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NEXTLINK COMMUNICATIONS, INC.
CERTIFICATE OF DESIGNATION OF THE POWERS, PREFERENCES AND
RELATIVE, PARTICIPATING, OPTIONAL AND OTHER SPECIAL RIGHTS OF
SERIES C CUMULATIVE CONVERTIBLE PARTICIPATING PREFERRED STOCK
AND QUALIFICATIONS, LIMITATIONS AND RESTRICTIONS THEREOF
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Pursuant to Section 151 of the
General Corporation Law of the State of Delaware
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NEXTLINK Communications, Inc. (the "Corporation"), a corporation
organized and existing under the General Corporation Law of the State of
Delaware, does hereby certify that, pursuant to authority conferred upon the
board of directors of the Corporation (the "Board of Directors") by the
Corporation's Certificate of Incorporation, as amended (the "Certificate of
Incorporation"), and pursuant to the provisions of Section 151 of the General
Corporation Law of the State of Delaware, said Board of Directors is authorized
to issue Preferred Stock of the Corporation in one or more series and the
Special Committee of the Board of Directors, as authorized by the Board of
Directors, has duly approved and adopted the following resolution on December 7,
1999 (the "Resolution"):
RESOLVED that, pursuant to the authority vested in the Board of
Directors by its Certificate of Incorporation, the Special Committee, as
authorized by the Board of Directors, hereby creates, authorizes and
provides for the issuance of a series of the preferred stock of the
Corporation, par value $.01 per share (such preferred stock designated as
the "Series C Cumulative Convertible Participating Preferred Stock"),
consisting of 584,375 shares and having the powers, designation,
preferences, relative, participating, optional and other special rights
and the qualifications, limitations and restrictions thereof that are set
forth in the Certificate of Incorporation and in this Resolution as
follows:
1. Number and Designation. 584,375 shares of the Preferred Stock of
the Corporation shall constitute a series designated as "Series C Cumulative
Convertible Participating Preferred Stock" (the "Series C Preferred Stock").
2. Definitions. Unless the context otherwise requires, when used
herein the following terms shall have the meaning indicated.
"Board of Directors" means the Board of Directors of the Corporation.
"Business Day" means any day except Saturday, Sunday and any day which
shall be a legal holiday or a day on which banking institutions in New York
City, New York generally are authorized or required by law or other governmental
actions to close.
"Capital Stock" means, with respect to any person, any and all shares,
interests, participations, rights in, or other equivalents (however designated
and whether voting and/or non-voting) of such person's capital stock, whether
outstanding on the Issue Date or issued
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after the Issue Date, and any and all rights (other than any evidence of
indebtedness), warrants or options exchangeable for or convertible into such
capital stock.
"Change of Control" will be deemed to have occurred at such time as any
of the following occur: (i) any person or any persons acting together that would
constitute a "group" for purposes of Section 13(d) of the Exchange Act, or any
successor provision thereto (other than Eagle River, Craig O. McCaw, Wendy P.
McCaw and their respective affiliates or an underwriter engaged in a firm
commitment underwriting on behalf of the Corporation), shall beneficially own
(within the meaning of Rule 13d-3 under the Exchange Act, or any successor
provision thereto) more than 50% of the aggregate voting power of all classes of
Voting Stock of the Corporation, (ii) neither Mr. Craig O. McCaw nor any person
designated by him to the Corporation as acting on his behalf shall be a director
of the Corporation, or (iii) from and after the date on which the Corporation
has redeemed indefeasibly or defeased in full its obligations in respect of its
12-1/2% Senior Notes due April 15, 2006 or defeased the covenants applicable
thereto in accordance with their terms, during any period of two consecutive
years, individuals who at the beginning of such period constituted the Board of
Directors (together with any new directors whose election by the Board of
Directors or whose nomination for election by the shareholders of the
Corporation was proposed by a vote of a majority of the directors of the
Corporation then still in office who were either directors at the beginning of
such period or whose election or nomination for election was previously so
approved) cease for any reason to constitute a majority of the Board of
Directors then in office.
"Class A Common Stock" means any shares of the Corporation's Class A
Common Stock, par value $.02 per share, now or hereafter authorized to be
issued, and any and all securities of any kind whatsoever of the Corporation
which may be exchanged for or converted into Class A Common Stock, any and all
securities of any kind whatsoever of the Corporation which may be issued on or
after the date hereof in respect of, in exchange for, or upon conversion of
shares of Class A Common Stock pursuant to a merger, consolidation, stock split,
stock dividend, recapitalization of the Corporation or otherwise.
"Common Stock" means the Corporation's Class A Common Stock, the
Corporation's Class B Common Stock, par value $.02 per share, and any other
common stock of the Corporation.
"Current Market Price" means the average of the daily Market Prices of
the Common Stock for ten consecutive trading days immediately preceding the date
for which such value is to be computed.
"Eagle River" means Eagle River Investments, L.L.C., a limited liability
company formed under the laws of the State of Washington.
"Exchange Act" means the Securities Exchange Act of 1934, as amended, or
any successor statute, and the rules and regulations promulgated thereunder.
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"Issue Date" means the original date of issuance of shares of Series C
Preferred Stock.
"Liquidation Preference" with respect to a share of Series C Preferred
Stock means, as at any date, the sum of (i) $1,000.00 plus (ii) any Special
Amount with respect to such share plus (iii) an amount equal to any accrued and
unpaid Preferred Dividends (as defined in paragraph 4(a) below) with respect to
such share from the last Dividend Payment Date through such date.
"Market Price" means, with respect to the Common Stock, on any given day,
(i) the price of the last trade, as reported on the Nasdaq National Market, not
identified as having been reported late to such system, or (ii) if the Common
Stock is so traded, but not so quoted, the average of the last bid and ask
prices, as those prices are reported on the Nasdaq National Market, or (iii) if
the Common Stock is not listed or authorized for trading on the Nasdaq National
Market or any comparable system, the average of the closing bid and asked prices
as furnished by two members of the National Association of Securities Dealers,
Inc. selected from time to time by the Corporation for that purpose. If the
Common Stock is not listed and traded in a manner that the quotations referred
to above are available for the period required hereunder, the Market Price per
share of Common Stock shall be deemed to be the fair value per share of such
security as determined in good faith by the Board of Directors of the
Corporation.
"Net Realizable FMV" means, with respect to a share of Common Stock, if
calculable, the amount of gross proceeds net of underwriters' discounts,
commissions or other selling expenses received by or to be received by the
holder in connection with the sale of such share of Common Stock on a when
issued basis or immediately after the conversion or, in all other cases, an
amount equal to 97% of the Current Market Price of the Common Stock.
"Preference Amount" with respect to a share of Series C Preferred Stock
means, as at any date, the sum of (i) $727.273 plus (ii) any Special Amount,
whether or not declared, with respect to such share plus (iii) an amount equal
to any accrued and unpaid Preferred Dividends with respect to such share from
the last Dividend Payment Date through such date.
"Series D Designation" means the Certificate of Designation for the
Series D Preferred Stock.
"Series D Preferred Stock" means the Series D Convertible Participating
Preferred Stock, par value $.01 per share, of the Corporation.
"Special Amount" with respect to a share of Series C Preferred Stock
shall mean all dividends and other amounts which have become payable in respect
of such share under paragraph 4(a) but which have not been paid. The Special
Amount with respect to any such share shall be reduced by the amount of any such
dividends and other amounts actually paid in respect of such share under
paragraph 4(c).
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"Voting Stock" means, with respect to any person, the Capital Stock of
any class or kind ordinarily having the power to vote for the election of
directors or other members of the governing body of such person.
3. Rank. (a) The Series C Preferred Stock and Series D Preferred
Stock each will, with respect to dividend rights and rights on liquidation,
winding-up and dissolution, rank (i) senior to the Corporation's 6-1/2%
Cumulative Convertible Preferred Stock, par value $.01 per share, all classes of
Common Stock and to each other class of Capital Stock of the Corporation or
series of Preferred Stock of the Corporation established hereafter by the Board
of Directors of the Corporation the terms of which do not expressly provide that
such class or series ranks senior to, or on a parity with, the Series C
Preferred Stock and Series D Preferred Stock as to dividend rights and rights on
liquidation, winding-up and dissolution of the Corporation (collectively
referred to, together with all classes of Common Stock of the Corporation, as
"Junior Securities"); (ii) on a parity with each class of Capital Stock of the
Corporation or series of Preferred Stock of the Corporation established
hereafter by the Board of Directors of the Corporation, the terms of which
expressly provide that such class or series will rank on a parity with the
Series C Preferred Stock and Series D Preferred Stock as to dividend rights and
rights on liquidation, winding-up and dissolution (collectively referred to as
"Parity Securities"); and (iii) junior to the Corporation's 14% Senior
Exchangeable Redeemable Preferred Shares, par value $.01 per share (the "Senior
Exchangeable Redeemable Preferred Shares"), and to each class of Capital Stock
of the Corporation or series of Preferred Stock of the Corporation established
hereafter by the Board of Directors of the Corporation in accordance with
Section 9(d) hereof, the terms of which expressly provide that such class or
series will rank senior to the Series C Preferred Stock and Series D Preferred
Stock as to dividend rights and rights on liquidation, winding-up and
dissolution of the Corporation (collectively referred to as "Senior
Securities"); provided that the relative powers, rights and preferences of the
Series C Preferred Stock and Series D Preferred Stock vis-a-vis the other shall
be as set forth herein and in the Series D Designation.
(b) The respective definitions of Junior Securities, Parity Securities
and Senior Securities shall also include any warrants, rights or options or
other securities exercisable or exchangeable for or convertible into any of the
Junior Securities, Parity Securities and Senior Securities, as the case may be.
(c) The Series C Preferred Stock shall be subject to the creation of
Junior Securities and Parity Securities and, to the extent permitted by Section
9(d), Senior Securities.
4. Dividends. (a) The holders of shares of Series C Preferred Stock
shall be entitled to receive with respect to each share of Series C Preferred
Stock, when, as and if declared by the Board of Directors, out of funds legally
available for the payment of dividends, dividends per annum equal to $54.5455
per share in cash (the "Preferred Dividend"). Preferred Dividends shall accrue
and shall be cumulative whether or not declared from the Issue Date and shall be
payable quarterly in arrears on March 31, June 30, September 30 and December 31
of each year (unless such day is not a Business Day, in which event such
dividends shall be payable on the next succeeding Business Day) (each such date
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being a "Dividend Payment Date" and each such quarterly period being a "Dividend
Period"), commencing on March 31, 2000. Each such dividend shall be payable to
the holders of record of shares of the Series C Preferred Stock as they appear
on the stock register of the Corporation at the close of business on the
corresponding Record Date. As used herein, the term "Record Date" means, with
respect to the dividend payable on March 31, June 30, September 30 and December
31, respectively, of each year, the preceding March 15, June 15, September 15
and December 15, or such other date, not more than 60 days or less than 10 days
preceding the payment dates thereof, as shall be fixed as the record date by the
Board of Directors.
(b) The amount of Preferred Dividends payable for each full Dividend
Period for each outstanding share of Series C Preferred Stock shall be computed
by dividing $54.5455 by four. The amount of Preferred Dividends payable on the
initial Dividend Payment Date, or in respect of any period shorter or longer
than a full Dividend Period, on the Series C Preferred Stock shall be computed
on the basis of twelve 30-day months and a 360-day year. No interest, or sum or
money in lieu of interest, shall be payable in respect of any dividend payment
or payments on the Series C Preferred Stock that may be in arrears.
(c) Accrued and unpaid Special Amounts for any past Dividend Periods
may be declared and paid on any subsequent Dividend Payment Date, to holders of
record on the corresponding Record Date.
(d) So long as any shares of the Series C Preferred Stock are
outstanding, no dividend, except as described in the last sentence of Section
4(e) below and except as described in the next succeeding sentence, shall be
declared or paid or set apart for payment on any Parity Securities, nor shall
any Parity Securities be redeemed, purchased or otherwise acquired for any
consideration (or any moneys be paid to or made available for a sinking fund for
the redemption of any shares of any such stock) by the Corporation, directly or
indirectly (except by conversion into or exchange for Parity Securities or
Junior Securities), unless in each case all Special Amounts have been or
contemporaneously are declared and paid or declared and a sum sufficient for the
payment thereof is set apart for such payment on the Series C Preferred Stock
for all Dividend Periods terminating on or prior to the date of payment of the
dividend on, or the date of redemption, purchase, or acquisition for
consideration of, such Parity Securities. When Special Amounts are not paid in
full or a sum sufficient for such payment is not set apart, as aforesaid, all
Special Amounts and additional amounts declared upon shares of the Series C
Preferred Stock and all dividends and additional amounts declared upon any other
Parity Securities shall be declared ratably in proportion to the respective
amounts of Special Amounts and additional amounts accumulated and unpaid on the
Series C Preferred Stock and dividends and additional amounts accumulated and
unpaid on such Parity Securities.
(e) So long as any shares of the Series C Preferred Stock are
outstanding, no dividends shall be declared or paid or set apart for payment and
no other distribution shall be declared or made upon Junior Securities, nor
shall any Junior Securities be redeemed, purchased or otherwise acquired (any
such dividend, distribution, redemption, purchase or acquisition being
hereinafter referred to as a "Junior Securities Distribution") for any
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consideration (or any moneys be paid to or made available for a sinking fund for
the redemption of any shares of any such stock) by the Corporation, directly or
indirectly (except by conversion into or exchange for Junior Securities), unless
in each case (i) all Special Amounts and additional amounts on all outstanding
shares of the Series C Preferred Stock and accrued and unpaid dividends and
additional amounts on any other Parity Securities shall have been paid or set
apart for payment for all past Dividend Periods with respect to the Series C
Preferred Stock and all past dividend periods with respect to such Parity
Securities and (ii) sufficient funds shall have been paid or set apart for the
payment of the dividend for the current Dividend Period with respect to the
Series C Preferred Stock and the current dividend period with respect to such
Parity Securities. Notwithstanding anything in this Certificate of Designation
to the contrary, the Corporation may declare and pay dividends on Parity Stock
which are payable solely in additional shares of, or by the increase in the
liquidation value of, Parity Stock or on Junior Stock which are payable in
additional shares of, or by the increase in the liquidation value of, Junior
Stock, as applicable, or repurchase, redeem or otherwise acquire Junior Stock in
exchange for Junior Stock, and Parity Stock in exchange for Parity Stock or
Junior Stock.
(f) So long as any shares of Series C Preferred Stock are outstanding,
if the Corporation pays a dividend in cash, securities or other property on the
Common Stock then at the same time the Corporation shall declare and pay a
dividend on each share of Series C Preferred Stock in an amount equal to the
Series C Per Share Participation Amount. The "Series C Per Share Participation
Amount" means, as at any date, 37.5% of the amount of dividends that would be
paid with respect to the Series C Preferred Stock and Series D Preferred Stock
taken together if converted into Common Stock on the date established as the
record date with respect to such dividend on the Common Stock divided by the
number of shares of Series C Preferred Stock then outstanding.
5. Liquidation Preference. (a) In the event of any liquidation,
dissolution or winding-up of the Corporation, whether voluntary or involuntary,
after payment or distribution of the assets of the Corporation (whether capital
or surplus) shall be made to or set apart for the holders of Senior Securities,
and before any payment or distribution of the assets of the Corporation (whether
capital or surplus) shall be made to or set apart for the holders of Junior
Securities, the holders of the shares of Series C Preferred Stock and Series D
Preferred Stock taken together shall be entitled to receive an amount in cash
equal to the greater of (x) the aggregate Liquidation Preferences (as set forth
herein and in the Series D Designation) of the shares of Series C Preferred
Stock and Series D Preferred Stock as of the date of liquidation, or (y) the
aggregate amount that would have been received with respect to the shares of
Series C Preferred Stock and Series D Preferred Stock if such stock had been
converted to Common Stock immediately prior to such liquidation, dissolution or
winding-up. If, upon any liquidation, dissolution or winding-up of the
Corporation, the assets of the Corporation, or proceeds thereof, shall be
insufficient to pay in full the aforesaid amounts under clause (x) of the
preceding sentence and liquidating payments on all Parity Securities, then such
assets, or proceeds thereof, shall (i) be distributed among the shares of Series
C Preferred Stock and the Series D Preferred Stock taken together and all such
other Parity Securities ratably in accordance with the respective amounts that
would be payable on such
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shares of Preferred Stock and any such other Parity Securities if all amounts
payable thereon were paid in full and (ii) the amount distributable under clause
(i) to the Series C Preferred Stock and Series D Preferred Stock taken together,
shall first be distributed to the Series C Preferred Stock until it has received
an amount equal to the aggregate Preference Amounts of all Series C Preferred
Stock outstanding as of the date of liquidation and thereafter 37.5% to the
Series C Preferred Stock and 62.5% to the Series D Preferred Stock. If, upon any
liquidation, dissolution or winding-up of the Corporation, the assets of the
Corporation, or proceeds thereof, distributable to the Series C Preferred Stock
and Series D Preferred Stock taken together shall be sufficient to pay in full
the aforesaid amounts under clause (x) of the first sentence of this subsection
5(a) then such amount shall first be distributed to the Series C Preferred Stock
until it has received an amount equal to the aggregate Preference Amounts of all
Series C Preferred Stock outstanding as of the date of liquidation and
thereafter 37.5% to the Series C Preferred Stock and 62.5% to the Series D
Preferred Stock. Any amounts distributed with respect to the Series C Preferred
Stock pursuant to this paragraph 5(a) shall be allocated pro rata among the
shares of Series C Preferred Stock. For the purposes of this paragraph 5,
neither the sale, conveyance, exchange or transfer (for cash, shares of stock,
securities or other consideration) of all or substantially all of the property
or assets of the Corporation nor the consolidation or merger of the Corporation
with or into one or more other entities shall be deemed to be a liquidation,
dissolution or winding-up of the Corporation.
(b) Subject to the rights of the holders of any Parity Securities,
after payment shall have been made in full to the holders of the Series C
Preferred Stock and the Series D Preferred Stock taken together, as provided in
this paragraph 5, any other series or class or classes of Junior Securities
shall, subject to the respective terms and provisions (if any) applying thereto,
be entitled to receive any and all assets remaining to be paid or distributed,
and the holders of the Series C Preferred Stock, Series D Preferred Stock and
any Parity Securities shall not be entitled to share therein.
6. Redemption. (a) The Series C Preferred Stock shall not be
redeemable by the Corporation prior to the later of (i) the fifth anniversary of
the Issue Date and (ii) the date on which the Corporation has redeemed
indefeasibly or defeased in full its obligations in respect of its 12-1/2%
Senior Notes due April 15, 2006 or defeased the covenants applicable thereto in
accordance with their terms (the "Redemption Trigger Date"). On and after the
Redemption Trigger Date, to the extent the Corporation shall have funds legally
available for such payment, and subject to the rights of the holders pursuant to
Section 8 hereof, the Corporation may redeem at its option shares of Series C
Preferred Stock, at any time in whole or from time to time in part, at a
redemption price per share equal to the Liquidation Preference as of the date
fixed for redemption, without interest; provided that the Corporation shall only
be entitled to redeem shares of the Series C Preferred Stock if shares of the
Series D Preferred Stock are also redeemed on a proportional basis based on the
percentage of each series of shares outstanding at such time.
(b) To the extent the Corporation shall have funds legally available
therefor, during the 180-day period commencing on the tenth anniversary of the
Issue Date, the holders of the Series C Preferred Stock shall have the right to
cause the Corporation to redeem at any
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time in whole or from time to time in part outstanding shares of Series C
Preferred Stock, if any, at a redemption price per share in cash equal to the
Liquidation Preference, without interest; provided that upon any such election
the Corporation shall be required to redeem a proportional amount of the Series
D Preferred Stock.
(c) Shares of Series C Preferred Stock which have been issued and
reacquired by the Corporation in any manner, including shares purchased or
redeemed, shall (upon compliance with any applicable provisions of the laws of
the State of Delaware) be retired and have the status of authorized and unissued
shares of the class of Preferred Stock undesignated as to series and may be
redesignated and reissued as part of any series of the Preferred Stock; provided
that no such issued and reacquired shares of Series C Preferred Stock shall be
reissued or sold as Series C Preferred Stock.
(d) If the Corporation is unable or shall fail to discharge its
obligation to redeem outstanding shares of Series C Preferred Stock pursuant to
paragraph 6(b) (the "Mandatory Redemption Obligation"), the Mandatory Redemption
Obligation shall be discharged as soon as the Corporation is able to discharge
such Mandatory Redemption Obligation. If and so long as any Mandatory Redemption
Obligation with respect to the Series C Preferred Stock shall not be fully
discharged, the Corporation shall not (i) directly or indirectly, redeem,
purchase, or otherwise acquire any Parity Security or discharge any mandatory or
optional redemption, sinking fund or other similar obligation in respect of any
Parity Securities or (ii) declare or make any Junior Securities Distribution,
or, directly or indirectly, discharge any mandatory or optional redemption,
sinking fund or other similar obligation in respect of any Junior Securities.
7. Procedure for Redemption. (a) In the event that fewer than all the
outstanding shares of Series C Preferred Stock are to be redeemed, in the case
of Section 6(a), the number of shares to be redeemed shall be determined by the
Board of Directors and the shares to be redeemed shall be selected pro rata
(with any fractional shares being rounded to the nearest whole shares).
Notwithstanding anything in Section 6 to the contrary, the Corporation shall
only redeem shares of Series C Preferred Stock pursuant to Section 6(a) or 6(b)
on a proportional basis based on the percentage of each series of shares
outstanding at such time.
(b) In the event the Corporation shall redeem shares of Series C
Preferred Stock pursuant to Section 6(a), notice of such redemption shall be
given by first class mail, postage prepaid, mailed not less than 30 days nor
more than 60 days prior to the redemption date, to each holder of record of the
shares to be redeemed at such holder's address as the same appears on the stock
register of the Corporation; provided that neither the failure to give such
notice nor any defect therein shall affect the validity of the giving of notice
for the redemption of any share of Series C Preferred Stock to be redeemed
except as to the holder to whom the Corporation has failed to give said notice
or except as to the holder whose notice was defective. Each such notice shall
state: (i) the redemption date; (ii) the number of shares of Series C Preferred
Stock to be redeemed and, if fewer than all the shares held by such holder are
to be redeemed, the number of shares to be redeemed from such holder; (iii) the
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redemption price; (iv) the place or places where certificates for such shares
are to be surrendered for payment of the redemption price; and (v) that
dividends on the shares to be redeemed will cease to accrue on such redemption
date.
(c) Notice having been mailed as aforesaid, if applicable, from and
after the redemption date, dividends on the shares of Series C Preferred Stock
so called for redemption shall cease to accrue, and all rights of the holders
thereof as stockholders of the Corporation (except the right to receive from the
Corporation the redemption price and except the right to convert shares so
called for redemption prior to the close of business on the date immediately
preceding the date fixed for such redemption) shall cease. Upon surrender in
accordance with said notice, if applicable, of the certificates for any shares
so redeemed (properly endorsed or assigned for transfer, if the Board of
Directors shall so require and the notice shall so state), such shares shall be
redeemed by the Corporation at the redemption price aforesaid. In case fewer
than all the shares represented by any such certificate are redeemed, a new
certificate shall be issued representing the unredeemed shares without cost to
the holder thereof.
8. Conversion. (a) (i) Subject to the provisions of this Section 8,
the holders of shares of Series C Preferred Stock shall have the right, at any
time in whole and from time to time in part, at such holders' option, to convert
any or all outstanding shares (and fractional shares) of Series C Preferred
Stock held by such holders into fully paid and non-assessable shares of Class A
Common Stock; provided that upon the exercise by any holder of Series C
Preferred Stock of this conversion option, a proportional amount, based on the
percentage of each series of shares outstanding, of the Series D Preferred Stock
shall automatically convert in accordance with the terms of the Series D
Designation. At any time and from time to time the outstanding shares of Series
C Preferred Stock and Series D Preferred Stock taken together shall be
convertible into a number of shares of Class A Common Stock (the "Aggregate
Conversion Shares") equal to the aggregate Liquidation Preferences of the shares
of the Series C Preferred Stock and the Series D Preferred Stock as set forth
herein and in the Series D Designation as of the date of conversion divided by
$63.25, subject to adjustment from time to time pursuant to paragraph 8(g)
hereof (the "Conversion Price"). The Series C Preferred Stock outstanding as at
any date shall be convertible into a number of shares of Class A Common Stock
(the "Aggregate Series C Conversion Shares") equal to the sum of (A) the
aggregate Preference Amounts with respect to all outstanding shares of Series C
Preferred Stock divided by the Net Realizable FMV of a share of Class A Common
Stock at the time of conversion plus (B) .375 times the excess, if any, of the
Aggregate Conversion Shares over the number determined pursuant to clause (A).
Each share of Series C Preferred Stock being converted shall convert into a
number of shares of Class A Common Stock equal to the Aggregate Series C
Conversion Shares divided by the number of shares of Series C Preferred Stock
then outstanding. Notwithstanding any call for redemption pursuant to Section
6(a), the right to convert shares so called for redemption shall terminate at
the close of business on the date immediately preceding the date fixed for such
redemption unless the Corporation shall default in making payment of the amount
payable upon such redemption.
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(ii) In the case of any partial conversion of Series C Preferred
Stock by the holders thereof, selection of the Series D Preferred Stock for
automatic conversion will be made by the Corporation in compliance with the
requirements of the principal national securities exchange, if any, on which the
Series D Preferred Stock is listed, or if the Series D Preferred Stock is not
listed on a national securities exchange, on a pro rata basis, by lot or such
other method as the Corporation, in its sole discretion, shall deem fair and
appropriate; provided, however, that the Corporation may redeem all the shares
held by holders of fewer than 5 shares of Series D Preferred Stock (or all of
the shares held by the holders who would hold less than 5 shares of Series D
Preferred Stock as a result of such redemption) as may be determined by the
Corporation.
(b) (i) In order to exercise the conversion privilege, the holder
of the shares of Series C Preferred Stock to be converted shall surrender the
certificate representing such shares at the principal executive offices of the
Corporation, with a written notice of election to convert completed and signed,
specifying the number of shares to be converted. Unless the shares issuable on
conversion are to be issued in the same name as the name in which such shares of
Series C Preferred Stock are registered, each share surrendered for conversion
shall be accompanied by instruments of transfer, in form satisfactory to the
Corporation, duly executed by the holder or the holder's duly authorized
attorney, and an amount sufficient to pay any transfer or similar tax.
(ii) As promptly as practicable after the surrender by the
holder of the certificates for shares of Series C Preferred Stock as aforesaid,
the Corporation shall issue and shall deliver to such holder, or on the holder's
written order to the holder's transferee, (x) a certificate or certificates for
the whole number of shares of Class A Common Stock issuable upon the conversion
of such shares in accordance with the provisions of this paragraph 8, (y) any
cash adjustment required pursuant to Section 8(f), and (z) in the event of a
conversion in part, a certificate or certificates for the whole number of shares
of Series C Preferred Stock not being so converted.
(iii) Each conversion of shares of Series C Preferred Stock
pursuant to paragraph 8(a) shall be deemed to have been effected immediately
prior to the close of business on the date on which the certificates for shares
of Series C Preferred Stock shall have been surrendered and such notice received
by the Corporation as aforesaid, and the person in whose name or names any
certificate or certificates for shares of Class A Common Stock shall be issuable
upon such conversion shall be deemed to have become the holder of record of the
shares of Class A Common Stock represented thereby at such time on such date and
such conversion shall be into a number of whole shares of Class A Common Stock
in respect of the shares of Series C Preferred Stock being converted as
determined in accordance with this Section 8 at such time on such date. All
shares of Class A Common Stock delivered upon conversion of the Series C
Preferred Stock will upon delivery be duly and validly issued and fully paid and
non-assessable, free of all liens and charges and not subject to any preemptive
rights. Upon the surrender of certificates representing the shares of Series C
Preferred Stock to be converted, the shares to be so converted shall no longer
be deemed to be outstanding and all rights of a holder with respect to such
shares surrendered for conversion shall immediately
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11
terminate except the right to receive the Class A Common Stock and other amounts
payable pursuant to this paragraph 8 and a certificate or certificates
representing the shares of Series C Preferred Stock not converted.
(c) (i) Upon delivery to the Corporation by a holder of shares of
Series C Preferred Stock of a notice of election to convert, the right of the
Corporation to redeem such shares of Series C Preferred Stock shall terminate,
regardless of whether a notice of redemption has been mailed as aforesaid.
(ii) If a holder of Series C Preferred Stock delivers to the
Corporation a certificate therefor and a notice of election to convert, the
Series C Preferred Stock to be converted shall cease to accrue dividends
pursuant to paragraph 4 but shall continue to be entitled to receive pro rata
dividends for the period from the last Dividend Payment Date to the date of
delivery of the notice of election to convert in preference to and in priority
over any dividends on any Junior Securities.
(iii) Except as provided above and in paragraph 8(g), the
Corporation shall make no payment or adjustment for accrued and unpaid dividends
on shares of Series C Preferred Stock, whether or not in arrears, on conversion
of such shares or for dividends theretofore paid on the shares of Class A Common
Stock.
(d) (i) The Corporation covenants that it will at all times reserve
and keep available, free from preemptive rights, such number of its authorized
but unissued shares of Class A Common Stock as shall be required for the purpose
of effecting conversions of the Series C Preferred Stock.
(ii) Prior to the delivery of any securities which the
Corporation shall be obligated to deliver upon conversion of the Series C
Preferred Stock, the Corporation shall comply with all applicable federal and
state laws and regulations which require action to be taken by the Corporation.
(e) The Corporation will pay any and all documentary stamp or similar
issue or transfer taxes payable in respect of the issue or delivery of shares of
Class A Common Stock on conversion of the Series C Preferred Stock pursuant
hereto; provided that the Corporation shall not be required to pay any tax which
may be payable in respect of any transfer involved in the issue or delivery of
shares of Class A Common Stock in a name other than that of the holder of the
Series C Preferred Stock to be converted and no such issue or delivery shall be
made unless and until the person requesting such issue or delivery has paid to
the Corporation the amount of any such tax or has established, to the
satisfaction of the Corporation, that such tax has been paid.
(f) In connection with the conversion of any shares of Series C
Preferred Stock, no fractions of shares of Class A Common Stock shall be
required to be issued to the holder of such shares of Series C Preferred Stock,
but in lieu thereof the Corporation shall pay a cash adjustment in respect of
such fractional interest in an amount equal to such fractional interest
multiplied by the Market Price per share of Class A Common Stock on the business
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12
day next preceding the business day on which such shares of Series C Preferred
Stock are deemed to have been converted.
(g) (i) In case the Corporation shall at any time after the Issue
Date (A) declare a dividend or make a distribution on Common Stock payable in
Common Stock (other than dividends or distributions payable to holders of the
Series C Preferred Stock including dividends paid as contemplated by Section
4(f)), (B) subdivide or split the outstanding Common Stock, (C) combine or
reclassify the outstanding Common Stock into a smaller number of shares, (D)
issue any shares of its Capital Stock in a reclassification of Common Stock
(including any such reclassification in connection with a consolidation or
merger in which the Corporation is the continuing corporation), or (E)
consolidate with, or merge with or into, any other person, the Conversion Price
in effect at the time of the record date for such dividend or distribution or on
the effective date of such subdivision, split, combination, consolidation,
merger or reclassification shall be adjusted so that the conversion of the
Series C Preferred Stock after such time shall entitle the holder to receive the
aggregate number of shares of Common Stock or other securities of the
Corporation (or other securities into which such shares of Common Stock have
been converted, exchanged, combined, consolidated, merged or reclassified
pursuant to clause 8(g)(i)(C), 8(g)(i)(D) or 8(g)(i)(E) above) which, if the
Series C Preferred Stock had been converted immediately prior to such time, such
holder would have owned upon such conversion and been entitled to receive by
virtue of such dividend, distribution, subdivision, split, combination,
consolidation, merger or reclassification. Such adjustment shall be made
successively whenever an event listed above shall occur.
(ii) In case the Corporation shall issue or sell any Common
Stock (or rights, options, warrants or other securities convertible into or
exercisable or exchangeable for shares of Common Stock) without consideration or
for a consideration per share (or having a conversion, exchange or exercise
price per share) less than the Current Market Price on the date of such issuance
(or, in the case of convertible or exchangeable or exercisable securities, less
than the Current Market Price as of the date of issuance of the rights, options,
warrants or other securities in respect of which shares of Common Stock were
issued) then, and in each such case, the Conversion Price shall be reduced to an
amount determined by multiplying (A) the Conversion Price in effect on the day
immediately prior to such date by (B) a fraction, the numerator of which shall
be the sum of (1) the number of shares of Common Stock outstanding immediately
prior to such sale or issuance multiplied by the then applicable Current Market
Price (such Current Market Price, the "Adjustment Price") and (2) the aggregate
consideration receivable by the Corporation for the total number of shares of
Common Stock so issued (or into or for which the rights, options, warrants or
other securities are convertible, exercisable or exchangeable), and the
denominator of which shall be the sum of (x) the total number of shares of
Common Stock outstanding immediately prior to such sale or issue and (y) the
number of additional shares of Common Stock issued (or into or for which the
rights, options, warrants or other securities may be converted, exercised or
exchanged), multiplied by the Adjustment Price. In case any portion of the
consideration to be received by the Corporation shall be in a form other than
cash, the fair market value of such noncash
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13
consideration shall be utilized in the foregoing computation. Such fair market
value shall be determined in good faith by the Board of Directors.
(iii) In case the Corporation shall fix a record date for the
issuance on a pro rata basis of rights, options or warrants to the holders of
its Common Stock or other securities entitling such holders to subscribe for or
purchase shares of Common Stock (or securities convertible into or exercisable
or exchangeable for shares of Common Stock) at a price per share of Common Stock
(or having a conversion, exercise or exchange price per share of Common Stock,
in the case of a security convertible into, or exerciseable or exchangeable for,
shares of Common Stock) less than the Current Market Price on such record date,
the maximum number of shares of Common Stock issuable upon exercise of such
rights, options or warrants (or conversion of such convertible securities) shall
be deemed to have been issued and outstanding as of such record date and the
Conversion Price shall be adjusted pursuant to paragraph 8(g)(ii) hereof, as
though such maximum number of shares of Common Stock had been so issued for an
aggregate consideration payable by the holders of such rights, options, warrants
or other securities prior to their receipt of such shares of Common Stock. In
case any portion of such consideration shall be in a form other than cash, the
fair market value of such noncash consideration shall be determined as set forth
in paragraph 8(g)(ii) hereof. Such adjustment shall be made successively
whenever such record date is fixed; and in the event that such rights, options
or warrants are not so issued or expire in whole or in part unexercised, or in
the event of a change in the number of shares of Common Stock to which the
holders of such rights, options or warrants are entitled (other than pursuant to
adjustment provisions therein comparable to those contained in this paragraph
8(g)), the Conversion Price shall again be adjusted as follows: (A) in the event
that all of such rights, options or warrants expire unexercised, the Conversion
Price shall be the Conversion Price that would then be in effect if such record
date had not been fixed; (B) in the event that less than all of such rights,
options or warrants expire unexercised, the Conversion Price shall be adjusted
pursuant to paragraph 8(g)(ii) to reflect the maximum number of shares of Common
Stock issuable upon exercise of such rights, options or warrants that remain
outstanding (without taking into effect shares of Common Stock issuable upon
exercise of rights, options or warrants that have lapsed or expired); and (C) in
the event of a change in the number of shares of Common Stock to which the
holders of such rights, options or warrants are entitled, the Conversion Price
shall be adjusted to reflect the Conversion Price which would then be in effect
if such holder had initially been entitled to such changed number of shares of
Common Stock. Notwithstanding anything herein to the contrary, no further
adjustment to the Conversion Price shall be made upon the issuance or sale of
Common Stock upon the exercise of any rights, options or warrants to subscribe
for or purchase Common Stock, if any adjustment in the Conversion Price was made
or required to be made upon the record date for the issuance or sale of such
rights, options or warrants under this clause 8(g)(iii). Notwithstanding
anything herein to the contrary, no adjustment in the Conversion Price shall be
made under this clause 8(g)(iii) to the extent the holders of Series C Preferred
Stock participate in any such distribution in accordance with Section 4(f)
hereof.
(iv) In case the Corporation shall fix a record date for the
making of a distribution to all holders of any class of Common Stock (including
any such distribution made
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14
in connection with a consolidation or merger in which the Corporation is the
continuing corporation) of evidences of indebtedness, assets or other property,
the Conversion Price to be in effect after such record date shall be determined
by multiplying the Conversion Price in effect immediately prior to such record
date by a fraction, (A) the numerator of which shall be the Conversion Price
immediately prior to such distributions less the fair market value (determined
as set forth in paragraph 8(g)(ii) hereof) of the portion of the assets, other
property or evidence of indebtedness so to be distributed which is applicable to
one share of Common Stock and (B) the denominator of which shall be the
Conversion Price immediately prior to such distributions. Such adjustments shall
be made successively whenever such a record date is fixed; and in the event that
such distribution is not so made, the Conversion Price shall again be adjusted
to be the Conversion Price which would then be in effect if such record date had
not been fixed. An adjustment to the Conversion Price also shall be made in
respect of dividends and distributions paid exclusively in cash to all holders
of any class of Common Stock (excluding any dividend or distribution in
connection with the liquidation, dissolution or winding-up of the Corporation,
whether voluntary or involuntary, and any cash that is distributed upon a
merger, consolidation or other transaction for which an adjustment pursuant to
paragraph 8(g)(i) is made) where the sum of (1) all such cash dividends and
distributions made within the preceding 12 months in respect of which no
adjustment has been made and (2) any cash and the fair market value (determined
as set forth in paragraph 8(g)(ii) hereof) of other consideration paid in
respect of any repurchases of Common Stock by the Corporation or any of its
subsidiaries within the preceding 12 months in respect of which no adjustment
has been made, exceeds 2% of the Corporation's market capitalization (being the
product of the then Current Market Price of the Common Stock times the aggregate
number of shares of Common Stock then outstanding on the record date for such
distribution). The Conversion Price to be in effect after such adjustment shall
be determined by subtracting from the Conversion Price in effect prior to such
adjustment an amount equal to the quotient of (A) the sum of clause (1) and
clause (2) above and (B) the number of shares of Common Stock outstanding on the
date such adjustment is to be determined. Notwithstanding anything herein to the
contrary, no adjustment in the Conversion Price shall be made under this clause
8(g)(iv) to the extent the holders of Series C Preferred Stock participate in
any such distribution in accordance with Section 4(f) hereof.
(v) No adjustment to the Conversion Price pursuant to (a)
paragraphs 8(g)(ii), 8(g)(iii) or 8(g)(iv) above shall be required unless such
adjustment would require an increase or decrease of at least $.50 in the
Conversion Price or (b) paragraph 8(g)(ii) above shall be required with respect
to rights, options, warrants or other securities outstanding on the Issue Date
or issued pursuant to the Company's employee benefit plans in effect on the
Issue Date or reserved for issuance thereunder as of the Issue Date or stock
options granted after the Issue Date pursuant to any stock option plans adopted
by the Board of Directors so long as such options have an exercise price not
less than the Market Price on the day preceding such grant; provided, however,
that any adjustments which by reason of paragraph 8(g)(v)(a) are not required to
be made shall be carried forward and taken into account in any subsequent
adjustment. All calculations under this paragraph 8(g) shall be made to the
nearest four decimal points.
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15
(vi) In the event that, at any time as a result of the
provisions of this paragraph 8(g), a holder of Series C Preferred Stock upon
subsequent conversion shall become entitled to receive any shares of Capital
Stock of the Corporation other than Common Stock, the number of such other
shares so receivable upon conversion of Series C Preferred Stock shall
thereafter be subject to adjustment from time to time in a manner and on terms
as nearly equivalent as practicable to the provisions contained herein.
(vii) If, as a result of the operation of paragraphs 8(g)(ii),
8(g)(iii) or 8(g)(iv) above and corresponding provisions in the Series D
Designation, the cumulative number of shares of Class A Common Stock issued or
issuable upon conversion of the Series C Preferred Stock and Series D Preferred
Stock, after giving effect to (x) the adjustments described in such paragraphs
and corresponding provisions in the Series D Designation and (y) all prior
conversions of the Series C Preferred Stock and Series D Preferred Stock, would
equal or exceed a number (the "Threshold Number") equal to 20% of the
outstanding shares of Class A Common Stock as of the Issue Date and if the
Company receives a written opinion of its outside counsel that the issuance of
such shares in excess of the Threshold Number would violate the rules of the
Nasdaq National Market or any other exchange on which the Class A Common Stock
is then quoted or traded, then until and unless the Corporation obtains the
approval of its common stockholders for the issuance of any such shares of Class
A Common Stock in excess of the Threshold Number, the holders shall only be
entitled to exercise their conversion rights with respect to a maximum number of
Series C and Series D Preferred Stock that would not result in an amount of
shares of Class A Common Stock being issued in excess of the Threshold Number,
but in any case, the Conversion Price shall be adjusted as provided in such
paragraphs. If, as a result of the operation of the preceding sentence, the
conversion rights of the holders of Series C Preferred Stock are limited by
operation thereof because appropriate stockholder approval has not been
obtained, the Corporation agrees for the benefit of the holders of Series C
Preferred Stock and Series D Preferred Stock to use its reasonable best efforts
to seek, as promptly as reasonably practicable, the requisite approval of its
common stockholders (and shall seek such approval as often as necessary to
obtain such approval), and will recommend to its stockholders that they vote in
favor of a resolution providing for such approval, for the amount of shares of
Class A Common Stock that would be issued or issuable upon conversion in full of
all outstanding Series C and Series D Preferred Stock. Notwithstanding anything
to the contrary set forth above, the holders of Series C Preferred Stock and
Series D Preferred Stock shall be entitled to exercise such holders' conversion
rights in full (after giving effect to any and all anti-dilution adjustments
resulting from operation of paragraphs 8(g)(ii), 8(g)(iii) or 8(g)(iv)) in
connection with any merger, consolidation or other transaction in which such
Series C Preferred Stock, Series D Preferred Stock or Class A Common Stock is
being converted into or exchanged for cash, securities or other property in
connection with such merger, consolidation or other transaction. In the event
that the Corporation elects to redeem the shares of Series C Preferred Stock and
Series D Preferred Stock at a time when the holders' right to convert such
shares into Class A Common Stock is limited as provided in this paragraph (g),
and such holders seek to exercise such conversion rights prior to the date fixed
for redemption in accordance with this Section 8 (the "Redemption Date"), then
if the total number of shares of Class A Common Stock issued or issuable upon
conversion of such shares, after giving effect to any adjustments provided under
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16
the first sentence of this section (the "Cumulative Number"), would exceed the
Threshold Number, the holders shall be entitled to convert such number of shares
of Series C Preferred Stock and Series D Preferred Stock into a number of shares
of Class A Common Stock up to the Threshold Number, and with respect to the
balance of such shares, the Corporation shall cancel such shares and shall pay
the holders in lieu thereof an amount in cash equal to (a)(i) the Cumulative
Number minus (ii) the Threshold Number multiplied by (b) the Market Price per
share of Class A Common Stock on the business day next preceding the business
day which is deemed the Redemption Date.
(h) All adjustments pursuant to this paragraph 8 shall be
notified to the holders of the Series C Preferred Stock and such notice shall be
accompanied by a schedule of computations of the adjustments.
9. Voting Rights. (a) The holders of record of shares of
Series C Preferred Stock shall be entitled to vote on an as-converted basis
(calculated in accordance with Section 8(a) as of the close of trading on the
last trading day of the most recently ended fiscal quarter of the Corporation)
with the Common Stock as a single class on all matters presented to the holders
of the Common Stock for vote, except as hereinafter provided in this Section 9
or as otherwise provided by law. So long as the provisions of Section 9(b)(i)
entitle the holders of Series C Preferred Stock to designate the Series C
Designee (as defined below), the holders of Series C Preferred Stock shall not
be entitled to vote as to the election of other directors of the Corporation.
(b) (i) On the Issue Date, the Board of Directors shall cause the
total number of directors then constituting the whole Board of Directors to be
increased by two and the holders of the outstanding shares of Series C Preferred
Stock shall be entitled to designate one director (the "Series C Designee") for
election to the Board of Directors of the Corporation and, voting separately as
a series, shall have the exclusive right to vote for the election of such
designee to the Board of Directors; and the holders of the outstanding shares of
Series D Preferred Stock shall be entitled to designate one director (the
"Series D Designee") for election to the Board of Directors of the Corporation
and, voting separately as a series, shall have the exclusive right to vote for
the election of such designee to the Board of Directors; provided that,
notwithstanding the foregoing, after the Issue Date, (i) the holders of the
outstanding shares of the Series C Preferred Stock shall continue to be entitled
to designate the Series C Designee for election to the Board of Directors and,
voting separately as a series, shall continue to have the exclusive right to
vote for the election of the Series C Designee to the Board of Directors, and
the holders of the outstanding shares of the Series D Preferred Stock shall
continue to be entitled to designate the Series D Designee for election to the
Board of Directors and, voting separately as a series, shall continue to have
the exclusive right to vote for the election of the Series D Designee to the
Board of Directors, in each case, for as long as, and only for as long as, at
least 40% of the aggregate number of shares of Series C Preferred Stock issued
on the Issue Date and of shares of Series D Preferred Stock issued on the
original date of issuance of the Series D Preferred Stock (such aggregate number
of shares of Series C Preferred Stock and Series D Preferred Stock being
referred to herein as the "Total C and D Shares") remains outstanding; (ii) the
entitlement of the holders of outstanding shares
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17
of Series C Preferred Stock to designate one director for election to the Board
of Directors, and the exclusive right of the holders of outstanding shares of
Series C Preferred Stock to vote, separately as a series, for the election of
the Series C Designee to the Board of Directors, shall cease immediately upon
less than 40% of the Total C and D Shares being outstanding, and the holders of
the outstanding shares of the Series C Preferred Stock shall be entitled to
designate one board observer (the "Series C Board Observer"), for as long as,
and only for as long as any shares of Series C Preferred Stock issued on the
Issue Date are outstanding; (iii) immediately upon no shares of Series C
Preferred Stock issued on the Issue Date being outstanding, the entitlement of
the holders of outstanding shares of Series C Preferred Stock to designate the
Series C Board Observer, and the rights of the Series C Observer, shall cease;
and (iv) immediately upon less than 40% but more than 20% of the Total C and D
Shares being outstanding, the Board of Directors shall cause the total number of
directors then constituting the whole Board of Directors to be decreased by one,
and the term of office of the Series C Designee shall terminate. The Series C
Designee may be removed with or without cause by the holders of the shares of
Series C Preferred Stock. The "Series C Board Observer" means a person who shall
not be a member of the Board of Directors and who shall have the rights as
agreed to with the Corporation, provided that such rights shall satisfy the
requirement of contractual management rights for purposes of the Department of
Labor's "plan assets" regulation.
(ii) If and whenever six quarterly dividends payable on the
Series C Preferred Stock have not been paid in full or if the Corporation shall
have failed to discharge its Mandatory Redemption Obligation or the Corporation
shall have failed to comply with Section 9(d) hereof, the total number of
directors then constituting the whole Board of Directors automatically shall be
increased by one and the holders of outstanding shares of Series C Preferred
Stock, voting separately as a single series, shall be entitled to elect one
additional director to serve on the Board of Directors at any annual meeting of
stockholders or special meeting held in place thereof, or at a special meeting
of the holders of the Series C Preferred Stock called as hereinafter provided.
Whenever all arrears in dividends and Special Amounts on the Series C Preferred
Stock then outstanding shall have been paid and dividends thereon for the
current quarterly dividend period shall have been paid or declared and set apart
for payment, or the Company shall have fulfilled its Mandatory Redemption
Obligation, as the case may be, then the right of the holders of outstanding
shares of Series C Preferred Stock to elect such additional director shall cease
(but subject always to the same provisions for the vesting of such voting rights
in the case of any similar future arrearage in six quarterly dividends or
failure to fulfill any Mandatory Redemption Obligation), and the term of office
of any person elected as director by the holders of outstanding shares of Series
C Preferred Stock pursuant to this subparagraph (b)(ii) shall forthwith
terminate and the total number of directors then constituting the whole Board of
Directors automatically shall be reduced by one. At any time after voting power
to elect one additional director shall have become vested and be continuing in
the holders of outstanding shares of Series C Preferred Stock pursuant to this
subparagraph (b)(ii), or if a vacancy shall exist in the office of a director
elected by the holders of outstanding shares of Series C Preferred Stock
pursuant to this subparagraph (b)(ii), a proper officer of the Corporation may,
and upon the written request of the holders of record of at least twenty-five
percent (25%) of the shares of Series C Preferred Stock then outstanding
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18
addressed to the Secretary of the Corporation shall, call a special meeting of
the holders of Series C Preferred Stock, for the purpose of electing the one
additional director which such holders are entitled to elect pursuant to this
subparagraph (b)(ii). If such meeting shall not be called by a proper officer of
the Corporation within twenty (20) days after personal service of said written
request upon the Secretary of the Corporation, or within twenty (20) days after
mailing the same within the United States by certified mail, addressed to the
Secretary of the Corporation at its principal executive offices, then the
holders of record of at least twenty-five percent (25%) of the outstanding
shares of Series C Preferred Stock may designate in writing one of their number
to call such meeting at the expense of the Corporation, and such meeting may be
called by the person so designated upon the notice required for the annual
meeting of stockholders of the Corporation and shall be held at the place for
holding the annual meetings of stockholders. Any holder of Series C Preferred
Stock so designated shall have, and the Corporation shall provide, access to the
lists of stockholders to be called pursuant to the provisions hereof.
(c) Without the written consent of holders of a majority of the
outstanding shares of Series C Preferred Stock or the affirmative vote of
holders of a majority of the outstanding shares of Series C Preferred Stock at a
meeting of the holders of Series C Preferred Stock called for such purpose, the
Corporation will not amend, alter or repeal any provision of the Restated
Certificate of Incorporation or this Certificate of Designation so as to
adversely affect the preferences, rights or powers of the Series C Preferred
Stock or to authorize the issuance of, or to issue any, additional shares of
Series C Preferred Stock; provided that any such amendment that changes any
dividend or other amount payable on or the liquidation preference of the Series
C Preferred Stock shall require the written consent of holders of two-thirds of
the outstanding shares of Series C Preferred Stock or the affirmative vote of
holders of two-thirds of the outstanding shares of Series C Preferred Stock at a
meeting of the holders of Series C Preferred Stock called for such purpose.
(d) Without the written consent of holders of a majority of the
outstanding shares of Series C Preferred Stock or the affirmative vote of
holders of a majority of the outstanding shares of Series C Preferred Stock at a
meeting of such holders called for such purpose, the Corporation will not
create, authorize or issue any (i) Parity Securities or (ii) Senior Securities
except Senior Securities issued in accordance with paragraph (f)(ii) of the
Certificate of Designation for the Senior Exchangeable Redeemable Preferred
Shares as in effect on December 3, 1999.
(e) Subject to the provisions of Sections 8 and 10 hereof, the
Corporation may, without the consent of any holder of Series C Preferred Stock,
consolidate with or merge with or into, or convey, transfer or lease all or
substantially all its assets as an entirety to, any Person, provided that: (1)
the successor, transferee or lessee (if not the Corporation) is organized and
existing under the laws of the United States of America or any State thereof or
the District of Columbia and the Series C Preferred Stock shall be converted
into or exchanged for and shall become shares of, or interests in, such
successor, transferee or lessee, having in respect of such successor,
transferee, or lessee substantially the same powers, preferences and relative,
participating, optional or other special rights and the qualifications,
limitations or
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19
restrictions thereof, that the Series C Preferred Stock has immediately prior to
such transaction; and (2) the Corporation delivers to the transfer agent an
officers' certificate and an opinion of counsel stating that such consolidation,
merger, conveyance, transfer or lease complies with this Certificate of
Designation. In the event of any consolidation or merger or conveyance, transfer
or lease of all or substantially all of the assets of the Corporation that is
permitted pursuant to this paragraph (e), the successor resulting from such
consolidation or into which the Corporation is merged or the transferee or
lessee to which such conveyance, transfer or lease is made, will succeed to, and
be substituted for, and may exercise every right and power of, the Corporation
with respect to the Series C Preferred Stock (or the shares or interests into,
or for which, the Series C Preferred Stock is converted or exchanged), and
thereafter, except in the case of a lease, the predecessor (if still in
existence) shall be released from its obligations and covenants with respect to
the Series C Preferred Stock.
(f) In exercising the voting rights set forth in this paragraph
9, each share of Series C Preferred Stock shall have one vote per share. Except
as otherwise required by applicable law or as set forth herein, the shares of
Series C Preferred Stock shall not have any relative, participating, optional or
other special voting rights and powers and the consent of the holders thereof
shall not be required for the taking of any corporate action.
10. Change of Control. (a) Within thirty days of a Change of
Control (the date of such occurrence being the "Change of Control Date"), the
Corporation shall notify the holders of the Series C Preferred Stock of such
occurrence and shall be required to make an offer (the "Offer to Purchase") to
each holder of shares of Series C Preferred Stock (subject to the rights of the
holders pursuant to Section 8 hereof) to repurchase such holder's shares of
Series C Preferred Stock, or such portion thereof as may be determined by such
holder, at a price per share in cash equal to 101% of the Liquidation Preference
plus, without duplication, an amount in cash equal to all accumulated and unpaid
dividends per share (including an amount in cash equal to a prorated dividend
for the period from the last Dividend Payment Date through such date); provided
that if any holders of Series C Preferred Stock tender their shares pursuant to
the Offer to Purchase, the Corporation shall be required to purchase a
proportional amount of the Series D Preferred Stock.
(b) The Offer to Purchase must take place on a Business Day
(the "Change of Control Payment Date") not later than 30 days following the
Change of Control Date. On the Change of Control Payment Date, the Corporation
shall (A) accept for payment the Series C Preferred Stock validly tendered
pursuant to the Offer to Purchase, (B) pay to the holders of shares so accepted
the purchase price therefor in cash and (C) cancel and retire each surrendered
certificate. Unless the Corporation defaults in the payment for the Series C
Preferred Stock tendered pursuant to the Offer to Purchase, dividends will cease
to accrue with respect to the Series C Preferred Stock tendered and all rights
of holders of such tendered shares will terminate, except for the right to
receive payment therefor.
(c) The Corporation will comply with any securities laws and
regulations, to the extent such laws and regulations are applicable to the
repurchase of the Series C Preferred Stock in connection with an Offer to
Purchase.
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20
(d) Notwithstanding anything to the contrary contained in this
Section 10, the Company will not repurchase or redeem any such stock pursuant to
this Section 10 until it has repurchased or repaid all outstanding debt
obligations pursuant to rights triggered pursuant to the terms thereof resulting
from the Change of Control in question.
11. Reports. So long as any of the Series C Preferred Stock is
outstanding, in the event the Corporation is not required to file quarterly and
annual financial reports with the Securities and Exchange Commission pursuant to
Section 13 or Section 15(d) of the Exchange Act, the Corporation will furnish
the holders of the Series C Preferred Stock with reports containing the same
information as would be required in such reports.
12. General Provisions. (a) The term "person" as used herein
means any corporation, limited liability company, partnership, trust,
organization, association, other entity or individual.
(b) The term "outstanding", when used with reference to shares
of stock, shall mean issued shares, excluding shares held by the Corporation or
a subsidiary of the Corporation.
(c) The headings of the sections, paragraphs, subparagraphs,
clauses and subclauses of this Certificate of Designation are for convenience of
reference only and shall not define, limit or affect any of the provisions
hereof.
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IN WITNESS WHEREOF, said NEXTLINK Communications, Inc. has caused this
Certificate of Designation to be signed by Gary D. Begeman, its Vice President
and Secretary, this 19 day of January, 2000.
NEXTLINK COMMUNICATIONS, INC.
By: /s/ Gary D. Begeman
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Name: Gary D. Begeman
Title: Vice President and Secretary
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