and the
Transfer Agent duly executed by, the Holder thereof or his attorney
duly authorized in writing);
(i) that Holders will be entitled to withdraw all or any portion
of Senior Exchangeable Redeemable Preferred Shares tendered if the
Corporation (or its paying agent) receives not later than the close of
business on the Expiration Date, a telegram, telex, facsimile
transmission or letter setting forth the name of the Holder, the
number of the Senior Exchangeable Redeemable Preferred Shares the
Holder tendered, the certificate number(s) of the Senior Exchangeable
Redeemable Preferred Shares the Holder tendered and a statement that
such Holder is withdrawing all or a portion of his tender;
(j) that the Corporation shall purchase all Senior Exchangeable
Redeemable Preferred Shares tendered;
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(k) that in the case of any Holder whose Senior Exchangeable
Redeemable Preferred Share is purchased only in part, the Corporation
shall issue and deliver to the Holder of such Senior Exchangeable
Redeemable Preferred Share without service charge, a new Senior
Exchangeable Redeemable Preferred Share or Senior Exchangeable
Redeemable Preferred Shares as requested by such Holder; and
(l) the CUSIP number or numbers of the Senior Exchangeable
Redeemable Preferred Shares offered to be purchased by the Corporation
pursuant to the Offer to Purchase.
Any Offer to Purchase shall be governed by and effected in accordance with
the Offer for such Offer to Purchase.
"Officers' Certificate" means a certificate signed by (i) the Chief
Executive Officer, President, an Executive Vice President or a Vice
President, and (ii) the Treasurer, Assistant Treasurer, Secretary or an
Assistant Secretary, of the Corporation and delivered to the Transfer Agent
and containing the following:
(a) a statement that each individual signing such certificate
has read such covenant or condition and the definitions herein
relating thereto;
(b) a brief statement as to the nature and scope of the
examination or investigation upon which the statements or opinions
contained in such certificate or opinion are based;
(c) a statement that, in the opinion of each such individual, he
has made such examination or investigation as is necessary to enable
him to express an informed opinion as to whether or not such covenant
or condition has been complied with; and
(d) a statement as to whether, in the opinion of each such
individual, such condition or covenant has been complied with.
"Opinion of Counsel" means a written opinion of legal counsel, who may be
counsel for the Corporation and containing the following statements:
(a) a statement that such counsel has read such covenant or
condition and the definitions herein relating thereto;
(b) a brief statement as to the nature and scope of the
examination or investigation upon which the statements or opinions
contained in such certificate or opinion are based;
(c) a statement that, in the opinion of each such individual, he
has made such examination or investigation as is necessary to enable
him to express an informed opinion as to whether or not such covenant
or condition has been complied with; and
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(d) a statement as to whether, in the opinion of each such
individual, such condition or covenant has been complied with.
"Original Shares" means Senior Exchangeable Redeemable Preferred
Shares that are not Exchange Shares.
"Parity Shares" shall have the meaning ascribed to it in paragraph (b)
hereof.
"Payment Date" shall have the meaning ascribed to it in the definition
of Offer to Purchase.
"Permitted Interest Rate or Currency Protection Agreement" of any
Person means any Interest Rate or Currency Protection Agreement entered
into with one or more financial institutions in the ordinary course of
business that is designed to protect such Person against fluctuations in
interest rates or currency exchange rates with respect to Debt Incurred and
which shall have a notional amount no greater than the payments due with
respect to the Debt being hedged thereby and not for purposes of
speculation.
"Person" means any individual, corporation, partnership, limited
liability company, joint venture, association, joint stock company, trust,
unincorporated organization, government or agency or political subdivision
thereof or any other entity.
"Predecessor Share" of any particular Senior Exchangeable Redeemable
Preferred Share means every previous Senior Exchangeable Redeemable
Preferred Share issued before, and evidencing all or a portion of the same
interest as that evidenced by, such particular Senior Exchangeable
Redeemable Preferred Share; and, for the purposes of this definition, any
Senior Exchangeable Redeemable Preferred Share issued and delivered in
exchange for or in lieu of a mutilated, destroyed, lost or stolen Senior
Exchangeable Redeemable Preferred Share shall be deemed to evidence the
same interest as the mutilated, destroyed, lost or stolen Senior
Exchangeable Redeemable Preferred Share.
"Preferred Stock" of any Person means Capital Stock of such Person of
any class or classes (however designated) that ranks prior, as to the
payment of dividends or as to the distribution of assets upon any voluntary
or involuntary liquidation, dissolution or winding up of such Person, to
shares of Capital Stock of any other class of such Person.
"Public Equity Offering" means a underwritten public offering of
common stock, par value $.01 per share, of the Corporation pursuant to an
effective registration statement filed with the Securities and Exchange
Commission in accordance with the Securities Act.
"Purchase Money Debt" means (i) Acquired Debt Incurred in connection
with the acquisition of Telecommunications Assets and (ii) Debt of the
Corporation or of any Restricted Subsidiary of the Corporation (including,
without limitation, Debt represented by Capital Lease Obligations, Vendor
Financing Facilities, mortgage financings and purchase money obligations)
Incurred for the purpose of financing all or any part of the cost of
construction, acquisition or improvement by the Corporation or any
Restricted Subsidiary of the Corporation or any Joint Venture of any
Telecommunications Assets of
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the Corporation, any Restricted Subsidiary of the Corporation or any Joint
Venture, and including any related notes, Guarantees, collateral documents,
instruments and agreements executed in connection therewith, as the same
may be amended, supplemented, modified or restated from time to time.
"Qualified Junior Shares" shall mean Junior Shares that do not
constitute Disqualified Stock.
"Qualifying Event" means a Public Equity Offering or one or more
Strategic Equity Investments which in either case results in aggregate net
proceeds to the Corporation of not less than $75 million.
"Quarterly Dividend Period" shall mean the quarterly period commencing
on each February 1, May 1, August 1 and November 1 and ending on the next
succeeding Dividend Payment Date, respectively.
"Receivables" means receivables, chattel paper, instruments, documents
or intangibles evidencing or relating to the right to payment of money in
respect of the sale of goods or services.
"Receivables Sale" of any Person means any sale of Receivables of such
Person (pursuant to a purchase facility or otherwise), other than in
connection with a disposition of the business operations of such Person
relating thereto or a disposition of defaulted Receivables for purpose of
collection and not as a financing arrangement.
"Redemption Date", with respect to any Senior Exchangeable Redeemable
Preferred Shares, means the date on which such Senior Exchangeable
Redeemable Preferred Shares are redeemed by the Corporation.
"Redemption Notice" shall have the meaning ascribed to it in paragraph
(e) hereof.
"Restricted Subsidiary" of the Corporation means any Subsidiary,
whether existing on or after the date of this Certificate of Designations,
unless such Subsidiary is an Unrestricted Subsidiary.
"Registration Rights Agreement" means that certain Preferred Exchange
and Registration Rights Agreement, dated as of January 31, 1997, by and
between the Corporation and Merrill Lynch, Pierce, Fenner & Smith
Incorporated and Toronto Dominion Securities (USA) Inc.
"Senior Exchangeable Redeemable Preferred Shares" shall have the
meaning ascribed to it in paragraph (a) hereof.
"Special Mandatory Redemption Price" shall have the meaning ascribed
to it in paragraph (e)(i) hereof.
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"Securities Act" means the Securities Act of 1933, as amended, and the
rules and regulations promulgated thereunder.
"Senior Shares" shall have the meaning ascribed to it in paragraph (b)
hereof.
"Strategic Equity Investment" means an investment in Qualified Junior
Shares made by a Strategic Investor in an aggregate amount of not less than
$25 million.
"Strategic Investor" means a Person engaged in one or more
Telecommunications Businesses (which need not be such Person's primary
business) that has, or 80% or more of the Voting Stock of which is owned,
directly or indirectly, by a Person that has, an equity market
capitalization or net worth, at the time of its initial investment in the
Corporation, in excess of $2.0 billion.
"Subordinated Debt" means Debt of the Corporation as to which the
payment of principal of (and premium, if any) and interest and other
payment obligations in respect of such Debt shall be subordinate to the
prior payment in full of the Exchange Notes, or the Existing Notes if the
Exchange Notes have not yet been issued, to at least the following extent:
(i) no payments of principal of (or premium, if any) or interest on or
otherwise due in respect of such Debt may be permitted for so long as any
default in the payment of principal (or premium, if any) or interest on the
Exchange Notes or Existing Notes, as applicable, exists; (ii) in the event
that any other default that with the passing of time or the giving of
notice, or both, would constitute an Event of Default exists with respect
to the Exchange Notes or the Existing Notes, as applicable, upon notice by
25% or more in principal amount of the Exchange Notes or the Existing
Notes, as applicable, to the relevant trustee, the relevant trustee shall
have the right to give notice to the Corporation and the holders of such
Debt (or trustees or agents therefor) of a payment blockage, and thereafter
no payments of principal of (or premium, if any) or interest on or
otherwise due in respect of such Debt may be made for a period of 179 days
from the date of such notice or for the period until such default has been
cured or waived or ceased to exist and any acceleration of the Exchange
Notes or the Existing Notes, as applicable, has been rescinded or annulled,
whichever period is shorter (which Debt may provide (A) no new period of
payment blockage may be commenced by a payment blockage notice unless and
until 360 days have elapsed since the effectiveness of the immediately
prior notice, (B) no nonpayment default that existed or was continuing on
the date of delivery of any payment blockage notice to such holders (or
such agents or trustees) shall be, or be made, the basis for a subsequent
payment blockage notice and (C) failure of the Corporation to make payment
on such Debt when due or within any applicable grace period, whether or not
on account of such payment blockage provisions, shall constitute an event
of default thereunder); and (iii) such Debt may not (x) provide for
payments of principal of such Debt at the stated maturity thereof or by way
of a sinking fund applicable thereto or by way of any mandatory redemption,
defeasance, retirement or repurchase thereof by the Corporation (including
any redemption, retirement or repurchase which is contingent upon events or
circumstances, but excluding any retirement required by virtue of
acceleration of such Debt upon an event of default thereunder), in each
case prior to the final Stated Maturity (as defined in the Existing
Indenture) of the Exchange Notes or the Existing
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Notes, as applicable, or (y) permit redemption or other retirement
(including pursuant to an offer to purchase made by the Corporation) of
such other Debt at the option of the holder thereof prior to the final
Stated Maturity (as defined in the Existing Indenture) of the Exchange
Notes or the Existing Notes, as applicable, other than a redemption or
other retirement at the option of the holder of such Debt (including
pursuant to an offer to purchase made by the Corporation) which is
conditioned upon a change of control of the Corporation pursuant to
provisions substantially similar to those contained in paragraph (h) hereof
(and which shall provide that such Debt will not be repurchased pursuant to
such provisions prior to the Corporation's repurchase of the Exchange Notes
or the Existing Notes, as applicable, required to be repurchased by the
Corporation pursuant to the provisions of Section 1016 of the Existing
Indenture or Section 1016 of the Indenture, as applicable.
"Subsidiary" of any Person means (i) a corporation more than 50% of
the combined voting power of the outstanding Voting Stock of which is
owned, directly or indirectly, by such Person or by one or more other
Subsidiaries of such Person or by such Person and one or more Subsidiaries
thereof or (ii) any other Person (other than a corporation) in which such
Person, or one or more other Subsidiaries of such Person or such Person and
one or more other Subsidiaries thereof, directly or indirectly, has at
least a majority ownership and power to direct the policies, management and
affairs thereof.
"Successor Share" of any particular Senior Exchangeable Redeemable
Preferred Share means every Senior Exchangeable Redeemable Preferred Share
issued after, and evidencing all or a portion of the same interest as that
evidenced by, such particular Senior Exchangeable Redeemable Preferred
Share; and, for the purposes of this definition, any Senior Exchangeable
Redeemable Preferred Share issued and delivered in exchange for or in lieu
of a mutilated, destroyed, lost or stolen Senior Exchangeable Redeemable
Preferred Share shall be deemed to evidence the same interest as the
mutilated, destroyed, lost or stolen Senior Exchangeable Redeemable
Preferred Share.
"Telecommunications Assets" means all assets, rights (contractual or
otherwise) and properties, whether tangible or intangible, used or intended
for use in connection with a Telecommunications Business.
"Telecommunications Business" means the business of (i) transmitting,
or providing services relating to the transmission of, voice, video or data
through owned or leased transmission facilities, (ii) creating, developing
or marketing communications related network equipment, software and other
devices for use in a Telecommunication Business or (iii) evaluating,
participating or pursuing any other activity or opportunity that is
primarily related to those identified in (i) or (ii) above and shall, in
any event, include all businesses in which the Corporation or any of its
Subsidiaries are engaged on the Issue Date; PROVIDED that the determination
of what constitutes a Telecommunications Business shall be made in good
faith by the Board of Directors of the Corporation, which determination
shall be conclusive.
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"Transfer Agent" means the transfer agent for the Senior Exchangeable
Redeemable Preferred Shares designated by the Corporation from time to
time.
"Unrestricted Subsidiary" means (1) any Subsidiary of the Corporation
designated as such by the Board of Directors as set forth below where (a)
neither the Corporation nor any of its other Subsidiaries (other than
another Unrestricted Subsidiary) (i) provides credit support for, or
Guarantee of, any Debt of such Subsidiary or any Subsidiary of such
Subsidiary (including any undertaking, agreement or instrument evidencing
such Debt) or (ii) is directly or indirectly liable for any Debt of such
Subsidiary or any Subsidiary of such Subsidiary, and (b) no default with
respect to any Debt of such Subsidiary or any Subsidiary of such Subsidiary
(including any right which the holders thereof may have to take enforcement
action against such Subsidiary) would permit (upon notice, lapse of time or
both) any holder of any other Debt of the Corporation and its Restricted
Subsidiaries to declare a default on such other Debt or cause the payment
thereof to be accelerated or payable prior to its final scheduled maturity
and (2) any Subsidiary of an Unrestricted Subsidiary. The Board of
Directors may designate any Subsidiary to be an Unrestricted Subsidiary
unless such Subsidiary owns any Capital Stock of, or owns or holds any Lien
on any property of, any other Subsidiary of the Corporation which is not a
Subsidiary of the Subsidiary to be so designated or otherwise an
Unrestricted Subsidiary, PROVIDED that either (x) the Subsidiary to be so
designated has total assets of $1,000 or less or (y) immediately after
giving effect to such designation, the Corporation could incur at least
$1.00 of additional Debt pursuant to paragraph (l)(i) hereof. The Board of
Directors may designate any Unrestricted Subsidiary to be a Restricted
Subsidiary, PROVIDED that, immediately after giving effect to such
designation, the Corporation could incur at least $1.00 of additional Debt
pursuant to the paragraph (l)(i) hereof.
"Vendor Financing Facility" means any agreements between the
Corporation or a Restricted Subsidiary of the Corporation and one or more
vendors or lessors of equipment to the Corporation or any of its Restricted
Subsidiaries (or any affiliate of any such vendor or lessor) providing
financing for the acquisition by the Corporation or any such Restricted
Subsidiary of equipment from any such vendor or lessor.
"Vice President", when used with respect to the Corporation means any
vice president, whether or not designated by a number or a word or words
added before or after the title "vice president".
"Voting Stock" of any Person means Capital Stock of such Person which
ordinarily has voting power for the election of directors (or persons
performing similar functions) of such Person, whether at all times or only
so long as no senior class of securities has such voting power by reason of
any contingency.
"Voting Rights Triggering Event" shall have the meaning ascribed to it
in paragraph f(iv) hereof.
"Wholly-Owned Restricted Subsidiary" of any Person means a Restricted
Subsidiary of such Person 99% or more of the outstanding Capital Stock or
other
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ownership interests of which (other than directors' qualifying shares)
shall at the time be owned by such Person or by one or more Wholly-Owned
Restricted Subsidiaries of such Person or by such Person and one or more
Wholly-Owned Restricted Subsidiaries of such Person.
(n) RESTRICTIONS ON TRANSFER
(i) Each Original Share shall contain a legend substantially to the
following effect until the Resale Restriction Termination Date (as defined
below) unless the Corporation determines otherwise:
THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933,
AS AMENDED (THE "SECURITIES ACT"), OR ANY STATE SECURITIES LAWS. NEITHER
THIS SECURITY NOR ANY INTEREST OR PARTICIPATION HEREIN MAY BE REOFFERED,
SOLD, ASSIGNED, TRANSFERRED, PLEDGED, ENCUMBERED OR OTHERWISE DISPOSED OF
IN THE ABSENCE OF SUCH REGISTRATION OR UNLESS SUCH TRANSACTION IS EXEMPT
FROM, OR NOT SUBJECT TO, REGISTRATION AND SUBJECT TO COMPLIANCE WITH OTHER
APPLICABLE LAWS. THE HOLDER OF THIS SECURITY BY ITS ACCEPTANCE HEREOF
AGREES TO OFFER, SELL OR OTHERWISE TRANSFER SUCH SECURITY, PRIOR TO THE
DATE WHICH IS THREE YEARS AFTER THE LATER OF THE ORIGINAL ISSUE DATE HEREOF
AND THE LAST DATE ON WHICH THE CORPORATION OR ANY AFFILIATE OF THE
CORPORATION WAS THE OWNER OF THIS SECURITY (OR ANY PREDECESSOR OF THIS
SECURITY) (THE "RESALE RESTRICTION TERMINATION DATE"), ONLY (A) TO THE
CORPORATION; (B) PURSUANT TO A REGISTRATION STATEMENT WHICH HAS BEEN
DECLARED EFFECTIVE UNDER THE SECURITIES ACT, (C) FOR SO LONG AS THESE
SECURITIES ARE ELIGIBLE FOR RESALE PURSUANT TO RULE 144A UNDER THE
SECURITIES ACT ("RULE 144A"), TO A PERSON IT REASONABLY BELIEVES IS A
"QUALIFIED INSTITUTIONAL BUYER" AS DEFINED IN RULE 144A THAT PURCHASES FOR
ITS OWN ACCOUNT OR FOR THE ACCOUNT OF A QUALIFIED INSTITUTIONAL BUYER TO
WHOM NOTICE IS GIVEN THAT THE TRANSFER IS BEING MADE IN RELIANCE ON
RULE 144A, (D) PURSUANT TO AN EXEMPTION FROM REGISTRATION UNDER THE
SECURITIES ACT PROVIDED BY RULE 144, (E) PURSUANT TO OFFERS AND SALES TO
NON-U.S. PERSONS THAT OCCUR OUTSIDE THE UNITED STATES WITHIN THE MEANING OF
REGULATION S UNDER THE SECURITIES ACT OR (F) IN THE CASE OF EITHER ANY
INITIAL INVESTOR THAT IS A QUALIFIED INSTITUTIONAL BUYER OR ANY SUBSEQUENT
INVESTOR, TO AN INSTITUTIONAL "ACCREDITED INVESTOR" WITHIN THE MEANING OF
SUBPARAGRAPH (a)(1), (2), (3) or (7) OF RULE 501 UNDER THE SECURITIES ACT
PURSUANT TO AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT (IF
AVAILABLE), AND OTHERWISE IN COMPLIANCE WITH OTHER APPLICABLE LAWS, SUBJECT
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TO THE CORPORATION'S AND THE TRANSFER AGENT AND REGISTRAR'S RIGHT PRIOR TO
ANY SUCH OFFER, SALE OR TRANSFER PURSUANT TO CLAUSE (C), (D), (E) OR (F) TO
REQUIRE THE DELIVERY OF A TRANSFER CERTIFICATE AND IN THE CASE OF CLAUSE
(F) AN OPINION OF COUNSEL /OR OTHER INFORMATION SATISFACTORY TO EACH OF
THEM. THE LEGEND WILL BE REMOVED UPON THE REQUEST OF A HOLDER AFTER THE
RESALE RESTRICTION TERMINATION DATE.
(ii) If prior to the Resale Restriction Termination Date (or such
shorter period as may be prescribed by Rule 144(k) under the Securities Act
(or any successor thereto)) a Holder of Original Shares that acquired
Senior Exchangeable Redeemable Preferred Shares from an Initial Purchaser
in a sale that was not made in reliance upon Rule 144A under the Securities
Act wishes to transfer such Original Shares, such transfer may be effected
only upon receipt by the Corporation or the Transfer Agent of a certificate
substantially in the form of Exhibit A hereto duly executed by such Holder
or his attorney duly authorized in writing.
[Balance of page intentionally blank.]
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IN WITNESS WHEREOF, said NEXTLINK Communications Merger, Inc., has caused
this Certificate to be signed by R. Bruce Easter, Jr., its Vice President, this
30th day of January 1997.
NEXTLINK COMMUNICATIONS MERGER, INC.
By: /s/ R. Bruce Easter, Jr.
----------------------------
Name: R. Bruce Easter, Jr.
Title: Vice President
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