Exhibit 4.2
CERTIFICATE OF DESIGNATIONS 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 151 of the
Delaware General Corporation Law
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New NEXTLINK Communications, Inc. (the "Corporation"), a corporation
organized and existing under the Delaware General Corporation Law, does hereby
certify that, pursuant to authority conferred upon the board of directors of the
Corporation (the "Board of Directors") by its Certificate of Incorporation
(hereinafter referred to as the "Certificate of Incorporation"), and pursuant to
the provisions of Section 151 of the Delaware General Corporation Law, said
Board of Directors, on May 29, 1998, duly approved and adopted a resolution to
read as follows (the "Resolution"):
RESOLVED, that, pursuant to the authority vested in the Board of
Directors by its Certificate 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 Certificate 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.
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(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 $.02 per share and the
Class B Common Stock, par value $.02 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 Share, 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
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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 or its successor
has not filed the registration statement relating to the Exchange
Offer (or, if applicable, the registration statement relating to
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)
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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 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.
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(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 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) [Intentionally omitted.]
(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 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
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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 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) [Intentionally omitted.];
(2) The Mandatory Redemption Price;
(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 Mandatory Redemption Price.
(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 Mandatory Redemption Price for such
shares shall be payable in cash to the Person whose name appears
on such certificate or certificates as the owner thereof, and
each surrendered certificate shall be canceled and retired.
(C) On and after the Redemption Date, unless the Corporation
defaults in the payment in full of the applicable redemption
price, dividends on the 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 Mandatory Redemption Price,
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
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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 Mandatory Redemption Price, without interest.
(f) Voting Rights.
(i) The Holders of Senior Exchangeable Redeemable Preferred
Shares, except as otherwise required under Delaware 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 be, 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 Certificate 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
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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.
(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
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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 Certificate
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 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
---- ----------
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
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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
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
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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 Party
Shares separately as a single class, to elect the lesser of two
directors and that number of directors constituting 25% of the
members of the Board of Directors. Each such event described in
clauses (1), (2), (3), (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
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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
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.
12
(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
Delaware 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 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;
13
(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.
(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
14
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.
(iv) 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.
(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
15
compliance with any applicable provisions of the laws of Delaware)
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, including but not limited to
reissuance as a stock dividend on the Company's 14% Senior
Exchangeable Redeemable Preferred Shares; provided that such
reacquired shares shall not otherwise be reissued as 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
16
connection with such refinancing, does not exceed the
aggregate principal amount outstanding or available 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 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
17
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
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.
18
(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 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
19
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 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
20
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.
"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
21
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.
"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
22
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 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.
23
"Eagle River" means Eagle River Investments, L.L.C., a limited
liability company formed under the laws of the State of Delaware.
"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.
"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
24
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
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.
25
"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 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
26
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 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,
27
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;
(k) that in the case of any Holder whose Senior Exchangeable
Redeemable Preferred Shares 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 Share 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:
28
(a) a statement that such counsel has read such covenant or
condition and the definitions herein relating thereto;
(b) a brief statement as to the nature and scope of the
examination or investigation upon which the statements or
opinions contained in such certificate or opinion are based;
(c) a statement that, in the opinion of each such
individual, he has made such examination or investigation as is
necessary to enable him to express an informed opinion as to
whether or not such covenant or condition has been complied with;
and
(d) a statement as to whether, in the opinion of each such
individual, such condition or covenant has been complied with.
"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
29
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 $.02 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
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.
30
"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.
"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
31
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 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.
32
"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.
"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.
33
"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 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
34
("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 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.
IN WITNESS WHEREOF, said New NEXTLINK Communications, Inc. has caused
this Certificate to be signed by R. Bruce Easter, Jr., its Vice President, this
29th day of May, 1998.
NEW NEXTLINK COMMUNICATIONS, INC.
By: /s/ R. Bruce Easter, Jr.
Name: R. Bruce Easter, Jr.
Title: Vice President