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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of The Securities Exchange Act of 1934
Date of Report (Date of earliest event reported) March 30, 1998
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IXC Communications, Inc.
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(Exact name of registrant as specified in its charter)
Delaware 0-20803 74-2644120
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(State or other jurisdiction (Commission (I.R.S. Employer
of incorporation) File Number) Identification No.)
1122 Capital of Texas Highway South, Austin, Texas 78746
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (512) 328-1112
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Not applicable
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(Former name or former address, if changed since last report.)
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ITEM 5. OTHER EVENTS.
On March 30, 1998, IXC Communications, Inc. (the "Company") completed
an offering (the "Convertible Preferred Offering") of $135 million of its 6 3/4%
Cumulative Convertible Preferred Stock (the "1998 Convertible Preferred Stock")
issued in the form of depositary shares (2,700,000 depositary shares at $50 per
share) to qualified institutional buyers under Rule 144A of the 1933 Securities
Act. The 1998 Convertible Preferred Stock is convertible at any time into Common
Stock at the option of the holder. In connection with the Convertible Preferred
Offering, a copy of the Purchase Agreement, Registration Rights Agreement,
Deposit Agreement and Certificate of Designation are attached hereto as Exhibits
4.1 through 4.4 and are hereby incorporated by reference herein. Also attached
as Exhibit 99.1 is a press release issued by the Company dated March 31, 1998,
which is hereby incorporated by reference herein.
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS
(c) EXHIBITS
4.1 Purchase Agreement dated as of March 25, 1998, by and among
IXC Communications, Inc., Goldman, Sachs & Co., Credit
Suisse First Boston Corporation, Merrill Lynch, Pierce,
Fenner & Smith Incorporated and Morgan Stanley & Co.
Incorporated
4.2 Registration Rights Agreement dated March 30, 1998, by and
among IXC Communications, Inc., Goldman, Sachs & Co., Credit
Suisse First Boston Corporation, Merrill Lynch, Pierce,
Fenner & Smith Incorporated and Morgan Stanley & Co.
Incorporated
4.3 Deposit Agreement dated as of March 30, 1998, by and among
IXC Communications, Inc. and BankBoston, N.A.
4.4 Certificate of Designation of Powers, Preferences and
Relative, Participating, Optional and Other Special Rights
of 6 3/4% Cumulative Convertible Preferred Stock and
Qualifications, Limitations and Restrictions Thereof
99.1 Press release dated March 31, 1998, as amended
2.
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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
Date: April 6, 1998
IXC Communications, Inc.
By: /s/ JAMES F. GUTHRIE
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James F. Guthrie
Chief Financial Officer
3.
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EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit
Number Description
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<C> <S>
4.1 Purchase Agreement dated as of March 25, 1998, by and among IXC
Communications, Inc., Goldman, Sachs & Co., Credit Suisse First
Boston Corporation, Merrill Lynch, Pierce, Fenner & Smith
Incorporated and Morgan Stanley & Co. Incorporated
4.2 Registration Rights Agreement dated March 30, 1998, by and among
IXC Communications, Inc., Goldman, Sachs & Co., Credit Suisse
First Boston Corporation, Merrill Lynch, Pierce, Fenner & Smith
Incorporated and Morgan Stanley & Co. Incorporated
4.3 Deposit Agreement dated as of March 30, 1998, by and among IXC
Communications, Inc. and BankBoston, N.A.
4.4 Form of Certificate of Designation of Powers, Preferences and
Relative, Participating, Optional and Other Special Rights of 6
3/4% Cumulative Convertible Preferred Stock and Qualifications,
Limitations and Restrictions Thereof
99.1 Press release dated March 31, 1998, as amended
</TABLE>
4.
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EXHIBIT 4.1
IXC Communications, Inc.
Depositary Shares Each Representing 1/20 of a Share of
6 3/4% Cumulative Convertible Preferred Stock
PURCHASE AGREEMENT
March 25, 1998
Goldman, Sachs & Co.,
Credit Suisse First Boston Corporation
Merrill Lynch & Co.
Merrill Lynch, Pierce, Fenner & Smith Incorporated
Morgan Stanley & Co. Incorporated
As representatives of the several Purchasers
named in Schedule I hereto,
c/o Goldman, Sachs & Co.,
85 Broad Street,
New York, New York 10004.
Ladies and Gentlemen:
IXC Communications, Inc., a Delaware corporation (the "Company"),
proposes, subject to the terms and conditions stated herein, to issue and sell
to the Purchasers named in Schedule I hereto (the "Purchasers") an aggregate of
2,700,000 Depositary Shares (the "Firm Shares") representing 135,000 shares of 6
3/4% Cumulative Convertible Preferred Stock of the Company (the "Preferred
Stock") and up to an aggregate of 405,000 Depositary Shares representing 20,250
shares of Preferred Stock (the "Optional Shares," and together with the Firm
Shares, the "Shares") that the Purchasers may elect to purchase pursuant to
Section 2 hereof, each having a liquidation preference equivalent to $50 per
Share, for the aggregate purchase price listed in Schedule I hereto. The
Preferred Stock is convertible into Common Stock ("Stock") of the Company.
The Shares are to be issued pursuant to a deposit agreement (the
"Deposit Agreement") to be dated as of March 30, 1998, among the Company,
BankBoston, N.A. as depositary (the "Depositary"), and holders from time to time
of the Depositary Receipts (the "Depositary Receipts") issued by the Depositary
and evidencing the Shares. Each Share will initially represent the right to
receive 1/20 of a share of Preferred Stock deposited pursuant to the
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Deposit Agreement.
1. The Company represents and warrants to, and agrees with, each of the
Purchasers that:
(a) A preliminary offering circular, dated March 17, 1998 (the
"Preliminary Offering Circular") and an offering circular, dated March
25, 1998 (the "Offering Circular"), and the Company's Annual Report on
Form 10-K for the fiscal year ended December 31, 1997, which is attached
to and made a part of the Preliminary Offering Circular and the Offering
Circular, have been prepared in connection with the offering of the
Shares. Any reference to the Preliminary Offering Circular or the
Offering Circular shall be deemed to refer to and include the Company's
most recent Annual Report on Form 10-K and all subsequent documents
filed with the United States Securities and Exchange Commission (the
"Commission") pursuant to Section 13(a), 13(c) or 15(d) of the United
States Securities Exchange Act of 1934, as amended (the "Exchange Act")
on or prior to the date of the Preliminary Offering Circular or the
Offering Circular, as the case may be, and any reference to the
Preliminary Offering Circular or the Offering Circular, as the case may
be, as amended or supplemented, as of any specified date, shall be
deemed to include (i) any documents filed with the Commission pursuant
to Section 13(a), 13(c) or 15(d) of the Exchange Act after the date of
the Preliminary Offering Circular or the Offering Circular, as the case
may be, and prior to such specified date and (ii) any Additional Issuer
Information (as defined in Section 5(f)) furnished by the Company prior
to the completion of the distribution of the Shares; and all documents
filed under the Exchange Act and so deemed to be included in the
Preliminary Offering Circular or the Offering Circular, as the case may
be, or any amendment or supplement thereto are hereinafter called the
"Exchange Act Reports". The Exchange Act Reports, when they were or are
filed with the Commission, conformed or will conform in all material
respects to the applicable requirements of the Exchange Act and the
applicable rules and regulations of the Commission thereunder. The
Preliminary Offering Circular or the Offering Circular and any
amendments or supplements thereto and the Exchange Act Reports did not
and will not, as of their respective dates, contain an untrue statement
of a material fact or omit to state a material fact necessary in order
to make the statements therein, in the light of the circumstances under
which they were made, not misleading; provided, however, that this
representation and warranty shall not apply to any statements or
omissions made in reliance upon and in conformity with information
furnished in writing to the Company by a Purchaser through Goldman,
Sachs & Co. expressly for use therein;
(b) Neither the Company nor any of its subsidiaries has sustained
since the date of the latest audited financial statements included in
the Offering Circular any material loss or interference with its
business from fire, explosion, flood or other calamity, whether or not
covered by insurance, or from any labor dispute or court or governmental
action, order or decree, otherwise than as set forth or contemplated in
the Offering Circular; and, since the respective dates as of which
information is given in the Offering Circular, there has not been any
change in the capital stock (other than (i)
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any change in the capital stock resulting from the exercise of stock
options, (ii) the issuance of shares under the Company's stock option or
other benefit or incentive plans, (iii) the conversion of shares of the
Company's 7 1/4% Junior Convertible Preferred Stock (the "Junior
Convertible Preferred Stock") and (iv) the payment of 9,655 shares of 12
1/2% Junior Exchangeable Preferred Stock (the "Junior Exchangeable
Preferred Stock") on February 15, 1998 and the payment of Junior
Convertible Preferred Stock scheduled for March 31, 1998 as
payment-in-kind dividends) or long-term debt of the Company or any of
its subsidiaries or any material adverse change, or any development
involving a prospective material adverse change, in or affecting the
general affairs, management, financial position, shareholders' equity or
results of operations of the Company and its subsidiaries, otherwise
than as set forth or contemplated in the Offering Circular;
(c) The Company and its subsidiaries have good and marketable
title in fee simple to all material real property and good and
marketable title to all material personal property owned by them, in
each case free and clear of all liens, encumbrances and defects except
such as are described in the Offering Circular or such as do not
materially affect the value of such property and do not interfere with
the use made and proposed to be made of such property by the Company and
its subsidiaries; and any material real property and material buildings
held under lease by the Company and its subsidiaries are held by them
under valid, subsisting and enforceable leases with such exceptions as
are not material and do not interfere with the use made and proposed to
be made of such property and buildings by the Company and its
subsidiaries;
(d) The Company has been duly incorporated and is validly
existing as a corporation in good standing under the laws of the State
of Delaware, with power and authority (corporate and other) to own its
properties and conduct its business as described in the Offering
Circular, and has been duly qualified as a foreign corporation for the
transaction of business and is in good standing under the laws of each
other jurisdiction in which it owns or leases properties or conducts any
business so as to require such qualification, or is subject to no
material liability or disability by reason of the failure to be so
qualified in any such jurisdiction; and each subsidiary of the Company
has been duly incorporated and is validly existing as a corporation in
good standing under the laws of its jurisdiction of incorporation;
(e) The Company has an authorized capitalization as set forth in
the Offering Circular, and all of the issued shares of capital stock of
the Company have been duly and validly authorized and issued and are
fully paid and non-assessable; the shares of Stock initially issuable
upon conversion of the Shares have been duly and validly authorized and
reserved for issuance and, when issued and delivered in accordance with
the provisions of the Shares, will be duly and validly issued, fully
paid and non-assessable and will conform to the description of the Stock
contained in the Offering Circular; and all of the issued shares of
capital stock of each subsidiary of the Company, except for Mutual
Signal Holding Corporation, PSINet Inc., UniDial Communications
Services, LLC, U.S. Advantage Long Distance, Inc., Progress
International L.L.C., Marca-Tel S.A. de C.V. and Telenor S.A., have been
duly and
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validly authorized and issued, are fully paid and non-assessable and
(except for directors' qualifying shares and except as otherwise set
forth in the Offering Circular) are owned directly or indirectly by the
Company, free and clear of all liens, encumbrances, equities or claims;
the holders of outstanding shares of capital stock of the Company are
not entitled to preemptive or other rights to acquire the Shares; there
are no outstanding securities, securities convertible into or
exchangeable for, or warrants, rights or options to purchase from the
Company, or obligations of the Company to issue, the Preferred Stock or
any other class of capital stock of the Company (except as set forth in
the Offering Circular under "Description of Capital Stock" and in
connection with the Company's stock option or other benefit or incentive
plans, the conversion of shares of the Junior Convertible Preferred
Stock and the payment of payment-in-kind dividends on the Exchangeable
Preferred Stock and the Junior Convertible Preferred Stock); the
Preferred Stock may be freely deposited by the Company with the
Depositary against issuances of Depositary Receipts; the Shares are
freely transferable by the Company to or for the account of the several
Purchasers and (to the extent described in the Offering Circular) the
initial purchasers thereof; and there are no restrictions on subsequent
transfers of the Shares under the laws of the United States except as
described in the Offering Circular under "Notice to Investors";
(f) The Shares, the Preferred Stock and the Stock have been duly
and validly authorized and, when issued and delivered against payment
therefor as provided herein, will be duly and validly issued and fully
paid and non-assessable and will conform to the description of the
Shares, the Preferred Stock and the Stock contained in the Offering
Circular;
(g) The Deposit Agreement has been duly authorized, executed and
delivered by the Company, and constitutes a valid and legally binding
agreement of the Company, enforceable in accordance with its terms,
subject, as to enforceability, to bankruptcy, insolvency, reorganization
and similar laws of general applicability relating to or affecting
creditors' rights and to general equity principles; upon issuance by the
Depositary of Depositary Receipts evidencing Shares the deposit of
Preferred Stock in respect thereof in accordance with the provisions of
the Deposit Agreement, such Depository Receipts will be duly and validly
issued and the persons in whose names the Depositary Receipts are
registered will be entitled to the rights specified therein and in the
Deposit Agreement; and the Deposit Agreement and the Depositary Receipts
conform in all material respects to the descriptions thereof contained
in the Offering Circular;
(h) Prior to the date hereof, neither the Company nor any of its
affiliates has taken any action which is designed to or which has
constituted or which might have been expected to cause or result in
stabilization or manipulation of the price of any security of the
Company in connection with the offering of the Shares;
(i) The issue and sale of the Shares by the Company and the
compliance by the Company with all of the provisions of the Shares, the
Certificate of Designations,
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the Deposit Agreement and this Agreement and the consummation of the
transactions herein and therein contemplated will not conflict with or
result in a breach or violation of any of the terms or provisions of, or
constitute a default under, any indenture, mortgage, deed of trust, loan
agreement or other agreement or instrument to which the Company or any
of its subsidiaries is a party or by which the Company or any of its
subsidiaries is bound or to which any of the property or assets of the
Company or any of its subsidiaries is subject, nor will such action
result in any violation of the provisions of the Certificate of
Incorporation or By-laws of the Company or, to the best of the Company's
knowledge, any statute or any order, rule or regulation of any court or
governmental agency or body having jurisdiction over the Company or any
of its subsidiaries or any of their properties; and, to the best of the
Company's knowledge, no consent, approval, authorization, order,
registration or qualification of or with any such court or governmental
agency or body is required for the issue and sale of the Shares or the
Shares, for the deposit of Preferred Stock being deposited with the
Depositary against issuance of Depositary Receipts evidencing the Shares
to be delivered or the consummation by the Company of the transactions
contemplated by this Agreement or the Certificate of Designations,
except such consents, approvals, authorizations, registrations or
qualifications as may be required under state securities or Blue Sky
laws in connection with the purchase and distribution of the Shares by
the Purchasers;
(j) Neither the Company nor any of its subsidiaries is in
violation of its Certificate of Incorporation or By-laws or in default
in the performance or observance of any material obligation, covenant or
condition contained in any indenture, mortgage, deed of trust, loan
agreement, lease or other agreement or instrument to which it is a party
or by which it or any of its properties may be bound;
(k) The statements set forth in the Offering Circular under the
caption "Description of Depositary Shares", "Description of Convertible
Preferred Stock" and "Description of Capital Stock", insofar as they
purport to constitute a summary of the terms of the Shares, the
Preferred Stock and the Stock, respectively, under the caption
"Description of Certain Indebtedness" and "Certain U.S. Federal Income
Tax Consequences", insofar as they purport to describe the provisions of
the laws and documents referred to therein, and under the caption
"Underwriting", insofar as it purports to describe the provisions of
this Agreement, are accurate, complete and fair;
(l) Except for Truman Breed, et. al. vs. U.S. Advantage Long
Distance, Inc., IXC Long Distance, Inc., IXC Communications, Inc., et.
al. In the District Court of Travis County, Texas, Case No. 9705729 and
IXC Long Distance, Inc. vs. Building Futures in Communications, Inc.
Arbitration, Austin, Texas, or as set forth in the Offering Circular and
the Exchange Act Reports, there are no legal or governmental proceedings
pending to which the Company or any of its subsidiaries is a party or of
which any property of the Company or any of its subsidiaries is the
subject which, if determined adversely to the Company or any of its
subsidiaries, would individually or in the aggregate have a material
adverse effect on the current or future financial
<PAGE> 6
position, shareholders' equity or results of operations of the Company
and its subsidiaries; and, to the best of the Company's knowledge, no
such proceedings are threatened or contemplated by governmental
authorities or threatened by others;
(m) When the Shares are issued and delivered pursuant to this
Agreement, the Shares will not be of the same class (within the meaning
of Rule 144A under the United States Securities Act of 1933, as amended
(the "Act")), as securities which are listed on a national securities
exchange registered under Section 6 of the Exchange Act, or quoted in a
U.S. automated inter-dealer quotation system;
(n) The Company is subject to Section 13 or 15(d) of the Exchange
Act;
(o) The Company is not, and after giving effect to the offering
and sale of the Shares, will not be an "investment company", or, except
for Grumman Hill Associates, L.P., Grumman Hill Associates, Inc. and
General Electric Pension Trust, an entity "controlled" by an "investment
company", as such terms are defined in the United States Investment
Company Act of 1940, as amended (the "Investment Company Act");
(p) Neither the Company, nor any person acting on its behalf has
offered or sold the Shares by means of any general solicitation or
general advertising within the meaning of Rule 502(c) under the Act by
means of any directed selling efforts within the meaning of Rule 902
under the Act and the Company, any affiliate of the Company and any
person acting on its or their behalf has complied with and will
implement the "offering restriction" within the meaning of such Rule
902; provided, however, that the Company makes no representation,
warranty or agreement with respect to the activities of any of the
Purchasers;
(q) Within the preceding six months, neither the Company nor any
other person acting on behalf of the Company has offered or sold to any
person any Shares, or any securities of the same or a similar class as
the Shares, other than Shares offered or sold to the Purchasers
hereunder. The Company will take reasonable precautions designed to
insure that any offer or sale, direct or indirect, in the United States
or to any U.S. person (as defined in Rule 902 under the Act) of any
Shares or any substantially similar security issued by the Company,
within six months subsequent to the date on which the distribution of
the Shares has been completed (as notified to the Company by Goldman,
Sachs & Co.), is made under restrictions and other circumstances
reasonably designed not to affect the status of the offer and sale of
the Shares in the United States and to U.S. persons contemplated by this
Agreement as transactions exempt from the registration provisions of the
Act;
(r) Neither the Company nor any of its affiliates does business
with the government of Cuba or with any person or affiliate located in
Cuba within the meaning of Section 517.075, Florida Statutes;
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(s) Ernst & Young LLP, who have certified certain financial
statements of the Company and its subsidiaries, are independent public
accountants as required by the Act and the rules and regulations of the
Commission thereunder;
(t) The Company and its subsidiaries (i) are in compliance with
any and all applicable foreign, federal, state and local laws and
regulations relating to the protection of human health and safety, the
environment or hazardous or toxic substances or wastes, pollutants or
contaminants ("Environmental Laws"), (ii) have received all permits,
licenses or other approvals required of them under applicable
Environmental Laws to conduct their respective businesses and (iii) are
in compliance with all terms and conditions of any such permit, license
or approval, except where such noncompliance with Environmental Laws,
failure to receive required permits, licenses or other approvals or
failure to comply with the terms and conditions of such permits,
licenses or approvals would not, singly or in the aggregate, have a
material adverse effect on the Company and its subsidiaries, taken as a
whole;
(u) There are no costs or liabilities associated with
Environmental Laws (including, without limitation, any capital or
operating expenditures required for clean-up, closure of properties or
compliance with Environmental Laws or any permit, license or approval,
any related constraints on operating activities and any potential
liabilities to third parties) which would, singly or in the aggregate,
have a material adverse effect on the Company and its subsidiaries,
taken as a whole;
(v) The Company has obtained the written agreement described in
Section 7(m) of this Agreement from trustees of the General Electric
Pension Trust, the EMS 1994 Trust, the RJS 1994 Trust, the Irwin Family
Limited Partnership, the Irwin Family Limited Partnership #2, the Irwin
Family Limited Partnership #3, Virginia Irwin Charitable Remainder
Unitrust Ltd, Grumman Hill Investments, L.P., Riordan & McKinzie Profit
Sharing and Savings Plan for the benefit of Carl W. McKinzie, Philip and
Jane Williams Living Trust and certain of its directors and executive
officers.
(w) Each of the Company and its subsidiaries has all necessary
licenses, consents, authorizations, approvals, orders, certificates and
permits of and from, and has made all declarations and filings with, all
federal, state, local, supranational, foreign and other governmental
authorities, all self-regulatory organizations and all courts and other
tribunals, to own, lease, license and use its properties and assets and
to conduct its business in the manner described in the Offering
Circular, the failure of which to obtain would have a material adverse
effect on the Company; and neither the Company nor any of its
subsidiaries has received any notice of proceedings relating to the
revocation or modification, or non-renewal of any such license, consent,
authorization, approval, order, certificate or permit which, singly or
in the aggregate, if the subject of an unfavorable decision, ruling or
finding, would have a material adverse effect on the Company and its
subsidiaries, taken as a whole, except as described in the Offering
Circular;
<PAGE> 8
(x) The Company and its subsidiaries own or possess, or can
acquire on reasonable terms, all material patents, patent rights,
licenses, inventions, copyrights, know-how (including trade secrets and
other unpatented and/or unpatentable proprietary or confidential
information, systems or procedures), trademarks, service marks and trade
names currently employed by them in connection with the business now
operated by them, and neither the Company nor any of its subsidiaries
has received any notice of infringement of or conflict with asserted
rights of others with respect to any of the foregoing which, singly or
in the aggregate, if the subject of an unfavorable decision, ruling or
finding, would have a material adverse effect on the Company and its
subsidiaries, taken as a whole;
(y) The Company and its subsidiaries are insured by insurers of
recognized financial responsibility against such losses and risks and in
such amounts as are prudent and customary in the businesses in which
they are engaged; neither the Company nor any of its subsidiaries has
been refused any insurance coverage sought or applied for; and neither
the Company nor any of its subsidiaries has any reason to believe that
it will not be able to renew its existing insurance coverage as and when
such coverage expires or to obtain similar coverage from similar
insurers as may be necessary to continue its business at a cost that
would not have a material adverse effect on the Company and its
subsidiaries, taken as a whole, except as described in the Offering
Circular; and
(z) The Company and each of its subsidiaries maintain a system of
internal accounting controls sufficient to provide reasonable assurance
that (i) transactions are executed in accordance with management's
general or specific authorizations; (ii) transactions are recorded as
necessary to permit preparation of financial statements in conformity
with generally accepted accounting principles and to maintain asset
accountability; (iii) access to assets is permitted only in accordance
with management's general or specific authorization; and (iv) the
recorded accountability for assets is compared with the existing assets
at reasonable intervals and appropriate action is taken with respect to
any differences.
2. Subject to the terms and conditions herein set forth, (a) the Company
agrees to issue and sell to each of the Purchasers, and each of the Purchasers
agrees, severally and not jointly, to purchase from the Company, at a purchase
price per share of $50.00, the number of Shares set forth opposite the name of
such Purchasers in Schedule I hereto and (b) in the event and to the extent that
the Purchasers shall exercise the election to purchase Optional Shares as
provided below, the Company agrees to issue and sell to each of the Purchasers,
and each of the Purchasers agrees, severally and not jointly, to purchase from
the Company, at the purchase price per share set forth in clause (a) of this
Section 2, that portion of the number of Optional Shares as to which such
election shall have been exercised (to be adjusted by you so as to eliminate
fractional shares) determined by multiplying such number of Optional Shares by a
fraction, the numerator of which is the maximum number of Optional Shares which
such Purchaser is entitled to purchase as set forth opposite the name of such
Purchaser in Schedule I hereto and the denominator of which is the maximum
number of Optional Shares that all of the
<PAGE> 9
Purchasers are entitled to purchase hereunder.
The Company hereby grants to the Purchasers the right to purchase at
their election up to 405,000 Optional Shares, in the aggregate, at the purchase
price per share set forth in the paragraph above, for the sole purpose of
covering over allotments in the sale of the Firm Shares. Any such election to
purchase Optional Shares may be exercised only by written notice from you to the
Company, given within a period of 30 calendar days after the date of this
Agreement, setting forth the aggregate number of Optional Shares to be purchased
and the date on which such Optional Shares are to be delivered, as determined by
you but in no event earlier than the First Time of Delivery (as defined in
Section 4 hereof) or, unless you and the Company otherwise agree in writing, no
earlier than two or later than ten business days after the date of such notice.
As compensation to the Purchasers for their commitments hereunder, the
Company at each Time of Delivery (as defined in Section 4 hereof) will pay to
Goldman, Sachs & Co., for the accounts of the several Purchasers, an amount
equal to $1.75 per share for the Shares to be delivered by the Company hereunder
at such Time of Delivery.
3. Upon the authorization by you of the release of the Firm Shares the
several Purchasers propose to offer the Firm Shares for sale upon the terms and
conditions set forth in this Agreement and the Offering Circular and each
Purchaser hereby represents and warrants to, and agrees with the Company that:
(a) It will offer and sell the Shares only to persons who it
reasonably believes are "qualified institutional buyers" ("QIBs") within
the meaning of Rule 144A under the Act in transactions meeting the
requirements of Rule 144A;
(b) It is an Institutional Accredited Investor; and
(c) It will not offer or sell the Shares by any form of general
solicitation or general advertising, including but not limited to the
methods described in Rule 502(c) under the Act.
4. (a) The Shares to be purchased by each Purchaser hereunder, in
definitive form, and in such authorized denominations and registered in such
names as Goldman, Sachs & Co. may request upon at least forty-eight hours' prior
notice to the Company, shall be delivered by or on behalf of the Company to
Goldman, Sachs & Co., through the facilities of The Depository Trust Company
("DTC"), for the account of such Purchaser, against payment by or on behalf of
such Purchaser of the purchase price therefor by wire transfer of Federal
(same-day) funds to the account specified by the Company to Goldman, Sachs & Co.
at least forty-eight hours in advance. The Company will cause the certificates
representing the Shares to be made available for checking and packaging at least
twenty-four hours prior to the Time of Delivery (as defined below) with respect
thereto at the office of DTC or its designated custodian (the "Designated
Office"). The time and date of such delivery and payment shall be, with respect
to the Firm Shares, 9:30 a.m., New York time, on March 30, 1998 or such other
<PAGE> 10
time and date as Goldman, Sachs & Co. and the Company may agree upon in writing,
and, with respect to the Optional Shares, 9:30 a.m., New York time, on the date
specified by Goldman, Sachs & Co. in the written notice given by Goldman, Sachs
& Co. of the Purchasers' election to purchase such Optional Shares, or such
other time and date as Goldman, Sachs & Co. and the Company may agree upon in
writing. Such time and date for delivery of the Firm Shares is herein called the
"First Time of Delivery", such time and date for delivery of the Optional
Shares, if not the First Time of Delivery, is herein called the "Second Time of
Delivery", and each such time and date for delivery is herein called a "Time of
Delivery".
At each Time of Delivery, the Company will pay, or cause to be paid, the
commission payable at Time of Delivery to the Purchasers under Section 2 hereof
by wire transfer of Federal (same-day) funds to the account specified by
Goldman, Sachs & Co. at least forty-eight hours in advance.
(b) The documents to be delivered at each Time of Delivery by or
on behalf of the parties hereto pursuant to Section 7 hereof, including the
cross-receipt for the Shares and any additional documents requested by the
Purchasers pursuant to Section 7(o) hereof, will be delivered at such time and
date at the offices of Shearman & Sterling, 599 Lexington Avenue, New York, New
York 10022 (the "Closing Location"), and the Shares will be delivered at the
Designated Office, all at the Time of Delivery. A meeting will be held at the
Closing Location at 1:00 p.m., New York City time, on the New York Business Day
next preceding such Time of Delivery, at which meeting the final drafts of the
documents to be delivered pursuant to the preceding sentence will be available
for review by the parties hereto. For the purposes of this Section 4, "New York
Business Day" shall mean each Monday, Tuesday, Wednesday, Thursday and Friday
which is not a day on which banking institutions in New York are generally
authorized or obligated by law or executive order to close.
5. The Company agrees with each of the Purchasers:
(a) To prepare the Offering Circular in a form approved by you;
to make no amendment or any supplement to the Offering Circular which
shall be disapproved by you promptly after reasonable notice thereof;
and to furnish you with copies thereof;
(b) Promptly from time to time to take such action as you may
reasonably request to qualify the Shares and the shares of Stock
issuable upon conversion of the Shares for offering and sale under the
securities laws of such jurisdictions as you may request and to comply
with such laws so as to permit the continuance of sales and dealings
therein in such jurisdictions for as long as may be necessary to
complete the distribution of the Shares, provided that in connection
therewith the Company shall not be required to qualify as a foreign
corporation or to file a general consent to service of process in any
jurisdiction;
(c) To furnish the Purchasers with four copies of the Offering
Circular and each amendment or supplement thereto signed by an
authorized officer of the Company
<PAGE> 11
with the independent accountants' report in the Offering Circular, and
any amendment or supplement containing amendments to the financial
statements covered by such report, signed by the accountants, and
additional copies thereof in such quantities as you may from time to
time reasonably request, and if, at any time prior to the expiration of
nine months after the date of the Offering Circular, any event shall
have occurred as a result of which the Offering Circular as then amended
or supplemented would include an untrue statement of a material fact or
omit to state any material fact necessary in order to make the
statements therein, in the light of the circumstances under which they
were made when such Offering Circular is delivered, not misleading, or,
if for any other reason it shall be necessary or desirable during such
same period to amend or supplement the Offering Circular, to notify you
and upon your request to prepare and furnish without charge to each
Purchaser and to any dealer in securities as many copies as you may from
time to time reasonably request of an amended Offering Circular or a
supplement to the Offering Circular which will correct such statement or
omission or effect such compliance;
(d) During the period beginning from the date hereof and
continuing until the date 90 days after the First Time of Delivery, the
Company will not, directly or indirectly, sell, offer to sell, solicit
an offer to buy, contract to sell, grant any option to purchase, or
otherwise transfer or dispose of, or register or announce the sale or
offering of any shares of capital stock of the Company, or any
securities that are convertible into or exercisable or exchangeable for
capital stock of the Company, without the prior written consent of
Goldman, Sachs & Co. Notwithstanding the foregoing, the Company may,
without the prior written consent of Goldman, Sachs & Co. (1) grant new
stock options or warrants (i) to employees, directors or consultants of
the Company or (ii) in exchange for any existing options or warrants to
purchase any capital stock of Network Long Distance, Inc. ("NLD") and
(2) issue new shares of the Company's capital stock (i) upon the
exercise of stock options or warrants, (ii) in connection with the
acquisition of NLD, (iii) under the earnout provisions associated with
the acquisition of Telecom One, Inc. by the Company (iv) as
consideration in any merger with any company or business or acquisition
of controlling or non-controlling interest in any company or business
subsequent to the date of this Agreement, (v) upon the conversion of any
of the Shares or of any shares of the Junior Convertible Preferred Stock
by holders thereof, (vi) as payment -in-kind dividends on the Shares,
the shares of the Junior Convertible Preferred Stock or the shares of
the Junior Exchangeable Preferred Stock, or (vii) in connection with a
stock split;
(e) Not to be or become, at any time prior to the expiration of
three years after the Time of Delivery, an open-end investment company,
unit investment trust, closed-end investment company or face-amount
certificate company that is or is required to be registered under
Section 8 of the Investment Company Act;
(f) At any time when the Company is not subject to Section 13 or
15(d) of the Exchange Act, for the benefit of holders from time to time
of Shares, to furnish at its expense, upon request, to holders of Shares
and prospective purchasers of securities
<PAGE> 12
information (the "Additional Issuer Information") satisfying the
requirements of subsection (d)(4)(i) of Rule 144A under the Act;
(g) If requested by you, to use its best efforts to cause the
Shares to be eligible for the PORTAL trading system of the National
Association of Securities Dealers, Inc.;
(h) To furnish to the holders of the Shares as soon as
practicable after the end of each fiscal year an annual report
(including a balance sheet and statements of income, shareholders'
equity and cash flows of the Company and its consolidated subsidiaries
certified by independent public accountants) and, as soon as practicable
after the end of each of the first three quarters of each fiscal year
(beginning with the fiscal quarter ending after the date of the Offering
Circular), upon written request to the Company, consolidated summary
financial information of the Company and its subsidiaries for such
quarter in reasonable detail;
(i) During a period of three years from the date of the Offering
Circular, to furnish to you, upon written request to the Company, copies
of all reports or other communications (financial or other) furnished to
holders of Shares, Preferred Stock or shares of Stock issuable as
dividends thereon or upon conversion thereof, and to deliver to you (i)
as soon as they are available, copies of any reports and financial
statements furnished to or filed with the Commission or any securities
exchange on which the Shares, or any class of securities of the Company
is listed; and (ii) such additional information concerning the business
and financial condition of the Company as you may from time to time
reasonably request (such financial statements to be on a consolidated
basis to the extent the accounts of the Company and its subsidiaries are
consolidated in reports furnished to its shareholders generally or to
the Commission);
(k) During the period of two years after the Time of Delivery,
the Company will not, and will not permit any of its "affiliates" (as
defined in Rule 144 under the Act) to, resell any of the Shares which
constitute "restricted securities" under Rule 144 that have been
reacquired by any of them;
(l) To use the net proceeds received by it from the sale of the
Shares pursuant to this Agreement in the manner specified in the
Offering Circular under the caption "Use of Proceeds";
(m) Prior to each Time of Delivery to deposit the Preferred Stock
with the Depositary in accordance with the provisions of the Deposit
Agreement and otherwise to comply with the Deposit Agreement so that
Depositary Receipts evidencing Shares will be executed (and, if
applicable, countersigned) and issued by the Depositary against receipt
of such Preferred Stock and delivered to the Purchasers at such Time of
Delivery; and
(n) To reserve and keep available at all times, free of
preemptive rights,
<PAGE> 13
shares of Stock for the purpose of enabling the Company to satisfy any
obligations to issue shares of its Stock upon conversion of the Shares.
6. The Company covenants and agrees with the several Purchasers that the
Company will pay or cause to be paid the following: (i) the fees, disbursements
and expenses of the Company's counsel and accountants in connection with the
issue of the Shares and all other expenses in connection with the preparation
and printing of the Preliminary Offering Circular and the Offering Circular and
any amendments and supplements thereto and the mailing and delivering of copies
thereof to the Purchasers and dealers; (ii) the cost of printing or producing
any Agreement among Purchasers, the Deposit Agreement, this Agreement, the
Certificate of Designations, the Blue Sky and Legal Investment Memoranda,
closing documents (including any compilations thereof) and any other documents
in connection with the offering, purchase, sale and delivery of the Shares
(excluding fees of counsel except as allowed by (iii) below); (iii) all
reasonable expenses in connection with the qualification of the Shares for
offering and sale under state securities laws as provided in Section 5(b)
hereof, including the fees and disbursements of counsel for the Purchasers in
connection with such qualification and in connection with the Blue Sky and legal
investment surveys; (iv) any fees charged by securities rating services for
rating the Shares; (v) the cost of preparing the Shares; (vi) the fees and
expenses in connection with the Certificate of Designations and the Shares;
(vii) any cost incurred in connection with the designation of the Shares for
trading in PORTAL and the listing of the shares of Stock issuable upon
conversion of the Shares and (viii) all other costs and expenses incident to the
performance of its obligations hereunder which are not otherwise specifically
provided for in this Section. It is understood, however, that, except as
provided in this Section, and Sections 8 and 11 hereof, the Purchasers will pay
all of their own costs and expenses, including the fees of their counsel,
transfer taxes on resale of any of the Shares by them, and any advertising
expenses connected with any offers they may make.
7. The obligations of the Purchasers hereunder, as to the Shares to be
delivered at each Time of Delivery, shall be subject, in their discretion, to
the condition that all representations and warranties and other statements of
the Company herein are, at and as of such Time of Delivery, true and correct,
the condition that the Company shall have performed all of its obligations
hereunder theretofore to be performed, and the following additional conditions:
(a) Shearman & Sterling, counsel for the Purchasers, shall have
furnished to you such opinion or opinions, dated such Time of Delivery,
with respect to the matters covered in paragraphs (i), (ii), (iii),
(viii), (ix), (xiii), (xv) and (xvi) of subsection (b) below as well as
such other related matters as you may reasonably request, and such
counsel shall have received such papers and information as they may
reasonably request to enable them to pass upon such matters;
(b) Riordan & McKinzie, counsel for the Company, shall have
furnished to you their written opinion, dated such Time of Delivery, in
form and substance satisfactory to you, to the effect that:
<PAGE> 14
(i) The Company has been duly incorporated and is validly
existing as a corporation in good standing under the laws of the
State of Delaware, with corporate power and authority to own its
properties and conduct its business as described in the Offering
Circular;
(ii) The Deposit Agreement has been duly executed and
delivered by the Company and, assuming due authorization,
execution and delivery of the Deposit Agreement by the Depositary
and that each of the Depositary and the Company has full power,
authority and legal right to enter into and perform its
obligations thereunder, constitutes a valid and legally binding
agreement of the Company, enforceable in accordance with its
terms, subject to bankruptcy, insolvency, reorganization and
similar laws of general applicability relating or affecting
creditors' rights generally and to general principles of equity;
and the statements set forth under the heading "Description of
Depositary Shares" in the Offering Circular, insofar as such
statements purport to summarize certain provisions of the Deposit
Agreement, fairly summarize, in all material respects, such
provisions;
(iii) Upon due issuance by the Depositary of the Master
Depositary Receipts evidencing Shares being delivered at such
Time of Delivery against the deposit of Preferred Stock to be
deposited by the Company in respect thereof in accordance with
the provisions of the Deposit Agreement, such Master Depositary
Receipt will be duly and validly issued and the person in whose
name the Master Depositary Receipt is registered will be entitled
to the rights specified therein and in the Deposit Agreement;
(iv) The Company has an authorized capitalization as set
forth in the Offering Circular, and all of the issued shares of
capital stock of the Company (including the Preferred Stock being
delivered at such Time of Delivery) have been duly and validly
authorized and issued and are fully paid and non-assessable; and
the shares of Stock initially issuable upon conversion of the
Shares have been duly and validly authorized and reserved for
issuance and, when issued and delivered in accordance with the
provisions of the Preferred Stock and the Certificate of
Designations, will be duly and validly issued and fully paid and
non-assessable, and will conform to the description of the Stock
contained in the Offering Circular;
(v) The Company has been duly qualified as a foreign
corporation for the transaction of business and is in good
standing under the laws of each other jurisdiction in which it
owns or leases properties or conducts any business so as to
require such qualification, except where the failure to so
qualify or remain in good standing would not in the aggregate
have a material adverse effect on the current or future
consolidated financial position, shareholders' equity or results
of operations of the Company and its subsidiaries taken as a
<PAGE> 15
whole (such counsel being entitled to rely in respect of the
opinion in this clause upon opinions of local counsel and in
respect of matters of fact upon certificates of officers of the
Company, provided that such counsel shall state that they believe
that both you and they are justified in relying upon such
opinions and certificates);
(vi) Each subsidiary of the Company has been duly
incorporated and is validly existing as a corporation in good
standing under the laws of its jurisdiction of incorporation; and
all of the issued shares of capital stock of each such
subsidiary, except for Mutual Signal Holding Corporation, PSINet
Inc., UniDial Communications Services, LLC, U.S. Advantage Long
Distance, Inc., Progress International L.L.C., Marca-Tel S.A. de
C.V. and Telenor S.A., have been duly and validly authorized and
issued, are fully paid and non-assessable, and (except for
directors' qualifying shares and except as otherwise set forth in
the Offering Circular) are owned directly or indirectly by the
Company, free and clear of all liens, encumbrances, equities or
claims (such counsel being entitled to rely in respect of the
opinion in this clause upon opinions of local counsel and in
respect of matters of fact upon certificates of officers of the
Company or its subsidiaries, provided that such counsel shall
state that they believe that both you and they are justified in
relying upon such opinions and certificates);
(vii) To the best of such counsel's knowledge and except
for Truman Breed, et. al. vs. U.S. Advantage Long Distance, Inc.,
IXC Long Distance, Inc., IXC Communications, Inc., et. al. In the
District Court of Travis County, Texas, Case No. 9705729 and IXC
Long Distance, Inc. vs. Building Futures in Communications, Inc.
Arbitration, Austin, Texas, or as set forth in the Offering
Circular and the Exchange Act Reports, there are no legal or
governmental proceedings pending to which the Company or any of
its subsidiaries is a party or of which any property of the
Company or any of its subsidiaries is the subject which, if
determined adversely to the Company or any of its subsidiaries,
would individually or in the aggregate have a material adverse
effect on the current or future consolidated financial position,
shareholders' equity or results of operations of the Company and
its subsidiaries taken as a whole; and, to the best of such
counsel's knowledge, no such proceedings are threatened or
contemplated by governmental authorities or threatened by
others;
(viii) This Agreement has been duly authorized, executed
and delivered by the Company;
(ix) The Certificate of Designations has been duly
authorized and executed by the parties thereto and constitutes a
valid and legally binding instrument, enforceable in accordance
with its terms;
(x) The issue and sale of the Shares and Preferred Stock
being
<PAGE> 16
delivered at such Time of Delivery to be sold by the Company,
the deposit of the Preferred Stock being deposited by the
Company with the Depositary against issuance of the Shares
evidencing the Depositary Receipts to be delivered at such Time
of Delivery by the Company and the compliance by the Company
with all of the provisions of the Certificate of Designations,
the Deposit Agreement and this Agreement and the consummation of
the transactions herein and therein contemplated will not (i)
result in any violation of the provisions of the Certificate of
Incorporation or By-laws of the Company, or (ii) to the best of
such counsel's knowledge, result in a breach or violation of any
of the terms and provisions of, or constitute a default under,
any statute, rule or regulation or any order of any governmental
agency or body or any court having jurisdiction over the Company
or any of its subsidiaries or any of their properties (other
than federal, state, local or foreign communications laws or
rules, regulations or policies of the Federal Communications
Commission ("FCC"), as to which no opinion is expressed), or any
agreement or instrument filed with the Commission as an exhibit
to any registration statement filed by the Company under the Act
prior to the date hereof, or as an exhibit to any Exchange Act
Report, to which the Company or any such subsidiary is a party
or by which either the Company or any such subsidiary is bound
or to which any of the property or assets of the Company or any
of its subsidiaries is subject, except where such breach,
violation or default would not in the aggregate have a material
adverse effect on the current or future consolidated financial
position, shareholders' equity or results of operations of the
Company and its subsidiaries taken as a whole;
(xi) No consent, approval, authorization, order,
registration or qualification of or with any such court or
governmental agency or body is required for the issue and sale
of the Shares, the deposit of the Preferred Stock being
deposited by the Company with the Depositary against issuance of
Shares evidencing the Depositary Receipts to be delivered at
such Time of Delivery by the Company or the consummation by the
Company of the transactions contemplated by this Agreement,
except such as may be required under the Act in connection with
the shares of Stock issuable upon conversion of the Shares and
such consents, approvals, authorizations, registrations or
qualifications as may be required under state securities or Blue
Sky laws in connection with the purchase and distribution of the
Shares by the Purchasers or as may be required by federal,
state, local or foreign communication laws or rules, regulation
or policies of the FCC;
(xii) Neither the Company nor any of its subsidiaries is
in violation of its Certificate of Incorporation or By-laws or
in default in the performance or observance of any material
obligation, covenant or condition contained in any indenture,
mortgage, deed of trust, loan agreement, lease or other
agreement or instrument to which it is a party or by which it or
any of its properties may be bound the effect of which would
cause a material adverse effect;
<PAGE> 17
(xiii) The statements set forth in the Offering Circular
under the caption "Description of Depositary Shares",
"Description of Convertible Preferred Stock" and "Description of
Capital Stock", insofar as they purport to constitute a summary
of the terms of the Shares and the Stock, respectively, under the
caption "Description of Certain Indebtedness" and "Certain U.S.
Federal Income Tax Consequences", insofar as they purport to
describe the provisions of the laws and documents referred to
therein, and under the caption "Underwriting" insofar as it
purports to describe the provisions of this Agreement, fairly
summarize, in all material respects, such provisions;
(xiv) In the course of the preparation of the Exchange Act
Reports (other than the financial statements and related
schedules therein, as to which such counsel need express no
opinion), we have participated in conferences with officers and
representatives of the Company and with the Company's independent
public accountants and you and your counsel, at which conferences
the contents of the Exchange Act Reports were discussed. Although
we have not independently verified the accuracy, completeness or
fairness of the statements made in the Exchange Act Reports, and
do not assume any responsibility for the accuracy, completeness
or fairness of such statements, on the basis of the foregoing,
relying as to materiality largely upon facts provided to us by,
and opinions as to factual matters of, officers and
representatives of the Company and its subsidiaries and without
independent verification, no facts came to our attention that
caused us to believe that: the Exchange Act Reports, when filed
with the Commission, contained any untrue statement of a
material fact or omitted to state any material fact necessary to
make the statements therein, in light of the circumstances under
which they were made, not misleading (except that we express no
opinion or belief with respect to the financial statements or
the notes and schedules thereto, pro forma or other financial or
statistical data included in the Exchange Act Reports);
(xv) Assuming the accuracy of the representations of the
Purchasers contained in Section 3 hereof, no registration of the
Shares under the Act is required for the offer, sale and initial
resale of the Shares by the Purchasers in the manner contemplated
by this Agreement;
(xvi) In the course of the preparation of the Offering
Circular, we have participated in conferences with officers and
representatives of the Company and with the Company's independent
public accountants and you and your counsel, at which conferences
the contents of the Offering Circular were discussed. Although we
have not independently verified the accuracy, completeness or
fairness of the statements made in the Offering Circular, and do
not assume any responsibility for the accuracy, completeness or
fairness of such statements, on the basis of the foregoing,
relying as to materiality largely upon facts provided to us by,
and opinions as to factual matters of, officers and
<PAGE> 18
representatives of the Company and its subsidiaries and without
independent verification, no facts came to our attention that
caused us to believe that: the Offering Circular, as amended or
supplemented by the Company prior to the Time of Delivery, as of
the date hereof contains any untrue statement of a material fact
or omitted to state any material fact necessary to make the
statements therein, in light of the circumstances under which
they were made, not misleading (except that we express no opinion
or belief with respect to the financial statements or the notes
and schedules thereto, pro forma or other financial or
statistical data included in the Offering Circular);
(xvii) The Company is not an "investment company" or,
except for Grumman Hill Investments, L.P., Grumman Hill
Associates, Inc. and General Electric Pension Trust, an entity
"controlled" by an "investment company", as such terms are
defined in the Investment Company Act; and
(xviii)To the best of counsel's knowledge, the Company and
its subsidiaries possess and are in compliance with all patents,
trademarks, franchises, permits, licenses (including without
limitation all software licenses) and similar items as well as
electronic data processing, electronic funds transfer and other
contracts, agreements, leases and arrangements necessary or
material to the conduct of its business as presently conducted
or proposed to be conducted and as described in the Offering
Circular, except where failure to possess any of the foregoing
would not, singly or in the aggregate, have a material adverse
effect upon the business, prospects, properties, operations,
condition (financial or otherwise) or results of operations of
the Company and its subsidiaries taken as a whole; to the best
of counsel's knowledge, the Company has not received any notice
of infringement of or conflict with (and knows of no such
infringement of or conflict with) asserted rights of others with
respect to any patents, trademarks, service marks, trade names,
copyrights or know-how which could result in any material
adverse effect on the Company and its subsidiaries taken as a
whole; and, to the best of counsel's knowledge, except as
otherwise described in the Offering Circular, neither the
Company nor any of its subsidiaries has received any notice of
cancellation of the same or any notice of proceedings relating
to the revocation, suspension or modification of any of the
foregoing which, singly or in the aggregate, would result in a
material adverse change in the business, prospects, properties,
operations, condition (financial or otherwise) or results of
operations of the Company and its subsidiaries taken as a whole,
or which is required to be disclosed in the Offering Circular.
(c) Reboul, MacMurray, Hewitt, Maynard & Kristol, U.S. regulatory
counsel for the Company, shall have furnished to you their written
opinion in the form attached hereto as Annex II, dated such Time of
Delivery;
(d) Counsel for the Depositary shall have furnished to you their
written
<PAGE> 19
opinion, dated such Time of Delivery, in form and substance satisfactory
to you, to the effect that:
(i) The Deposit Agreement has been duly authorized,
executed and delivered by the Depositary and constitutes a valid
and legally binding obligation of the Depositary, enforceable in
accordance with its terms, subject as to enforcement to
bankruptcy, insolvency, reorganization and similar laws of
general applicability relating to or affecting creditors' rights
and to general equity principles.
(e) On the date of the Offering Circular prior to the execution
of this Agreement and also at each Time of Delivery, Ernst & Young LLP
shall have furnished to you a letter or letters, dated the respective
dates of delivery thereof, in form and substance satisfactory to you, to
the effect set forth in Annex I hereto;
(f) On the date of the Offering Circular prior to the execution
of this Agreement and also at each Time of Delivery, Arthur Andersen LLP
shall have furnished to you a letter or letters, dated the respective
dates of delivery thereof, in form and substance satisfactory to you, to
the effect set forth in Annex I hereto;
(g) (i) Neither the Company nor any of its subsidiaries shall
have sustained since the date of the latest audited financial statements
included in the Offering Circular any loss or interference with its
business from fire, explosion, flood or other calamity, whether or not
covered by insurance, or from any labor dispute or court or governmental
action, order or decree, otherwise than as set forth or contemplated in
the Offering Circular, and (ii) since the respective dates as of which
information is given in the Offering Circular there shall not have been
any change in the capital stock or long-term debt of the Company or any
of its subsidiaries (other than any change in the capital stock
resulting from the exercise of stock options, the issuance of shares
under the Company's stock option or other benefit or incentive plans or
the conversion of shares of the Junior Convertible Preferred Stock) or
any change, or any development involving a prospective change, in or
affecting the general affairs, management, financial position,
shareholders' equity or results of operations of the Company and its
subsidiaries, otherwise than as set forth or contemplated in the
Offering Circular, the effect of which, in any such case described in
Clause (i) or (ii), is in the judgment of the Purchasers so material and
adverse as to make it impracticable or inadvisable to proceed with the
public offering or the delivery of the Shares being delivered at such
Time of Delivery on the terms and in the manner contemplated in this
Agreement and in the Offering Circular;
(h) On or after the date hereof (i) no downgrading shall have
occurred in the rating accorded the Company's debt securities or
preferred stock by any "nationally recognized statistical rating
organization", as that term is defined by the Commission for purposes of
Rule 436(g)(2) under the Act, and (ii) no such organization shall have
publicly announced that it has under surveillance or review, with
possible negative
<PAGE> 20
implications, its rating of any of the Company's debt securities or
preferred stock;
(i) On or after the date hereof there shall not have occurred any
of the following: (i) a suspension or material limitation in trading in
securities generally on the New York Stock Exchange or on the Nasdaq
National Market; (ii) a suspension or material limitation in trading in
the Company's securities on the Nasdaq National Market; (iii) a general
moratorium on commercial banking activities declared by either Federal
or New York State authorities; or (iv) the outbreak or escalation of
hostilities involving the United States or the declaration by the United
States of a national emergency or war, if the effect of any such event
specified in this Clause (iv) in the judgment of the Purchasers makes it
impracticable or inadvisable to proceed with the public offering or the
delivery of the Shares on the terms and in the manner contemplated in
the Offering Circular;
(j) The Shares have been designated for trading on PORTAL;
(k) On or before the 14th calendar day following the First Time
of Delivery, the shares of Stock issuable upon conversion of the Shares
shall have been duly listed for quotation on the Nasdaq National Market;
(l) The Company shall have furnished or caused to be furnished to
you at the Time of Delivery certificates of officers of the Company
satisfactory to you as to the accuracy of the representations and
warranties of the Company herein at and as of such Time of Delivery, as
to the performance by the Company of all of its obligations hereunder to
be performed at or prior to such Time of Delivery, as to the matters set
forth in subsections (a) and (h) of this Section and as to such other
matters as you may reasonably request;
(m) The trustee of each of the General Electric Pension Trust,
the EMS 1994 Trust, the RJS 1994 Trust, the Irwin Family Limited
Partnership, the Irwin Family Limited Partnership #2, the Irwin Family
Limited Partnership #3, Virginia Irwin Charitable Remainder Unitrust
Ltd, Grumman Hill Investments, L.P., Riordan & McKinzie Profit Sharing
and Savings Plan for the benefit of Carl W. McKinzie, Philip and Jane
Williams Living Trust and certain of the directors, and executive
officers of the Company shall have furnished to Goldman, Sachs & Co. a
written agreement, prior to the date hereof, to the effect set forth in
Annex III hereto;
(n) Grumman Hill Associates Inc. shall have furnished to Goldman,
Sachs & Co. a written agreement, prior to the First Time of Delivery, to
the effect set forth in Annex III hereto; and
(o) The Depositary shall have furnished or caused to be furnished
to you at such Time of Delivery certificates satisfactory to you
evidencing the deposit with it of the Preferred Stock being so deposited
against issuance of Depositary Receipts evidencing the Shares to be
delivered by the Company at such Time of Delivery, and
<PAGE> 21
the execution, countersignature (if applicable), issuance and delivery
of Depositary Receipts evidencing such Shares pursuant to the Deposit
Agreement.
8. (a) The Company will indemnify and hold harmless each Purchaser
against any losses, claims, damages or liabilities, joint or several, to which
such Purchaser may become subject, under the Act or otherwise, insofar as such
losses, claims, damages or liabilities (or actions in respect thereof) arise out
of or are based upon an untrue statement or alleged untrue statement of a
material fact contained in any Preliminary Offering Circular or the Offering
Circular, or any amendment or supplement thereto, or arise out of or are based
upon the omission or alleged omission to state therein a material fact necessary
to make the statements therein not misleading, and will reimburse each Purchaser
for any legal or other expenses reasonably incurred by such Purchaser in
connection with investigating or defending any such action or claim as such
expenses are incurred; provided, however, that the Company shall not be liable
in any such case to the extent that any such loss, claim, damage or liability
arises out of or is based upon an untrue statement or alleged untrue statement
or omission or alleged omission made in any Preliminary Offering Circular or the
Offering Circular or any such amendment or supplement in reliance upon and in
conformity with written information furnished to the Company by any Purchaser
through Goldman, Sachs & Co. expressly for use therein.
(b) Each Purchaser will indemnify and hold harmless the Company against
any losses, claims, damages or liabilities to which the Company may become
subject, under the Act or otherwise, insofar as such losses, claims, damages or
liabilities (or actions in respect thereof) arise out of or are based upon an
untrue statement or alleged untrue statement of a material fact contained in any
Preliminary Offering Circular or the Offering Circular, or any amendment or
supplement thereto, or arise out of or are based upon the omission or alleged
omission to state therein a material fact or necessary to make the statements
therein not misleading, in each case to the extent, but only to the extent, that
such untrue statement or alleged untrue statement or omission or alleged
omission was made in any Preliminary Offering Circular or the Offering Circular
or any such amendment or supplement in reliance upon and in conformity with
written information furnished to the Company by such Purchaser through Goldman,
Sachs & Co. expressly for use therein; and will reimburse the Company for any
legal or other expenses reasonably incurred by the Company in connection with
investigating or defending any such action or claim as such expenses are
incurred.
(c) Promptly after receipt by an indemnified party under subsection (a)
or (b) above of notice of the commencement of any action, such indemnified party
shall, if a claim in respect thereof is to be made against the indemnifying
party under such subsection, notify the indemnifying party in writing of the
commencement thereof; but the omission so to notify the indemnifying party shall
not relieve it from any liability which it may have to any indemnified party
otherwise than under such subsection. In case any such action shall be brought
against any indemnified party and it shall notify the indemnifying party of the
commencement thereof, the indemnifying party shall be entitled to participate
therein and, to the extent that it shall wish, jointly with any other
indemnifying party similarly notified, to assume the defense thereof, with
counsel satisfactory to such indemnified party (who shall not, except with the
<PAGE> 22
consent of the indemnified party, be counsel to the indemnifying party), and,
after notice from the indemnifying party to such indemnified party of its
election so to assume the defense thereof, the indemnifying party shall not be
liable to such indemnified party under such subsection for any legal expenses of
other counsel or any other expenses, in each case subsequently incurred by such
indemnified party, in connection with the defense thereof other than reasonable
costs of investigation. No indemnifying party shall, without the written consent
of the indemnified party, effect the settlement or compromise of, or consent to
the entry of any judgment with respect to, any pending or threatened action or
claim in respect of which indemnification or contribution may be sought
hereunder (whether or not the indemnified party is an actual or potential party
to such action or claim) unless such settlement, compromise or judgment (i)
includes an unconditional release of the indemnified party from all liability
arising out of such action or claim and (ii) does not include a statement as to,
or an admission of, fault, culpability or a failure to act, by or on behalf of
any indemnified party.
(d) If the indemnification provided for in this Section 8 is unavailable
to or insufficient to hold harmless an indemnified party under subsection (a) or
(b) above in respect of any losses, claims, damages or liabilities (or actions
in respect thereof) referred to therein, then each indemnifying party shall
contribute to the amount paid or payable by such indemnified party as a result
of such losses, claims, damages or liabilities (or actions in respect thereof)
in such proportion as is appropriate to reflect the relative benefits received
by the Company on the one hand and the Purchasers on the other from the offering
of the Shares. If, however, the allocation provided by the immediately preceding
sentence is not permitted by applicable law or if the indemnified party failed
to give the notice required under subsection (c) above, then each indemnifying
party shall contribute to such amount paid or payable by such indemnified party
in such proportion as is appropriate to reflect not only such relative benefits
but also the relative fault of the Company on the one hand and the Purchasers on
the other in connection with the statements or omissions which resulted in such
losses, claims, damages or liabilities (or actions in respect thereof), as well
as any other relevant equitable considerations. The relative benefits received
by the Company on the one hand and the Purchasers on the other shall be deemed
to be in the same proportion as the total net proceeds from the offering (before
deducting expenses) received by the Company bear to the total underwriting
discounts and commissions received by the Purchasers, in each case as set forth
in the Offering Circular. The relative fault shall be determined by reference
to, among other things, whether the untrue or alleged untrue statement of a
material fact or the omission or alleged omission to state a material fact
relates to information supplied by the Company on the one hand or the Purchasers
on the other and the parties' relative intent, knowledge, access to information
and opportunity to correct or prevent such statement or omission. The Company
and the Purchasers agree that it would not be just and equitable if contribution
pursuant to this subsection (d) were determined by pro rata allocation (even if
the Purchasers were treated as one entity for such purpose) or by any other
method of allocation which does not take account of the equitable considerations
referred to above in this subsection (d). The amount paid or payable by an
indemnified party as a result of the losses, claims, damages or liabilities (or
actions in respect thereof) referred to above in this subsection (d) shall be
deemed to include any legal or other expenses reasonably incurred by such
indemnified party in connection with investigating or defending any such action
or claim. Notwithstanding the provisions of this
<PAGE> 23
subsection (d), no Purchaser shall be required to contribute any amount in
excess of the amount by which the total price at which the Shares underwritten
by it and distributed to investors were offered to investors exceeds the amount
of any damages which such Purchaser has otherwise been required to pay by reason
of such untrue or alleged untrue statement or omission or alleged omission. The
Purchasers' obligations in this subsection (d) to contribute are several in
proportion to their respective underwriting obligations and not joint.
(e) The obligations of the Company under this Section 8 shall be in
addition to any liability which the Company may otherwise have and shall extend,
upon the same terms and conditions, to each person, if any, who controls any
Purchaser within the meaning of the Act; and the obligations of the Purchasers
under this Section 8 shall be in addition to any liability which the respective
Purchasers may otherwise have and shall extend, upon the same terms and
conditions, to each officer and director of the Company and to each person, if
any, who controls the Company within the meaning of the Act.
9. (a) If any Purchaser shall default in its obligation to purchase the
Shares which it has agreed to purchase hereunder at a Time of Delivery, you may
in your discretion arrange for you or another party or other parties to purchase
such Shares on the terms contained herein. If within thirty-six hours after such
default by any Purchaser you do not arrange for the purchase of such Shares,
then the Company shall be entitled to a further period of thirty-six hours
within which to procure another party or other parties satisfactory to you to
purchase such Shares on such terms. In the event that, within the respective
prescribed periods, you notify the Company that you have so arranged for the
purchase of such Shares, or the Company notifies you that it has so arranged for
the purchase of such Shares, you or the Company shall have the right to postpone
such Time of Delivery for a period of not more than seven days, in order to
effect whatever changes may thereby be made necessary in the Offering Circular,
or in any other documents or arrangements, and the Company agrees to prepare
promptly any amendments to the Offering Circular which in your opinion may
thereby be made necessary. The term "Purchaser" as used in this Agreement shall
include any person substituted under this Section with like effect as if such
person had originally been a party to this Agreement with respect to such
Shares.
(b) If, after giving effect to any arrangements for the purchase of the
Shares of a defaulting Purchaser or Purchasers by you and the Company as
provided in subsection (a) above, the aggregate number of such Shares which
remains unpurchased does not exceed one-eleventh of the aggregate number of all
the Shares to be purchased at such Time of Delivery, then the Company shall have
the right to require each non-defaulting Purchaser to purchase the number of
Shares which such Purchaser agreed to purchase hereunder and, in addition, to
require each non-defaulting Purchaser to purchase its pro rata share (based on
the number of Shares which such
Purchaser agreed to purchase hereunder) of the Shares of such defaulting
Purchaser or Purchasers for which such arrangements have not been made; but
nothing herein shall relieve a defaulting Purchaser from liability for its
default.
(c) If, after giving effect to any arrangements for the purchase of the
Shares of a defaulting Purchaser or Purchasers by you and the Company as
provided in subsection (a)
<PAGE> 24
above, the aggregate number of Shares which remains unpurchased exceeds
one-eleventh of the aggregate number of all the Shares to be purchased at such
Time of Delivery, or if the Company shall not exercise the right described in
subsection (b) above to require non-defaulting Purchasers to purchase Shares of
a defaulting Purchaser or Purchasers, then this Agreement (or, with respect to
the Second Time of Delivery, the obligations of the Purchasers to purchase and
of the Company to sell the Optional Shares) shall thereupon terminate, without
liability on the part of any non-defaulting Purchaser or the Company, except for
the expenses to be borne by the Company and the Purchasers as provided in
Section 6 hereof and the indemnity and contribution agreements in Section 8
hereof; but nothing herein shall relieve a defaulting Purchaser from liability
for its default.
10. The respective indemnities, agreements, representations, warranties
and other statements of the Company and the several Purchasers, as set forth in
this Agreement or made by or on behalf of them, respectively, pursuant to this
Agreement, shall remain in full force and effect, regardless of any
investigation (or any statement as to the results thereof) made by or on behalf
of any Purchaser or any controlling person of any Purchaser, or the Company, or
any officer or director or controlling person of the Company, and shall survive
delivery of and payment for the Shares.
11. If this Agreement shall be terminated pursuant to Section 9 hereof,
the Company shall not then be under any liability to any Purchaser except as
provided in Sections 6 and 8 hereof; but, if for any other reason, any Shares
are not delivered by or on behalf of the Company as provided herein, the Company
will reimburse the Purchasers through you for all out-of-pocket expenses
approved in writing by you, including fees and disbursements of counsel,
reasonably incurred by the Purchasers in making preparations for the purchase,
sale and delivery of the Shares not so delivered, but the Company shall then be
under no further liability to any Purchaser except as provided in Sections 6 and
8 hereof.
12. In all dealings hereunder, you shall act on behalf of each of the
Purchasers, and the parties hereto shall be entitled to act and rely upon any
statement, request, notice or agreement on behalf of any Purchaser made or given
by you jointly or by Goldman, Sachs & Co. on behalf of you as the
representatives.
All statements, requests, notices and agreements hereunder shall be in
writing, and if to the Purchasers shall be delivered or sent by mail, telex or
facsimile transmission to you as the representatives in care of Goldman, Sachs &
Co., 85 Broad Street, New York, New York 10004, Attention: Registration
Department; and if to the Company shall be delivered or sent by mail, telex or
facsimile transmission to the address of the Company set forth in the Offering
Circular, Attention: Secretary; provided, however, that any notice to a
Purchaser pursuant to Section 8(c) hereof shall be delivered or sent by mail,
telex or facsimile transmission to such Purchaser at its address set forth in
its Purchasers' Questionnaire, or telex constituting such Questionnaire, which
address will be supplied to the Company by you upon request. Any such
statements, requests, notices or agreements shall take effect upon receipt
thereof.
13. This Agreement shall be binding upon, and inure solely to the
benefit of, the
<PAGE> 25
Purchasers, the Company and, to the extent provided in Sections 8 and 10 hereof,
the officers and directors of the Company and each person who controls the
Company or any Purchaser, and their respective heirs, executors, administrators,
successors and assigns, and no other person shall acquire or have any right
under or by virtue of this Agreement. No purchaser of any of the Shares from any
Purchaser shall be deemed a successor or assign by reason merely of such
purchase.
14. Time shall be of the essence of this Agreement.
15. This Agreement shall be governed by and construed in accordance with
the laws of the State of New York.
16. This Agreement may be executed by any one or more of the parties
hereto in any number of counterparts, each of which shall be deemed to be an
original, but all such respective counterparts shall together constitute one and
the same instrument.
If the foregoing is in accordance with your understanding, please sign
and return to us one for the Company and each of the Purchasers plus one for
each counsel counterparts hereof, and upon the acceptance hereof by you, on
behalf of each of the Purchasers, this letter and such acceptance hereof shall
constitute a binding agreement between each of the Purchasers and the Company.
It is understood that your acceptance of this letter on behalf of each of the
Purchasers is pursuant to the authority set forth in a form of Agreement among
Purchasers, the form of which shall be submitted to the Company for examination
upon request, but without warranty on your part as to the authority of the
signers thereof.
<PAGE> 26
Very truly yours,
IXC COMMUNICATIONS, INC.
By: /s/ STUART K. COPPENS
------------------------------------------
Name: Stuart K. Coppens
Title: Chief Accounting Officer
Accepted as of the date hereof:
Goldman, Sachs & Co.
Credit Suisse First Boston Corporation
Merrill Lynch & Co.
Merrill Lynch, Pierce, Fenner & Smith Incorporated
Morgan Stanley & Co. Incorporated
By: /s/ GOLDMAN, SACHS & CO.
------------------------------------------
(Goldman, Sachs & Co.)
On behalf of each of the Purchasers
<PAGE> 27
SCHEDULE I
<TABLE>
<CAPTION>
AGGREGATE
LIQUIDATION
AGGREGATE AMOUNT OF
LIQUIDATION OPTIONAL SHARES
AMOUNT OF TO BE PURCHASED
FIRM SHARES IF MAXIMUM
TO BE OPTION
PURCHASED EXERCISED
--------- ---------
PURCHASER
---------
<S> <C> <C>
Goldman, Sachs & Co $67,500,000 $10,125,000
Credit Suisse First Boston Corporation 27,000,000 4,050,000
Merrill Lynch, Pierce, Fenner & Smith Incorporated 13,500,000 2,025,000
Morgan Stanley & Co. Incorporated 27,000,000 4,050,000
Total $135,000,000 $20,250,000
============= ===========
</TABLE>
<PAGE> 28
ANNEX I
Pursuant to Section 7(e) and (f) of the Purchase Agreement, the
accountants shall furnish letters to the Purchasers to the effect that:
(i) They are independent certified public accountants with
respect to the Company and its subsidiaries within the meaning of the
Securities Exchange Act of 1934 (the "Exchange Act") and the applicable
published rules and regulations thereunder,
(ii) In their opinion, the consolidated financial statements and
financial statement schedules audited by them and included in the
Offering Circular comply as to form in all material respects with the
applicable requirements of the Exchange Act and the related published
rules and regulations;
(iii) The unaudited selected financial information with respect
to the consolidated results of operations and financial position of the
Company for the five most recent fiscal years included in the Offering
Circular agrees with the corresponding amounts (after restatements where
applicable) in the audited consolidated financial statements for such
five fiscal years;
(iv) On the basis of limited procedures not constituting an audit
in accordance with generally accepted auditing standards, consisting of
a reading of the unaudited financial statements and other information
referred to below, a reading of the latest available interim financial
statements of the Company and its subsidiaries, inspection of the minute
books of the Company and its subsidiaries since the date of the latest
audited financial statements included in the Offering Circular,
inquiries of officials of the Company and its subsidiaries responsible
for financial and accounting matters and such other inquiries and
procedures as may be specified in such letter, nothing came to their
attention that caused them to believe that:
(A) the unaudited consolidated statements of income,
consolidated balance sheets and consolidated statements of cash
flows included in the Offering Circular are not in conformity
with generally accepted accounting principles applied on the
basis substantially consistent with the basis for the audited
condensed consolidated statements of income, consolidated balance
sheets and consolidated statements of cash flows included in the
Offering Circular;
(B) any other unaudited income statement data and balance
sheet items included in the Offering Circular do not agree with
the corresponding items in the unaudited consolidated financial
statements from which such data and items were derived, and any
such unaudited data and items were not determined on a basis
substantially consistent with the basis for the corresponding
amounts in the audited consolidated financial statements
included
<PAGE> 29
in the Offering Circular;
(C) the unaudited financial statements which were not
included in the Offering Circular but from which were derived any
unaudited condensed financial statements referred to in Clause
(A) and any unaudited income statement data and balance sheet
items included in the Offering Circular and referred to in Clause
(B) were not determined on a basis substantially consistent with
the basis for the audited consolidated financial statements
included in the Offering Circular;
(D) any unaudited pro forma consolidated condensed
financial statements included in the Offering Circular do not
comply as to form in all material respects with the applicable
accounting requirements or the pro forma adjustments have not
been properly applied to the historical amounts in the
compilation of those statements;
(E) as of a specified date not more than five days prior
to the date of such letter, there have been any changes in the
consolidated capital stock (other than issuances of capital stock
upon exercise of options and stock appreciation rights, upon
earn-outs of performance shares and upon conversions of
convertible securities, in each case which were outstanding on
the date of the latest financial statements included in the
Offering Circular) or any increase in the consolidated long-term
debt of the Company and its subsidiaries, or any decreases in
consolidated net current assets or stockholders' equity or other
items specified by the Purchasers, or any increases in any items
specified by the Purchasers, in each case as compared with
amounts shown in the latest balance sheet included in the
Offering Circular except in each case for changes, increases or
decreases which the Offering Circular discloses have occurred or
may occur or which are described in such letter; and
(F) for the period from the date of the latest financial
statements included in the Offering Circular to the specified
date referred to in Clause (E) there were any decreases in
consolidated net revenues or operating profit or the total
consolidated net income or other items specified by the
Purchasers, or any increases in any items specified by the
Purchasers, in each case as compared with the comparable period
of the preceding year and with any other period of corresponding
length specified by the Purchasers, except in each case for
decreases or increases which the Offering Circular discloses have
occurred or may occur or which are described in such letter; and
(v) In addition to the examination referred to in their report(s)
included in the Offering Circular and the limited procedures, inspection
of minute books, inquiries and other procedures referred to in
paragraphs (iii) and (iv) above, they have carried out certain specified
procedures, not constituting an audit in accordance with generally
accepted auditing standards, with respect to certain amounts,
percentages and financial information specified by the Purchasers, which
are derived from the general accounting
<PAGE> 30
records of the Company and its subsidiaries, which appear in the
Offering Circular, and have compared certain of such amounts,
percentages and financial information with the accounting records of the
Company and its subsidiaries and have found them to be in agreement.
<PAGE> 31
ANNEX II
OPINION OF U.S. REGULATORY COUNSEL FOR THE COMPANY
Attach opinion of U.S. regulatory counsel for the Company, to be
delivered pursuant to Section 7(c) of the Purchase Agreement to the effect that:
(i) (A) the execution and delivery by the Company of, and
performance of its obligations under, the Purchase Agreement, the
Certificate of Designations and the Shares do not violate (1) the
Federal Communications Act of 1934, as amended (the "Communications
Act"), any rules or regulations of the Federal Communications Commission
("FCC") applicable to the Company, (2) any state or local law, rule or
regulation relating to telecommunications applicable to the Company
("State Law") or (3) to the best of such counsel's knowledge after due
inquiry, any decree from any court or tribunal, and (B) no authorization
of or filing with the FCC or any state or local authority regulating
telecommunications services provided by the Company or any of its
subsidiaries, including state public utility commissions ("State
Authorities") is necessary for the execution and delivery by the Company
of, or the performance of its obligations under the Purchase Agreement,
Certificate of Designations or the Shares;
(ii) The Company and its subsidiaries are nondominant carriers
authorized by the FCC to provide interstate interexchange
telecommunications services. The Company and its subsidiaries have been
granted Section 214 authority by the FCC to provide international
telecommunications services through the resale of international switched
voice and private line services and each of the Company and its
subsidiaries has on file with the FCC tariffs applicable to its domestic
interstate and international services. No further FCC authority is
required by the Company or any of its subsidiaries to conduct its
business as described in the Offering Circular;
(iii) The Company and its subsidiaries are certified and/or
registered to resell intrastate interexchange telecommunications
services in New York and ________ and are authorized but not required to
be certified or registered, to resell intrastate interexchange
telecommunications services in Michigan and Washington D.C. Each of the
Company and its subsidiaries has a tariff on file in each state in which
it resells telecommunications services. No further authority is required
from any of the State Authorities by the Company or any of its
subsidiaries to conduct its business as described in the Offering
Circular;
(iv) (A) each of the Company and its subsidiaries (1) has paid
all fees required by the FCC and the State Authorities; and (2) has all
certificates, orders, permits, licenses, authorizations, consents and
approvals of and from, and has made all reports, filings and
registrations, with the FCC and the State Authorities, all self
regulatory organizations and all courts and tribunals necessary to own,
lease, license and use its properties and assets and to conduct its
business in the manner described in
<PAGE> 32
the Offering Circular and is conducting its business in accordance
therewith; and (B) to the best of such counsel's knowledge after due
inquiry, neither the Company nor any of its subsidiaries has received
any notice of proceedings relating to the revocation, modification or
non-renewal of any such certificates, orders, permits, licenses,
authorizations, consents or approvals, or the qualification or rejection
of any such report, filing or registration, the effect of which, singly
or in the aggregate, would have a material adverse effect on the Company
and its subsidiaries, taken as a whole;
(v) neither the Company nor any of its subsidiaries is in
violation of, or in default under, the Communications Act, the
telecommunications rules or regulations of the FCC, or State Law the
effect of which, singly or in the aggregate, would have a material
adverse effect on the Company and its subsidiaries, taken as a whole;
(vi) to the best of such counsel's knowledge after due inquiry,
(A) no decree or order of the FCC or any State Authority has been issued
against the Company or any of its subsidiaries and (B) no litigation,
proceeding, inquiry or investigation has been commenced or threatened,
and no notice of violation or order to show cause has been issued,
against the Company or any of its subsidiaries before or by the FCC or
any State Authority. To the best of such counsel's knowledge after due
inquiry, there are no rulemakings or other administrative proceedings
pending before the FCC or any State Authority which (A) are generally
applicable to telecommunications services or the resale thereof and (B)
if decided adversely to the interests of the Company or any of its
subsidiaries, would have a material adverse effect on the Company and
its subsidiaries, taken as a whole; and
(vii) the statements in the Offering Circular under the captions
"Risk Factors--Regulation" and "Business--Regulatory Environment" and in
"Item 1--Business--Regulation" of the Company's most recent annual
report on Form 10-K, insofar as such statements constitute a summary of
the legal matters, documents or proceedings referred to therein, are
accurate in all material respects and fairly summarize all matters
referred to therein.
<PAGE> 33
ANNEX III
March 24, 1998
Goldman, Sachs & Co.
Credit Suisse First Boston Corporation
Merrill Lynch & Co.
Merrill Lynch, Pierce, Fenner & Smith Incorporated
Morgan Stanley & Co. Incorporated
As representatives of the several
Purchasers
c/o Goldman, Sachs & Co.
85 Broad Street
New York, New York 10004
IXC Communications, Inc.
Ladies and Gentlemen:
In connection with the proposed offering of 2,500,000 Depositary
Shares (the "Shares") each representing 1/20 of a share of Cumulative
Convertible Preferred Stock, par value $.01 per share of IXC Communications,
Inc., a Delaware corporation (the "Company"), pursuant to a Purchase Agreement
(the "Purchase Agreement") to be entered into by and among the Company and each
of you, as representatives of the several purchasers named therein (the
"Purchasers"), the undersigned hereby agrees that without the prior written
consent of Goldman, Sachs & Co. the undersigned will not, directly or
indirectly, sell, offer to sell, solicit an offer to buy, pledge, contract to
sell, grant any option to purchase, or otherwise transfer or dispose of, or
register or announce the sale or offering of any shares of capital stock of the
Company, or any securities that are convertible into or exercisable or
exchangeable for capital stock of the Company beneficially owned by them
beginning on the date of the Purchase Agreement and continuing for a period of
90 days following the date of such agreement or, if applicable, until the date
on which the Company notifies the undersigned that it no longer intends to
proceed with the proposed offering of Shares; provided, however, that the
undersigned may without such consent (i) exercise any outstanding stock options
granted pursuant to existing employee benefit plans of the Company referred to
in the Offering Circular (as defined in the Purchase Agreement), and (ii) with
prior notice to Goldman, Sachs & Co., make (x) bona fide gifts to persons, or
(y) transfers or sales to affiliates of the undersigned, in each case who agree
in writing with Goldman, Sachs & Co. to be bound by the provisions of this
letter. If for any reason the Purchase Agreement shall be terminated prior to
the First Time of Delivery (as defined in the Purchase Agreement), this letter
agreement shall likewise be terminated.
<PAGE> 34
This letter is being executed as an inducement for the Purchasers
to execute the Purchase Agreement and is solely for the benefit of the
Purchasers and their respective successors, assigns, heirs and personal
representatives, and no other person shall acquire any right by virtue of this
letter. This letter shall be governed by and construed in accordance with the
laws of the State of New York. This letter may be amended, modified or
supplemented only by written instrument signed by the undersigned and Goldman,
Sachs & Co.
Very truly yours,
<PAGE> 1
EXHIBIT 4.2
IXC COMMUNICATIONS, INC.
2,700,000 DEPOSITARY SHARES EACH REPRESENTING 1/20 OF A SHARE OF
6-3/4% CUMULATIVE CONVERTIBLE PREFERRED STOCK
(LIQUIDATION PREFERENCE $50 PER SHARE)
REGISTRATION RIGHTS AGREEMENT
March 30, 1998
Goldman, Sachs & Co.,
Credit Suisse First Boston Corporation
Merrill Lynch & Co.
Merrill Lynch, Pierce, Fenner & Smith Incorporated
Morgan Stanley & Co. Incorporated
As representatives of the several Purchasers
named in Schedule I hereto
c/o Goldman, Sachs & Co.
85 Broad Street
New York, New York 10004
Ladies and Gentlemen:
IXC Communications, Inc., a Delaware corporation (the "Company"),
proposes to sell to the Purchasers named in Schedule I hereto (the
"Purchasers"), upon the terms set forth in a purchase agreement dated March 25,
1998 (the "Purchase Agreement"), 2,700,000 Depositary Shares (each a "Depositary
Share" and collectively, the "Depositary Shares"). Each Depositary Share
represents ownership of 1/20 of a share of 6-3/4% Cumulative Convertible
Preferred Stock, $.01 par value per share (liquidation preference $1,000 per
share) (the "Convertible Preferred Stock"), deposited under the Deposit
Agreement dated as of March 30, 1998, among the Company, BankBoston, N.A., as
Depositary (the "Depositary"), and all holders from time to time of depositary
receipts issued thereunder (the "Depositary Receipts"). The Depositary Shares
will be convertible into shares of Common Stock, par value $.01 per share, of
the Company (the "Common Stock") as set forth in the Offering Circular dated
March 25, 1997, subject to adjustment in accordance with the Certificate of
Designation of the Convertible Preferred Stock (the "Certificate"). The
Depositary Shares, the Convertible Preferred Stock and the Common Stock issuable
upon conversion of the Convertible Preferred Stock, or paid as dividends
thereon, are collectively herein referred to as the "Securities" and each of
them as held singularly is herein referred to as a "Security". As an inducement
to the Purchasers to enter into the Purchase Agreement and in satisfaction of a
condition to the Purchasers' obligations thereunder, the Company agrees with the
Purchasers, (i) for the benefit of the Purchasers and (ii) for the benefit of
the holders of the Securities from time to time (each of the foregoing a
"Holder" and together the "Holders"), as follows:
1. Shelf Registration. So long as any Transfer Restricted Security
(as defined in Section 5 hereof) exists, the Company shall take the following
actions:
<PAGE> 2
(a) The Company shall, at its cost, prepare and, on or before May 14,
1998, file with the Securities and Exchange Commission (the "Commission") and
thereafter shall use its best efforts to cause to be declared effective on or
prior to June 26, 1998 a registration statement on the appropriate form (the
"Shelf Registration Statement") covering the offer and sale of the Transfer
Restricted Securities by the Holders thereof from time to time in accordance
with the methods of distribution set forth in the Shelf Registration Statement
and Rule 415 under the Securities Act of 1933 (the "Securities Act")
(hereinafter, the "Shelf Registration").
(b) The Company shall use its best efforts to keep the Shelf
Registration Statement continuously effective, in order to permit the prospectus
included therein to be lawfully delivered by the Holders of the relevant
Securities, until such time as all the Securities covered by the Shelf
Registration Statement have been sold pursuant thereto or may be sold pursuant
to Rule 144(k) under the Securities Act (or any successor rule thereof),
assuming for this purpose that the Holders thereof are not affiliates of the
Company (in any such case, such period being called the "Shelf Registration
Period"). The Company shall be deemed not to have used its best efforts to keep
the Shelf Registration Statement effective during the requisite period if it
voluntarily takes any action that would result in Holders of Securities covered
thereby not being able to offer and sell such Securities during that period,
unless (i) such action is required by applicable law or (ii) upon the occurrence
of any event contemplated by paragraph 2(b)(v) below, such action is taken by
the Company in good faith and for valid business reasons and the Company
thereafter promptly complies with the requirements of paragraph 2(h) below if
the Company has determined in good faith that there are no material legal or
commercial impediments in so doing.
(c) Notwithstanding any other provisions of this Agreement to the
contrary, the Company shall cause (other than information required to be
supplied by the selling Holders pursuant to this Agreement) (i) the Shelf
Registration Statement and the related prospectus and any amendment or
supplement thereto to comply in all material respects with the applicable
requirements of the Securities Act and the rules and regulations of the
Commission thereunder, (ii) the Shelf Registration Statement and any amendment
thereto not to contain, when it becomes effective, an untrue statement of a
material fact or omit to state a material fact required to be stated therein or
necessary to make the statements therein not misleading and (iii) any prospectus
forming a part of the Shelf Registration Statement, and any amendment or
supplement to such prospectus, not to contain, as of the date of such prospectus
or amendment or supplement, any untrue statement of a material fact or omit to
state a material fact required to be stated therein or necessary in order to
make the statements therein, in light of the circumstances under which they were
made, not misleading.
(d) The Company shall, from time to time, cause the Shelf
Registration Statement to be amended to cover additional shares of Common Stock
issued in payment of dividends, if any, as permitted in accordance with the
terms of the Convertible Preferred Stock.
2. Registration Procedures. In connection with the Shelf
Registration contemplated by Section 1 hereof the following provisions shall
apply so long as any Transfer Restricted Security exists:
(a) The Company shall (i) furnish, without charge, to the Purchasers,
prior to the filing thereof with the Commission, a copy of the Shelf
Registration Statement and each amendment thereof and each amendment or
supplement, if any, to the prospectus included therein and, in the event that
the Purchasers (with respect to any portion of an unsold allotment from the
original offering) are participating in the Shelf Registration Statement, shall
use its best efforts to reflect in each such document, when so filed with the
Commission, such comments as such Purchasers reasonably may propose, (ii)
include in each such document the names of the Holders who propose to sell
Transfer Restricted Securities pursuant to the Shelf Registration
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<PAGE> 3
Statement as selling security holders and (iii) file pursuant to Rule 424(b)
under the Securities Act an amendment to the Shelf Registration Statement or
amend the prospectus to cover new Holders of Securities upon written notice by
such new Holders to the effect.
(b) The Company shall give written notice to the Purchasers and the
Holders (which notice pursuant to clauses (ii)-(v) hereof shall be accompanied
by an instruction, if applicable, to suspend the use of the prospectus until the
requisite changes have been made):
(i) when the Shelf Registration Statement or any amendment
thereto has been filed with the Commission and when the Shelf
Registration Statement or any post-effective amendment thereto has
become effective;
(ii) of any request by the Commission for amendments or
supplements to the Shelf Registration Statement or the prospectus
included therein or for additional information;
(iii) of the issuance by the Commission of any stop order
suspending the effectiveness of the Shelf Registration Statement or the
initiation of any proceedings for that purpose;
(iv) of the receipt by the Company or its legal counsel of any
notification with respect to the suspension of the qualification of the
Securities for sale in any jurisdiction or the initiation or threatening
of any proceeding for such purpose; and
(v) of the happening of any event that requires the Company to
make changes in the Shelf Registration Statement or the prospectus in
order that the Shelf Registration Statement and the prospectus do not
contain an untrue statement of a material fact and do not omit to state
a material fact required to be stated therein or necessary to make the
statements therein (in the case of the prospectus, in light of the
circumstances under which they were made) not misleading, which written
notice need not provide any detail as to the nature of such event.
(c) The Company shall use reasonable commercial efforts to obtain the
withdrawal at the earliest possible time, of any order suspending the
effectiveness of the Shelf Registration Statement.
(d) The Company shall furnish to each Holder of Transfer Restricted
Securities included within the coverage of the Shelf Registration, without
charge, one copy of the Shelf Registration Statement and any post-effective
amendment thereto, including financial statements and schedules, and, if the
Holder so requests in writing, all exhibits thereto (other than those, if any,
incorporated by reference).
(e) The Company shall, during the Shelf Registration Period, deliver
to each Holder of Transfer Restricted Securities included within the coverage of
the Shelf Registration Statement, without charge, as many copies of the
prospectus (including each preliminary prospectus) included in the Shelf
Registration Statement and any amendment or supplement thereto as such person
may reasonably request. The Company consents, subject to the provisions of this
Agreement, to the use of the then current prospectus or any amendment thereto,
together with any supplement thereto, by each of the selling Holders in
connection with the offering and sale of the Transfer Restricted Securities
covered by the prospectus, or any amendment or supplement thereto, included in
the Shelf Registration Statement.
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<PAGE> 4
(f) Prior to any public offering of the Securities pursuant to the
Shelf Registration Statement, the Company shall register or qualify or cooperate
with the Holders of the Transfer Restricted Securities included therein and
their respective counsel in connection with the registration or qualification of
such Securities for offer and sale under the securities or "blue sky" laws of
such states of the United States as any such Holder reasonably requests in
writing and do any and all other acts or things necessary or advisable to enable
the offer and sale in such jurisdictions of the Securities covered by the Shelf
Registration Statement; provided, however, that the Company shall not be
required to (i) qualify generally to do business in any jurisdiction where it is
not then otherwise required to be so qualified or (ii) take any action which
would subject it to general service of process or to taxation in any
jurisdiction where it is not then so subject.
(g) The Company shall cooperate with the Holders of the Transfer
Restricted Securities to facilitate the timely preparation and delivery of
certificates representing the Securities to be sold pursuant to the Shelf
Registration Statement free of any restrictive legends and in such denominations
and registered in such names as the Holders may request a reasonable period of
time prior to sales of the Securities pursuant to the Shelf Registration
Statement.
(h) Upon the occurrence of any event contemplated by paragraphs (ii)
through (v) of Section 2(b) above during the period for which the Company is
required to maintain an effective Shelf Registration Statement, the Company
shall promptly prepare and file a post-effective amendment to the Shelf
Registration Statement or an amendment or supplement to the related prospectus
and any other required document so that, as thereafter delivered to Holders or
purchasers of Securities, the prospectus will not contain an untrue statement of
a material fact or omit to state any material fact required to be stated therein
or necessary to make the statements therein, in light of the circumstances under
which they were made, not misleading. If the Company notifies the Purchasers or
the Holders, in accordance with paragraphs (ii) through (v) of Section 2(b)
above, to suspend the use of the prospectus until the requisite changes to the
prospectus have been made, then the Purchasers and the Holders shall suspend use
of such prospectus.
(i) The Company will comply with all rules and regulations of the
Commission to the extent and so long as they are applicable to the Shelf
Registration and will make generally available to its security holders (or
otherwise provide in accordance with Section 11(a) of the Securities Act) an
earnings statement satisfying the provisions of Section 11(a) of the Securities
Act, no later than 45 days after the end of a 12-month period (or 90 days, if
such period is a fiscal year) beginning with the first month of the Company's
first fiscal quarter commencing after the effective date of the Shelf
Registration Statement, which statement shall cover such 12-month period.
(j) The Company may require each Holder of Securities to be sold
pursuant to the Shelf Registration Statement to furnish to the Company such
information regarding the Holder and the distribution of the Securities by such
Holder as the Company may from time to time reasonably require for inclusion in
the Shelf Registration Statement, and the Company may exclude from such
registration the Securities of any Holder that fails to furnish such information
within a reasonable time after receiving such request.
(k) The Company shall (i) make reasonably available for inspection by
the Holders of the Transfer Restricted Securities and any attorney, accountant
or other agent retained by the Holders of the Securities all relevant financial
and other records, pertinent corporate documents and properties of the Company
and (ii) cause the Company's officers, directors, employees, accountants and
auditors to supply all relevant information reasonably requested by the Holders
of the Securities or any such attorney, accountant or agent in connection with
the Shelf Registration Statement, in each case, as shall be reasonably necessary
to
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<PAGE> 5
enable such persons to conduct a reasonable investigation within the meaning of
Section 11 of the Securities Act; provided, however, that the foregoing
inspection and information gathering (i) shall be coordinated by you and, on
behalf of the other parties, by one counsel (the "Designated Counsel")
designated by the Holders of a majority in principal amount of the Securities
covered by the Shelf Registration Statement (provided that Holders of Depositary
Shares representing shares of Convertible Preferred Stock shall be deemed to be
Holders of the aggregate number of Convertible Preferred Stock which may be
obtained upon surrender of all of Holders' Depositary Shares, provided further
that Holders of Common Stock issued upon the conversion of the Convertible
Preferred Stock shall be deemed to be Holders of the aggregate number of
Convertible Preferred Stock from which such Common Stock was converted) and (ii)
shall not be available for any such Holder that is a competitor of the Company,
and provided further that such Holders shall keep the information so received
confidential.
(l) The Company will use its best efforts to cause the Common Stock
relating to such Shelf Registration Statement to be listed on the Nasdaq
National Market.
(m) The Company shall use reasonable commercial efforts to take all
other steps necessary to effect the registration of the Transfer Restricted
Securities covered by the Shelf Registration Statement contemplated hereby.
3. Registration Expenses. The Company shall bear all fees
and expenses incurred in connection with the performance of its obligations
under Sections 1 through 2 hereof, whether or not the Shelf Registration
Statement is filed or becomes effective.
4. Indemnification. (a) The Company agrees to indemnify and hold
harmless each Holder and each person, if any, who controls such Holder within
the meaning of the Securities Act or the Securities Exchange Act of 1934 (the
"Exchange Act") (each Holder and such controlling persons are referred to
collectively as the "Indemnified Parties") from and against any losses, claims,
damages or liabilities, joint or several, or any actions in respect thereof
(including any losses, claims, damages, liabilities or actions relating to
purchases and sales of the Securities) to which each Indemnified Party becomes
subject under the Securities Act, the Exchange Act or otherwise, insofar as such
losses, claims, damages, liabilities or actions arise out of or are based upon,
any untrue statement or alleged untrue statement of a material fact contained in
the Shelf Registration Statement or prospectus or in any amendment or supplement
thereto or in any preliminary prospectus relating to the Shelf Registration, or
arise out of, or are based upon, the omission or alleged omission to state
therein a material fact required to be stated therein or necessary to make the
statements therein not misleading, and subject to subsection (c) below, shall
reimburse, as incurred, the Indemnified Parties for any legal or other expenses
reasonably incurred by them in connection with investigating or defending any
such loss, claim, damage, liability or action in respect thereof; provided,
however, that the Company shall not be liable in any such case to the extent
that such loss, claim, damage, liability, or action in respect thereof arises
out of or is based upon (x) the use of any prospectus in violation of the last
sentence of Section 2(h), or (y) any untrue statement or alleged untrue
statement or omission or alleged omission made in the Shelf Registration
Statement or prospectus or in any amendment or supplement thereto or in any
preliminary prospectus relating to the Shelf Registration in reliance upon, and
in conformity with, written information pertaining to such Holder and furnished
to the Company by or on behalf of such Holder specifically for inclusion
therein; provided further, however, that this indemnity agreement will be
separate from any liability which the Company may otherwise have to such
Indemnified Party; provided further, however, that with respect to any untrue
statement or alleged untrue statement in or omission or alleged omission from
any prospectus, the indemnity agreement contained in this subsection (a) shall
not inure to the benefit of any Holder that sold the Securities concerned
-5-
<PAGE> 6
to the person asserting any such losses, claims, damages or liabilities, to the
extent that any such loss, claim, damage or liability of such Holder results
from the fact that there was not sent or given to such person, at or prior to
the written confirmation of the sale of such Securities to such person, a copy
of the prospectus if the Company had previously furnished copies thereof to such
Holder and such prospectus corrected such untrue statement or omission or
alleged untrue statement or omission.
(b) Each Holder, severally and not jointly, will indemnify and hold
harmless the Company and each person, if any, who controls the Company within
the meaning of the Securities Act or the Exchange Act from and against any
losses, claims, damages or liabilities or any actions in respect thereof, to
which the Company or any such controlling person becomes subject under the
Securities Act, the Exchange Act or otherwise, insofar as such losses, claims,
damages, liabilities or actions arise out of or are based upon any untrue
statement or alleged untrue statement of a material fact contained in a Shelf
Registration Statement or prospectus or in any amendment or supplement thereto
or in any preliminary prospectus relating to a Shelf Registration, or arise out
of, or are based upon the omission or alleged omission to state therein a
material fact necessary to make the statements therein not misleading, but in
each case only to the extent that the untrue statement or omission or alleged
untrue statement or omission was made in reliance upon and in conformity with
written information pertaining to such Holder and furnished to the Company by or
on behalf of such Holder specifically for inclusion therein; and, subject to the
limitation set forth immediately preceding this clause, and to subsection (c)
below, shall reimburse, as incurred, the Company for any legal or other expenses
reasonably incurred by the Company or any such controlling person in connection
with investigating or defending any loss, claim, damage, liability or action in
respect thereof; provided, however, that such Holder shall not have any
liability under this clause (b) in excess of the aggregate purchase price paid
by such Holder for the Depositary Shares purchased by such Holder. This
indemnity agreement will be separate from any liability which such Holder may
otherwise have to the Company or any of its controlling persons.
(c) Promptly after receipt by an indemnified party under this Section
4 of notice of the commencement of any action or proceeding (including a
governmental investigation), such indemnified party will, if a claim in respect
thereof is to be made against the indemnifying party under this Section 4,
notify the indemnifying party of the commencement thereof; but the omission so
to notify the indemnifying party will not, in any event, relieve the
indemnifying party from any obligations to any indemnified party other than the
indemnification obligation provided in subsections (a) or (b) above. In case any
such action is brought against any indemnified party, and it notifies the
indemnifying party of the commencement thereof, the indemnifying party will be
entitled to participate therein and, to the extent that it may wish, jointly
with any other indemnifying party similarly notified, to assume the defense
thereof, with counsel reasonably satisfactory to such indemnified party (who
shall not, except with the consent of the indemnified party, be counsel to the
indemnifying party), and after notice from the indemnifying party to such
indemnified party of its election so to assume the defense thereof the
indemnifying party will not be liable to such indemnified party under this
Section 4 for any legal or other expenses, other than reasonable costs of
investigation, subsequently incurred by such indemnified party in connection
with the defense thereof. No indemnifying party shall, without the prior written
consent of the indemnified party, effect any settlement of any pending or
threatened action in respect of which any indemnified party is or could have
been a party and indemnity could have been sought hereunder by such indemnified
party unless such settlement includes an unconditional release of such
indemnified party from all liability on any claims that are the subject matter
of such action.
(d) If the indemnification provided for in this Section 4 is
unavailable or insufficient to hold harmless an indemnified party under
subsections (a) or (b) above, then each indemnifying party shall contribute to
the amount paid or payable by such indemnified party as a result of the losses,
claims, damages
-6-
<PAGE> 7
or liabilities (or actions in respect thereof) referred to in subsections (a) or
(b) above (i) in such proportion as is appropriate to reflect the relative
benefits received by the indemnifying party or parties on the one hand and the
indemnified party on the other from the registration of the Securities, pursuant
to the Shelf Registration, or (ii) if the allocation provided by the foregoing
clause (i) is not permitted by applicable law, in such proportion as is
appropriate to reflect not only the relative benefits referred to in clause (i)
above but also the relative fault of the indemnifying party or parties on the
one hand and the indemnified party on the other, in connection with the
statements or omissions that resulted in such losses, claims, damages or
liabilities (or actions in respect thereof), as well as any other relevant
equitable considerations. The relative fault of the parties shall be determined
by reference to, among other things, whether the untrue or alleged untrue
statement of a material fact or the omission or alleged omission to state a
material fact relates to information supplied by the Company on the one hand or
such Holder or such other indemnified party, as the case may be, on the other,
and the parties' relative intent, knowledge, access to information and
opportunity to correct or prevent such statement or omission. The amount paid by
an indemnified party as a result of the losses, claims, damages or liabilities
referred to in the first sentence of this subsection (d) shall be deemed to
include any legal or other expenses reasonably incurred by such indemnified
party in connection with investigating or defending any action or claim which is
the subject of this subsection (d). Notwithstanding any other provision of this
subsection (d), the Holders shall not be required to contribute any amount in
excess of the amount by which the net proceeds received by such Holders from the
sale of the Securities pursuant to the Shelf Registration Statement exceeds the
amount of damages which such Holders have otherwise been required to pay by
reason of such untrue or alleged untrue statement or omission or alleged
omission. No person guilty of fraudulent misrepresentation (within the meaning
of Section 11(f) of the Securities Act) shall be entitled to contribution from
any person who was not guilty of such fraudulent misrepresentation. For purposes
of this paragraph (d), each person, if any, who controls such indemnified party
within the meaning of the Securities Act or the Exchange Act shall have the same
rights to contribution as such indemnified party and each person, if any, who
controls the Company within the meaning of the Securities Act or the Exchange
Act shall have the same rights to contribution as the Company.
(e) The agreements contained in this Section 4 shall survive the sale
of the Securities pursuant to the Shelf Registration Statement and shall remain
in full force and effect, regardless of any termination or cancellation of this
Agreement or any investigation made by or on behalf of any indemnified party.
5. Liquidated Damages Under Certain Circumstances. (a) Liquidated
Damages (the "Liquidated Damages") shall accrue with respect to the Depositary
Shares (and the corresponding Convertible Preferred Stock) which are Transfer
Restricted Securities upon the occurrence of any of the following events (each
such event in clauses (i), (ii) and (iii) below being herein called a
"Registration Default"):
(i) if by May 14, 1998, the Shelf Registration Statement
has not been filed with the Commission;
(ii) if by June 26, 1998, the Shelf Registration Statement
has not been declared effective by the Commission; or
(iii) if after the Shelf Registration Statement is declared
effective (A) the Shelf Registration Statement thereafter ceases to be
effective; or (B) the Shelf Registration Statement or the related
prospectus ceases to be usable (in each case except as permitted in
paragraph (c) below) in connection with resales of Transfer Restricted
Securities in accordance with and during the periods
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<PAGE> 8
specified herein because either (1) any event occurs as a result of
which the related prospectus forming part of such Shelf Registration
Statement would include any untrue statement of a material fact or omit
to state any material fact necessary to make the statements therein in
the light of the circumstances under which they were made not
misleading, or (2) it shall be necessary to amend such Shelf
Registration Statement or supplement the related prospectus, to comply
with the Securities Act or the Exchange Act or the respective rules
thereunder.
(b) Liquidated Damages shall accrue with respect to the Depositary
Shares (and the corresponding Convertible Preferred Stock) which are Transferred
Restricted Securities from and including the date on which any such Registration
Default shall occur until all such Registration Defaults have been cured
according to the following:
(i) with respect to the first 45-day period following the
occurrence of such Registration Default, at a rate of $0.25 per year per
Depositary Share ($5.00 per year per $1,000 in liquidation preference of
the Convertible Preferred Stock); and
(ii) with respect to any period beyond 45 days following
the occurrence of such Registration Default, at a rate of an additional
$0.125 per year per Depositary Share (an additional $2.50 per year per
$1,000 in liquidation preference of the Convertible Preferred Stock).
The amount of Liquidated Damages for each Depositary Share (and each
corresponding share of Convertible Preferred Stock) shall be determined by
multiplying the applicable Liquidated Damages rate, specified above, by a
fraction, the numerator of which is the number of days such Liquidation Damages
rate was applicable during such period (determined on the basis of a 360-day
year comprised of twelve 30-day months), and the denominator of which is 360.
(c) A Registration Default referred to in Section 5(a)(iii) shall be
deemed not to have occurred and be continuing in relation to the Shelf
Registration Statement or the related prospectus if (i) such Registration
Default has occurred solely as a result of one of the following, each of which
is referred to herein as a "Permitted Interruption:" (x) the filing of a
post-effective amendment to the Shelf Registration Statement to incorporate
annual audited financial information with respect to the Company where such
post-effective amendment is not yet effective and needs to be declared effective
to permit Holders to use the related prospectus or (y) material business
developments, with respect to the Company that would need to be described in the
Shelf Registration Statement or the related prospectus to make such Shelf
Registration Statement or related prospectus accurate and complete and (ii) in
the case of clause (y), the Company proceeds promptly and in good faith to amend
or supplement the Shelf Registration Statement and related prospectus to
describe such events if the Company has determined in good faith that there are
no material legal or commercial impediments in so doing; provided, however, that
a Permitted Interruption shall expire and will not prevent a Registration
Default from occurring or continuing to the extent it exceeds 45 days for a
single period. Multiple Permitted Interruptions shall not exceed 60 days for
more than one period in any calender year or 120 days in the aggregate.
Liquidated Damages shall accrue in accordance with the foregoing sentence from
the date that such Permitted Interruption expires until such Registration
Default is cured.
(d) Any amounts of Liquidated Damages due pursuant to this Section 5
will be payable in such form and on such terms and conditions as provided in the
Certificate with respect to the Convertible Preferred Stock. In addition to the
Liquidated Damages with respect to the Depositary Shares (and the corresponding
Convertible Preferred Stock) Holders may receive Liquidated Damages with respect
to Common
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<PAGE> 9
Stock issued by the Company as dividends. The Liquidated Damages amount per
share of Common Stock will be equal to the Liquidated Damages per Depositary
Share multiplied by 20 and then divided by the conversion rate of Convertible
Preferred Stock then applicable pursuant to the Certificate. Notwithstanding
anything to the contrary contained in this Section 5, the Company will not be
required to pay Liquidated Damages with respect to more than one Registration
Default during any single period.
(e) "Transfer Restricted Securities" means each Security (including
additional shares of Convertible Preferred Stock issued in payment of dividends
on the Convertible Preferred Securities, if any, as permitted in accordance with
the terms of the Convertible Preferred Stock) until (i) the date on which such
Security has been effectively registered under the Securities Act and disposed
of in accordance with the Shelf Registration Statement or (ii) the date on which
such Security is saleable pursuant to Rule 144(k) under the Securities Act (or
any successor rule thereof) or would be saleable pursuant to Rule 144(k) under
the Securities Act had it not been held by, or had never been held by, an
affiliate of the Company.
6. Rules 144 and 144A. So long as any Transfer Restricted Security
exists, the Company shall use its best efforts to file the reports required to
be filed by it under the Securities Act and the Exchange Act in a timely manner
and, if at any time the Company is not required to file such reports, it will,
upon the request of any Holder of Transfer Restricted Securities, make publicly
available other information so long as necessary to permit sales of its
securities pursuant to Rules 144 and 144A. The Company covenants that, if in the
event the Company is no longer subject to Sections 13 or 15(d) of the Exchange
Act, it will take such further action as any Holder of Transfer Restricted
Securities may reasonably request, all to the extent required from time to time
to enable such Holder to sell Transfer Restricted Securities without
registration under the Securities Act within the limitation of the exemptions
provided by Rules 144 and 144A (including the requirements of Rule 144A(d)(4)).
The Company will provide a copy of this Agreement to prospective purchasers of
Securities identified to the Company by the Purchasers upon request.
Notwithstanding the foregoing, nothing in this Section 6 shall be deemed to
require the Company to register any of its securities pursuant to the Exchange
Act.
7. Miscellaneous. (a) Amendments and Waivers. The provisions of this
Agreement may not be amended, modified or supplemented, and waivers or consents
to departures from the provisions hereof may not be given, except by the Company
and the written consent of the Holders of a majority of the Transfer Restricted
Securities (provided that Holders of Depositary Shares representing shares of
Convertible Preferred Stock shall be deemed to be Holders of the aggregate
number of Convertible Preferred Stock which may be obtained upon surrender of
all of Holders' Depositary Shares, provided further that Holders of Common Stock
issued upon conversion of Convertible Preferred Stock shall be deemed to be
Holders of the aggregate number of Convertible Preferred Stock from which such
Common Stock was converted) affected by such amendment, modification,
supplement, waiver or consents.
(b) Notices. All notices and other communications provided for or
permitted hereunder shall be made in writing by hand delivery, first-class mail,
facsimile transmission, or air courier which guarantees overnight delivery:
(1) if to the Holders, at the most current address given by
the Holders of record to the Company in accordance with the provisions
of this Section 7(b), which address initially is, with respect
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<PAGE> 10
to each Holder, the address of such Holder to which confirmation of the
sale of the Depositary Shares to such Holder was first sent by the
Purchasers, with a copy in like manner to you as follows:
Goldman, Sachs & Co.,
Credit Suisse First Boston Corporation
Merrill Lynch & Co.
Merrill Lynch, Pierce, Fenner & Smith Incorporated
Morgan Stanley & Co. Incorporated
c/o Goldman, Sachs & Co.
85 Broad Street
New York, New York 10004
Fax No.: (212) 902-3000
Attention: Donald T. Hansen
with a copy to:
Shearman & Sterling
599 Lexington Avenue
New York, NY 10022
Fax No.: (212) 848-7179
Attention: Jim Scott, Esq.
(2) if to the Company, at its address as follows:
IXC Communications, Inc.
1122 Capital of Texas Highway South
Austin, Texas 78746
Fax No.: (512) 329-4717
Attention: Chief Financial Officer
with a copy to:
Riordan & McKinzie
695 Town Center Drive, Suite 1500
Costa Mesa, CA 92626
Fax No.: (714) 549-3244
Attention: Michael P. Whalen, Esq.
All such notices and communications shall be deemed to have been duly
given: at the time delivered by hand, if personally delivered; three business
days after being deposited in the mail, postage prepaid, if mailed; when receipt
is acknowledged by recipient's facsimile machine operator, if sent by facsimile
transmission; and on the day delivered, if sent by overnight air courier
guaranteeing next day delivery.
(c) No Inconsistent Agreements; Damages. The Company has not, as of
the date hereof, entered into, nor shall it, on or after the date hereof, enter
into, any agreement with respect to its securities that is inconsistent with the
rights granted to the Holders herein or otherwise conflicts with the provisions
hereof. Notwithstanding anything to the contrary contained in this Agreement, it
is hereby acknowledged and agreed
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<PAGE> 11
that the Company shall have no liability for monetary damages to the Purchasers
or any Holder for any breaches, failures to comply or violations by it of
Section 1 or 2 of this Agreement except as expressly provided in Section 4 or 5
hereof; provided, however, in the event that the Company breaches, fails to
comply or violates the provisions of Section 1 or 2 hereof, the Holders shall be
entitled to, and the Company shall not oppose the granting of, equitable relief,
including injunction and specific performance.
(d) Successors and Assigns. This Agreement shall inure to the benefit
of and be binding upon the successors and assigns of each of the parties,
including, without the need for an express assignment or any consent by the
Company thereto, subsequent Holders of Transfer Restricted Securities. The
Company hereby agrees to extend the benefits of this Agreement to any Holder of
Transfer Restricted Securities and any such Holder may specifically enforce the
provisions of this Agreement as if an original party hereto.
(e) Counterparts. This Agreement may be executed in any number of
counterparts and by the parties hereto in separate counterparts, each of which
when so executed shall be deemed to be an original and all of which taken
together shall constitute one and the same agreement.
(f) Headings. The headings in this Agreement are for convenience of
reference only and shall not limit or otherwise affect the meaning hereof.
(g) Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED
IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK WITHOUT REGARD TO
PRINCIPLES OF CONFLICTS OF LAWS.
By the execution and delivery of this Agreement, the Company submits to
the nonexclusive jurisdiction of any federal or state court in the State of New
York.
(h) Severability. If any one or more of the provisions contained
herein, or the application thereof in any circumstance, is held invalid, illegal
or unenforceable, the validity, legality and enforceability of any such
provision in every other respect and of the remaining provisions contained
herein shall not be affected or impaired thereby.
(i) Securities Held by the Company. Whenever the consent or approval
of Holders of a specified percentage of Transfer Restricted Securities is
required hereunder, Securities held by the Company or its affiliates shall not
be counted in determining whether such consent or approval was given by the
Holders of such required percentage.
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<PAGE> 12
If the foregoing is in accordance with your understanding of our
agreement, please sign and return to the Company a counterpart hereof, whereupon
this instrument, along with all counterparts, will become a binding agreement
among the Purchasers and the Company in accordance with its terms.
Very truly yours,
IXC COMMUNICATIONS, INC.
By: /s/ STUART K. COPPENS
------------------------------------
Name: Stuart K. Coppens
Title: Chief Accounting Officer
The foregoing Registration
Rights Agreement is hereby confirmed
and accepted as of the date first
above written.
Goldman, Sachs & Co.
Credit Suisse First Boston Corporation
Merrill Lynch & Co.
Merrill Lynch, Pierce, Fenner & Smith Incorporated
Morgan Stanley & Co. Incorporated
By: /s/ GOLDMAN, SACHS & CO.
------------------------------------
(Goldman, Sachs & Co.)
On behalf of each of the Purchasers
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<PAGE> 13
SCHEDULE I
Purchasers
Goldman, Sachs & Co.
Credit Suisse First Boston Corporation
Merrill Lynch, Pierce, Fenner & Smith Incorporated
Morgan Stanley & Co. Incorporated
<PAGE> 1
EXHIBIT 4.3
IXC COMMUNICATIONS, INC.
BANKBOSTON, N.A.
AND
THE HOLDERS FROM TIME TO TIME OF
THE DEPOSITARY RECEIPTS DESCRIBED HEREIN
---------------------
DEPOSIT AGREEMENT
---------------------
DATED AS OF MARCH 30, 1998
<PAGE> 2
DEPOSIT AGREEMENT dated as of March 30, 1998, among IXC COMMUNICATIONS,
INC., a Delaware corporation, (the "Company"), BANKBOSTON, N.A., a national
banking association banking corporation, and the holders from time to time of
the Receipts described herein.
WHEREAS, it is desired to provide as hereinafter set forth in this
Deposit Agreement, for the deposit from time to time of shares of the Company's
6 3/4% Cumulative Convertible Preferred Stock, $.01 par value, liquidation
preference $1,000 per share (the "Stock"), with the Depositary for the purposes
set forth in this Deposit Agreement and for the issuance hereunder of Receipts
evidencing Depositary Shares in respect of the Stock so deposited; and
WHEREAS, the Receipts are to be substantially in the form of Exhibit A
annexed hereto, with appropriate insertions, modification and omissions, as
hereinafter provided in this Deposit Agreement;
NOW, THEREFORE, in consideration of the premises, the parties hereto
agree as follows:
ARTICLE I
Definitions
The following definitions shall for all purposes, unless otherwise
indicated, apply to the respective terms used in this Deposit Agreement;
"Certificate" shall mean the Certificate of Designation of Preferences
and Rights filed or to be filed with the Secretary of State of the State of
Delaware establishing the Stock as a series of preferred stock, of the Company.
"Company" shall mean IXC Communications, Inc., a Delaware corporation,
and its successors.
"Deposit Agreement" shall mean this Deposit Agreement, as amended or
supplemented from time to time.
"Depositary" shall mean BankBoston, N.A., or any successor as Depositary
hereunder.
"Depositary Shares" shall mean Depositary Shares, each representing 1/20
of a share of Stock and evidenced by a Receipt.
"Depositary's Agent' shall mean an agent appointed by the Depositary
pursuant to Section 7.05.
"Depositary's Office" shall mean the principal corporate trust office of
the Depositary at 150 Royall Street, Canton, Massachusetts, at which at any
particular time its depositary receipt business shall be administered.
<PAGE> 3
"Holder" as applied to a Receipt shall mean the person in whose name a
Receipt is registered on the books of the Depositary maintained for such
purpose.
"Receipt" shall mean one of the Depositary Receipts, substantially in
the form set forth as Exhibit A hereto, issued hereunder, whether in definitive
or temporary forms and evidencing the number of Depositary Shares held of record
by the holder of such Depositary Shares.
"Registrar" shall mean the Depositary or such other bank or trust
company that shall be appointed to register ownership and transfers of Receipts
as herein provided as well as to effect transfers and the distribution of
dividends with respect to the Stock.
"Securities Act" shall mean the Securities Act of 1933, as amended.
"Stock" shall mean shares of the Company's 6 3/4% Cumulative Convertible
Preferred Stock, $.01 par value, liquidation preference $1,000 per share.
ARTICLE II
Form of Receipts, Deposit of Stock,
Execution and Delivery, Transfer, Surrender and Redemption of Receipts
SECTION 2.01 Form and Transfer of Receipts. Definitive Receipts shall be
engraved or printed or lithographed on steel-engraved borders, with appropriate
insertions, modifications and omissions, as hereinafter provided. Pending the
preparation of definitive Receipts, the Depositary, upon the written order of
the Company delivered in compliance with Section 2.02, shall execute and deliver
temporary Receipts that are printed, lithographed, typewritten, mimeographed or
otherwise substantially of the tenor of the definitive Receipts in lieu of which
they are issued and with such appropriate insertions, omissions, substitutions
and other variations as the persons executing such Receipts may determine, as
evidenced by their execution of such Receipts. If temporary Receipts are issued,
the Company and the Depositary will cause definitive Receipts to be prepared
without unreasonable delay. After the preparation of definitive Receipts, the
temporary Receipts shall be exchangeable for definitive Receipts upon surrender
of the temporary Receipts at the Depositary's Office, without charge to the
holder. Upon surrender for cancellation of any one or more temporary Receipts,
the Depositary shall execute and deliver in exchange therefor definitive
Receipts representing the same number of Depositary shares as are represented by
the surrendered temporary Receipt or Receipts. Such exchange shall be made at
the Company's expense and without any charge therefor. Until so exchanged, the
temporary Receipts shall in all respects be entitled to the same benefits under
this Deposit Agreement, and with respect to the Stock, as definitive Receipts.
Receipts shall be executed by the Depositary by the manual or facsimile
signature of a duly authorized signatory of the Depositary and, if a Registrar
for the Receipts shall have been appointed, countersigned by the manual
signature of a duly authorized signatory of the Registrar; provided that no
Receipt shall be entitled to any benefits under this Deposit Agreement or be
valid or obligatory
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<PAGE> 4
for any purpose unless it shall have been executed manually by a duly authorized
signatory of the Depositary or, if a Registrar for the Receipts shall have been
appointed, by facsimile signature of a duly authorized signatory of the
Depositary and countersigned manually by a duly authorized signatory of such
Registrar. The Depositary shall record on its books each Receipt so signed and
delivered as hereinafter provided.
Receipts shall be in denominations of any number of whole Depositary
Shares.
Receipts may be endorsed with or have incorporated in the text thereof
such legends or recitals or changes not inconsistent with the provisions of this
Deposit Agreement as may be required by the Depositary or required to comply
with any applicable law or any regulation thereunder or with the rules and
regulations of any securities exchange or other trading market upon which the
Stock, the Depositary Shares or the Receipts may be listed or to conform with
any usage with respect thereto, or to indicate any special limitations or
restrictions to which any particular Receipts are subject.
Title to Depositary Shares evidenced by a Receipt that is properly
endorsed or accompanied by a properly executed instrument of transfer shall be
transferable by delivery with the same effect as in the case of a negotiable
instrument; provided, however, that until transfer of a Receipt shall be
registered on the books of the depositary as provided in Section 2.03, the
Depositary may, notwithstanding any notice to the contrary, treat the holder of
record at such time as the absolute owner thereof for the purpose of determining
the person entitled to distribution of dividends or other distributions or to
any notice provided for in this Deposit Agreement and for all other purposes.
SECTION 2.02 Deposit of Stock; Execution and Delivery of Receipts in
Respect Thereof. Subject to the terms and conditions of this Deposit Agreement,
the Company may from time to time deposit shares of Stock under this Deposit
Agreement by delivery to the Depositary of a certificate or certificates for the
Stock to be deposited, properly endorsed or accompanied, if required by the
Depositary, by a duly executed instrument of transfer or endorsement, in form
satisfactory to the Depositary, together with all such certifications as may be
required by the Depositary in accordance with the provisions of this Deposit
Agreement, and together with a written order of the Company directing the
Depositary to execute and deliver to, or upon the written order of, the person
or persons stated in such order a Receipt or Receipts for the number of
Depositary shares representing such deposited Stock.
Deposited Stock shall be held by the Depositary at the Depositary' s
Office or at such other place or places as the Depositary shall determine.
Upon receipt by the Depositary of a certificate or certificates for
Stock deposited in accordance with the provisions of this Section, together with
the other documents required as above specified, and upon recordation of the
Stock on the books of the Company in the name of the Depositary or its nominee,
the Depositary, subject to the terms and conditions of this Deposit Agreement,
shall execute and deliver, to or upon the order of the person or persons named
in the
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<PAGE> 5
written order delivered to the Depositary referred to in the first paragraph of
this Section, a Receipt or Receipts for the number of Depositary Shares
representing the Stock so deposited and registered in such name or names as may
be requested by such person or persons. The Depositary shall execute and deliver
such Receipt or Receipts at the Depositary's Office or such other offices, if
any, as the Depositary may designate. Delivery at other offices shall be at the
risk and expense of the person requesting such delivery.
Notwithstanding anything to the contrary contained herein, upon the
execution of this Deposit Agreement, the Company shall deliver to the Depositary
a duly executed certificate evidencing 135,000 shares of Stock, which Stock
shall entitle the Depositary to issue a total of 2,700,000 Depositary Shares.
Such Depositary Shares have already been sold by the Company to various
purchasers pursuant to a Purchase Agreement dated March 25, 1998 by and among
the Company and the purchasers named therein (the "Purchase Agreement"). It is
contemplated that the Depositary Shares purchased, including any additional
Depositary Shares purchased as a result of the exercise by such purchasers of
certain over-allotment options set forth in the Purchase Agreement, shall be
held, traded or otherwise disposed of on a book-entry-only basis through the
facilities of the Depositary Trust Company ("DTC") in accordance with the Letter
of Representations dated March 30, 1998 between the Depositary and DTC (the
"Letter of Representations"). Accordingly, upon receipt of the Stock, or any
additional shares of Stock subsequently issued and delivered by the Company to
the Depositary, the Depositary shall issue and deliver one or more Receipts
registered in the name of Cede & Co., or such other nominee as DTC shall
designate. The Depositary has agreed to hold such Receipts as custodian of DTC
according to the terms of the Letter of Representations. So long as the Letter
of Representations is in effect and DTC is acting as the securities depository
for the Depositary Shares, the Depositary shall deliver all notices and
correspondence and shall take all other action with respect to any disposition
of the Depositary Shares (including any declaration and payment of dividend on
or redemption, repurchase, stock-split, combination, reclassification,
conversion affecting the Depositary Shares) as required by the provisions of the
Letter of Representation. In the event of a conflict between the provisions of
the Letter of Representations, while in effect, and the provisions of this
Deposit Agreement, the provisions of the Letter of Representations shall
control.
Other than in the case of splits, combinations or other
reclassifications affecting the Stock, or in the case of dividend or other
distributions of Stock, if any, there shall be deposited hereunder not more than
155,250 shares of Stock.
SECTION 2.03 Registration of Transfer of Receipts. Subject to the terms
and conditions of this Deposit Agreement, including payment of the fees of the
Depositary as provided in Section 5.07, the Depositary shall register on its
books from time to time transfers of Receipts upon any surrender thereof by the
holder in person or by duly authorized attorney, properly endorsed or
accompanied by a properly executed instrument of transfer. Thereupon the
Depositary shall execute a new Receipt or Receipts evidencing the same aggregate
number of Depositary Shares as those evidenced by the Receipt or Receipts
surrendered and deliver such new Receipt or Receipts to or upon the order of the
person entitled thereto.
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<PAGE> 6
SECTION 2.04 Split-ups and Combinations of Receipts; Surrender of
Receipts and Withdrawal of Stock. Upon surrender of a Receipt or Receipts at the
Depositary's Office or at such other offices as it may designate for the purpose
of effecting a split-up or combination of such Receipt or Receipts, and subject
to the terms and conditions of this Deposit Agreement, the Depositary shall
execute and deliver a new Receipt or Receipts in the authorized denomination or
denominations requested, evidencing the aggregate number of Depositary Shares
evidenced by the Receipt or Receipts surrendered.
Any holder of a Receipt or Receipts representing any number of whole
shares of Stock may withdraw the Stock and all money and other property, if any,
represented thereby by surrendering such Receipt or Receipts at the Depositary's
Office or at such other offices as the Depositary may designate for such
withdrawals. Upon payment of the fees of the Depositary for the withdrawal of
Stock as provided in Section 5.07 and payment of all taxes and without
unreasonable delay, the Depositary shall deliver to such holder or to the person
or persons designated by such holder as hereinafter provided, the number of
whole shares of Stock and all money and other property, if any, represented by
the Depositary Shares evidenced by the Receipt or Receipts so surrendered for
withdrawal, but holders of such whole shares of Stock will not thereafter be
entitled to deposit such stock hereunder or to receive Depositary Shares
therefor. If a Receipt delivered by the holder to the Depositary in connection
with such withdrawal shall evidence a number of Depositary Shares in excess of
the number of Depositary Shares representing the number of whole shares of Stock
to be so withdrawn, the Depositary shall at the same time, in addition to such
number of whole shares of Stock and such money and other property, if any, to be
so withdrawn, deliver to such holder, or pursuant to his order, upon payment of
the fees of the Depositary for the withdrawal of Stock as provided in Section
5.07 and payment of all taxes, a new Receipt evidencing such excess number of
Depositary Shares. Delivery of the Stock and money and other property, if any,
being withdrawn may be made by the delivery of such certificates, documents of
title and other instruments as the Depositary may deem appropriate.
If the Stock and the money and other property, if any, being withdrawn
are to be delivered to a person or persons other than the holder of the Receipt
or Receipts being surrendered for withdrawal of Stock, such holder shall execute
and deliver to the Depositary a written order so directing the Depositary and
the Depositary may require that the Receipt or Receipts surrendered by such
holder for the withdrawal of such shares of Stock be properly endorsed in blank
or accompanied by a properly executed instrument of transfer in blank.
Delivery of the Stock and the money and other property, if any,
represented by Receipts surrendered for withdrawal shall he made by the
Depositary at the Depositary's Office, except that, at the request, risk and
expense of the holder surrendering such Receipt or Receipts and for the account
of the holder thereof, such delivery may be made at such other place as may be
designated by such holder.
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<PAGE> 7
SECTION 2.05 Limitations on Execution and Delivery, Transfers, Surrender
and Exchange of Receipts. As a condition precedent to the execution and
delivery, registration of transfer, split-up, combination, surrender or exchange
of any Receipt, the Depositary, any of the Depositary's Agents or the Company
may require payment to it of a sum sufficient for the payment (or, in the event
that the Depositary or the Company shall have made such payment, the
reimbursement to it) of any charges or expenses payable by the holder of a
Receipt pursuant to Section 5.07, may require the production of evidence
satisfactory to it as to the identity and genuineness of any signature and may
also require compliance with such "regulation", if any, as the Depositary or the
Company may establish consistent with the provisions of this Deposit Agreement.
The deposit of Stock may be refused, the delivery of Receipts against
Stock may be suspended, the registration of transfer of Receipts may be refused
and the registration of transfer, surrender or exchange of outstanding Receipts
may be suspended (i) during any period when the register of stockholders of the
Company is closed or (ii) if any such action is deemed necessary or advisable by
the Depositary, any of the Depositary's Agents or the Company at any time or
from time to time because of any requirement of law or of any government or
governmental body or commission or under any provision of this Deposit
Agreement.
SECTION 2.06 Lost Receipts, etc. In case any receipt shall be mutilated,
destroyed, lost or stolen, the Depositary in its discretion may execute and
deliver a Receipt of like form and tenor in exchange and substitution for such
mutilated Receipt upon cancellation thereof, or in lieu of and in substitution
for such destroyed, lost or stolen Receipt. Before the Depositary shall execute
and deliver a new Receipt in substitution for a destroyed, lost or stolen
Receipt, the holder thereof shall have (i) filed with the Depositary (a) a
request for such execution and delivery before the Depositary has received
notice that the Receipt has been acquired by a bona fide purchaser, and (b) a
sufficient indemnity bond (if so requested by the Depositary), and (ii)
satisfied any other reasonable requirements requested by the Depositary.
SECTION 2.07 Optional Redemption of Stock. If the Company shall elect to
redeem shares of Stock pursuant to the Certificate, it shall (unless otherwise
agreed in writing with the Depositary) give the Depositary not less than 45
days' notice of the date of such proposed redemption of Stock and of the number
of shares of Stock held by the Depositary to be redeemed. On the date of such
redemption, provided that the Company shall then have paid in full to the
Depositary the redemption price (determined pursuant to the Certificate) of the
Stock deposited with the Depositary to be redeemed, the Depositary shall redeem
(using the proceeds of such redemption) the Depositary Shares relating to such
Stock. The Depositary shall mail, first class postage prepaid, notice of the
redemption of Stock and the proposed simultaneous redemption of the Depositary
Shares relating to the Stock to be redeemed, not less than 30 days and not more
than 60 days prior to the date fixed for redemption of such Stock and Depositary
Shares (the "Redemption Date"), to the holders on the record date fixed for such
redemption pursuant to Section 4.04 of the Receipts evidencing the Depositary
Shares to be so redeemed, at the addresses of such holders as the same appear on
the records of the Depositary; but neither failure to mail any such notice to
one or more such holders nor any defect in any notice shall affect the
sufficiency of the proceedings for redemption as to the other
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<PAGE> 8
holders. The Company shall provide the Depositary with such notice, and each
such notice shall state: (i) the record date for purposes of such redemption;
(ii) the Redemption Date; (iii) the number of Depositary Shares to be redeemed
and, if fewer than all the Depositary Shares held by any holder are to be
redeemed, the number of Depositary Shares held by such holder to be so redeemed;
(iv) the redemption price; (v) the place or places where Receipts evidencing
Depositary Shares to be redeemed are to be surrendered for payment of the
redemption price; and (vi) that dividends in respect of the Stock represented by
the Depositary Shares to be redeemed will cease to accrue at the close of
business on such Redemption Date. In case fewer than all the outstanding
Depositary Shares are to be redeemed, the Depositary Shares to be redeemed shall
be selected by lot or by any other substantially equivalent method determined by
the Depositary.
Notice having been mailed by the Depositary as aforesaid, from and after
the Redemption Date (unless the Company shall have failed to redeem the shares
of Stock to be redeemed by it as set forth in the Company's notice provided for
in the preceding paragraph) all dividends in respect of the shares of Stock
called for redemption shall cease to accrue, the Depositary Shares called for
redemption shall be deemed no longer to be outstanding and all rights of the
holders of Receipts evidencing such Depositary Shares (except the right to
receive the redemption price) shall, to the extent of such Depositary Shares,
cease and terminate. Upon surrender in accordance with said notice of the
Receipts evidencing such Depositary Shares (properly endorsed or assigned for
transfer, if the Depositary shall so require), such Depositary Shares shall be
redeemed at a redemption price per Depositary Share equal to 1/20th of the
redemption price per share paid in respect of a share of Stock pursuant to the
Certificate, plus all money and other property, if any, represented by such
Depositary Shares, including all amounts paid by the Company in respect of
dividends that on that Redemption Date have accrued on the shares of Stock to be
so redeemed and that have not theretofore been paid. The foregoing shall be
subject to the terms and conditions of the Certificate.
If fewer than all of the Depositary Shares evidenced by a Receipt are
called for redemption, the Depositary will deliver to the holder of such Receipt
upon its surrender to the Depositary together with payment of the redemption
price for the Depositary Shares called for redemption, a new Receipt evidencing
the Depositary Shares evidenced by such prior Receipt and not called for
redemption.
Except as provided in the preceding paragraph of this Section 2.07, the
Depositary shall not be required to transfer or exchange for another Receipt any
Receipt evidencing Depositary Shares called or being called for redemption in
whole or in part.
The Depositary shall remit to the Company any funds deposited by or for
the account of the Company for the purpose of redeeming any Depositary Shares
that the holders thereof have failed to redeem after two years from the date of
such deposit, without further action necessary on the part of the Company.
SECTION 2.08 Cancellation and Destruction Of Surrendered Receipts. All
Receipts surrendered to the Depositary or any Depositary's Agent shall be
canceled by the Depositary. Except
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<PAGE> 9
as prohibited by applicable law or regulation, the Depositary is authorized to
destroy all Receipts so canceled.
ARTICLE III
Certain Obligations of Holders of Receipts and the Company
SECTION 3.01 Filing Proofs of Certificates and Other Information. Any
holder of a Receipt may be required from time to time to file such proof of
residence, or other matters or other information to execute such certificates
and to make such representations and warranties as the Depositary or the Company
may reasonably deem necessary or proper. The Depositary or the Company may
withhold the delivery, or delay the registration of transfer, redemption or
exchange, of any Receipt or the withdrawal of the Stock represented by the
Depositary Shares evidenced by any Receipt or the distribution of any dividend
or other distribution or the sale of any property or rights or of the proceeds
thereof until such proof or other information is filed or such certificates are
executed or such representations and warranties are made.
SECTION 3.02 Payment of Taxes or Other Governmental Charges. Holders of
Receipts shall be obligated to make payments to the Depositary of certain
charges and expenses, as provided in Section 5.07. Registration of transfer of
any Receipt or any withdrawal of Stock and all money or other property, if any,
represented by the Depositary Shares evidenced by such Receipt may be refused
until any such payment due is made, and any dividends, interest payments or
other distributions may be withheld or any part of or all the Stock or other
property represented by the Depositary Shares evidenced by such Receipt and not
theretofore sold may be sold for the account of the holder thereof (after
attempting by reasonable means to notify such holder prior to such sale), and
such dividends, interest payments or other distributions or the proceeds of any
such sale may be applied to any payment of such charges or expenses, the holder
of such Receipt remaining liable for any deficiency.
SECTION 3.03 Warranty as to Stock. The Company hereby represents and
warrants that the Stock, when issued, will be duly authorized, validly issued,
fully paid and nonassessable. Such representation and warranty shall survive the
deposit of the Stock and the issuance of Receipts.
ARTICLE IV
The Deposited Securities: Notices
SECTION 4.01 Cash Distributions. Whenever the Depositary shall receive
any cash dividend or other cash distribution on Stock, the Depositary, shall,
subject to Sections 3.01 and 3.02, distribute to holders of Receipts on the
record date fixed pursuant to Section 4.04 (net of the fees of the Depositary as
provided in Section 5.07 hereof) such amounts of such dividend or distribution
as are, as nearly as practicable, in proportion to the respective numbers of
Depositary Shares evidenced by the Receipts held by such holders, provided,
however, that in case the Company or the Depositary
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<PAGE> 10
shall be required to withhold and shall withhold from any cash dividend or other
cash distribution in respect of the Stock an amount on account of taxes, the
amount made available for distribution or distributed in respect of Depositary
Shares shall be reduced accordingly. The Depositary shall distribute or make
available for distribution, as the case may be, only such amount, however, as
can be distributed without attributing to any holder of Depositary Shares a
fraction of one cent, and any balance not so distributable shall be held by the
Depositary (without liability for interest thereon) and shall be added to and be
treated as part of the next sum received by the Depositary for distribution to
holders of Receipts then outstanding.
SECTION 4.02 Distributions Other than Cash, Rights, Preferences or
Privileges. Whenever the Depositary shall receive any distribution other than
cash, rights, preferences or privileges upon Stock, the Depositary shall,
subject to Sections 3.01 and 3.02, distribute to holders of Receipts on the
record date fixed pursuant to Section 4.04 such amounts of the securities or
property received by it as are, as nearly as practicable, in proportion to the
respective numbers of Depositary Shares evidenced by the Receipts held by such
holders, in any manner that the Depositary may deem equitable and practicable
for accomplishing such distribution. If in the opinion of the Depositary such
distribution cannot be made proportionately among such holders, or if for any
other reason (including any requirement that the Company or the Depositary
withhold an amount on account of taxes or governmental charges) the Depositary
deems, after consultation with the Company, such distribution not to be
feasible, the Depositary may, with the approval of the Company, adopt such
method as it deems equitable and practicable for the pulse of effecting such
distribution, including the sale (at public or private sale) of the securities
or property thus received, or any part thereof, at such place or places and upon
such terms as it may deem proper. The net proceeds of any such sale shall,
subject to Sections 3.01 and 3.02, be distributed or made available for
distribution, as the case may be, by the Depositary to such holders of Receipts
as provided by Section 4.01 in the case of a distribution received in cash. The
Company shall not make any distribution of such securities unless the Company
shall have provided an opinion of counsel stating that such securities have been
registered under the Securities Act or do not need to be so registered.
SECTION 4.03 Subscription Rights, Preferences or Privileges. If the
Company shall at any time offer or cause to be offered to the persons in whose
names Stock is recorded on the books of the Company any rights, preferences or
privileges to subscribe for or to purchase any securities or any rights,
preferences or privileges of any other nature, such rights, preferences or
privileges shall in each such instance be made available by the Depositary to
the holders of Receipts in such manner as the Depositary may determine, either
by the issue to such holders of warrants representing such rights, preferences
or privileges or by such other method as may be determined by the Depositary
with the approval of the Company; provided, however, that (i) if at the time of
issue or offer of any such rights, preferences or privileges the Depositary
determines that it is not lawful or (after consultation with the Company) not
feasible to make such rights, preferences or privileges available to holders of
Receipts by the issue of warrants or otherwise, or (ii) if and to the extent so
instructed by holders of Receipts who do not desire to exercise such rights,
preferences or privileges, then the Depositary may (with approval of the Company
in any case where the Depositary has determined that it is not feasible to make
such rights, preferences or privileges available), if applicable laws or the
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<PAGE> 11
terms of such rights, preferences or privileges permit such transfer, sell such
rights, preferences or privileges at public or private sale, at such place or
places and upon such terms as it may deem proper. The net proceeds of any such
sale shall, subject to Sections 3.01 and 3.02, be distributed by the Depositary
to the holders of Receipts entitled thereto as provided by Section 4.01 in the
case of a distribution received in cash.
If registration under the Securities Act of the securities to which any
rights, preferences or privileges relate is required in order for holders of
Receipts to be offered or sold the securities to which such rights, preferences
or privileges relate, the Company agrees with the Depositary that it will file
promptly a registration statement pursuant to such Act with respect to such
rights, preferences or privileges and securities and use its best efforts and
take all steps available to it to cause such registration statement to become
effective sufficiently in advance of the expiration of such rights, preferences
or privileges to enable such holders to exercise such rights, preferences or
privileges. In no event shall the Depositary make available to the holders of
Receipts any right, preference or privilege to subscribe for or to purchase any
securities unless and until such registration statement shall have become
effective, or unless the offering and sale of such securities to such holders
are exempt from registration under the provisions of the Securities Act and the
Company shall have provided to the Depositary an opinion of counsel to such
effect.
If any other action under the laws of any jurisdiction or any
governmental or administrative authorization, consent or permit is required in
order for such rights, preferences or privileges to be made available to holders
of Receipts, the Company agrees with the Depositary that the Company will use
its best efforts to take such action or obtain such authorization, consent or
permit sufficiently in advance of the expiration of such rights, preferences or
privileges to enable such holders to exercise such rights, preferences or
privileges.
SECTION 4.04 Notice of Dividends, etc.; Fixing Record Date for Holders
of Receipts. Whenever any cash dividend or other cash distribution shall become
payable or any distribution other than cash shall be made, or if rights,
preferences or privileges shall at any time be offered with respect to Stock, or
whenever the Depositary shall receive notice of (i) any meeting at which holders
of Stock are entitled to vote or of which holders of Stock are entitled to
notice or (ii) any election on the part of the Company to redeem any shares of
Stock, or whenever the Depositary and the Company shall decide it is
appropriate, the Depositary shall in each such instance fix a record date (which
shall be the same date as the record date fixed by the Company with respect to
or otherwise in accordance with the terms of the Stock) for the determination of
the holders of Receipts who shall be entitled to receive such dividend,
distribution, rights, preferences or privileges or the net proceeds of the sale
thereof, or to give instructions for the exercise of voting rights at any such
meeting, or who shall be entitled to notice of such meeting, or whose Depositary
Shares are to be redeemed or for any other appropriate reasons.
SECTION 4.05 Voting Rights. Upon receipt of notice of any meeting at
which the holders of Stock are entitled to vote, the Depositary shall, as soon
as practicable thereafter, mail to the holders of Receipts entitled thereto a
notice that shall contain (i) such information as is contained in
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<PAGE> 12
such notice of meeting and (ii) a statement that such holders may, subject to
any applicable restrictions, instruct the Depositary as to the exercise of the
voting rights pertaining to the amount of Stock represented by their respective
Depositary Shares (including an express indication that instructions may be
given to the Depositary to give a discretionary proxy to a person designated by
the Company) and a brief statement as to the manner in which such instructions
may be given. Upon the written request of the holders of Receipts on the
relevant record date, the Depositary shall endeavor insofar as practicable to
vote or cause to be voted, in accordance with the instructions set forth in such
requests, the maximum number of whole shares of Stock represented by the
Depositary Shares evidenced by all Receipts as to which any particular voting
instructions are received, provided that the Depositary receives such
instructions sufficiently in advance of such voting to enable it to so vote or
cause to be voted. The Company hereby agrees to take all reasonable action that
may be deemed necessary by the Depositary in order to enable the Depositary to
vote such Stock or cause such Stock to be voted. In the absence of specific
instructions from the holder of a Receipt, the Depositary will abstain from
voting (but, in its discretion, not from appearing at any meeting with respect
to such Stock unless directed to the contrary by the holders of all the
Receipts) to the extent of the Stock represented by the Depositary Shares
evidenced by such Receipt.
SECTION 4.06 Changes Affecting Deposited Securities and
Reclassifications, Recapitalizations, etc. Upon any change in par or stated
value, split-up, combination or any other reclassification of the Stock, or upon
any recapitalization, reorganization, merger, amalgamation or consolidation
affecting the Company or to which it is a party, the Depositary may in its
discretion with the approval of, and shall upon the instructions of, the
Company, and (in either case) in such manner as the Depositary may deem
equitable, (i) make such adjustments as are certified by the Company in the
fraction of an interest represented by one Depositary Share in one share of
Stock as may be necessary fully to reflect the effects of such change in par or
stated value, split-up, combination or other reclassification of Stock, or of
such recapitalization, reorganization , merger, amalgamation or consolidation,
and (ii) treat any securities that shall be received by the Depositary in
exchange for or upon conversion of or in respect of the Stock as new deposited
securities so received in exchange for or upon conversion or in respect of such
Stock. In any such case the Depositary may in its discretion, with the approval
of the Company, execute and deliver additional Receipts or may call for the
surrender of all outstanding Receipts to be exchanged for new Receipts
specifically describing such new deposited securities. Anything to the contrary
herein notwithstanding, holders of Receipts shall have the right from and after
the effective date of any such change in par or stated value, split-up,
combination or other reclassification of the Stock or any such recapitalization,
reorganization, merger, amalgamation or consolidation to surrender such Receipts
to the Depositary with instructions to convert, exchange or surrender the Stock
represented thereby only into or for, as the case may be, the kind and amount of
shares of stock and other securities and property and cash into which the Stock
represented by such Receipts might have been converted or for which such Stock
might have been exchanged or surrendered immediately prior to the effective date
of such transaction.
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<PAGE> 13
SECTION 4.07 Delivery of Reports. The Depositary shall furnish to
holders of Receipts any reports and communications received from the Company
that are received by the Depositary as the holder of Stock.
SECTION 4.08 Lists of Receipt Holders. Promptly upon request from time
to time by the Company, the Depositary shall furnish to it a list, as of a
recent date, of the names, addresses and holdings of all holders of Receipts.
ARTICLE V
The Depositary, the Depositary's Agents, the Registrar and the Company
SECTION 5.01 Maintenance of Offices, Agencies and Transfer Books by the
Depositary; Registrar. Upon execution of this Deposit Agreement, the Depositary
shall maintain at the Depositary's Office, facilities for the execution and
delivery, registration and registration of transfer, surrender and exchange,
split-up, combination and redemption of Receipts and deposit and withdrawal of
Stock, and at the offices of the Depositary's Agents, if any, facilities for the
delivery, registration of transfer, surrender and exchange, split combination
and redemption of Receipts and deposit and withdrawal of Stock, all in
accordance with the provisions of this Deposit Agreement.
The Depositary shall keep books at the Depositary's Office for the
registration and transfer of Receipts, which books at all reasonable times shall
be open for inspection by the holders of Receipts; provided that any such holder
requesting to exercise such right shall certify to the Depositary that such
inspection shall be for a proper purpose reasonably related to such person's
interest as an owner of Depositary Shares evidenced by the Receipts.
The Depositary may close such books, at any time or from time to time,
when deemed expedient by it in connection with the performance of its duties
hereunder.
The Depositary may, with the approval of the Company, appoint a
Registrar for registration of the Receipts or the Depositary Shares evidenced
thereby. If the Receipts or the Depositary Shares evidenced thereby or the Stock
represented by such Depositary Shares shall be listed or admitted to trading on
any national securities exchange or other trading market, the Depositary will
appoint a Registrar (acceptable to the Company) for registration of such
Receipts or Depositary Shares in accordance with any requirements of such
exchange or market. Such Registrar (which may be the Depositary if so permitted
by the requirements of such exchange or market) may be removed and a substitute
registrar appointed by the Depositary upon the request or with the approval of
the Company. If the Receipts, such Depositary Shares or such Stock are listed on
one or more other stock exchanges or trading markets, the Depositary will, at
the request of the Company, arrange such facilities for the delivery,
registration, registration of transfer, surrender and exchange of such Receipts,
such Depositary Shares or such Stock as may be required by law or applicable
stock exchange or market regulation.
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<PAGE> 14
SECTION 5.02 Prevention of or Delay in Performance by the Depositary or
the Company. Neither the Depositary nor the Company shall incur any liability to
any holder of any Receipt if by reason of any provision of any present or future
law, or regulation thereunder, of the United States of America or of any other
governmental authority or by reason of any provision, present or future, of the
Company's Certificate of Incorporation, as amended (including the Certificate)
or by reason of any act of God or war or other circumstance beyond the control
of the relevant party, the Depositary or the Company shall be prevented or
forbidden from, delayed in, or subjected to any penalty on account of, doing or
performing any act or thing which the terms of this Deposit Agreement provide
shall be done or performed; nor shall the Depositary or the Company incur
liability to any holder of a Receipt (i) by reason of any nonperformance or
delay, caused as aforesaid, in the performance of any act or thing which the
terms of this Deposit Agreement shall provide shall or may be done or performed,
or (ii) by reason of any exercise of, or failure to exercise, any discretion
provided for in this Deposit Agreement except, in the case of any such exercise
or failure to exercise discretion not caused as aforesaid, if caused by the
gross negligence or willful misconduct of the party charged with such exercise
or failure to exercise.
Where, by the terms of a distribution pursuant to Sections 4.01 or 4.02
of this Deposit Agreement, or an offering or distribution pursuant to Section
4.03 of this Deposit Agreement, or for any other reason, such distribution or
offering may not be made available to holders of Receipts, and the Depositary
may not dispose of such distribution or offering on behalf of such holders and
make the net proceeds available to such holders, then the Depositary shall not
make such distribution or offering, and shall allow any rights, if applicable,
to lapse.
SECTION 5.03 Obligation of the Depositary and the Company. Neither the
Depositary nor the Company assumes any obligation or shall be subject to any
liability under this Deposit Agreement to holders of Receipts except that each
of them agrees (i) to use its best judgment and good faith in the performance of
such duties as are specifically set forth in this Deposit Agreement and (ii)
that it shall be liable for gross negligence or willful misconduct in the
performance of such duties as are specifically set forth in this Deposit
Agreement.
Neither the Depositary nor the Company shall be under any obligation to
appear in, prosecute or defend any action, suit or other proceeding in respect
of the Stock, the Depositary Shares or the Receipts that in its opinion may
involve it in expense or liability, unless indemnity satisfactory to it against
all expense and liability shall be furnished as often as may be required.
Neither the Depositary nor the Company shall be liable for any action or
any failure to act by it in reliance upon the advice of legal counsel or
accountants, or information from any person presenting Stock for deposit, any
holder of a Receipt or any other person believed by it in good faith to be
competent to give such advice or information. The Depositary and the Company may
each rely and shall each be protected in acting upon any written notice,
request, direction or other document believed by it to be genuine and to have
been signed or presented by the proper party or parties.
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<PAGE> 15
The Depositary shall not be responsible for any failure to carry out any
instruction to vote any of the shares of Stock or for the manner or effect of
any such vote made, as long as any such action or non-action is in good faith.
The Depositary undertakes to perform such duties and only such duties as are
specifically set forth in this Deposit Agreement, and no implied covenants or
obligations shall be read into this Deposit Agreement against the Depositary.
The Depositary may also act as transfer agent or registrar of any of the
securities of the Company and its affiliates.
The Depositary undertakes not to issue any Receipt other than to
evidence the Depositary Shares then on deposit with the Depositary. The
Depositary also undertakes not to sell (except as provided herein), pledge or
lend Depositary Shares held by it as Depositary.
No disclaimer of liability under the Securities Act is intended by any
provision of this Deposit Agreement.
SECTION 5.04 Resignation and Removal of the Depositary; Appointment
Successor Depositary. The Depositary may at any time resign as Depositary
hereunder by delivering written notice of its election to do so to the Company,
such resignation to take effect upon the appointment of a successor Depositary
and its acceptance of such appointment as hereinafter provided.
The Depositary may at any time be removed by the Company by notice of
such removal delivered to the Depositary, such removal to take effect upon the
appointment of a successor Depositary and its acceptance of such appointment as
hereinafter provided.
In case at any time the Depositary acting hereunder shall resign or be
removed, the Company shall, within 60 days after the delivery of the notice of
resignation or removal, as the case may be, appoint a successor Depositary,
which shall be a bank or trust company having its principal office in the United
States of America and having a combined capital and surplus of at least
$50,000,000. If no successor Depositary shall have been so appointed and have
accepted appointment within 60 days after delivery of such notice, the resigning
or removed Depositary may petition any court of competent jurisdiction for the
appointment of a successor Depositary. Every successor Depositary shall execute
and deliver to its predecessor and to the Company an instrument in writing
accepting its appointment hereunder, and thereupon such successor vested with
all the rights, powers, duties and obligations of its predecessor and for all
purposes shall be the Depositary under this Deposit Agreement, and such
predecessor, upon payment of all sums due it and upon the written request of the
Company, shall execute and deliver an instrument transferring to such successor
all rights and powers of such predecessor hereunder, shall duly assign, transfer
and deliver all right, title and interest in the Stock and any moneys or
property held hereunder to such successor, and shall deliver to such successor a
list of the holders of all outstanding Receipts and such records, books and
other information in its possession relating thereto. Any successor Depositary
shall promptly mail notice of its appointment to the holders of Receipts.
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<PAGE> 16
Any corporation into or with which the Depositary may be merged,
consolidated or converted shall be the successor of such Depositary without the
execution or filing of any document or any further act, and notice thereof shall
not be required hereunder.
SECTION 5.05 Corporate Notices and Reports. The Company agrees that it
will transmit to the holders of Receipts, in each case at the addresses
furnished to it pursuant to Section 4.08, all notices and reports (including
without limitation financial statements) required by law or by the rules of any
national securities exchange or trading market upon which the Stock, the
Depositary Shares or the Receipts are listed, to be furnished to the holders of
Receipts. Such transmission will be at the Company's expense.
SECTION 5.06 Indemnification. The Company agrees to indemnify the
Depositary, its directors, employees, agents and affiliates and any Depositary's
Agent against, and hold each of them harmless from, any liability or expense
(including, but not limited to, the reasonable fees and expenses of counsel)
which may arise out of acts performed or omitted by the Company in accordance
with the provisions of this Deposit Agreement and of the Receipts, as the same
may be amended, modified or supplemented from time to time, (i) by either the
Depositary or a Depositary's Agent or their respective directors, employees,
agents and affiliates, except for any liability or expense arising out of the
gross negligence or bad faith of any of them, or (ii) by the Company or any of
its directors, employees, agents and affiliates.
The Depositary shall notify the Company in writing of the commencement
of any action or claim in respect of which indemnification may be sought
promptly after the Depositary becomes aware of such commencement and shall
consult in good faith with the Company as to the conduct of the defense of such
action or claim. The Company shall not compromise or settle any such action or
claim without the consent of the Depositary.
SECTION 5.07 Charges and Expenses. The Company shall pay all transfer
and other taxes and governmental charges arising solely from the existence of
the depositary arrangements. The Company shall pay all charges of the Depositary
in connection with the initial deposit of the Stock and the initial issuance of
the Depositary Shares, all withdrawals of shares of the Stock by owners of
Depositary Shares and the registration of transfer of title to any Depositary
Shares. All other transfer and other taxes and governmental charges shall be at
the expense of holders of Depositary Shares. If, at the request of a holder of
Receipts, the Depositary incurs charges or expenses for which it or the Company
is not otherwise liable hereunder, such holder will be liable for such charges
and expenses. All other charges and expenses of the Depositary and any
Depositary's Agent hereunder and of any Registrar (including, in each case, fees
and expenses of counsel) incident to the performance of their respective
obligations hereunder will be paid by the Company upon consultation and
agreement between the Depositary and the Company as to the amount and nature of
such charges and expenses. The Depositary shall present its statement for
charges and expenses to the Company once a month or at such other intervals as
the Company and the Depositary may agree.
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<PAGE> 17
ARTICLE VI
Amendment and Termination.
SECTION 6.01 Amendment. The form of the Receipts and any provisions of
this Deposit Agreement may at any time and from time to time be amended by
agreement between the Company and the Depositary in any respect which they may
deem necessary or desirable; provided, however, that no such amendment which
shall materially and adversely alter the rights of the holders of Receipts shall
be effective unless such amendment shall have been approved by the holders of at
least a majority of the Depositary Shares then outstanding. Notwithstanding the
foregoing, in no event may any amendment impair the right of any holder of any
Receipts, upon surrender of such Receipts and subject to any conditions
specified in this Deposit Agreement, to receive shares of Stock and any money or
other property represented thereby, except in order to comply with mandatory
provisions of applicable law. Every holder of an outstanding Receipt at the time
any such amendment becomes effective in accordance with its terms shall be
deemed, by continuing to hold such Receipt, to consent and agree to such
amendment and to be bound by the Deposit Agreement as amended thereby.
SECTION 6.02 Termination. This Deposit Agreement may be terminated by
the Company at any time upon not less than 60 days' prior written notice to the
Depositary, in which case, upon a date that is not later than 30 days after the
date of such notice, the Depositary shall deliver or make available for delivery
to holders of Receipts upon surrender of the Receipt or Receipts held by such
holder, and upon payment of any applicable taxes or governmental charges, such
number of whole shares of Stock represented by such Receipt or Receipts. The
Depositary may likewise terminate this Deposit Agreement by mailing notice of
such termination to the Company and the holders of all Receipts then outstanding
if at any time 60 days shall have expired after the Depositary shall have
delivered to the Company a written notice of its election to resign and a
successor depositary shall not have been appointed and accepted its appointment
as provided in Section 5.04. If the holder of any Receipt or Receipts shall not
have surrendered such Receipt or Receipts in exchange for whole shares of Stock
on or prior to the effective date of termination of this Deposit Agreement, such
holder shall for all purposes, including the payment of dividends, be deemed to
be a holder of the appropriate number of whole shares of Stock previously
represented by such Receipt or Receipts and shall thereafter surrender to the
Company such Receipt or Receipts in exchange for whole shares of Stock.
If any Receipts shall remain outstanding after the date of termination,
the Depositary thereafter shall discontinue the registration of transfers of
Receipts, shall suspend the distribution of dividends to the holders thereof,
and shall not give any further notices or perform any further acts under this
Deposit Agreement, except that the Depositary shall continue to collect
dividends and other distributions pertaining to the Stock, shall sell rights as
provided in this Deposit Agreement, and shall continue to deliver such Stock,
together with any dividends or other distributions received with respect thereto
and the net proceeds of the sale of any rights or other property, in exchange
for Receipts surrendered to the Depositary (after deducting, in each case, the
fee of the Depositary for the surrender of a Receipt, any expenses for the
account of the holder of such Receipt in accordance
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<PAGE> 18
with the terms and conditions of this Deposit Agreement, and any applicable
taxes or governmental charges). At any time after the expiration of one year
from the date of termination the Depositary may sell such Stock then held
hereunder and may thereafter hold uninvested the net proceeds of any such sale,
together with any other cash then held by it hereunder, without liability for
interest, for the pro rata benefit of the holders which have not theretofore
surrendered their Receipts. After making such sale, the Depositary shall be
discharged from all obligations under this Deposit Agreement, except to account
for such net proceeds and other cash (after deducting, in each case, the fee of
the Depositary for the surrender of a Receipt, any expenses for the account of
the holder of such Receipt in accordance with the terms and conditions of this
Deposit Agreement, and any applicable taxes or governmental charges).
This Deposit Agreement shall automatically terminate after there shall
have been made a final distribution in respect of the Stock in connection with
any liquidation, dissolution or winding up of the Company and such distribution
shall have been distributed to the holders of Receipts pursuant to Section 4.01
or 4.02, as applicable.
Upon the termination of this Deposit Agreement, the Company shall be
discharged from all obligations under this Deposit Agreement except for its
obligations to the Depositary and any Depositary' s Agent and any Registrar
under Sections 5.06 and 5.07.
ARTICLE VII
Miscellaneous
SECTION 7.01 Counterparts. This Deposit Agreement may be executed in any
number of counterparts, and by each of the parties hereto on separate
counterparts, each of which counterparts, when so executed and delivered, shall
be deemed an original, but all such counterparts taken together shall constitute
one and the same instrument.
SECTION 7.02 Exclusive Benefit of Parties. This Deposit Agreement is for
the exclusive benefit of the parties hereto, and their respective successors
hereunder, and shall not be deemed to give any legal or equitable right, remedy
or claim to any other person whatsoever.
SECTION 7.03 Invalidity of Provisions. In case any one or more of the
provisions contained in this Deposit Agreement or in the Receipts should be or
become invalid, illegal or unenforceable in any respect, the validity, legality
and enforceability of the remaining provisions contained herein or therein shall
in no way be affected, prejudiced or disturbed thereby.
SECTION 7.04 Notices. Any and all notices to be given to the Company
hereunder or under the Receipts shall be in writing and shall be deemed to have
been duly given if personally delivered or sent by mail, or by telegram or
facsimile transmission confirmed by letter, addressed to the Company at:
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<PAGE> 19
1122 Capital of Texas Highway South
Austin, Texas 78746-6426
Attention: General Counsel
Telephone No.: (512) 427-3595
or at any other address of which the Company shall have notified the Depositary
in writing.
Any and all notices to be given to the Depositary hereunder or under the
Receipts shall be in writing and shall be deemed to have been duly given if
personally delivered or sent by mail, or by telegram or facsimile transmission
confirmed by letter, addressed to the Depositary at the Depositary's Office at
150 Royall Street, Mail Stop 45-02-62, Canton, Massachusetts 02021, attention to
Client Administration, fax number (718) 575-2149, or at any other address of
which the Depositary shall have notified the Company in writing.
Any and all notices to be given to any holder of a Receipt hereunder or
under the Receipts shall be in writing and shall be deemed to have been duly
given if personally delivered or sent by mail, or by telegram or facsimile
transmission confirmed by letter, addressed to each such holder at the address
of such holder as it appears on the books of the Depositary, or if such holder
shall have filed with the Depositary a written request that notices intended for
such holder be mailed to some other address, at the address designated in such
request.
Delivery of a notice sent by mail or by telegram or facsimile
transmission shall be deemed. to be effected at the time when a duly addressed
letter containing the same (or a confirmation thereof in the case of a telegram
or facsimile transmission) is deposited, first class postage prepaid, in a post
office letter box. The Depositary or the Company may, however, without
liability, act upon any telegram or facsimile transmission received by it from
the other or from any holder of a Receipt, notwithstanding that such telegram or
facsimile transmission shall not subsequently be confirmed by letter or as
aforesaid.
SECTION 7.05 Depositary's Agents. The Depositary may from time to time
appoint Depositary's Agents to act in any respect for the Depositary for the
purposes of this Deposit Agreement and may at any time appoint additional
Depositary' s Agents and vary or terminate the appointment of such Depositary's
Agents. The Depositary will notify the Company of any such action and shall
remain responsible for the performance of its obligations hereunder as if no
Depositary Agent were appointed.
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<PAGE> 20
The Company hereby also appoints the Depositary as Registrar and
Transfer Agent in respect of the Receipts and the Depositary hereby accepts such
appointments.
SECTION 7.06 Holders of Receipts Are Parties. The holders of Receipts
from time to time shall be parties to this Deposit Agreement and shall be bound
by all of the terms and conditions hereof and of the Receipts by acceptance of
delivery thereof.
SECTION 7.07 Governing Law. This Deposit Agreement and the Receipts and
all rights hereunder and thereunder and provisions hereof and thereof shall be
governed by, and construed in accordance with, the laws of the State of New
York.
SECTION 7.08 Inspection of Deposit Agreement. Copies of this Deposit
Agreement shall be filed with the Depositary and the Depositary's Agents and
shall be open to inspection during business hours at the Depositary's Office and
the respective offices of the Depositary's Agents, if any, by any holder of a
Receipt.
SECTION 7.09 Headings. The headings of articles and sections in this
Deposit Agreement and in the form of the Receipt set forth in Exhibit A hereto
have been inserted for convenience only and are not to be regarded as a part of
this Deposit Agreement or the Receipts or to have any hearing upon the meaning
or interpretation of any provision contained herein or in the Receipts.
IN WITNESS WHEREOF, the Company and the Depositary have duly executed
this Agreement as of the day and year first above set forth, and all holders of
Receipts shall become parties hereto by and upon acceptance by them of delivery
of Receipts issued in accordance with the terms hereof.
IXC COMMUNICATIONS, INC.
By: /s/ STUART K. COPPENS
-------------------------------------
Name: Stuart K. Coppens
Title: Chief Accounting Officer
BANKBOSTON, N.A.
By: /s/ CAROLE MULVEY-EORI
-------------------------------------
Name: Carole Mulvey-Eori
Title: Administration Manager
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<PAGE> 21
EXHIBIT A
[Form of Face of Receipt]
Number Depositary Shares
DRB
DEPOSITARY RECEIPT FOR DEPOSITARY SHARES
REPRESENTING 6-3/4% CUMULATIVE CONVERTIBLE PREFERRED STOCK OF
IXC COMMUNICATIONS, INC.
CUSIP 450713 870
INCORPORATED UNDER THE LAWS OF THE STATE OF DELAWARE
SEE REVERSE SIDE FOR CERTAIN DEFINITIONS
BANK BOSTON, N.A., as Depositary (the "Depositary"), hereby certifies that:
is the registered owner of __________________________________ DEPOSITARY SHARES
("Depositary Shares"), each Depositary Share representing 1/20 of a share of
6-3/4% Cumulative Convertible Preferred Stock (with a liquidation preference of
$1,000 per share of Cumulative Convertible Preferred Stock) (the "Stock"), of
IXC Communications, Inc., a Delaware corporation (the "Corporation"), on deposit
with the Depositary, subject to the terms and entitled to the benefits of the
Deposit Agreement dated as of March 30, 1998 (the "Deposit Agreement"), among
the Corporation, the Depositary and the holders from time to time of the
Depositary Receipts issued thereunder. By accepting this Depositary Receipt the
holder hereof becomes a party to and agrees to be bound by all the terms and
conditions of the Deposit Agreement. This Depositary Receipt shall not be valid
or obligatory for any purpose or entitled to any benefits under the Deposit
Agreement unless it shall have been executed by the Depositary by the manual
signature of a duly authorized signatory or, if executed in facsimile by the
Depositary, countersigned by a Registrar in respect of the Depositary Receipts
by the manual signature of a duly authorized signatory thereof.
Dated:
Countersigned and Registered:
BANKBOSTON, N.A. BANKBOSTON, N.A.
Registrar Depositary
By:__________________________ By:_______________________________
Its:_________________________
Exhibit A - Page 1
<PAGE> 22
[FORM OF REVERSE OF RECEIPT]
COMPANY
THE CORPORATION WILL FURNISH WITHOUT CHARGE TO EACH RECEIPT HOLDER WHO SO
REQUESTS A COPY OF THE DEPOSIT AGREEMENT AND A COPY OR SUMMARY OF THE
CERTIFICATE OF DESIGNATIONS, POWERS, PREFERENCES AND RELATIVE, PARTICIPATING,
OPTIONAL OR OTHER RIGHTS, AND OF THE QUALIFICATIONS, LIMITATIONS OR RESTRICTIONS
THEREOF, OF THE STOCK OF THE CORPORATION. ANY SUCH REQUEST IS TO BE ADDRESSED TO
THE DEPOSITARY NAMED ON THE FACE OF THIS RECEIPT.
----------
The following abbreviations, when used in the instructions on the face of this
receipt, shall be construed as though they were written out in full according to
applicable laws or regulations.
TEN COM - as tenants in common UNIF GIFT ACT - _______ Custodian ________
Minor (Cust)
TEN ENT - as tenants by the Under Uniform Gifts to Minors Act
entireties
JT TEN - as joint tenants with __________________________________
right of survivorship State
and not as tenants
in common
Additional abbreviations may also be used though not in the above list.
For value received, ________ hereby sell(s), assign(s) and transfer(s) unto
PLEASE INSERT SOCIAL SECURITY OR OTHER
IDENTIFYING NUMBER OF ASSIGNEE
________________________________________________________________________________
________________________________________________________________________________
PLEASE PRINT OR TYPEWRITE NAME AND ADDRESS, INCLUDING ZIP CODE, OF
ASSIGNEE
________________________________________________________________________________
________________________________________________________________________________
Depositary Shares represented by the within Receipt, hereby irrevocably
constituting and appointing
________________________________________________________________________________
Attorney to transfer the said Depositary Shares on the blocks of the within
named Depositary with full power of substitution in the premises.
Dated: ________________ ________________________________________
NOTICE The signature to the assignment
must correspond with the name as written
upon the face of this Receipt in every
particular, without alteration or
enlargement or any change whatever
Exhibit A - Page 2
<PAGE> 1
EXHIBIT 4.4
CERTIFICATE OF DESIGNATION OF THE POWERS,
PREFERENCES AND RELATIVE, PARTICIPATING, OPTIONAL
AND OTHER SPECIAL RIGHTS OF
6 3/4% CUMULATIVE
CONVERTIBLE PREFERRED STOCK AND
QUALIFICATIONS, LIMITATIONS AND RESTRICTIONS THEREOF
- --------------------------------------------------------------------------------
Pursuant to Section 151 of the
General Corporation Law of the State of Delaware
- --------------------------------------------------------------------------------
IXC Communications, Inc. (the "Company"), a corporation
organized and existing under the General Corporation Law of the State of
Delaware, does hereby certify that (i) pursuant to authority conferred upon the
board of directors of the Company (the "Board of Directors") by its Restated
Certificate of Incorporation (hereinafter referred to as the "Restated
Certificate of Incorporation"), and pursuant to the provisions of Sections
141(c)(2) and 151 of the General Corporation Law of the State of Delaware, said
Board of Directors is authorized to issue Preferred Stock of the Company in one
or more series and has authorized a committee of the Board of Directors (the
"Finance Committee") to adopt the resolution set forth below and (ii) the
Finance Committee duly approved and adopted the following resolution on March
25, 1998 (the "Resolution"):
RESOLVED that, pursuant to the authority vested in the Board of
Directors by its Restated Certificate of Incorporation, and the
authority vested by such Board of Directors in a committee of the Board
(the "Finance Committee"), all the members of which are members of such
Board, the Finance Committee does hereby create, authorize and provide
for the issuance of 6 3/4% Cumulative Convertible Preferred Stock, par
value $.01 per share, with a stated value of $1000 per share, initially
consisting of up to 155,250 shares having the designation, preferences,
relative, participating, optional and other special rights and the
qualifications, limitations and restrictions thereof that are set forth
in the Restated Certificate of Incorporation and in this Resolution as
follows:
1. Designation. There is hereby created out of the authorized and
unissued shares of Preferred Stock of the Company a series of Preferred Stock
designated as the "6 3/4% Cumulative Convertible Preferred Stock" (the
"Cumulative Convertible Preferred Stock"). The number of shares constituting the
Cumulative Convertible Preferred Stock shall be 155,250, and such shares shall
be represented by stock certificates substantially in the form set forth in
Exhibit A hereto. The liquidation preference of the Cumulative Convertible
Preferred Stock shall be $1,000
<PAGE> 2
per share (the "Liquidation Preference"). The date the Cumulative Convertible
Preferred Stock is first issued is referred to as the "Issue Date".
2. Rank. The Cumulative Convertible Preferred Stock will, rank
(i) pari passu in right of payment with the Company's 7 1/4% Junior Convertible
Preferred Stock Due 2007 (the "7 1/4% Preferred Stock"), the Company's 12 1/2%
Junior Exchangeable Preferred Stock Due 2009 and 12 1/2% Series B Junior
Exchangeable Preferred Stock Due 2009 (collectively, the "Exchangeable Preferred
Stock") and each other class of Capital Stock or series of Preferred Stock
established hereafter by the Board of Directors, the terms of which expressly
provide that such class or series ranks on a parity with the Cumulative
Convertible Preferred Stock as to dividend rights and rights on liquidation,
dissolution and winding up of the Company (collectively referred to, as "Parity
Securities"); (ii) junior in right of payment to any Senior Securities (as
defined) as to dividends and upon liquidation, dissolution or winding up of the
Company and (iii) senior in right of payment as to dividend rights and upon
liquidation, dissolution or winding up of the Company to the Common Stock and
any Capital Stock of the Company that expressly provides that it will rank
junior to the Cumulative Convertible Preferred Stock as to dividend rights or
rights on liquidation, winding up and dissolution of the Company (collectively
referred to as "Junior Securities"). The Company may not authorize, create (by
way of reclassification or otherwise) or issue any class or series of Capital
Stock of the Company ranking senior in right of payment as to dividend rights or
upon liquidation, dissolution or winding up of the Company to the Cumulative
Convertible Preferred Stock ("Senior Securities") or any obligation or security
convertible or exchangeable into, or evidencing a right to purchase, shares of
any class or series of Senior Securities without the affirmative vote or consent
of the holders of at least 66-2/3% of the outstanding shares of Cumulative
Convertible Preferred Stock.
3. Dividends. The Holders of shares of the Cumulative Convertible
Preferred Stock will be entitled to receive, when, as and if dividends are
declared by the Board of Directors out of funds of the Company legally available
therefor, cumulative preferential dividends from the Issue Date of the
Cumulative Convertible Preferred Stock accruing at the rate of $67.50 per share
of Cumulative Convertible Preferred Stock per annum, or $16.875 per share of
Cumulative Convertible Preferred Stock per quarter, payable quarterly in arrears
on January 1, April 1, July 1, and October 1 of each year or, if any such date
is not a Business Day, on the next succeeding business day (each, a "Dividend
Payment Date"), to the Holders of record as of the next preceding December 15,
March 15, June 15, and September 15 (each, a "Record Date"). Accrued but unpaid
dividends, if any, may be paid on such dates as determined by the Board of
Directors. Dividends will be payable in cash except as set forth below.
Dividends payable on the Cumulative Convertible Preferred Stock will be computed
on the basis of a 360-day year of twelve 30-day months and will be deemed to
accrue on a daily basis. Dividends may, at the option of the Company, be paid in
Common Stock if, and only if, the documents governing the Company's indebtedness
that exists on the Issue Date then prohibit the payment of such dividends in
cash. If the Company elects to pay dividends in shares of Common Stock, the
number of shares of Common Stock to be distributed will be calculated by
dividing the amount of such dividend otherwise payable in cash by 95% of the
arithmetic average of the Closing Price (as defined) for the five Trading Days
(as defined) preceding the Dividend Payment Date. The Cumulative Convertible
Preferred Stock will not be redeemable unless all dividends accrued through such
redemption date shall have been paid in full.
-2-
<PAGE> 3
Notwithstanding anything to the contrary herein contained, the Company shall not
be required to declare or pay a dividend if another person (including, without
limitation, any of its subsidiaries) pays an amount to the Holders equal to the
amount of such dividend on behalf of the Company and, in such event, the
dividend will be deemed paid for all purposes.
Dividends on the Cumulative Convertible Preferred Stock will
accrue whether or not the Company has earnings or profits, whether or not there
are funds legally available for the payment of such dividends and whether or not
dividends are declared. Dividends will accumulate to the extent they are not
paid on the Dividend Payment Date for the quarter to which they relate.
Accumulated unpaid dividends will accrue and cumulate at a rate of 6.75% per
annum. The Company will take all reasonable actions required or permitted under
Delaware law to permit the payment of dividends on the Cumulative Convertible
Preferred Stock.
No dividend whatsoever shall be declared or paid upon, or any sum
set apart for the payment of dividends upon, any outstanding share of the
Cumulative Convertible Preferred Stock with respect to any dividend period
unless all dividends for all preceding dividend periods have been declared and
paid upon, or declared and a sufficient sum set apart for the payment of such
dividend upon, all outstanding shares of Cumulative Convertible Preferred Stock.
Unless full cumulative dividends on all outstanding shares of Cumulative
Convertible Preferred Stock due for all past dividend periods shall have been
declared and paid, or declared and a sufficient sum for the payment thereof set
apart, then: (i) no dividend (other than a dividend payable solely in shares of
Junior Securities or options, warrants or rights to purchase Junior Securities)
shall be declared or paid upon, or any sum set apart for the payment of
dividends upon, any shares of Junior Securities; (ii) no other distribution
shall be declared or made upon, or any sum set apart for the payment of any
distribution upon, any shares of Junior Securities; (iii) no shares of Junior
Securities shall be purchased, redeemed or otherwise acquired or retired for
value (excluding an exchange for shares of other Junior Securities or a
purchase, redemption or other acquisition from the proceeds of a substantially
concurrent sale of Junior Securities) by the Company or any of its subsidiaries;
and (iv) no monies shall be paid into or set apart or made available for a
sinking or other like fund for the purchase, redemption or other acquisition or
retirement for value of any shares of Junior Securities by the Company or any of
its subsidiaries. Holders of the Cumulative Convertible Preferred Stock will not
be entitled to any dividends, whether payable in cash, property or stock, in
excess of the full cumulative dividends as herein described.
4. Liquidation Preference. Upon any voluntary or involuntary
liquidation, dissolution or winding up of the affairs of the Company after
payment in full of the liquidation preference (and any accrued and unpaid
dividends) on any Senior Securities, each Holder of shares of the Cumulative
Convertible Preferred Stock shall be entitled, on an equal basis with the
holders of the 7 1/4% Preferred Stock, the Exchangeable Preferred Stock and any
other outstanding Parity Securities, to payment out of the assets of the Company
available for distribution of the Liquidation Preference per share of the
Cumulative Convertible Preferred Stock held by such Holder, plus an amount equal
to the accrued and unpaid dividends on the Cumulative Convertible Preferred
Stock and Liquidated Damages (as defined) (if any) to the date fixed for
liquidation, dissolution, or winding up before any distribution is made on any
Junior Securities, including, without limitation, Common Stock of the Company.
After payment in full of the Liquidation Preference and an amount
-3-
<PAGE> 4
equal to the accrued and unpaid dividends and Liquidated Damages (if any), to
which Holders of Cumulative Convertible Preferred Stock are entitled, such
Holders will not be entitled to any further participation in any distribution of
assets of the Company. However, neither the voluntary 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 Company nor the
consolidation or merger of the Company with or into one or more corporations
will be deemed to be a voluntary or involuntary liquidation, dissolution or
winding up of the Company, unless such sale, conveyance, exchange, transfer,
consolidation or merger shall be in connection with a liquidation, dissolution
or winding up of the affairs of the Company or reduction or decrease in capital
stock.
5. Redemption. The Cumulative Convertible Preferred Stock may not
be redeemed at the option of the Company on or prior to April 5, 2000. After
April 5, 2000 the Company may redeem the Cumulative Convertible Preferred Stock.
Notwithstanding the foregoing, prior to April 1, 2002, the Company shall only
have the option to redeem shares of the Cumulative Convertible Preferred Stock
if, during the period of 30 consecutive Trading Days ending on the Trading Day
immediately preceding the date that the notice of redemption is mailed to
Holders, the Closing Price for the Common Stock exceeded $75 divided by the
Conversion Rate effective on the date of such notice for at least 20 of such
Trading Days. Subject to the immediately preceding sentence, the Cumulative
Convertible Preferred Stock may be redeemed, in whole or in part, at the option
of the Company after April 5, 2000, at the redemption prices specified below
(expressed as percentages of the Liquidation Preference thereof), in each case,
together with an amount equal to accrued and unpaid dividends on the Cumulative
Convertible Preferred Stock (excluding any declared dividends for which the
Record Date has passed) and Liquidated Damages (if any), to the date of
redemption, upon not less than 15 nor more than 60 days' prior written notice,
if redeemed during the period commencing on April 5, 2000 to March 31, 2001 at
105.40%, and thereafter during the 12-month period commencing on April 1 of each
of the years set forth below:
<TABLE>
<CAPTION>
REDEMPTION
YEAR RATE
- ---- -------
<S> <C>
2001................................................ 104.73%
2002................................................ 104.05%
2003................................................ 103.38%
2004................................................ 102.70%
2005................................................ 102.03%
2006................................................ 101.35%
2007................................................ 100.68%
2008 and thereafter................................. 100.00%
</TABLE>
Except as provided in the preceding sentence, no payment or
allowance will be made for accrued dividends on any shares of Cumulative
Convertible Preferred Stock called for redemption.
On and after any date fixed for redemption (the "Redemption
Date"), provided that the Company has made available at the office of the
Transfer Agent a sufficient amount of cash to effect the redemption, dividends
will cease to accrue on the Cumulative Convertible
-4-
<PAGE> 5
Preferred Stock called for redemption (except that, in the case of a Redemption
Date after a dividend payment Record Date and prior to the related Dividend
Payment Date, holders of Cumulative Convertible Preferred Stock on the dividend
payment Record Date will be entitled on such Dividend Payment Date to receive
the dividend payable on such shares), such shares shall no longer be deemed to
be outstanding and all rights of the holders of such shares as holders of
Cumulative Convertible Preferred Stock shall cease except the right to receive
the cash deliverable upon such redemption, without interest from the Redemption
Date.
In the event of a redemption of only a portion of the then
outstanding shares of Cumulative Convertible Preferred Stock, the Company shall
effect such redemption on a pro rata basis, except that the Company may redeem
all of the shares held by Holders of fewer than 100 shares (or all of the shares
held by Holders who would hold less than 100 shares as a result of such
redemption), as may be determined by the Company.
With respect to a redemption pursuant hereto, the Company will
send a written notice of redemption by first class mail to each holder of record
of shares of Cumulative Convertible Preferred Stock, not fewer than 15 days nor
more than 60 days prior to the Redemption Date at its registered address (the
"Redemption Notice"); provided, however, that no failure to give such notice nor
any deficiency therein shall affect the validity of the procedure for the
redemption of any shares of Cumulative Convertible Preferred Stock to be
redeemed except as to the holder or holders to whom the Company has failed to
give said notice or except as to the holder or holders whose notice was
defective. The Redemption Notice shall state:
a. the redemption price;
b. whether all or less than all the outstanding shares of
the Cumulative Convertible Preferred Stock are to be redeemed and the total
number of shares of the Cumulative Convertible Preferred Stock being redeemed;
c. the Redemption Date;
d. that the holder is to surrender to the Company, in the
manner, at the place or places and at the price designated, his certificate or
certificates representing the shares of Cumulative Convertible Preferred Stock
to be redeemed; and
e. that dividends on the shares of the Cumulative
Convertible Preferred Stock to be redeemed shall cease to accumulate on such
Redemption Date unless the Company defaults in the payment of the redemption
price.
Each holder of Cumulative Convertible Preferred Stock shall
surrender the certificate or certificates representing such shares of Cumulative
Convertible Preferred Stock to the Company, duly endorsed (or otherwise in
proper form for transfer, as determined by the Company), in the manner and at
the place designated in the Redemption Notice, and on the Redemption Date the
full redemption price for such shares shall be payable in cash to the person
whose name appears on such certificate or certificates as the owner thereof, and
each surrendered certificate shall be canceled and retired. In the event that
less than all of the shares represented by any such certificate are redeemed, a
new certificate shall be issued representing the unredeemed shares.
-5-
<PAGE> 6
6. Voting Rights. Holders of record of shares of the Cumulative
Convertible Preferred Stock will have no voting rights, except as required by
law and as provided in this Section 6 and in Sections 2, 8 and 13 hereof. Upon
the accumulation of accrued and unpaid dividends on the outstanding Cumulative
Convertible Preferred Stock in an amount equal to six full quarterly dividends
(whether or not consecutive) (together with any event with a similar effect
pursuant to the terms of any other series of Preferred Stock upon which like
rights have been conferred, a "Voting Rights Triggering Event"), the number of
members of the Company's Board of Directors will be immediately and
automatically increased by two (unless previously increased pursuant to the
terms of any other series of Preferred Stock upon which like rights have been
conferred), and the Holders of a majority of the outstanding shares of
Cumulative Convertible Preferred Stock, voting together as a class (pro rata,
based on liquidation preference) with the holders of any other series of
Preferred Stock upon which like rights have been conferred and are exercisable,
will be entitled to elect two members to the Board of Directors of the Company.
Voting rights arising as a result of a Voting Rights Triggering Event will
continue until such time as all dividends in arrears on the Cumulative
Convertible Preferred Stock are paid in full. Notwithstanding the foregoing,
however, such voting rights to elect directors will expire when the number of
shares of Cumulative Convertible Preferred Stock outstanding is reduced to
13,500 or less.
In the event such voting rights expire or are no longer
exercisable because dividends in arrears have been paid in full, the term of any
directors elected pursuant to the provisions of this paragraph 6 above shall
terminate forthwith and the number of directors constituting the Board of
Directors shall be immediately and automatically decreased by two (until the
occurrence of any subsequent Voting Rights Triggering Event). At any time after
voting power to elect directors shall have become vested and be continuing in
the holders of Cumulative Convertible Preferred Stock (together with the holders
of any other series of Preferred Stock upon which like rights have been
conferred and are exercisable) pursuant to this paragraph 6, or if vacancies
shall exist in the offices of directors elected by such holders, a proper
officer of the Company may, and upon the written request of the holders of
record of at least 25% of the shares of Cumulative Convertible Preferred Stock
then outstanding or the holders of 25% of the shares of any other series of
Preferred Stock then outstanding upon which like rights have been conferred and
are exercisable addressed to the secretary of the Company shall, call a special
meeting of the Holders of Cumulative Convertible Preferred Stock and the holders
of such other series of Preferred Stock for the purpose of electing the
directors which such holders are entitled to elect pursuant to the terms hereof;
provided, however, that no such special meeting shall be called if the next
annual meeting of stockholders of the Company is to be held within 60 days after
the voting power to elect directors shall have become vested (or such vacancies
arise, as the case may be), in which case such meeting shall be deemed to have
been called for such next annual meeting. If such meeting shall not be called,
pursuant to the provision of the immediately preceding sentence, by a proper
officer of the Company within 20 days after personal service to the secretary of
the Company at its principal executive offices, then the Holders of record of at
least 25% of the outstanding shares of Cumulative Convertible Preferred Stock or
the holders of 25% of the shares of any other series of Preferred Stock upon
which like rights have been conferred and are exercisable may designate in
writing one of their members to call such meeting at the expense of the Company,
and such meeting may be called by the person so designated upon the notice
required for the annual meetings of stockholders of the Company and shall be
held at the place for holding the annual meetings of stockholders. Any Holder of
-6-
<PAGE> 7
Cumulative Convertible Preferred Stock or such other series of Preferred Stock
so designated shall have, and the Company shall provide, access to the lists of
Holders of Cumulative Convertible Preferred Stock and the holders of such other
series of Preferred Stock for any such meeting of the holders thereof to be
called pursuant to the provisions hereof. If no special meeting of the Holders
of Cumulative Convertible Preferred Stock and the holders of such other series
of Preferred Stock is called as provided in this paragraph 6, then such meeting
shall be deemed to have been called for the next meeting of stockholders of the
Company.
At any meeting held for the purposes of electing directors at
which the Holders of Cumulative Convertible Preferred Stock (together with the
holders of any other series of Preferred Stock upon which like rights have been
conferred and are exercisable) shall have the right, voting together as a
separate class, to elect directors as aforesaid, the presence in person or by
proxy of the Holders of at least a majority in voting power of the outstanding
shares of Cumulative Convertible Preferred Stock (and such other series of
Preferred Stock) shall be required to constitute a quorum thereof.
Any vacancy occurring in the office of a director elected by the
Holders of Cumulative Convertible Preferred Stock (and such other series of
Preferred Stock) may be filled by the remaining director elected by the Holders
of Cumulative Convertible Preferred Stock (and such other series of Preferred
Stock) unless and until such vacancy shall be filled by the Holders of
Cumulative Convertible Preferred Stock (and such other series of Preferred
Stock).
Except as set forth above and otherwise required by applicable
law, the creation, authorization or issuance of any shares of any Junior
Securities, Parity Securities or Senior Securities, or the increase or decrease
in the amount of authorized Capital Stock of any class, including Preferred
Stock, shall not require the affirmative vote or consent of Holders of
Cumulative Convertible Preferred Stock and shall not be deemed to affect
adversely the rights, preferences, privileges or voting rights of shares of
Cumulative Convertible Preferred Stock.
In any case in which the Holders of Cumulative Convertible
Preferred Stock shall be entitled to vote pursuant hereto or pursuant to
Delaware law, each Holder of Cumulative Convertible Preferred Stock entitled to
vote with respect to such matters shall be entitled to one vote for each share
of Cumulative Convertible Preferred Stock held.
Except as required by law, the Holders of the Cumulative
Convertible Preferred Stock will not be entitled to vote on any merger or
consolidation involving the Company or a sale of all or substantially all the
assets of the Company.
7. Conversion Rights. The Cumulative Convertible Preferred Stock
will be convertible at the option of the Holder, into shares of Common Stock at
any time, unless previously redeemed or repurchased, at a conversion rate of
13.748 shares of Common Stock per share of the Cumulative Convertible Preferred
Stock) (as adjusted pursuant to the provisions hereof, the "Conversion Rate")
(subject to the adjustments described below). The right to convert a share of
the Cumulative Convertible Preferred Stock called for redemption or delivered
for repurchase will
-7-
<PAGE> 8
terminate at the close of business on the Redemption Date for such Cumulative
Convertible Preferred Stock or at the time of the repurchase, as the case may
be.
The right of conversion attaching to any share of Cumulative
Convertible Preferred Stock may be exercised by the Holder thereof by delivering
the share to be converted to the office of the Transfer Agent, or any agency or
office of the Company maintained for that purpose, accompanied by a duly signed
and completed notice of conversion in form reasonably satisfactory to the
Transfer Agent of the Company, such as that which is set forth in Exhibit B
hereto. The conversion date will be the date on which the share and the duly
signed and completed notice of conversion are so delivered. As promptly as
practicable on or after the conversion date, the Company will issue and deliver
to the Transfer Agent a certificate or certificates for the number of full
shares of Common Stock issuable upon conversion, with any fractional shares
rounded up to full shares or, at the Company's option, payment in cash in lieu
of any fraction of a share, based on the Closing Price of the Common Stock on
the Trading Day preceding the conversion date. Such certificate or certificates
will be delivered by the Transfer Agent to the appropriate Holder on a
book-entry basis or by mailing certificates evidencing the additional shares to
the Holders at their respective addresses set forth in the register of Holders
maintained by the Transfer Agent. All shares of Common Stock issuable upon
conversion of the Cumulative Convertible Preferred Stock will be fully paid and
nonassessable and will rank pari passu with the other shares of Common Stock
outstanding from time to time. Any shares of Cumulative Convertible Preferred
Stock surrendered for conversion during the period from the close of business on
any Record Date to the opening of business on the next succeeding Dividend
Payment Date must be accompanied by payment of an amount equal to the dividends
payable on such Dividend Payment Date on the shares of Cumulative Convertible
Preferred Stock being surrendered for conversion. No other payment or adjustment
for dividends, or for any dividends in respect of shares of Common Stock, will
be made upon conversion. Holders of Common Stock issued upon conversion will not
be entitled to receive any dividends payable to holders of Common Stock as of
any record time before the close of business on the conversion date.
The Conversion Rate shall be adjusted from time to time by the
Company as follows:
a. If the Company shall hereafter pay a dividend or make a
distribution in Common Stock to all holders of any outstanding class or series
of Common Stock of the Company, the Conversion Rate in effect at the opening of
business on the date following the date fixed for the determination of
shareholders entitled to receive such dividend or other distribution shall be
increased by multiplying such Conversion Rate by a fraction of which the
denominator shall be the number of shares of Common Stock outstanding at the
close of business on the Record Date (as defined below) fixed for such
determination and the numerator shall be the sum of such number of outstanding
shares and the total number of shares constituting such dividend or other
distribution, such increase to become effective immediately after the opening of
business on the day following the Record Date. If any dividend or distribution
of the type described in this provision (a) is declared but not so paid or made,
the Conversion Rate shall again be adjusted to the Conversion Rate which would
then be in effect if such dividend or distribution had not been declared.
b. If the outstanding shares of Common Stock shall be
subdivided into a greater number of shares of Common Stock, the Conversion Rate
in effect at the opening of
-8-
<PAGE> 9
business on the day following the day upon which such subdivision becomes
effective shall be proportionately increased and, conversely, if the outstanding
shares of Common Stock shall be combined into a smaller number of shares of
Common Stock, the Conversion Rate in effect at the opening of business on the
day following the day upon which such combination becomes effective shall be
proportionately reduced, such increase or reduction, as the case may be, to
become effective immediately after the opening of business on the day following
the day upon which such subdivision or combination becomes effective.
c. If the Company shall offer or issue rights, options or
warrants to all holders of its outstanding Common Stock entitling them to
subscribe for or purchase Common Stock at a price per share less than the
Current Market Price (as defined below) on the Record Date fixed for the
determination of shareholders entitled to receive such rights or warrants, the
Conversion Rate shall be adjusted so that the same shall equal the rate
determined by multiplying the Conversion Rate in effect at the opening of
business on the date after such Record Date by a fraction of which the
denominator shall be the number of shares of Common Stock outstanding at the
close of business on the Record Date plus the number of shares of Common Stock
which the aggregate offering price of the total number of shares of Common Stock
subject to such rights, options or warrants would purchase at such Current
Market Price and of which the numerator shall be the number of shares of Common
Stock outstanding at the close of business on the Record Date plus the total
number of additional shares of Common Stock subject to such rights, options or
warrants for subscription or purchase. Such adjustment shall become effective
immediately after the opening of business on the day following the Record Date
fixed for determination of shareholders entitled to purchase or receive such
rights or warrants. To the extent that shares of Common Stock are not delivered
pursuant to such rights, options or warrants, upon the expiration or termination
of such rights or warrants the Conversion Rate shall again be adjusted to be the
Conversion Rate which would then be in effect had the adjustments made upon the
issuance of such rights or warrants been made on the basis of delivery of only
the number of shares of Common Stock actually delivered. If such rights or
warrants are not so issued, the Conversion Rate shall again be adjusted to be
the Conversion Rate which would then be in effect if such date fixed for the
determination of shareholders entitled to receive such rights or warrants had
not been fixed. In determining whether any rights or warrants entitle the
holders to subscribe for or purchase Common Stock at less than such Current
Market Price, and in determining the aggregate offering price of such shares of
Common Stock, there shall be taken into account any consideration received for
such rights or warrants, with the value of such consideration, if other than
cash, to be determined by the Board of Directors.
d. If the Company shall, by dividend or otherwise,
distribute to all holders of its shares of Common Stock shares of any class of
capital stock of the Company (other than any dividends or distributions to which
provision (a) of this Section applies) or evidences of its indebtedness, cash or
other assets (including securities, but excluding any rights or warrants of a
type referred to in paragraph (c) of this Section) (the foregoing hereinafter
called the "Distributed Securities"), then, in each such case, the Conversion
Rate shall be increased so that the same shall be equal to the rate determined
by multiplying the Conversion Rate in effect immediately prior to the close of
business on the Record Date (as defined below) with respect to such distribution
by a fraction of which the denominator shall be the Current Market Price
(determined as provided in provision g(ii) of this Section) of the Common Stock
on such date less the Fair Market Value (as
-9-
<PAGE> 10
defined below) on such date of the portion of the Distributed Securities so
distributed applicable to one share of Common Stock and the numerator shall be
such Current Market Price, such increase to become effective immediately prior
to the opening of business on the day following the Record Date; provided,
however, that, in the event the then Fair Market Value (as so determined) of the
portion of the Distributed Securities so distributed applicable to one share of
Common Stock is equal to or greater than the Current Market Price on the Record
Date, in lieu of the foregoing adjustment, adequate provision shall be made so
that each Holder of Cumulative Convertible Preferred Stock shall have the right
to receive upon conversion of a share of Cumulative Convertible Preferred Stock
(or any portion thereof) the amount of Distributed Securities such holder would
have received had such holder converted such share of Cumulative Convertible
Preferred Stock (or portion thereof) immediately prior to such Record Date. If
such dividend or distribution is not so paid or made, the Conversion Rate shall
again be adjusted to be the Conversion Rate which would then be in effect if
such dividend or distribution had not been declared. If the Board of Directors
determines the Fair Market Value of any distribution for purposes hereof by
reference to the actual or when issued trading market for any securities
comprising all or part of such distribution, it must in doing so consider the
prices in such market over the same period used in computing the Current Market
Price pursuant to provision g(ii) of this section to the extent possible.
Rights or warrants distributed by the Company to all holders of
Common Stock entitling the holders thereof to subscribe for or purchase shares
of the Company's Capital Stock (either initially or under certain
circumstances), which rights or warrants, until the occurrence of a specified
event or events ("Dilution Trigger Event"): (i) are deemed to be transferred
with such Common Stock; (ii) are not exercisable; and (iii) are also issued in
respect of future issuances of Common Stock, shall be deemed not to have been
distributed for purposes of this provision (d) (and no adjustment to the
Conversion Rate under this provision (d) shall be required) until the occurrence
of the earliest Dilution Trigger Event, whereupon such rights and warrants shall
be deemed to have been distributed and an appropriate adjustment to the
Conversion Rate under this provision (d) shall be made. If any such rights or
warrants, including any such existing rights or warrants distributed prior to
the date hereof, are subject to subsequent events, upon the occurrence of each
of which such rights or warrants shall become exercisable to purchase different
securities, evidences of indebtedness or other assets, then the occurrence of
each such event shall be deemed to be such date of issuance and record date with
respect to new rights or warrants (and a termination or expiration of the
existing rights or warrants without exercise by the holder thereof). In
addition, in the event of any distribution (or deemed distribution) of rights or
warrants, or any Dilution Trigger Event with respect thereto, that was counted
for purposes of calculating a distribution amount for which an adjustment to the
Conversion Rate under this provision (d) was made, (1) in the case of any such
rights or warrants which shall all have been redeemed or repurchased without
exercise by any holders thereof, the Conversion Rate shall be readjusted upon
such final redemption or repurchase to give effect to such distribution or
Dilution Trigger Event, as the case may be, as though it were a cash
distribution, equal to the per share redemption or repurchase price received by
a holder or holders of Common Stock with respect to such rights or warrants
(assuming such holder had retained such rights or warrants), made to all holders
of Common Stock as of the date of such redemption or repurchase, and (2) in the
case of such rights or warrants which shall have expired or been terminated
without exercise by any holders thereof, the Conversion Rate shall be readjusted
as if such rights and warrants had not been issued.
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Notwithstanding any other provision of this provision (d) to the
contrary, Capital Stock, rights, warrants, evidences of indebtedness, other
securities, cash or other assets (including, without limitation, any rights
distributed pursuant to any shareholder rights plan) shall be deemed not to have
been distributed for purposes of this provision (d) if the Company makes proper
provision so that each Holder of shares of Cumulative Convertible Preferred
Stock who converts a share of Cumulative Convertible Preferred Stock (or any
portion thereof) after the date fixed for determination of shareholders entitled
to receive such distribution shall be entitled to receive upon such conversion,
in addition to the Common Stock issuable upon such conversion, the amount and
kind of such distributions that such holder would have been entitled to receive
if such holder had, immediately prior to such determination date, converted such
share of Cumulative Convertible Preferred Stock into Common Stock.
For purposes of this provision (d), provision (a) and provision
(b), any dividend or distribution to which this provision (d) is applicable that
also includes Common Stock, or rights or warrants to subscribe for or purchase
Common Stock to which provision (b) applies (or both), shall be deemed instead
to be (1) a dividend or distribution of the evidences of indebtedness, cash,
assets, shares of capital stock, rights or warrants other than (A) such shares
of Common Stock or (B) rights or warrants to which provision (b) applies (and
any Conversion Rate increase required by this provision (d) with respect to such
dividend or distribution shall then be made) immediately followed by (2) a
dividend or distribution of such Common Stock or such rights or warrants (and
any further Conversion Rate increase required by provisions (a) and (b) with
respect to such dividend or distribution shall then be made), except that (1)
the Record Date of such dividend or distribution shall be substituted as "the
Record Date fixed for the determination of stockholders entitled to receive such
dividend or other distribution", "Record Date fixed for such determination" and
"Record Date" within the meaning of provision (a) and as "the Record Date fixed
for the determination of shareholders entitled to receive such rights or
warrants", "the date fixed for the determination of the shareholders entitled to
receive such rights or warrants" and "such Record Date" within the meaning of
provision (b), and (2) any share of Common Stock included in such dividend or
distribution shall not be deemed "outstanding at the close of business on the
date fixed for such determination" within the meaning of provision (a).
e. If the Company shall, by dividend or otherwise,
distribute to all holders of its Common Stock cash (excluding any cash that is
part of a distribution referred to in provision (d)) in an aggregate amount
that, combined together with (1) the aggregate amount of any other such
distributions to all holders of its Common Stock made exclusively in cash within
the 12 months preceding the date of payment of such distribution, and in respect
of which no adjustment pursuant to this provision (e) has been made, and (2) the
aggregate of any cash plus the Fair Market Value (as determined by the Board of
Directors, whose determination shall be conclusive and described in a resolution
of the Board of Directors) of consideration payable in respect of any tender
offer by the Company or a Subsidiary of the Company for all or any portion of
the Common Stock concluded within the 12 months preceding the date of payment of
such distribution, and in respect of which no adjustment pursuant to provision
(d) has been made, exceeds 10% of the product of the Current Market Price
(determined as provided below) on the Record Date with respect to such
distribution times the number of shares of Common Stock outstanding on such
date, then, and in each such case, immediately after the close of business on
such date, the Conversion Rate shall be
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<PAGE> 12
increased so that the same shall equal the price determined by multiplying the
Conversion Rate in effect immediately prior to the close of business on such
Record Date by a fraction (i) the denominator of which shall be equal to the
Current Market Price on the Record Date less an amount equal to the quotient of
(x) the excess of such combined amount over such 10% amount divided by (y) the
number of shares of Common Stock outstanding on the Record Date and (ii) the
numerator of which shall be equal to the Current Market Price on such Record
Date; provided, however, that, if the portion of the cash so distributed
applicable to one share of Common Stock is equal to or greater than the Current
Market Price of the Common Stock on the Record Date, in lieu of the foregoing
adjustment, adequate provision shall be made so that each holder of Cumulative
Convertible Preferred Stock shall have the right to receive upon conversion of a
share of Cumulative Convertible Preferred Stock (or any portion thereof) the
amount of cash such holder would have received had such holder converted such
share of Cumulative Convertible Preferred Stock (or portion thereof) immediately
prior to such Record Date. If such dividend or distribution is not so paid or
made, the Conversion Rate shall again be adjusted to be the Conversion Rate
which would then be in effect if such dividend or distribution had not been
declared.
f. If a tender or exchange offer made by the Company or
any of its subsidiaries for all or any portion of the Common Stock expires and
such tender or exchange offer (as amended upon the expiration thereof) requires
the payment to shareholders (based on the acceptance (up to any maximum
specified in the terms of the tender offer) of Purchased Shares (as defined
below)) of an aggregate consideration having a Fair Market Value that, combined
together with (1) the aggregate of the cash plus the Fair Market Value, as of
the expiration of such tender offer, of consideration payable in respect of any
other tender offers, by the Company or any of its subsidiaries for all or any
portion of the Common Stock expiring within the 12 months preceding the
expiration of such tender offer and in respect of which no adjustment pursuant
to this provision (f) has been made and (2) the aggregate amount of any
distributions to all holders of the Common Stock made exclusively in cash within
12 months preceding the expiration of such tender offer and in respect of which
no adjustment pursuant to provision (e) has been made, exceeds 10% of the
product of the Current Market Price as of the last time (the "Expiration Time")
tenders could have been made pursuant to such tender offer (as it may be
amended) times the number of shares of Common Stock outstanding (including any
tendered shares) at the Expiration Time, then, and in each such case,
immediately prior to the opening of business on the day after the date of the
Expiration Time, the Conversion Rate shall be adjusted so that the same shall
equal the price determined by multiplying the Conversion Rate in effect
immediately prior to the close of business on the date of the Expiration Time by
a fraction of which the denominator shall be the number of shares of Common
Stock outstanding (including any tendered shares) at the Expiration Time
multiplied by the Current Market Price of the Common Stock on the Trading Day
next succeeding the Expiration Time and the numerator shall be the sum of (x)
the Fair Market Value of the aggregate consideration payable to shareholders
based on the acceptance (up to any maximum specified in the terms of the tender
offer) of all shares validly tendered and not withdrawn as of the Expiration
Time (the shares deemed so accepted, up to any such maximum, being referred to
as the "Purchased Shares") and (y) the product of the number of shares of Common
Stock outstanding (less any Purchased Shares) at the Expiration Time and the
Current Market Price of the Common Stock on the Trading Day next succeeding the
Expiration Time, such reduction (if any) to become effective immediately prior
to the opening of business on the day following the Expiration Time. If the
Company is obligated to
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<PAGE> 13
purchase shares pursuant to any such tender offer, but the Company is
permanently prevented by applicable law from effecting any such purchases or all
such purchases are rescinded, the Conversion Rate shall again be adjusted to be
the Conversion Rate which would then be in effect if such tender offer had not
been made. If the application of this provision (f) to any tender offer would
result in a decrease in the Conversion Rate, no adjustment shall be made for
such tender offer under this provision (f).
The Company may make voluntary increases in the Conversion Rate
in addition to those required in the foregoing provisions, provided that each
such increase is in effect for at least 20 calendar days.
In addition, in the event that any other transaction or event
occurs as to which the foregoing Conversion Rate adjustment provisions are not
strictly applicable but the failure to make any adjustment would adversely
affect the conversion rights represented by the Cumulative Convertible Preferred
Stock in accordance with the essential intent and principles of such provisions,
then, in each such case, either (i) the Company will appoint an investment
banking firm of recognized national standing, or any other financial expert that
does not (or whose directors, officers, employees, affiliates or stockholders do
not) have a direct or material indirect financial interest in the Company or any
of its subsidiaries, who has not been, and, at the time it is called upon to
give independent financial advice to the Company, is not (and none of its
directors, officers, employees, affiliates or stockholders are) a promoter,
director or officer of the Company or any of its subsidiaries, which will give
their opinion upon or (ii) the Board of Directors shall, in its sole discretion,
determine consistent with the Board of Directors' fiduciary duties to the
holders of the Company's Common Stock, the adjustment, if any, on a basis
consistent with the essential intent and principles established in the foregoing
Conversion Rate adjustment provisions, necessary to preserve, without dilution,
the conversion rights represented by the Cumulative Convertible Preferred Stock.
Upon receipt of such opinion or determination, the Company will promptly mail a
copy thereof to the Holders of the Cumulative Convertible Preferred Stock and
will, subject to the fiduciary duties of the Board of Directors, make the
adjustments described therein.
The Company will provide to Holders of the Cumulative Convertible
Preferred Stock reasonable notice of any event that would result in an
adjustment to the Conversion Rate pursuant to this section so as to permit the
Holders to effect a conversion of Cumulative Convertible Preferred Stock into
shares of Common Stock prior to the occurrence of such event.
g. For purposes of this section, the following terms shall
have the meaning indicated:
i. "Current Market Price" means the average of the
daily closing prices per share of Common Stock for the 10 consecutive trading
days immediately prior to the date in question.
ii. "Fair Market Value" shall mean the amount which
a willing buyer would pay a willing seller in an arm's-length transaction, under
usual and ordinary circumstances and after consideration of all available uses
and purposes without any compulsion
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<PAGE> 14
upon the seller to sell or the buyer to buy, as determined by the Board of
Directors, whose determination shall be made in good faith and shall be
conclusive and described in a resolution of the Board of Directors.
iii. "Record Date" shall mean, with respect to any
dividend, distribution or other transaction or event in which the holders of
Common Stock have the right to receive any cash, securities or other property or
in which the Common Stock (or other applicable security) is exchanged for or
converted into any combination of cash, securities or other property, the date
fixed for determination of shareholders entitled to receive such cash,
securities or other property (whether such date is fixed by the Board of
Directors or by statute, contract or otherwise).
h. No adjustment in the Conversion Rate shall be required
unless such adjustment would require an increase or decrease of at least 1% in
such rate; provided, however, that any adjustments which by reason of this
paragraph are not required to be made shall be carried forward and taken into
account in any subsequent adjustment. All calculations under this paragraph
shall be made by the Company and shall be made to the nearest cent or to the
nearest one-hundredth of a share, as the case may be. No adjustment need be made
for a change in the par value or no par value of the Common Stock.
i. Whenever the Conversion Rate is adjusted as herein
provided, the Company shall promptly file with the Transfer Agent an Officers'
Certificate setting forth the Conversion Rate after such adjustment and setting
forth a brief statement of the facts requiring such adjustment. Promptly after
delivery of such certificate, the Company shall prepare a notice of such
adjustment of the Conversion Rate setting forth the adjusted Conversion Rate and
the date on which each adjustment becomes effective and shall mail such notice
of such adjustment of the Conversion Rate to each holder of Cumulative
Convertible Preferred Stock at such holder's last address appearing on the
register of holders maintained for that purpose within 20 days of the effective
date of such adjustment. Failure to deliver such notice shall not affect the
legality or validity of any such adjustment.
j. In any case in which this paragraph provides that an
adjustment shall become effective immediately after a Record Date for an event,
the Company may defer until the occurrence of such event issuing to the holder
of any share of Cumulative Convertible Preferred Stock converted after such
Record Date and before the occurrence of such event the additional Common Stock
issuable upon such conversion by reason of the adjustment required by such event
over and above the Common Stock issuable upon such conversion before giving
effect to such adjustment.
k. For purposes of this paragraph, the number of shares of
Common Stock at any time outstanding shall not include shares held in the
treasury of the Company but shall include shares issuable in respect of scrip
certificates issued in lieu of fractions of Common Stock. The Company shall not
pay any dividend or make any distribution on Common Stock held in the treasury
of the Company.
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<PAGE> 15
8. Certain Covenants.
a. Transactions with Affiliates
Without the affirmative vote or consent of the holders of
a majority of the outstanding shares of Cumulative Convertible Preferred Stock,
the Company will not, and will not permit any of its subsidiaries to, make any
payment to, or sell, lease, transfer or otherwise dispose of any of its
properties or assets to, or purchase any property or assets from, or enter into
or make or amend any contract, agreement, understanding, loan, advance or
guarantee with, or for the benefit of, any Affiliate (each of the foregoing, an
"Affiliate Transaction"), unless (i) such Affiliate Transaction is on terms that
are no less favorable to the Company or the relevant subsidiary than those that
would have been obtained in a comparable transaction by the Company or such
subsidiary with an unrelated Person and (ii) the Company files in its minute
books with respect to any Affiliate Transaction or series of related Affiliate
Transaction involving aggregate consideration in excess of $1.0 million, a
resolution of the Board of Directors set forth in an Officers' Certificate
certifying that such Affiliate Transaction complies with clause (i) above and
that such Affiliate Transaction has been approved by a majority of the members
of the Board of Directors that are disinterested as to such Affiliate
Transaction.
As used herein, "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 purposes of
this definition, "control" (including, with correlative meanings, the terms
"controlling," "controlled by" and "under common control with"), as used with
respect to any Person, shall mean the possession, directly or indirectly, of the
power to direct or cause the direction of the management or policies of such
Person, whether through the ownership of voting securities, by agreement or
otherwise; provided that beneficial ownership of 10% or more of the voting
securities of a Person shall be deemed to be control.
The provisions of the foregoing paragraph shall not
prohibit (i) any issuance of securities, or other payments, awards or grants in
cash, securities or otherwise pursuant to, or the funding of, employment
arrangements, stock options and stock ownership plans approved by the Board of
Directors, (ii) the grant of stock options or similar rights to employees and
directors of the Company pursuant to plans approved by the Board of Directors,
(iii) any employment or consulting arrangement or agreement entered into by the
Company or any of its subsidiaries in the ordinary course of business and
consistent with the past practice of the Company or such subsidiary, (iv) the
payment of reasonable fees to directors of the Company and its subsidiaries who
are not employees of the Company or its subsidiaries, (v) any Affiliate
Transaction between the Company and a subsidiary thereof or between such
subsidiaries (for purposes of this paragraph, "subsidiary" includes any entity
deemed to be an Affiliate because the Company or any of its subsidiaries own
securities in such entity or controls such entity), or (vi) transactions between
the Company or any subsidiary thereof specifically contemplated by the PSINet
Agreement dated as of July 22, 1997 between a subsidiary of the Company and
PSINet, as amended as of the date hereof.
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<PAGE> 16
b. Payments for Consent
The Company nor any of its subsidiaries will, directly or
indirectly, pay or cause to be paid any consideration, whether by way of
dividend or other distribution, fee or otherwise, to any Holder of shares of the
Cumulative Convertible Preferred Stock for or as an inducement to any consent,
waiver or amendment of any of the terms or provisions of the Certificate of
Designations or the Cumulative Convertible Preferred Stock unless such
consideration is offered to be paid and is paid to all Holders of the Cumulative
Convertible Preferred Stock that consent, waive or agree to amend in the time
frame set forth in the solicitation documents relating to such consent, waiver
or agreement.
c. Reports
Whether or not required by the rules and regulations of
the Commission, so long as any shares of the Cumulative Convertible Preferred
Stock are outstanding, the Company will furnish to the Holders of the Cumulative
Convertible Preferred Stock (i) all quarterly and annual financial information
that would be required to be contained in a filing with the Commission on Forms
10-Q and 10-K if the Company were required to file such Forms, including
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" and, with respect to the annual information only, a report thereon
by the Company's certified independent accountants and (ii) all information that
would be required to be contained in a current report on Form 8-K if the Company
were required to file such reports. In the event the Company has filed any such
report with the Commission, it will not be obligated to separately finish the
report to any Holder unless and until such Holder requests a copy of the report.
In addition, whether or not required by the rules and regulations of the
Commission, the Company will file a copy of all such information and reports
with the Commission for public availability (unless the Commission will not
accept such a filing) and make such information available to securities analysts
and prospective investors upon request.
9. Merger, Consolidation or Sale of Assets of the Company
In the event that the Company is party to any Fundamental Change
or transaction (including, without limitation, a merger other than a merger that
does not result in a reclassification, conversion, exchange or cancellation of
Common Stock), consolidation, sale of all or substantially all of the assets of
the Company, recapitalization or reclassification of Common Stock (other than a
change in par value, or from par value to no par value, or from no par value to
par value or as a result of a subdivision or combination of Common Stock) or any
compulsory share exchange (each of the foregoing, including any Fundamental
Change, being referred to as a "Transaction"), the Company will be obligated,
subject to applicable provisions of state law and the restrictions of the
Indenture, either to offer (a "Repurchase Offer") to purchase all of the shares
of Cumulative Convertible Preferred Stock on the date (the "Repurchase Date")
that is 75 days after the date the Company gives notice of the Transaction, at a
price (the "Repurchase Price") equal to $1,000.00 per share of Cumulative
Convertible Preferred Stock, together with an amount equal to accrued and unpaid
dividends on the Cumulative Convertible Preferred Stock through the Repurchase
Date or to adjust the Conversion Rate as described below. If a Repurchase Offer
is made, the Company shall deposit, on or prior to the Repurchase Date, with a
paying agent an amount of money sufficient to
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<PAGE> 17
pay the aggregate Repurchase Price of the Cumulative Convertible Preferred Stock
which is to be paid on the Repurchase Date.
On or before the 15th day after the Company knows or reasonably
should know that a Transaction has occurred, the Company will be required to
mail to all Holders a notice of the occurrence of such Transaction and whether
or not the documents governing the Company's indebtedness permit at such time a
Repurchase Offer, and, as applicable, either the new Conversion Rate (as
adjusted at the option of the Company) or the date by which the Repurchase Offer
must be accepted, the Repurchase Price for the Cumulative Convertible Preferred
Stock and the procedures which the holder must follow to accept the Repurchase
Offer. To accept the Repurchase Offer, the Holder of a share of Cumulative
Convertible Preferred Stock will be required to deliver, on or before the 10th
day prior to the Repurchase Date, written notice to the Company (or an agent
designated by the Company for such purpose) of the holder's acceptance, together
with the certificates evidencing the Cumulative Convertible Preferred Stock with
respect to which the offer is being accepted, duly endorsed for transfer.
In the event the Company does not make a Repurchase Offer with
respect to a Transaction and such Transaction results in shares of Common Stock
being converted into the right to receive, or being exchanged for, (i) in the
case of any Transaction other than a Transaction involving a Common Stock
Fundamental Change (as defined below) (and subject to funds being legally
available for such purpose under applicable law at the time of such conversion),
securities, cash or other property, each share of the Cumulative Convertible
Preferred Stock shall thereafter be convertible into the kind and, in the case
of a Transaction which does not involve a Fundamental Change (as defined below),
amount of securities, cash and other property receivable upon the consummation
of such Transaction by a holder of that number of shares of Common Stock into
which a share of the Cumulative Convertible Preferred Stock was convertible
immediately prior to such Transaction, or (ii) in the case of a Transaction
involving a Common Stock Fundamental Change, common stock, each share of the
Cumulative Convertible Preferred Stock shall thereafter be convertible (in the
manner described therein) into common stock of the kind received by holders of
Common Stock (but in each case after giving effect to any adjustment discussed
below relating to a Fundamental Change if such Transaction constitutes a
Fundamental Change), other than as required by Delaware law.
If any Fundamental Change occurs, then the Conversion Rate in
effect will be adjusted immediately after such Fundamental Change as described
below. In addition, in the event of a Common Stock Fundamental Change, each
share of Cumulative Convertible Preferred Stock shall be convertible solely into
common stock of the kind received by holders of Common Stock as a result of such
Common Stock Fundamental Change.
The Conversion Rate in the case of any Transaction involving a
Fundamental Change will be adjusted immediately after such Fundamental Change:
(i) in the case of a Non-Stock Fundamental Change
(as defined below), the Conversion Rate will thereupon become the higher of (A)
the Conversion Rate in effect immediately prior to such Non-Stock Fundamental
Change, but after giving effect to any other prior
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<PAGE> 18
adjustments effected, and (B) a fraction, the numerator of which is (x) the
redemption rate for one share of the Cumulative Convertible Preferred Stock if
the redemption date were the date of such Non-Stock Fundamental Change (or, for
the period commencing on the first date of original issuance of the Cumulative
Convertible Preferred Stock and through April 1, 1999, and the twelve-month
period commencing April 1, 1999, the product of 106.75% and 106.075%,
respectively), multiplied by $1000 plus (y) the amount of any then-accrued and
unpaid dividends on one share of the Cumulative Convertible Preferred Stock, and
the denominator of which is the greater of the Applicable Price or the then
applicable Reference Market Price; and
(ii) in the case of a Common Stock Fundamental
Change, the Conversion Rate in effect immediately prior to such Common Stock
Fundamental Change, but after giving effect to any other prior adjustments
effected, will thereupon be adjusted by multiplying such Conversion Rate by a
fraction of which the denominator will be the Purchaser Stock Price (as defined
below) and the numerator will be the Applicable Price; provided, however, that
in the event of a Common Stock Fundamental Change in which (A) 100% of the value
of the consideration received by a holder of Common Stock is common stock of the
successor, acquirer, or other third party (and cash, if any, is paid only with
respect to any fractional interests in such common stock resulting from such
Common Stock Fundamental Change) and (B) all Common Stock will have been
exchanged for, converted into, or acquired for common stock (and cash with
respect to fractional interests) of the successor, acquirer, or other third
party, the Conversion Rate in effect immediately prior to such Common Stock
Fundamental Change will thereupon be adjusted by multiplying such Conversion
Rate by the number of shares of common stock of the successor, acquirer, or
other third party received by a holder of one share of Common Stock as a result
of such Common Stock Fundamental Change.
The term "Applicable Price" means (i) in the case of a Non-Stock
Fundamental Change in which the holders of Common Stock receive only cash, the
amount of cash received by the holder of one share of Common Stock and (ii) in
the event of any other Non-Stock Fundamental Change or any Common Stock
Fundamental Change, the average of the Closing Price (as defined below) for
Common Stock during the ten Trading Days prior to the record date for the
determination of the holders of Common Stock entitled to receive such
securities, cash, or other property in connection with such Non-Stock
Fundamental Change or Common Stock Fundamental Change or, if there is no such
record date, the date upon which the holders of Common Stock shall have the
right to receive such securities, cash, or other property (such record date or
distribution date being hereinafter referred to as the "Entitlement Date") in
each case as adjusted in good faith by the Company to appropriately reflect any
of the events referred to above.
The term "Common Stock Fundamental Change" means any Fundamental
Change in which more than 50% of the value (as determined in good faith by the
Board of Directors of the Company) of the consideration received by holders of
Common Stock consists of common stock that for each of the ten consecutive
Trading Days prior to the Entitlement Date has been admitted for listing or
admitted for listing subject to notice of issuance on a national securities
exchange or quoted on the Nasdaq National Market; provided, however, that a
Fundamental Change shall not be a Common Stock Fundamental Change unless either
(i) the Company continues to exist after the occurrence of such Fundamental
Change and the outstanding Cumulative Convertible Preferred
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<PAGE> 19
Stock continues to exist as outstanding Cumulative Convertible Preferred Stock
or (ii) not later than the occurrence of such Fundamental Change, the
outstanding Cumulative Convertible Preferred Stock is converted into or
exchanged for shares of convertible Preferred Stock of an entity succeeding to
the business of the Company or a subsidiary thereof, which convertible Preferred
Stock has powers, preferences, and relative, participating, optional, or other
rights and qualifications, limitations, and restrictions, substantially similar
to those of the Cumulative Convertible Preferred Stock.
The term "Fundamental Change" means the occurrence of any
Transaction or event in connection with a plan pursuant to which all or
substantially all Common Stock shall be exchanged for, converted into, acquired
for, or constitute solely the right to receive securities, cash, or other
property (whether by means of an exchange offer, liquidation, tender offer,
consolidation, merger, combination, reclassification, recapitalization, or
otherwise), provided, that, in the case of a plan involving more than one such
Transaction or event, for purposes of adjustment of the Conversion Rate, such
Fundamental Change shall be deemed to have occurred when substantially all
Common Stock shall be exchanged for, converted into, or acquired for or
constitute solely the right to receive securities, cash, or other property, but
the adjustment shall be based upon the consideration that a holder of Common
Stock received in such Transaction or event as a result of which more than 50%
of Common Stock shall have been exchanged for, converted into, or acquired for
or constitute solely the right to receive securities, cash, or other property.
The term "Non-Stock Fundamental Change" means any Fundamental Change other than
a Common Stock Fundamental Change.
The term "Purchaser Stock Price" means, with respect to any
Common Stock Fundamental Change, the average of the Closing Prices for the
common stock received in such Common Stock Fundamental Change for the ten
consecutive Trading Days prior to and including the Entitlement Date, as
adjusted in good faith by the Company to appropriately reflect any of the events
referred to above.
The term "Reference Market Price" shall initially mean $38.79
(which is an amount equal to 66 2/3% of the reported last sales price for Common
Stock on the Nasdaq National Market on March 25, 1998) and in the event of any
adjustment of the Conversion Rate other than as a result of a Non-Stock
Fundamental Change, the Reference Market Price shall also be adjusted so that
the ratio of the Reference Market Price to the Conversion Rate after giving
effect to any such adjustment shall always be the same as the ratio of the
initial Reference Market Price to the initial Conversion Rate.
In case (1) the Company shall declare a dividend (or any other
distribution) on its Common Stock payable otherwise than in cash out of its
earned surplus; (2) the Company shall authorize the granting to all holders of
its Common Stock of rights or warrants to subscribe for or purchase any shares
of capital stock of any class or of any other rights; (3) of any
reclassification of the Common Stock of the Company (other than a subdivision or
combination of its outstanding Common Stock); (4) of any consolidation or merger
to which the Company is a party and for which approval of any shareholders of
the Company is required; (5) the sale or transfer of all or substantially all
the assets of the Company; or (6) of the voluntary or involuntary dissolution,
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<PAGE> 20
liquidation or winding up of the Company; then the Company shall cause to be
filed with the Transfer Agent and at each office or agency maintained for the
purpose of conversion of the Cumulative Convertible Preferred Stock, and shall
cause to be mailed to all holders at their last addresses as they shall appear
in the Cumulative Convertible Preferred Stock Register, at least 20 days (or 10
days in any case specified in clause (1) or (2) above) prior to the applicable
date hereinafter specified, a notice stating (x) the date on which a record is
to be taken for the purpose of such dividend, distribution, rights or warrants,
or, if a record is not to be taken, the date as of which the holders of Common
Stock of record to be entitled to such dividend, distribution, rights or
warrants are to be determined or (y) the date on which such reclassification,
consolidation, merger, sale, transfer, dissolution, liquidation or winding up is
expected to become effective, and the date as of which it is expected that
holders of Common Stock of record shall be entitled to exchange their Common
Stock for securities, cash or other property deliverable upon such
reclassification, consolidation, merger, sale, transfer, dissolution,
liquidation or winding up. Failure to give the notice requested by this Section
or any defect therein shall not affect the legality or validity of any dividend,
distribution, right, warrant, reclassification, consolidation, merger, sale,
transfer, dissolution, liquidation or winding up, or the vote upon any such
action.
The Company shall at all times reserve and keep available, free
from preemptive rights, out of its authorized but unissued shares of Common
Stock (or out of its authorized shares of Common Stock held in the treasury of
the Company), for the purpose of effecting the conversion of the Cumulative
Convertible Preferred Stock, the full number of shares of Common Stock then
issuable upon the conversion of all outstanding shares of Cumulative Convertible
Preferred Stock.
The Company will pay any and all document, stamp or similar issue
or transfer taxes that may be payable in respect of the issue or delivery of
Common Stock on conversion of the Cumulative Convertible Preferred Stock
pursuant hereto. The Company shall not, however, be required to pay any tax
which may be payable in respect of any transfer involved in the issue and
delivery of shares of Common Stock in a name other than that of the Holder of
the share of Cumulative Convertible Preferred Stock or the shares of Cumulative
Convertible Preferred Stock to be converted, and no such issue or delivery shall
be made unless and until the Person requesting such issue has paid to the
Company the amount of any such tax, or has established to the satisfaction of
the Company that such tax has been paid.
10. Reissuance of Cumulative Convertible Preferred Stock. Shares
of Cumulative Convertible Preferred Stock redeemed for or converted into Common
Stock or that have been reacquired in any manner shall not be reissued as shares
of Cumulative Convertible Preferred Stock and shall (upon compliance with any
applicable provisions of the laws of Delaware) have the status of authorized and
unissued shares of Preferred Stock undesignated as to series and may be
redesignated and reissued as part of any series of Preferred Stock; provided,
however, that so long as any shares of Cumulative Convertible Preferred Stock
are outstanding, any issuance of such shares must be in compliance with the
terms hereof.
11. 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.
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<PAGE> 21
12. Additional Rights of Holders. In addition to the rights
provided to Holders under this Certificate of Designation, Holders shall have
the rights set forth in the Registration Rights Agreement.
13. Amendment, Supplement and Waiver. The Company may amend this
Certificate of Designation with the affirmative vote or consent of the holders
of a majority of the shares of Cumulative Convertible Preferred Stock then
outstanding, (including votes or consents obtained in connection with a tender
offer or exchange offer for the Cumulative Convertible Preferred Stock) and,
except as otherwise provided by applicable law, any past default or failure to
comply with any provision of this Certificate of Designation may also be waived
with the consent of such holders. Notwithstanding the foregoing, however,
without the consent of each Holder affected, an amendment or waiver may not
(with respect to any shares of the Cumulative Convertible Preferred Stock held
by a non-consenting Holder): (i) alter the voting rights with respect to the
Cumulative Convertible Preferred Stock or reduce the number of shares of the
Cumulative Convertible Preferred Stock whose Holders must consent to an
amendment, supplement or waiver, (ii) reduce the Liquidation Preference of any
share of the Cumulative Convertible Preferred Stock or adversely alter the
provisions with respect to the redemption of the Cumulative Convertible
Preferred Stock, (iii) reduce the rate of or change the time for payment of
dividends on any share of the Cumulative Convertible Preferred Stock, (iv) waive
a default in the payment of dividends or Liquidated Damages (if any) on the
Cumulative Convertible Preferred Stock, (v) make any share of the Cumulative
Convertible Preferred Stock payable in money other than United States dollars,
(vi) make any change in the provisions of the Certificate of Designation
relating to waivers of the rights of Holders of the Cumulative Convertible
Preferred Stock to receive the Liquidation Preference, dividends or Liquidated
Damages (if any) on the Cumulative Convertible Preferred Stock, or (vii) make
any change in the foregoing amendment and waiver provisions.
Notwithstanding the foregoing, without the consent of any Holder
of the Cumulative Convertible Preferred Stock, the Company may (to the extent
permitted by, and subject to the requirements of, Delaware law) amend or
supplement this Certificate of Designation to cure any ambiguity, defect or
inconsistency, to provide for uncertificated shares of the Cumulative
Convertible Preferred Stock in addition to or in place of certificated shares of
the Cumulative Convertible Preferred Stock, to make any change that would
provide any additional rights or benefits to the Holders of the Cumulative
Convertible Preferred Stock or to make any change that the Board of Directors
determines, in good faith, is not materially adverse to Holders of the
Cumulative Convertible Preferred Stock.
14. Shelf Registration; Liquidated Damages. Pursuant to the
Registration Rights Agreement, the Company will agree to file a Shelf
Registration Statement with the Commission on the appropriate form under the
Securities Act with respect to the Cumulative Convertible Preferred Stock, any
depositary shares issued in connection with the Cumulative Convertible Preferred
Stock (the "Depositary Shares"), and Common Stock issuable upon conversion
thereof or paid as dividends thereon, to cover resales of the Depositary Shares,
the Cumulative Convertible Preferred Stock or such Common Stock by the Holders
thereof who satisfy certain conditions relating to the provision of information
in connection with the Shelf Registration Statement. The Company will use its
best efforts to cause the Shelf Registration Statement to be declared effective
as promptly as possible by
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<PAGE> 22
the Commission. For purposes hereof, "Transfer Restricted Securities" means each
Depositary Share or share of the Cumulative Convertible Preferred Stock or
Common Stock issuable upon conversion thereof or paid as dividends thereon until
the earlier of (i) the date on which such Depositary Share or share of
Cumulative Convertible Preferred Stock or Common Stock has been effectively
registered under the Securities Act and disposed of in accordance with the Shelf
Registration Statement or (ii) the date on which such Depositary Share or share
of Cumulative Convertible Preferred Stock or Common Stock is eligible to be
distributed to the public pursuant to Rule 144(k) under the Securities Act.
The Registration Rights Agreement will provide that the Company
will (i) file the Shelf Registration Statement with the Commission on or prior
to 45 days after the Issue Date, (ii) use its best efforts to cause the Shelf
Registration to be declared effective by the Commission on or prior to June 26,
1998 and (iii) use its best efforts to maintain the effectiveness of the Shelf
Registration Statement until all Depositary Shares, shares of Cumulative
Convertible Preferred Stock and shares of Common Stock issued upon conversion
thereof or as dividends thereon that are not held by affiliates of the Company
(A) may be resold without restriction under Rule 144(k) under the Securities Act
or (B) have been sold pursuant to the Shelf Registration Statement (subject to
the Company's right to notify Holders that the Prospectus contained therein
ceases to be accurate and complete as a result of material business developments
for up to 120 days during such three-year period, provided that (A) no single
period may exceed 45 days and (B) such periods in the aggregate may not exceed
60 days in any calendar year). If (a) the Company fails to file the Shelf
Registration Statement required by the Registration Rights Agreement on or
before the date specified for such filing, (b) such Shelf Registration Statement
is not declared effective by the Commission on or prior to the date specified
for such effectiveness (the "Effectiveness Target Date") or (c) the Shelf
Registration Statement is declared effective but thereafter ceases to be
effective or usable in connection with resales of Transfer Restricted Securities
during the periods specified in the Registration Rights Agreement (each such
event referred to in clauses (a) through (c) above a "Registration Default"),
then the Company will pay Liquidated Damages as required by the Registration
Rights Agreement to each Holder of shares of the Cumulative Convertible
Preferred Stock which are Transfer Restricted Securities (and the corresponding
Depositary Shares), with respect to the first 45-day period immediately
following the occurrence of such Registration Default in an amount equal to
$0.25 per year per Depositary Share ($5.00 per year per $1,000 in Liquidation
Preference of the Cumulative Convertible Preferred Stock) held by such Holder.
The amount of the Liquidated Damages will increase by an additional $2.50 per
year per $1,000 in Liquidation Preference of the Cumulative Convertible
Preferred Stock with respect to any subsequent period until all Registration
Defaults have been cured. In addition, holders of shares of the Cumulative
Convertible Preferred Stock which are Transfer Restricted Securities may receive
Liquidated Damages with respect to Common Stock which are Transfer Restricted
Securities issued in lieu of paying dividends in cash. The Liquidated Damages
amount per share of Common Stock will be equal to the Liquidated Damages per
share of Cumulative Convertible Preferred Stock, divided by the Conversion Rate.
All accrued Liquidated Damages will be paid by the Company, to the extent
permitted by applicable law, on each Dividend Payment Date and, to the extent
the net dividend payable on such date may be paid through the issuance of Common
Stock, may be paid in Common Stock (valued on the same basis as for the dividend
then payable). Following the cure of all Registration Defaults, the accrual of
Liquidated Damages will cease. Notwithstanding anything to
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<PAGE> 23
the contrary herein contained, during any period, the Company will not be
required to pay Liquidated Damages with respect to more than one Registration
Default.
The summary herein of certain provisions of the Registration
Rights Agreement does not purport to be complete and is subject to, and is
qualified in its entirety by reference to, all the provisions of the
Registration Rights Agreement, a copy of which is available upon request to the
Company.
15. Transfer and Exchange. When Cumulative Convertible Preferred
Stock is presented to the Transfer Agent with a request to register the transfer
of such Cumulative Convertible Preferred Stock or to exchange such Cumulative
Convertible Preferred Stock for an equal number of shares of Cumulative
Convertible Preferred Stock of other authorized denominations, the Transfer
Agent shall register the transfer or make the exchange as requested if its
reasonable requirements for such transaction are met and such transfer or
exchange is in compliance with applicable laws or regulations.
16. Certain Definitions. As used in this Certificate of
Designation, the following terms shall have the following meanings (and (1)
terms defined in the singular have comparable meanings when used in the plural
and vice versa, (2) "including" means including without limitation, (3) "or" is
not exclusive and (4) an accounting term not otherwise defined has the meaning
assigned to it in accordance with United States generally accepted accounting
principles as in effect on the Issue Date and all accounting calculations will
be determined in accordance with such principles), unless the content otherwise
requires:
"Board of Directors" mean the Board of Directors of the Company
or any committee thereof duly authorized to act on behalf of the Board.
"Business Day" means each day which is not a legal holiday.
"Capital Stock" of any person means any and all shares,
interests, rights to purchase, warrants, options, participation or other
equivalents of or interests in (however designated) equity of such person,
including any Preferred Stock, but excluding any debt securities convertible
into or exchangeable for such equity.
"Closing Price" means on any day the reported last bid price on
such day, or in case no sale takes place on such day, the average of the
reported closing bid and asked prices on the principal national securities
exchange on which such stock is listed or admitted to trading, or if not listed
or admitted to trading on any national securities exchange, the average of the
closing bid and asked prices as furnished by any independent registered
broker-dealer firm, selected by the Company for that purpose, in each case
adjusted for any stock split during the relevant period.
"Commission" means the Securities and Exchange Commission.
"Default" means any event which is, or after notice or passage of
time or both would be, a Voting Rights Triggering Event.
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<PAGE> 24
"Holders" means the registered holders from time to time of the
Cumulative Convertible Preferred Stock.
"Indenture" means the Indenture dated as of October 5, 1995, as
supplemented and amended, between the Company and IBJ Schroder Bank & Trust
Company.
"Liquidated Damages" means, with respect to any share of
Cumulative Convertible Preferred Stock, the additional amounts payable pursuant
to Section 14 hereof.
"Officers' Certificate" means a certificate signed by two
officers of the Company.
"Person" means any individual, corporation, partnership, joint
venture, limited liability company, association, joint-stock company, trust,
unincorporated organization, government or any agency or political subdivision
thereof or any other entity.
"Preferred Stock", as applied to the Capital Stock of any
corporation, means Capital Stock of any class or classes (however designated)
which is preferred as to the payment of dividends, or as to the distribution of
assets upon any voluntary or involuntary liquidation or dissolution of such
corporation, over shares of Capital Stock of any other class of such
corporation.
"Registration Rights Agreement" means the Registration Rights
Agreement among the Company, Goldman, Sachs & Co., Credit Suisse First Boston
Corporation, Merrill Lynch & Company and Morgan Stanley Dean Witter with respect
to the Cumulative Convertible Preferred Stock.
"Securities Act" means the Securities Act of 1933.
"Shelf Registration Statement" means a shelf registration
statement filed with the Commission to cover resales of Transfer Restricted
Securities by holders thereof, as required by the Registration Rights Agreement.
"Subsidiary" means any corporation, association, partnership,
limited liability company or other business entity of which more than 50% of the
total voting power of shares of capital stock or other interests entitled
(without regard to the occurrence of any contingency) to vote in the election of
directors, managers or trustees thereof is at the time owned or controlled,
directly or indirectly, by the Company, the Company and one or more Subsidiaries
or one or more Subsidiaries and any partnership the sole general partner or the
managing partner of which the Company or any Subsidiary or the only general
partners of which are the Company and one or more Subsidiaries or one or more
Subsidiaries.
"Trading Day" means, in respect of any securities exchange or
securities market, each Monday, Tuesday, Wednesday, Thursday and Friday, other
than any day on which securities are not traded on the applicable securities
exchange or in the applicable securities market.
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<PAGE> 25
"Transfer Agent" means the transfer agent for the Cumulative
Convertible Preferred Stock appointed by the Company, which initially shall be
BankBoston, N.A.
"Transfer Restricted Securities" means each share of Cumulative
Convertible Preferred Stock (or the shares of Common Stock into which such share
of Cumulative Convertible Preferred Stock is convertible) until (i) the date on
which such security has been effectively registered under the Securities Act and
disposed of in accordance with the Shelf Registration Statement or (ii) the date
on which such security is distributed to the public pursuant to Rule 144 under
the Securities Act or is saleable pursuant to Rule 144(k) under the Securities
Act (or any successor rule thereof) or would be saleable pursuant to Rule 144(k)
under the Securities Act had it not been held by, or had it never been held by,
an affiliate of the Company.
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<PAGE> 26
IN WITNESS WHEREOF, said IXC Communications, Inc., has caused
this Certificate of Designation to be signed by James F. Guthrie, its Executive
Vice President and Chief Financial Officer, this 30th day of March, 1998.
IXC COMMUNICATIONS, INC.,
by /s/ JAMES F. GUTHRIE
---------------------------------------
Name: James F. Guthrie
Title: Executive Vice President
and Chief Financial Officer
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<PAGE> 27
EXHIBIT A
FORM OF CONVERTIBLE PREFERRED STOCK
FACE OF SECURITY
THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE UNITED STATES
SECURITIES ACT OF 1933 (THE "SECURITIES ACT") AND MAY NOT BE OFFERED, SOLD,
PLEDGED OR OTHERWISE TRANSFERRED EXCEPT (1) TO A PERSON WHOM THE SELLER
REASONABLY BELIEVES IS A QUALIFIED INSTITUTIONAL BUYER WITHIN THE MEANING OF
RULE 144A UNDER THE SECURITIES ACT PURCHASING FOR ITS OWN ACCOUNT OR FOR THE
ACCOUNT OF A QUALIFIED INSTITUTIONAL BUYER IN A TRANSACTION MEETING THE
REQUIREMENTS OF RULE 144A, (2) IN AN OFFSHORE TRANSACTION COMPLYING WITH RULE
903 OR RULE 904 OF REGULATION S UNDER THE SECURITIES ACT, (3) TO AN INSTITUTION
THAT IS AN "ACCREDITED INVESTOR" WITHIN THE MEANING OF RULE 501(a)(1), (2), (3)
OR (7) UNDER THE SECURITIES ACT IN A TRANSACTION EXEMPT FROM THE REGISTRATION
REQUIREMENTS OF THE SECURITIES ACT, (4) PURSUANT TO AN EXEMPTION FROM
REGISTRATION UNDER THE SECURITIES ACT PROVIDED BY RULE 144 THEREUNDER (IF
AVAILABLE), OR (5) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE
SECURITIES ACT, AND IN EACH CASE, IN ACCORDANCE WITH ALL APPLICABLE SECURITIES
LAWS OF THE STATES OF THE UNITED STATES.
IN CONNECTION WITH ANY TRANSFER, THE HOLDER WILL DELIVER TO THE
REGISTRAR AND TRANSFER AGENT SUCH CERTIFICATES AND OTHER INFORMATION AS SUCH
REGISTRAR AND TRANSFER AGENT MAY REASONABLY REQUIRE TO CONFIRM THAT THE TRANSFER
COMPLIES WITH THE FOREGOING RESTRICTIONS.
-1-
<PAGE> 28
Certificate Number Number of Shares of Convertible
Preferred Stock
[ ] [ ]
CUSIP NO.: 450713870
6 3/4% Cumulative Convertible Preferred Stock (par
value $0.01) (liquidation preference $1,000
per share of Convertible Preferred Stock)
of
IXC Communications, Inc.
IXC Communications, Inc., a Delaware corporation (the "Company"),
hereby certifies that [ ] (the "Holder") is the registered owner of fully paid
and non-assessable preferred securities of the Company designated the 6 3/4%
Cumulative Convertible Preferred Stock (par value $0.01) (liquidation preference
$1,000 per share of Cumulative Convertible Preferred Stock) (the "Cumulative
Convertible Preferred Stock"). The shares of Cumulative Convertible Preferred
Stock are transferable on the books and records of the Registrar, in person or
by a duly authorized attorney, upon surrender of this certificate duly endorsed
and in proper form for transfer. The designation, rights, privileges,
restrictions, preferences and other terms and provisions of the Cumulative
Convertible Preferred Stock represented hereby are issued and shall in all
respects be subject to the provisions of the Certificate of Designation dated
March [ ], 1998, as the same may be amended from time to time (the "Certificate
of Designation"). Capitalized terms used herein but not defined shall have the
meaning given them in the Certificate of Designation. The Company will provide a
copy of the Certificate of Designation to a Holder without charge upon written
request to the Company at its principal place of business.
Reference is hereby made to select provisions of the Cumulative
Convertible Preferred Stock set forth on the reverse hereof, and to the
Certificate of Designation, which select provisions and the Certificate of
Designation shall for all purposes have the same effect as if set forth at this
place.
Upon receipt of this certificate, the Holder is bound by the
Certificate of Designation and is entitled to the benefits thereunder.
Unless the Transfer Agent's Certificate of Authentication hereon
has been properly executed, these shares of Cumulative Convertible Preferred
Stock shall not be entitled to any benefit under the Certificate of Designation
or be valid or obligatory for any purpose.
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<PAGE> 29
IN WITNESS WHEREOF, the Company has executed this certificate
this [ ] day of [ ], [ ].
IXC COMMUNICATIONS, INC.,
By:
----------------------------------
Name:
Title:
[Seal]
By:
----------------------------------
Name:
Title:
TRANSFER AGENT'S CERTIFICATE OF AUTHENTICATION
This is one of the Cumulative Convertible Preferred Stock
referred to in the within mentioned Certificate of Designation.
Dated: [ ], [ ]
BankBoston, N.A.
as Transfer Agent,
By:
---------------------------------
Authorized Signatory
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<PAGE> 30
REVERSE OF SECURITY
Dividends on each share of Cumulative Convertible Preferred Stock
shall be payable at a rate per annum set forth in the face hereof or as provided
in the Certificate of Designation.
The shares of Cumulative Convertible Preferred Stock shall be
redeemable as provided in the Certificate of Designation. The shares of
Cumulative Convertible Preferred Stock shall be convertible into the Company's
Common Stock in the manner and according to the terms set forth in the
Certificate of Designation.
As required under Delaware law, the Company shall furnish to any
Holder upon request and without charge, a full summary statement of the
designations, voting rights preferences, limitations and special rights of the
shares of each class or series authorized to be issued by the Company so far as
they have been fixed and determined and the authority of the Board of Directors
to fix and determine the designations, voting rights, preferences, limitations
and special rights of the class and series of shares of the Company.
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<PAGE> 31
ASSIGNMENT
FOR VALUE RECEIVED, the undersigned assigns and transfers the
shares of Cumulative Convertible Preferred Stock evidenced hereby to:
- --------------------------------------------------------------------
- --------------------------------------------------------------------
- --------------------------------------------------------------------
- ----------------------------
(Insert assignee's social security or tax identification number)
- --------------------------------------------------------------------
- --------------------------------------------------------------------
- --------------------------------------------------------------------
- --------------------------------------------------------------------
- --------------------------------------------------------------------
- --------------------------------------------------------------------
(Insert address and zip code of assignee)
and irrevocably appoints:
--------------------------------------------
- --------------------------------------------------------------------
- --------------------------------------------------------------------
- --------------------------------------------------------------------
__________agent to transfer the shares of Cumulative Convertible Preferred Stock
evidenced hereby on the books of the Transfer Agent and Registrar. The agent may
substitute another to act for him or her.
Date:
-----------------------
Signature:
-----------------------------------
(Sign exactly as your name appears on the other side of this Cumulative
Convertible Preferred Stock Certificate)
Signature Guarantee:*
------------------------------------------------
- --------
*
----- (Signature must be guaranteed by an "eligible guarantor
institution" that is, a bank, stockbroker, savings and loan association or
credit union meeting the requirements of the Registrar, which requirements
include membership or participation in the Securities Transfer Agents Medallion
Program ("STAMP") or such other "signature guarantee program" as may be
determined by the Registrar in addition to, or in substitution for, STAMP, all
in accordance with the Securities Exchange Act of 1934, as amended.)
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<PAGE> 32
EXHIBIT B
NOTICE OF CONVERSION
(To be Executed by the Registered Holder
in order to Convert the Convertible, Preferred Stock)
The undersigned hereby irrevocably elects to convert (the "Conversion") shares
of [ ]% Cumulative Convertible Preferred Stock (the "Cumulative Convertible
Preferred Stock"), represented by stock certificate No(s). ___ (the "Cumulative
Convertible Preferred Stock Certificates") into shares of common stock ("Common
Stock") of IXC Communications, Inc. (the "Company") according to the conditions
of the Certificate of Designation of the Powers, Preferences and Relative,
Participating, Optional and Other Special Rights of the Cumulative Convertible
Preferred Stock and Qualifications, Limitations and Restrictions Thereof (the
"Certificate of Designation"), as of the date written below. If shares are to be
issued in the name of a person other than the undersigned, the undersigned will
pay all transfer taxes payable with respect thereto and is delivering herewith
such certificates. No fee will be charged to the holder for any conversion,
except for transfer taxes, if any. A copy of each Cumulative Convertible
Preferred Stock Certificate is attached hereto (or evidence of loss, theft or
destruction thereof).
The undersigned represents and warrants that all offers and sales by the
undersigned of the shares of Common Stock issuable to the undersigned upon
conversion of the Cumulative Convertible Preferred Stock shall be made pursuant
to registration of the Common Stock under the Securities Act of 1933 (the
"Act"), or pursuant to any exemption from registration under the Act.
Any holder, upon the exercise of its conversion rights in accordance with the
terms of the Certificate of Designation and the Cumulative Convertible Preferred
Stock, agrees to be bound by the terms of the Registration Rights Agreement.
Capitalized terms used but not defined herein shall have the meanings ascribed
thereto in or pursuant to the Certificate of Designation.
Date of Conversion:
----------------------------------
Applicable Conversion Rate:
--------------------------
Number of shares of Convertible
Preferred Stock to be Converted:
---------------------
Number of shares of
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<PAGE> 33
Common Stock to be Issued:
----------------------------
Signature:
--------------------------------------------
Name:
-------------------------------------------------
Address:**
----------------------------------------------
Fax No.:
----------------------------------------------
* The Company is not required to issue shares of Common Stock until the
original Cumulative Convertible Preferred Stock Certificate(s) (or
evidence of loss, theft or destruction thereof) to be converted are
received by the Company or its Transfer Agent. The Company shall issue
and deliver shares of Common Stock to an overnight courier not later
than three business days following receipt of the original Cumulative
Convertible Preferred Stock Certificate(s) to be converted.
** Address where shares of Common Stock and any other payments or
certificates shall be sent by the Company.
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<PAGE> 1
EXHIBIT 99.1
IXC NEWS RELEASE, AS AMENDED
March 31, 1998
IXC Communications, Inc. Completes Sale of $135 Million of
Convertible Preferred Stock
IXC Communications, Inc. (Nasdaq: IIXC) announced today that it completed
the sale under Rule 144A of $135 million of its 6-3/4% Cumulative Convertible
Preferred Stock (the "Convertible Preferred Stock"). The Convertible Preferred
Stock was issued in the form of 2,700,000 depositary shares ("Depositary
Share"), each Depositary Share representing 1/20 of a share of the Convertible
Preferred Stock. The Convertible Preferred Stock is convertible at the option
of the holders at any time from the date of issue at a conversion rate (subject
to adjustment in certain events) of 0.6874 shares of Common Stock per $50
Depositary Share (13.748 shares of Common Stock per $1,000 share of Convertible
Preferred Stock).
Dividends on the Convertible Preferred Stock are cumulative and are
payable quarterly. Dividends may, at IXC's option, be paid in Common Stock
under certain circumstances. The Convertible Preferred Stock is redeemable
after April 15, 2000, subject to certain conditions if redeemed prior to April
1, 2002.
The net proceeds from the offering will be used to fund capital
expenditures, including a portion of IXC's coast-to-coast digital
communications network, and for general corporate purposes.
The Convertible Preferred Stock has not been registered under the
Securities Act of 1933 and may not be offered or sold in the United States
absent registration or an applicable exemption from registration requirements.
Austin, Texas-based IXC Communications, Inc. is one of the largest and
fastest-growing suppliers of network-based information delivery solutions for
the global communications market. The Company owns and operates one of the
nation's newest and most technologically advanced digital networks and makes
network capacity available to local telephone companies, national and regional
long-distance carriers, cable and utility companies, and Internet Service
Providers. IXC also offers a complete line of telecommunications products and
services to both wholesale and retail customers, including private line,
broadband, and switched and dedicated inbound and outbound calling products,
and calling card and debit card services. IXC is a publicly traded company
listed on NASDAQ under the symbol of IIXC. IXC's Web site is located at
www.ixc-comm.com.
###
Investor Contact: Media Contact:
James F. Guthrie Melissa Jackson
Executive Vice President, Manager of Public Relations
Chief Financial Officer (512) 231-5247
(512) 427-3713 [email protected]
[email protected]
