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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 13D
(Rule 13d-101)
Under the Securities Exchange Act of 1934
ICG Communications, Inc.
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(Name of Issuer)
Common Stock, par value $.01 per share
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(Title of Class of Securities)
449246107
---------------------------------
(CUSIP Number)
Charles Y. Tanabe, Esq.
Senior Vice President and General Counsel
Liberty Media Corporation
9197 South Peoria Street
Englewood, Colorado 80112
(720) 875-5400
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(Name, Address and Telephone Number of Person Authorized
to Receive Notices and Communications)
April 10, 2000
--------------------------------------------
(Date of Event which Requires Filing of this Statement)
If the filing person has previously filed a statement on Schedule 13G to
report the acquisition that is the subject of this Schedule 13D, and is filing
this schedule because of Rule 13d-1(e), 13d-1(f) or 13d-1(g), check the
following box. [_]
Note. Schedules filed in paper format shall include a signed original and
five copies of the schedule, including all exhibits. See Rule 13d-7(b) for
other parties to whom copies are to be sent.
(Continued on following pages)
(Page 1 of 17 Pages)
_______________________
/*/The remainder of this cover page shall be filled out for a reporting person's
initial filing on this form with respect to the subject class of securities, and
for any subsequent amendment containing information which would alter the
disclosures provided in a prior cover page.
The information required in the remainder of this cover page shall not be deemed
to be "filed" for the purpose of Section 18 of the Securities Exchange Act of
1934 ("Act") or otherwise subject to the liabilities of that section of the Act
but shall be subject to all other provisions of the Act (however, see the
Notes).
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CUSIP NO. 449246107
================================================================================
1 NAMES OF REPORTING PERSONS
I.R.S. IDENTIFICATION NOS. OF ABOVE PERSONS (ENTITIES ONLY)
Liberty Media Corporation
84-1288730
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2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP
(a) [_]
(b) [ ]
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3 SEC USE ONLY
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4 SOURCE OF FUNDS
WC
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5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT
TO ITEM 2(d) or 2(e) [_]
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6 CITIZENSHIP OR PLACE OF ORGANIZATION
Delaware
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7 SOLE VOTING POWER
NUMBER OF
24,523,810 shares
SHARES -------------------------------------------------------
8 SHARED VOTING POWER
BENEFICIALLY
0
OWNED BY -------------------------------------------------------
9 SOLE DISPOSITIVE POWER
EACH
24,523,810 shares
REPORTING -------------------------------------------------------
10 SHARED DISPOSITIVE POWER
PERSON
0
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11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON*
24,523,810 shares
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12 CHECK IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES
[_]
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13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
Approximately 33.55%. See Item 5.
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14 TYPE OF REPORTING PERSON
CO
================================================================================
* Assuming (1) conversion of all 8% Series A-1 Convertible Preferred Stock
beneficially owned by the Reporting Person, and (2) exercise of all five-year
Common Stock warrants beneficially owned by the Reporting Person.
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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 13D
Statement of
LIBERTY MEDIA CORPORATION
Pursuant to Section 13(d) of the Securities Exchange Act of 1934
in respect of
ICG Communications, Inc.
Item 1. Security and Issuer.
Liberty Media Corporation, a Delaware corporation ("Liberty" or the
"Reporting Person"), is filing this Statement on Schedule 13D (this "Statement")
with respect to the common stock, par value $.01 per share (the "Common Stock"),
of ICG Communications, Inc., a Delaware corporation (the "Issuer"). The Issuer's
principal executive offices are located at 161 Inverness Drive West, Englewood,
Colorado 80112.
Item 2. Identity and Background.
The reporting person is Liberty Media Corporation, whose principal business
address is 9197 South Peoria Street, Englewood, Colorado 80112. Liberty ICOMM,
Inc., a Delaware corporation and a wholly owned subsidiary of Liberty ("ICOMM"),
and Liberty ICOMM Warrants, Inc., a Delaware corporation and a wholly owned
subsidiary of Liberty ("ICOMM Warrants"), are the registered holders of
securities that may be converted into, or exercised to acquire, the shares of
Common Stock beneficially owned by Liberty (the "Shares"), as more particularly
described herein.
Prior to March 9, 1999, the Reporting Person was controlled by Tele-
Communications, Inc., a Delaware corporation ("TCI"). TCI's principal business
address is 9197 South Peoria Street, Englewood, Colorado 80112. TCI is
principally engaged through its subsidiaries and affiliates in the acquisition,
development and operation of cable television systems throughout the United
States.
As a result of the consummation on March 9, 1999 of the merger (the "AT&T
Merger") of a wholly owned subsidiary of AT&T Corp., a New York corporation
("AT&T"), with and into TCI,
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(i) TCI became a wholly owned subsidiary of AT&T; (ii) the businesses and assets
of the Liberty Media Group and TCI Ventures Group of TCI were combined; and
(iii) the holders of TCI's Liberty Media Group common stock and TCI Ventures
Group common stock received in exchange for their shares a new class of common
stock of AT&T intended to reflect the results of AT&T's "Liberty Media Group."
Following the AT&T Merger, AT&T's "Liberty Media Group" consists of the assets
and businesses of TCI's Liberty Media Group and its TCI Ventures Group prior to
the AT&T Merger, except for certain assets that were transferred to TCI's "TCI
Group" in connection with the AT&T Merger, and the "AT&T Common Stock Group"
consists of all of the other assets and businesses of AT&T. AT&T's principal
business address is 32 Avenue of the Americas, New York, New York 10013. AT&T is
principally engaged in the business of providing voice, data and video
communications services to large and small businesses, consumers and government
entities in the United States and internationally.
The board of directors and management of the Reporting Person manage the
business and affairs of the Reporting Person, including, but not limited to,
making determinations regarding the disposition and voting of the Shares.
Although the Reporting Person is a wholly owned subsidiary of AT&T, a majority
of the Reporting Person's board of directors consists of individuals designated
by TCI prior to the AT&T Merger. If these individuals or their designated
successors cease to constitute a majority of the Reporting Person's board of
directors, the Reporting Person will transfer all of its assets and businesses
to a new entity. Although this new entity would be owned substantially by AT&T,
it would continue to be managed (including with respect to the voting and
disposition of the Shares) by management of the Reporting Person prior to such
transfer of assets.
As a result, the Reporting Person, acting through its board of directors
and management, will have the power to determine how the Shares will be voted
and, subject to the limitations of the Delaware General Corporation law, will
have the power to dispose of the Shares, and thus is considered the beneficial
owner of the Shares for purposes of Section 13(d) of the Securities Exchange Act
of 1934, as amended (the "Exchange Act").
The Liberty Media Group, principally through the Reporting Person, is
engaged in (i) the production, acquisition and distribution through all
available formats and media of branded entertainment, educational and
informational programming and software, including multimedia products, (ii)
electronic retailing, direct marketing, advertising sales related to programming
services, infomercials and transaction processing, (iii) international cable
television distribution, telephony and programming, (iv) satellite
communications, and (v) investments in wireless domestic telephony and other
technology ventures.
Schedule 1 attached to this Statement contains the following information
concerning each director, executive officer or controlling person of the
Reporting Person: (i) name and residence or business address, (ii) principal
occupation or employment; and (iii) the name, principal business and address of
any corporation or other organization in which such employment is conducted.
Schedule 1 is incorporated herein by reference.
To the knowledge of the Reporting Person, each of the persons named on
Schedule 1 (the
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"Schedule 1 Persons") is a United States citizen, except for David J.A. Flowers,
who is a Canadian citizen. During the last five years, neither the Reporting
Person nor any of the Schedule 1 Persons (to the knowledge of the Reporting
Person) has been convicted in a criminal proceeding (excluding traffic
violations or similar misdemeanors). During the last five years, neither the
Reporting Person nor any of the Schedule 1 Persons (to the knowledge of the
Reporting Person) has been a party to a civil proceeding of a judicial or
administrative body of competent jurisdiction and, as a result of such
proceeding, is or was subject to a judgment, decree or final order enjoining
future violations of, or prohibiting or mandating activities subject to, federal
or state securities laws or finding any violation with respect to such laws.
Schedule 2 attached to this Statement contains the following information,
which has been provided to the Reporting Person by AT&T, concerning each
director, executive officer or controlling person of AT&T: (i) name and
residence or business address, (ii) principal occupation or employment; and
(iii) the name, principal business and address of any corporation or other
organization in which such employment is conducted. Schedule 2 is incorporated
herein by reference.
Based upon information provided to the Reporting Person by AT&T, (i) to the
knowledge of AT&T, each of the persons named on Schedule 2 (the "Schedule 2
Persons") is a United States citizen, (ii) during the last five years, neither
AT&T nor any of the Schedule 2 Persons (to the knowledge of AT&T) has been
convicted in a criminal proceeding (excluding traffic violations or similar
misdemeanors), and (iii) during the last five years, neither AT&T nor any of the
Schedule 2 Persons (to the knowledge of AT&T) has been a party to a civil
proceeding of a judicial or administrative body of competent jurisdiction and,
as a result of such proceeding, is or was subject to a judgment, decree or final
order enjoining future violations of, or prohibiting or mandating activities
subject to, federal or state securities laws or finding any violation with
respect to such laws.
The foregoing summary of the terms of the AT&T Merger is qualified in its
entirety by reference to the text of the Agreement and Plan of Restructuring and
Merger, dated as of June 23, 1998, among AT&T, Italy Merger Corp. and TCI, a
copy of which has been incorporated by reference as Exhibit 7(a), and to the
text of the AT&T/TCI Proxy Statement/Prospectus, a copy of which has been
incorporated by reference as Exhibit 7(b).
Item 3. Source and Amount of Funds or Other Consideration.
As more fully described in Item 6 below, the Reporting Person entered into
the Preferred Stock and Warrant Purchase Agreement, dated February 27, 2000
(the "Original Purchase Agreement"), as amended by the Amendment, dated April
10, 2000 (the "Amendment Agreement" and, together with the Original Purchase
Agreement, the "Purchase Agreement") between the Issuer, the Reporting Person,
Gleacher/ICG Investors, LLC and HMTF Bridge ICG, LLC, providing for the
acquisition by the Reporting Person of (i) 50,000 shares of the Issuer's 8%
Series A-1 Convertible Preferred Stock (the "Series A-1 Preferred Stock") and
(ii) a warrant to purchase 6,666,667 shares of the Issuer's Common Stock, par
value $.01 per share (the "Warrant"). The Reporting Person acquired the Series
A-1 Preferred Stock and Warrant on April 10, 2000, paying a cash purchase price
of $500,000,000. The purchase price was paid with funds from the Reporting
Person's existing cash reserves.
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The foregoing summary of the terms of the Purchase Agreement is qualified
in its entirety by reference to the full text of the Original Purchase Agreement
and the Amendment Agreement, copies of which are included as Exhibits 7(c) and
7(d), respectively, to this Statement and are incorporated herein by reference.
Item 4. Purpose of Transaction.
The Reporting Person currently holds its interest in the Issuer for
investment purposes.
The Reporting Person intends to continuously review its investment in the
Issuer, and may in the future determine (i) to acquire additional securities of
the Issuer, through open market purchases, private agreements or otherwise, (ii)
to dispose of all or a portion of the securities of the Issuer owned by it or
(iii) to take any other available course of action, which could involve one or
more of the types of transactions or have one or more of the results described
in the next paragraph of this Item 4. Notwithstanding anything contained herein,
the Reporting Person specifically reserves the right to change its intention
with respect to any or all of such matters. In reaching any decision as to its
course of action (as well as to the specific elements thereof), the Reporting
Person currently expects that it would take into consideration a variety of
factors, including, but not limited to, the following: the Issuer's business and
prospects; other developments concerning the Issuer and the voice and data
service, data manager and network facilities provider businesses generally;
other business opportunities available to the Reporting Person; developments
with respect to the business of the Reporting Person; changes in law and
government regulations; general economic conditions; and money and stock market
conditions, including the market price of the securities of the Issuer.
In addition, the matters set forth in Item 6 are incorporated in this Item
4 by reference as if fully set forth herein.
Other than as set forth in this Statement, the Reporting Person has no
present plans or proposals which relate to or would result in:
(a) The acquisition by any person of additional securities of the Issuer,
or the disposition of securities of the Issuer;
(b) An extraordinary corporate transaction such as a merger,
reorganization or liquidation, involving the Issuer or any of its
subsidiaries;
(c) A sale or transfer of a material amount of assets of the Issuer or of
any of its subsidiaries;
(d) Any change in the present board of directors or management of the
Issuer, including any plans or proposals to change the number or term
of directors or to fill any existing vacancies on the board;
(e) Any material change in the present capitalization or dividend policy
of the Issuer;
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(f) Any other material change in the Issuer's business or corporate
structure;
(g) Changes in the Issuer's charter, bylaws or instruments corresponding
thereto or other actions which may impede the acquisition of control
of the Issuer by any person;
(h) A class of securities of the Issuer being delisted from a national
securities exchange or ceasing to be authorized to be quoted in an
inter-dealer quotation system of a registered national securities
association;
(i) A class of equity securities of the Issuer becoming eligible for
termination of registration pursuant to Section 12(g)(4) of the
Exchange Act; or
(j) Any action similar to any of those enumerated in this paragraph.
Item 5. Interest in Securities of the Issuer.
(a) After giving effect to the Acquisition, assuming conversion of
the Series A-1 Preferred Stock and exercise of the Warrant, the Reporting Person
beneficially owns through its subsidiaries, ICOMM and ICOMM Warrants, 24,523,810
shares of Common Stock. Based on the 48,582,035 shares of Common Stock that were
issued and outstanding as of March 27, 2000 (as disclosed in the Issuer's Annual
Report on Form 10-K for the 12-month period ended December 31, 1999), the
24,523,810 shares beneficially owned by the Reporting Person represented on that
date, on a pro forma basis calculated in accordance with Rule 13d-3 of the
Exchange Act, approximately 33.55% of the issued and outstanding shares of
Common Stock. The 24,523,810 shares beneficially owned by the Reporting Person
are represented by the Series A-1 Preferred Stock and Warrant, which are
immediately convertible into or exercisable for shares of Common Stock.
Except as described in the preceding paragraph, to the knowledge of the
Reporting Person, none of the Schedule 1 Persons and none of the Schedule 2
Persons beneficially owns any shares of Common Stock.
(b) The Reporting Person has the sole power to vote or to direct the
voting of the Shares and the sole power to dispose of, or to direct the
disposition of, the Shares.
(c) Except for the acquisition of the Series A-1 Preferred Stock and the
Warrant, no transactions in the shares of Common Stock have been effected by the
Reporting Person or, to the knowledge of the Reporting Person, by any of the
Schedule 1 Persons or Schedule 2 Persons during the past 60 days.
(d) None.
(e) Not applicable.
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Item 6. Contracts, Arrangements, Understandings or Relationships With
Respect to Securities of the Issuer.
Securities Purchase Agreement
-----------------------------
Pursuant to the Original Purchase Agreement, the Reporting Person agreed to
acquire 500,000 shares of the Issuer's preferred stock and the Warrant for an
aggregate purchase price of $500,000,000. The Original Purchase Agreement was
amended pursuant to the Amendment Agreement in order to: (a) redesignate the
Issuer's preferred stock so that the Reporting Person would be issued shares of
8% Series A-1 Preferred Stock, HMTF Bridge ICG, LLC and certain of its
affiliates would be issued shares of 8% Series A-2 Preferred Stock and
Gleacher/ICG Investors, LLC would be issued shares of 8% Series A-3 Preferred
Stock (the Series A-1 Preferred Stock, 8% Series A-2 Preferred Stock and 8%
Series A-3 Preferred Stock are referred to collectively herein as the "Preferred
Stock"), (b) reduce the number of shares of Series A-1 Preferred Stock to be
purchased by the Reporting Person to 50,000 (with a corresponding reduction in
the number of shares to be purchased by the other purchasers under the Purchase
Agreement) and (c) increase the initial Liquidation Preference (as defined
below) of each share of Preferred Stock from $1,000 to $10,000 (with no change
to the aggregate purchase price as a result of the amendments referred to in (b)
and (c) above).
The foregoing summary of the terms of the Purchase Agreement and the
Amendment Agreement is qualified in its entirety by reference to the full text
of the Purchase Agreement, which is included as Exhibit 7(c), and the Amendment
Agreement, a copy of which is included as Exhibit 7(d), to this Statement and
are incorporated herein by reference.
Registration Rights Agreement
-----------------------------
At Closing, the Issuer, the Reporting Person and the holders of 8% Series
A-2 Preferred Stock and 8% Series A-3 Preferred Stock entered into a
Registration Rights Agreement (the "Registration Rights Agreement"), pursuant to
which the Issuer has agreed to effect six "demand" registrations at the request
of the holders of a majority of the Registrable Securities (as defined below)
held by the Reporting Person and any direct or indirect transferee of any
Registrable Securities held by the Reporting Person, provided that each such
demand registration must be in respect of Registrable Securities with a fair
market value of at least $50,000,000 and provided that certain other
restrictions are met. The Reporting Person may make two additional demands for
registration following the exercise of all or a portion of the Warrant. The
Registration Rights
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Agreement also grants demand registration rights to holders of Registrable
Securities affiliated with HMTF Bridge ICG, LLC and Gleacher/ICG Investors, LLC.
In addition, the purchasers have certain piggyback registration rights in
connection with registrations of the Issuer's securities under the Securities
Act of 1933 (the "Securities Act"), as well as rights to request a shelf
registration of specified portions of the Registrable Securities.
"Registrable Securities" means (a) the Registrable Common Stock (as defined
below) and (b) any securities of the Issuer or any successor entity into which
Registrable Common Stock may hereafter be converted or changed until such time
that such Securities are no longer outstanding or, in certain cases, no longer
require registration. "Registrable Common Stock" means (a) shares of Common
Stock issued or issuable upon conversion of shares of Preferred Stock plus any
additional shares of Preferred Stock issued in respect thereof in connection
with any stock split, stock dividend or similar event with respect to the
Preferred Stock, plus any additional shares of Common Stock issued with respect
to such issued shares of Common Stock in connection with any stock splits, stock
dividends, or similar events with respect to the Common Stock, (b) shares of
Common Stock issued or issuable upon exercise of the Warrant, plus any
additional shares of Common Stock issued in respect of such issued shares of
Common Stock in connection with any stock split, stock dividend or similar event
with respect to the Common Stock and (c) any shares of Common Stock owned by a
holder that are restricted securities within the meaning of Rule 144 or all such
shares if such holder reasonably believes at such time that it may be deemed to
be an "affiliate" (as that term is defined in Rule 144 under the Securities Act)
of the Issuer.
The foregoing summary of the terms of the Registration Rights Agreement is
qualified in its entirety by reference to the full text of the Registration
Rights Agreement, a copy of which is included as Exhibit 7(e) to this Statement
and is incorporated herein by reference.
Certificate of Designation
--------------------------
As contemplated by the Purchase Agreement, the board of directors of the
Issuer approved and adopted the Certificate of Designation of the Powers,
Preferences and Relative, Participating, Optional and Other Special Rights of 8%
Series A-1 Convertible Preferred Stock, 8% Series A-2 Convertible Preferred
Stock and 8% Series A-3 Convertible Preferred Stock, and Qualifications,
Limitations and Restrictions Thereof (the "Certificate of Designation") to
create three series of Preferred Stock. Except with respect to director
designation rights, the powers, preferences and relative, participating,
optional and other special rights of each series of Preferred Stock are
identical.
Under the Certificate of Designation, the shares of Preferred Stock will,
with respect to dividend rights and rights on liquidation, winding-up and
dissolution, rank (i) senior to all shares of Common Stock and to each other
class of capital stock or preferred stock of the Issuer (other than Preferred
Stock Mandatorily Redeemable 2009 of the Issuer), the terms of which do not
expressly provide that it ranks senior to or on a parity with the shares of the
Preferred Stock as to dividend rights and rights on liquidation, winding-up and
dissolution of the Issuer; (ii) on a parity with the Preferred Stock Mandatorily
Redeemable 2009 of the Issuer and with each other class of capital stock or
series of preferred stock of the Issuer issued by Issuer, the terms of which
expressly provide that such class or series will rank on a parity with the
shares of the Preferred Stock as to dividend rights and rights on liquidation,
winding-up and dissolution, if the Issuer, in issuing the shares, complies with
applicable provisions in the Certificate of Designation; and (iii) junior to
each class of capital stock or series of preferred stock of the Issuer issued by
the Issuer, the terms of which expressly provide that such class or series will
rank senior to the shares of Preferred Stock as to dividend rights and rights
upon liquidation, winding-up and dissolution, if the Issuer, in issuing the
shares, complies with applicable provisions in the Certificate of Designation.
Holders of shares of Preferred Stock are entitled to receive with respect
to each share of Preferred Stock, out of funds legally available for the payment
of dividends, dividends at a rate per
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annum of 8% of the then-effective Liquidation Preference. "Liquidation
Preference" means, initially, an amount equal to $10,000 per share of Preferred
Stock plus accrued and unpaid dividends, subject to adjustments in accordance
with the provisions of the Certificate of Designation. Such dividends shall be
cumulative from the date of issuance of the Preferred Stock and shall be payable
quarterly in arrears (each quarterly payment date, a "Dividend Payment Date"").
On each Dividend Payment Date, commencing on the June 30, 2000 Dividend Payment
Date, to and including the June 30, 2005 Dividend Payment Date, accrued
dividends on a share of Preferred Stock for the preceding Dividend Period shall
be added cumulatively to, and thereafter remain a part of, the Liquidation
Preference of such share. Thereafter, accrued dividends shall be payable
quarterly on each Dividend Payment Date, commencing on September 30, 2005, to
the holders of record of Preferred Stock as of the close of business on the
applicable Dividend Record Date (as defined in the Certificate of Designation).
Accrued Dividends that are not paid in full in cash on any Dividend Payment Date
(whether or not declared and whether or not there are sufficient funds legally
available for the payment thereof) shall be added cumulatively to the
Liquidation Preference on the applicable Dividend Payment Date and thereafter
remain a part thereof.
Holders of shares of Preferred Stock will have the right, generally, at any
time, to convert any or all their shares of Preferred Stock into a number of
fully paid and nonassessable shares of Common Stock equal to the then effective
Liquidation Preference thereof plus accrued and unpaid dividends to the date of
conversion divided by the "Conversion Price" in effect at the time of
conversion. The initial Conversion Price is $28.00 per share, and is subject to
adjustment upon the occurrence of certain events.
The shares of Preferred Stock may be redeemed at any time commencing on or
after June 30, 2005, in whole or from time to time in part, at the election of
the Issuer, at a redemption price payable in cash equal to 100% of the then
effective Liquidation Preference (after giving effect to the Special Dividend
(as defined in the Certificate of Designation) if applicable) plus accrued and
unpaid dividends from the last Dividend Payment Date to the date fixed for
redemption. Shares of Preferred Stock (if not earlier redeemed or converted)
shall be mandatorily redeemed by the Issuer on June 30, 2015, at a redemption
price per share in cash equal to the then effective Liquidation Preference
(after giving effect to the Special Dividend, if applicable), plus accrued and
unpaid dividends thereon from the last Dividend Payment Date to the date of
mandatory redemption.
If a Change of Control (as defined in the Certificate of Designation)
occurs prior to June 30, 2005, an amount equal to the Special Dividend will be
added to the Liquidation Preference of each share of Preferred Stock. The
Special Dividend, for each share of Preferred Stock, is the difference between
(i) $14,859.47 (as that number may be adjusted for stock splits, stock dividends
or similar events) and (ii) the amount of the actual Liquidation Preference of
such share immediately prior to the Change of Control.
Upon occurrence of a Change of Control, the Issuer has the right, but not
the obligation, to offer to repurchase all the shares of Preferred Stock at a
purchase price per share in cash equal to 101% of the Liquidation Preference of
each share of Preferred Stock repurchased (after giving effect to the Special
Dividend, if applicable), plus an amount equal to 101% of all dividends accrued
and unpaid thereon to the date fixed for the repurchase. If the Issuer does not
offer to repurchase all the shares of Preferred Stock in accordance with the
Certificate of Designation, the dividend rate on the
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Preferred Stock will increase to 16%. If the dividend rate is so increased, the
Issuer will have the right (but not the obligation) (i) at any time prior to
June 30, 2005 to offer to repurchase all the shares of Preferred Stock at a
purchase price per share in cash equal to 101% of the Liquidation Preference of
each share of Preferred Stock repurchased (after giving effect to the Special
Dividend, if applicable), plus an amount equal to 101% of all dividends accrued
and unpaid thereon to the date fixed for the repurchase and (ii) at any time
after June 30, 2005, to offer to repurchase all the shares of Preferred Stock at
a purchase price per share in cash equal to 100% of the Liquidation Preference
of each share of Preferred Stock repurchased (after giving effect to the Special
Dividend, if applicable), plus an amount equal to 100% of all dividends accrued
and unpaid thereon to the date fixed for the repurchase. If the Issuer makes
such an offer, the dividend rate on the Preferred Stock will be thereafter
reduced to 8%.
Holders of the shares of Preferred Stock will be entitled to vote on all
matters upon which the holders of the Issuer's Common Stock are entitled to
vote. In exercising these voting rights, each share of Preferred Stock shall be
entitled to vote on an as-converted basis with the holders of the Issuer's
Common Stock. The approval of the holders of between 51% and 75% the then-
outstanding shares of Preferred Stock, voting as one class, will be required for
the Issuer to take certain actions.
For so long as the Reporting Person and its affiliates own any combination
of shares of Preferred Stock and shares of Common Stock that, taken together (on
an as converted basis), equal at least 2,687,571 shares of Common Stock (as
adjusted for any stock dividends, splits and combinations and similar events
affecting the Common Stock from time to time), the Reporting Person may elect
one director, or if greater, such number (rounded up to the nearest whole
number) equal to 10% of the then authorized number of members of the Issuer's
board of directors, to serve on the board of directors of the Issuer.
Additionally, for so long as the Reporting Person and its affiliates own any
combination of shares of Preferred Stock and shares of Common Stock that, taken
together (on an as converted basis), equal at least 8,928,571 shares of Common
Stock (as adjusted for any stock dividends, splits and combinations and similar
events affecting the Common Stock from time to time), the Reporting Person may
elect an additional director, or if greater, such number (rounded up to the
nearest whole number) of additional directors equal to 10% of the then
authorized number of members of the Issuer's board of directors, to serve on the
board of directors of the Issuer. Pursuant to the foregoing rights, the
Reporting Person has elected Gary S. Howard and Carl Vogel to the board of
directors of the Issuer. The Purchase Agreement contains a parallel provision
for the election of a director that is inoperative for so long as the above
described provision is in effect. Pursuant to the Certificate of Designation,
holders of the Series A-2 Preferred Stock have the right to elect one director
under certain circumstances.
The foregoing summary of the terms of the Certificate of Designation is
qualified in its entirety by reference to the full text of the Certificate of
Designation, a copy of which is included as Exhibit 7(f) to this Statement and
is incorporated herein by reference.
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Common Stock Warrant Certificate
--------------------------------
As contemplated by the Purchase Agreement, at the Closing, the Issuer
issued a certificate evidencing ownership of the Warrant (the "Warrant
Certificate") to the Reporting Person. The Warrant entitles the Reporting Person
or its permitted assigns to purchase from the Issuer up to 6,666,667 fully paid
and nonassessable shares of Common Stock at an exercise price of $34.00 per
share, as adjusted from time to time pursuant to the terms of the Warrant
Certificate. The Warrant Certificate is void after April 10, 2005. Similar
warrants were also issued to the other purchasers.
The foregoing summary of the terms of the Warrant Certificate is qualified
in its entirety by reference to the full text of the Warrant Certificate, a copy
of which is included as Exhibit 7(g) to this Statement and is incorporated
herein by reference.
Item 7. Materials to be Filed as Exhibits.
<TABLE>
<CAPTION>
Exhibit No. Exhibit
- ------------ -------
<S> <C>
Exhibit 7(a): Agreement and Plan of Restructuring and Merger, dated as of June 23, 1998,
among AT&T Corp., Italy Merger Corp. and Tele-Communications, Inc.
(incorporated by reference to Appendix A to the AT&T/TCI Proxy
Statement/Prospectus that forms a part of the Registration Statement on Form
S-4 of AT&T (File No. 333-70279) filed on January 8, 1999 (the "AT&T
Registration Statement")).
Exhibit 7(b): AT&T/TCI Proxy Statement/Prospectus (incorporated by reference to the AT&T
Registration Statement).
Exhibit 7(c): Preferred Stock and Warrant Purchase Agreement, dated as of February 27,
2000, between the Issuer, the Reporting Person, Gleacher/ICG Investors LLC
and HMTF Bridge ICG, LLC.
Exhibit 7(d): Amendment, dated as of April 10, 2000, between the Issuer, the Reporting
Person, Gleacher/ICG Investors, LLC and HMTF Bridge ICG, LLC, HM4 ICG
Qualified Fund, LLC, HM4 ICG Private Fund, LLC, HM PG-IV ICG, LLC, HM
4-SBS ICG Coninvestors, LLC and HM 4-EQ ICQ Coninvestors, LLC.
Exhibit 7(e): Registration Rights Agreement, dated as of April 7, 2000, between the Issuer, the
Reporting Person, Gleacher/ICG Investors, LLC and HMTF Bridge ICG, LLC,
HM4 ICG Qualified Fund, LLC, HM4 ICG Private Fund, LLC, HM PG-IV ICG,
LLC, HM 4-SBS ICG Coninvestors, LLC and HM 4-EQ ICQ Coninvestors,
LLC.
</TABLE>
Page 12
<PAGE>
<TABLE>
<S> <C>
Exhibit 7(f): Certificate of Designation of the Powers, Preferences and Relative,
Participating, Optional and Other Special Rights of the 8% Series A-1
Convertible Preferred Stock, 8% Series A-2 Convertible Preferred Stock
and 8% Series A-3 Convertible Preferred Stock and Qualifications,
Limitations and Restrictions Thereof.
Exhibit 7(g): Form of Common Stock Warrant, dated as of April 10, 2000.
</TABLE>
Page 13
<PAGE>
SIGNATURE
After reasonable inquiry and to the best of my knowledge and belief, I
certify that the information set forth in this statement is true, complete and
correct.
Dated: April 20, 2000
LIBERTY MEDIA CORPORATION
By: /s/ Vivian J. Carr
-------------------
Name: Vivian J. Carr
Title: Vice President
Page 14
<PAGE>
SCHEDULE 1
DIRECTORS AND EXECUTIVE OFFICERS
OF
LIBERTY MEDIA CORPORATION
The name and present principal occupation of each director and executive
officer of the Reporting Person are set forth below. The business address for
each person listed below is c/o Liberty Media Corporation, 9197 South Peoria
Street, Englewood, Colorado 80112. All executive officers and directors listed
on this Schedule 1 are United States citizens, except for David J.A. Flowers,
who is a Canadian citizen.
<TABLE>
<CAPTION>
Name Principal Occupation
- ---- --------------------
<S> <C>
John C. Malone Chairman of the Board and Director of the Reporting Person; Director
of AT&T Corp.
Robert R. Bennett President, Chief Executive Officer and Director of the Reporting
Person
Gary S. Howard Executive Vice President, Chief Operating Officer and Director of the
Reporting Person
Daniel E. Somers Director of the Reporting Person; President and Chief Executive Officer of
AT&T Broadband, LLC (f/k/a Tele-Communications, Inc.)
John C. Petrillo Director of the Reporting Person; Executive Vice President,
Corporate Strategy and Business Development of AT&T Corp.
Larry E. Romrell Director of the Reporting Person; Consultant to AT&T Broadband, LLC
(f/k/a Tele-Communications, Inc.)
Jerome H. Kern Director of the Reporting Person; Chairman of the Board and Chief
Executive Officer of On Command Corporation
Paul A. Gould Director of the Reporting Person; Managing Director of Allen & Company
Incorporated
John D. Zeglis Director of the Reporting Person; Director and President of AT&T
Corp.; Chairman of the Board and Chief Executive Officer of AT&T Wireless Group
David B. Koff Senior Vice President and Assistant Secretary of the Reporting Person
Charles Y. Tanabe Senior Vice President, General Counsel and Assistant Secretary of
the Reporting Person
Carl E. Vogel Senior Vice President of the Reporting Person
Peter Zolintakis Senior Vice President of the Reporting Person
Vivian J. Carr Vice President and Secretary of the Reporting Person
Kathryn Scherff Vice President and Controller of the Reporting Person
David J.A. Flowers Vice President and Treasurer of the Reporting Person
</TABLE>
Page 15
<PAGE>
SCHEDULE 2
DIRECTORS AND EXECUTIVE OFFICERS
OF
AT&T CORP.
The name and present principal occupation of each director and executive
officer of AT&T Corp. are set forth below. The business address for each person
listed below is c/o AT&T Corp., 295 North Maple Avenue, Basking Ridge, New
Jersey 07920. All executive officers and directors listed on this Schedule 2 are
United States citizens.
<TABLE>
<CAPTION>
Name Title
- ---- -----
<S> <C>
C. Michael Armstrong Chairman of the Board, Chief Executive Officer and Director
Kenneth T. Derr Director; Chairman of the Board, Retired, of Chevron Corporation
M. Kathryn Eickhoff Director; President of Eickhoff Economics Incorporated
Walter Y. Elisha Director; Chairman of the Board and Chief Executive Officer,
Retired, of Springs Industries, Inc.
George M. C. Fisher Director; Chairman of the Board of Eastman Kodak Company
Donald V. Fites Director; Chairman of the Board, Retired, of Caterpillar, Inc.
Amos B. Hostetter, Jr. Director; Chairman of the Board of Pilot House Associates
Ralph S. Larsen Director; Chairman of the Board and Chief Executive Officer of
Johnson & Johnson
John C. Malone Director; Chairman of the Board of the Reporting Person
Donald F. McHenry Director; President of The IRC Group LLC
Michael I. Sovern Director; President Emeritus and Chancellor Kent Professor of
Law at Columbia University
Sanford I. Weill Director; Chairman of the Board and Co-CEO of Citigroup Inc.
Thomas H. Wyman Director
John D. Zeglis President of AT&T Corp.; Chief Executive Officer of AT&T
Wireless Group and Director
Harold W. Burlingame Executive Vice President, Merger & Joint Venture Integration
James W. Cicconi Executive Vice President-Law & Government Affairs and General
Counsel
Mirian M. Graddick Executive Vice President, Human Resources
</TABLE>
Page 16
<PAGE>
<TABLE>
<CAPTION>
Name Title
- ---- -----
<S> <C>
Frank Ianna Executive Vice President and President, AT&T Network Services
Michael G. Keith Executive Vice President, AT&T Wireless Group
Richard J. Martin Executive Vice President, Public Relations and Employee
Communication
David C. Nagel President of AT&T Labs; Chief Technology Officer
John C. Petrillo Executive Vice President, Corporate Strategy and Business
Development
Richard R. Roscitt Executive Vice President and President of AT&T Business Services
Daniel E. Somers President and CEO of AT&T Broadband
</TABLE>
Page 17
<PAGE>
EXHIBIT INDEX
Exhibit No. Exhibit
- ----------- -------
Exhibit 7(a): Agreement and Plan of Restructuring and Merger, dated as of
June 23, 1998, among AT&T Corp., Italy Merger Corp. and Tele-
Communications, Inc. (incorporated by reference to Appendix A
to the AT&T/TCI Proxy Statement/Prospectus that forms a part of
the Registration Statement on Form S-4 of AT&T (File No. 333-
70279) filed on January 8, 1999 (the "AT&T Registration
Statement")).
Exhibit 7(b): AT&T/TCI Proxy Statement/Prospectus (incorporated by reference
to the AT&T Registration Statement).
Exhibit 7(c): Preferred Stock and Warrant Purchase Agreement, dated as of
February 27, 2000, between the Issuer, the Reporting Person,
Gleacher/ICG Investors LLC and HMTF Bridge ICG, LLC.
Exhibit 7(d): Amendment, dated as of April 10, 2000, between the Issuer, the
Reporting Person, Gleacher/ICG Investors, LLC and HMTF Bridge
ICG, LLC, HM4 ICG Qualified Fund, LLC, HM4 ICG Private Fund,
LLC, HM PG-IV ICG, LLC, HM 4-SBS ICG Coninvestors, LLC and
HM 4-EQ ICQ Coninvestors, LLC.
Exhibit 7(e): Registration Rights Agreement, dated as of April 7, 2000,
between the Issuer, the Reporting Person, Gleacher/ICG
Investors, LLC and HMTF Bridge ICG, LLC, HM4 ICG Qualified
Fund, LLC, HM4 ICG Private Fund, LLC, HM PG-IV ICG, LLC, HM 4-
SBS ICG Coninvestors, LLC and HM 4-EQ ICQ Coninvestors, LLC.
Exhibit 7(f): Certificate of Designation of the Powers, Preferences and
Relative, Participating, Optional and Other Special Rights of
the 8% Series A-1 Convertible Preferred Stock, 8% Series A-2
Convertible Preferred Stock and 8% Series A-3 Convertible
Preferred Stock and Qualifications, Limitations and
Restrictions Thereof.
Exhibit 7(g): Form of Common Stock Warrant, dated as of April 10, 2000.
<PAGE>
EXHIBIT 7(c)
================================================================================
PREFERRED STOCK AND WARRANT PURCHASE AGREEMENT
BY AND BETWEEN
ICG COMMUNICATIONS, INC.
AND
THE PURCHASERS LISTED ON SCHEDULE I HERETO
Dated as of
February 27, 2000
================================================================================
TABLE OF CONTENTS
<TABLE>
<S> <C>
ARTICLE I DEFINITIONS.................................................... 1
ARTICLE II SALE AND PURCHASE............................................. 6
2.1 Agreement to Sell and to Purchase; Purchase Price................ 6
2.2 Closing.......................................................... 6
ARTICLE III REPRESENTATIONS AND WARRANTIES OF THE COMPANY................ 7
3.1 Organization and Standing........................................ 7
3.2 Capital Stock.................................................... 8
3.3 Authorization; Enforceability.................................... 9
3.4 No Violation; Consents........................................... 9
3.5 Commission Filings; Financial Statements......................... 10
3.6 Private Offering................................................. 10
3.7 Provided Information............................................. 11
3.8 Material Adverse Change.......................................... 11
3.9 Litigation....................................................... 11
3.10 Permits and Licenses............................................. 11
3.11 Intellectual Property, etc....................................... 12
3.12 Board Approval................................................... 12
3.13 British Telecommunications....................................... 12
3.14 Share Exchange Agreement......................................... 12
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF THE PURCHASES............... 13
4.1 Organization; Authorization; Enforceability...................... 13
4.2 Private Placement................................................ 13
4.3 No Violation; Consents........................................... 14
4.4 No Litigation.................................................... 15
4.5 No Group Status.................................................. 15
ARTICLE V COVENANTS OF THE COMPANY....................................... 15
5.1 Operation of Business............................................ 15
5.2 HMTF and Liberty Directors....................................... 16
5.3 Access to Books and Records...................................... 18
5.4 Agreement to Take Necessary and Desirable Actions................ 18
5.5 Compliance with Conditions; Commercially Reasonable Efforts...... 18
5.6 HSR Act Notification............................................. 19
5.7 Consents and Approvals........................................... 19
5.8 Reservation of Shares............................................ 19
5.9 Use of Proceeds.................................................. 20
5.10 Filing of Certificate of Designation............................. 20
5.11 Listing of Shares................................................ 20
5.12 Periodic Information............................................. 20
5.13 Legends.......................................................... 20
5.14 Payment; Paying Agent; Certain Information....................... 21
5.15 Rights Plan...................................................... 21
5.16 Proportional Purchase Right...................................... 21
5.17 Modification of Share Exchange Agreement......................... 22
ARTICLE VI COVENANTS OF THE PURCHASERS................................... 22
6.1 Agreement to Take Necessary and Desirable Actions................ 22
6.2 Compliance with Conditions; Commercially Reasonable Efforts...... 22
6.3 HSR Act Notification............................................. 22
6.4 Consents and Approvals........................................... 23
6.5 Restrictions on Transfer......................................... 23
6.6 Standstill....................................................... 23
ARTICLE VII CONDITIONS PRECEDENT TO CLOSING.............................. 24
7.1 Conditions to the Company's Obligations.......................... 24
7.2 Conditions to Each Purchaser's Obligations....................... 25
ARTICLE VIII MISCELLANEOUS............................................... 26
8.1 Survival; Indemnification........................................ 26
8.2 Notices.......................................................... 28
8.3 Governing Law.................................................... 31
8.4 Termination...................................................... 31
8.5 Entire Agreement................................................. 32
8.6 Modifications and Amendments..................................... 32
8.7 Waivers and Extensions........................................... 32
8.8 Titles and Headings.............................................. 32
8.9 Exhibits and Schedules........................................... 32
8.10 Expenses......................................................... 32
8.11 Press Releases and Public Announcements.......................... 32
8.12 Assignment; No Third Party Beneficiaries......................... 33
8.13 Severability..................................................... 33
8.14 Counterparts..................................................... 33
8.15 Further Assurances............................................... 33
8.16 Remedies Cumulative.............................................. 33
8.17 Several Liability of the Purchasers.............................. 34
8.18 No Duty to Other Purchasers...................................... 34
8.19 Specific Performance............................................. 34
8.20 No Purchaser Affiliate Liability................................. 34
</TABLE>
Exhibits
- --------
Exhibit A - Form of Warrant
Exhibit B - Certificate of Designation
Exhibit C - Form of Registration Rights Agreement
Exhibit D - Form of Legal Opinion
Exhibit E - Form of Management Rights Agreement
Schedules
- ---------
Schedule 3.1(b) - Equity Interests
Schedule 3.2 - Company Capital Stock
Schedule 5.1(iv) - Dividends or Distributions on Capital Stock
<PAGE>
This PREFERRED STOCK AND WARRANT PURCHASE
AGREEMENT is dated as of February 27, 2000 (this
"Agreement"), by and between ICG COMMUNICATIONS,
INC. a Delaware corporation (the "Company"), and
each of the purchasers listed on Schedule I hereto
(individually, a "Purchaser" and collectively, the
"Purchasers").
WHEREAS, the Company proposes, subject to the terms and conditions set
forth herein, to issue and sell to the Purchasers 750,000 shares of its 8%
Series A Convertible Preferred Stock, initial liquidation preference $1,000 per
share, par value $0.01 per share (the "Series A Preferred Stock");
WHEREAS, the Company proposes, subject to the terms and conditions set
forth herein, to issue and sell to the Purchasers warrants (each a "Warrant" and
together, the "Warrants") to purchase 10,000,000 shares of the Company's Common
Stock, par value $0.01 per share (the "Warrant Shares"), in substantially the
form of Exhibit A attached hereto;
WHEREAS, subject to the terms and conditions set forth herein, each
Purchaser desires to purchase such Series A Preferred Stock and Warrants from
the Company;
NOW, THEREFORE, the parties hereto, intending to be legally bound,
hereby agree as follows:
ARTICLE I
DEFINITIONS
(a) As used in this Agreement, the following terms shall have the
following meanings:
"Affiliate" means, with respect to any Person, any other Person
---------
directly or indirectly controlling, controlled by, or under direct or indirect
common control with, such Person. For the purposes of this definition, "control"
when used with respect to any Person means the power to direct the management
and policies of such Person, directly or indirectly, whether through the
ownership of voting securities, by contract or otherwise; and the terms
"controlling" and "controlled" have meanings correlative to the foregoing;
provided that neither AT&T Corp. ("AT&T") nor any Subsidiary of AT&T which is
not included in AT&T's Liberty Media Group (as defined in AT&T's Certificate of
Incorporation) will be deemed to be an Affiliate of Liberty.
"Applicable Law" means (a) any United States Federal, state, local or
--------------
foreign law, statute, rule, regulation, order, writ, injunction, judgment,
decree or permit of any Governmental Authority and (b) any rule or listing
requirement of any applicable national stock exchange or listing requirement of
any national stock exchange or Commission recognized trading market on which
securities issued by the Company or any of the Subsidiaries are listed or
quoted.
2
<PAGE>
"Business Day" means any day other than a Saturday, a Sunday, the day
------------
after Thanksgiving or a day when banks in The City of New York are authorized by
Applicable Law to be closed.
"Capital Stock" means (i) with respect to any Person that is a
-------------
corporation, any and all shares, interests, participations, rights or other
equivalents (however designated) of corporate stock and (ii) with respect to any
other Person, any and all partnership or other equity interests of such Person.
"Certificate of Designation" means the Certificate of Designation of
--------------------------
the Powers, Preferences and Relative, Participating, Optional and Other Special
Rights and Qualifications, Limitations and Restrictions thereof relating to the
Series A Preferred Stock, in the form attached hereto as Exhibit B.
"Commission" means the United States Securities and Exchange
----------
Commission.
"Commission Filings" means all reports, registration statements and
------------------
other filings filed by the Company with the Commission (and all notes and
schedules thereto and documents incorporated by reference therein).
"Common Stock" means the common stock, par value $0.01 per share, of
------------
the Company.
"Contract" means any contract, lease, loan agreement, mortgage,
--------
security agreement, trust indenture, note, bond, or other agreement (whether
written or oral) or instrument.
"Conversion Shares" means the shares of Common Stock issuable upon the
-----------------
conversion of the Series A Preferred Stock in accordance with the terms of the
Certificate of Designation.
"Equity Documents" means this Agreement, the Registration Rights
----------------
Agreement, the Certificate of Designation, the Management Rights Agreements, the
Share Exchange Agreement and the Warrants.
"Exchange Act" means the Securities Exchange Act of 1934, as amended,
------------
and the rules and regulations of the Commission promulgated thereunder.
"filed," when used with respect to a Commission Filing, means filed
-----
with the Commission and publicly available.
"GAAP" means United States generally accepted accounting principles,
----
consistently applied.
"Gleacher Group" means Gleacher/ICG Investors LLC and its Affiliates.
--------------
"Gleacher Holders" means members of the Gleacher Group that are
----------------
holders of all or a portion of the Gleacher Shares.
3
<PAGE>
"Gleacher Shares" means (i) the shares of Series A Preferred Stock
---------------
issued to Gleacher on the Closing Date under this Agreement held by members of
the Gleacher Group plus (ii) the shares of Common Stock issued to and held by
members of the Gleacher Group upon conversion of the shares referred to in
clause (i) above.
"Governmental Authority" means (i) any foreign, Federal, state or
----------------------
local court or governmental or regulatory agency or authority, (ii) any
arbitration board, tribunal or mediator and (iii) any national stock exchange or
Commission recognized trading market on which securities issued by the Company
or any of the Subsidiaries are listed or quoted.
"HMTF" means Hicks, Muse, Tate & Furst Incorporated, a Texas
----
corporation.
"HMTF Funds" means the funds affiliated with the HMTF Purchaser
----------
identified by the HMTF Purchaser on or prior to the Closing Date.
"HMTF Group" means HMTF and its Affiliates and their respective
----------
officers, directors, partners, members, stockholders and employees (and members
of their respective families and trusts for the primary benefit of such family
members), and HMTF Purchaser and its Affiliates.
"HMTF Holders" means members of the HMTF Group that are holders of all
------------
or a portion of the HMTF Shares.
"HMTF Purchaser" means HM4 ICG Qualified Fund, LLC; HM4 ICG Private
--------------
Fund, LLC; HM PG-IV ICG, LLC; HM 4-SBS ICG Coinvestors, LLC; HM 4-EQ ICG
Coinvestors, LLC and HMTF Bridge ICG, LLC.
"HMTF Shares" means the HMTF Issued Series A Preferred Shares held by
-----------
members of the HMTF Group plus the shares of Common Stock issued to and held by
members of the HMTF Group upon conversion of the HMTF Issued Series A Preferred
Shares or upon exercise of the Warrants held by members of the HMTF Group.
"HSR Act" means the Hart-Scott-Rodino Antitrust Improvements Act of
-------
1976, as amended, and applicable rules and regulations.
"Liberty" means Liberty Media Corporation, a Delaware corporation,
-------
provided that if substantially all of the assets of Liberty Media Corporation
are at any time hereafter contributed to Liberty Media Group LLC, a Delaware
limited liability company, then from and after such contribution, Liberty shall
mean Liberty Media Group LLC.
"Liberty Group" means Liberty and its Affiliates.
-------------
"Liberty Holders" means members of the Liberty Group that are holders
---------------
of all or a portion of the Liberty Shares.
"Liberty Shares" means the Liberty Issued Series A Preferred Shares
--------------
held by members of the Liberty Group plus the shares of Common Stock issued to
and held by members
4
<PAGE>
of the Liberty Group upon conversion of the Liberty Issued Series A Preferred
Shares or upon exercise of the Warrants held by members of the Liberty Group.
"Lien" means any mortgage, pledge, lien, security interest, claim,
----
restriction, charge or encumbrance of any kind.
"Management Rights Agreements" means the Management Rights Agreements
----------------------------
to be dated as of the Closing Date, to be executed by the Company and delivered
to the HMTF Funds, a form of which is attached as Exhibit E.
"Material Adverse Effect" means a material adverse effect on the
-----------------------
condition (financial or otherwise), business, assets or results of operations of
the Company and its Subsidiaries, taken as a whole.
"Permitted Transferee" means, with respect to any Purchaser, or any
--------------------
Permitted Transferee of any Purchaser, (i) any Purchaser Affiliate of such
Purchaser that is not a holder of Common Stock on the date hereof or an
Affiliate of such holder; (ii) any Person that is a member of the Liberty Group;
and (iii) any Person that is a member of the HMTF Group and any Person
investing, directly or indirectly, in or in parallel with any member of the HMTF
Group; provided, however, that each Permitted Transferee must agree in writing
pursuant to a Permitted Transferee Agreement, in accordance with the provisions
of Section 6.5, to be bound by the terms, and subject to the conditions, of this
Agreement to the same extent, and in the same manner, as the transferring
Purchaser prior to the transfer of any Securities to such Permitted Transferee;
and provided, further, that the transfer of Securities from such Purchaser to
such Permitted Transferee is in compliance with all applicable securities laws.
"Person" means any individual, partnership, corporation, limited
------
liability company, joint venture, association, joint-stock company, trust,
unincorporated organization, government or agency or political subdivision
thereof, or other entity.
"Purchaser Affiliate" means (a) any direct or indirect holder of any
-------------------
equity interests or securities in any Purchaser (whether limited or general
partners, members, stockholders or otherwise), (b) any Affiliate of any
Purchaser or (c) any director, officer, employee, representative or agent of (i)
such Purchaser, (ii) any Affiliate of such Purchaser or (iii) any holder of
equity interests or securities referred to in clause (a) above.
"Registration Rights Agreement" means the Registration Rights
-----------------------------
Agreement, to be dated as of the Closing Date, to be entered into by and among
the Company and the Purchasers, in the form attached hereto as Exhibit C.
"Securities" means the Shares and the Warrants.
----------
"Securities Act" means the Securities Act of 1933, as amended, and the
--------------
rules and regulations of the Commission promulgated thereunder.
"Series A Preferred Stock" has the meaning set forth in the first
------------------------
recital to this Agreement. The Series A Preferred Stock has the designation,
powers, preferences and rights, and qualifications, limitations and restrictions
thereof set forth in the Certificate of Designation.
5
<PAGE>
"Share Exchange Agreement" means the Share Exchange Agreement between
------------------------
Quadrangle Investments, Inc. and a Subsidiary of the Company to be dated as of
February 28, 2000.
"Shares" means the shares of Series A Preferred Stock to be issued and
------
sold by the Company to the Purchasers pursuant to Section 2.1 hereof.
"Subsidiary" means, with respect to any Person (i) a corporation a
----------
majority of whose capital stock with voting power, under ordinary circumstances,
to elect directors is at the time, directly or indirectly, owned by such Person,
by a subsidiary of such Person, or by such Person and one or more subsidiaries
of such Person, (ii) a partnership in which such Person or a subsidiary of such
Person is, at the date of determination, a general partner of such partnership
and has the power to direct the policies and management of such partnership or
(iii) any other Person (other than a corporation) in which such Person, a
subsidiary of such Person or such Person and one or more subsidiaries of such
Person, directly or indirectly, at the date of determination thereof, has (A) at
least a majority ownership interest or (B) the power to elect or direct the
election of the directors or other governing body of such Person.
"Transactions" means the transactions contemplated by this Agreement
------------
and the other Equity Documents.
(b) As used in this Agreement, the following terms shall have the
meanings given thereto in the Sections set forth opposite such terms:
Term Section
---- -------
Agreement Preamble
Closing 2.2
Closing Date 2.2
Company Preamble
Conversion Agent 5.14(b)(ii)
DGCL 3.2(b)
HMTF Director 5.2(a)
HMTF Issued Series A Preferred Shares 5.2(a)
Indemnified Party 8.1(c)
Indemnified Person 8.1(b)
Indemnifying Party 8.1(c)
Information 3.7
Issuance 2.1
Liberty Director 5.2(b)
Liberty Issued Series A Preferred Shares 5.2(b)(i)
Losses 8.1(b)
Notices 8.2
Paying Agent 5.14(b)(i)
Permitted Transferee Agreement 6.5
Projections 3.7
Purchaser; Purchasers Preamble
6
<PAGE>
Term Section
---- -------
Purchase Price 2.1
Registrar 5.14(b)(iii)
Securities Transfer 6.5
Supplying Purchasers 8.18
Warrants Recitals
Warrant Shares Recitals
ARTICLE II
SALE AND PURCHASE
2.1 Agreement to Sell and to Purchase; Purchase Price.
-------------------------------------------------
On the Closing Date, and upon the terms and subject to the conditions set
forth in this Agreement, the Company shall issue and sell to each Purchaser, and
each Purchaser, severally and not jointly, shall purchase and accept from the
Company such number of Shares and Warrants as is set forth opposite such
Purchaser's name on Schedule 1 hereto (the "Issuance"), for a purchase price of
one thousand dollars ($1,000) per Share (the "Purchase Price"), payable by wire
transfer of immediately available funds to a bank account or bank accounts
designated by the Company described in Section 2.2(a)(i).
2.2 Closing.
-------
The closing of the Issuance to each Purchaser (the "Closing") shall take
place on a date to be specified by the Company and such Purchaser, which shall
be no later than the later of (A) the 2nd Business Day after the date as of
which all of the conditions set forth in Article VII hereof shall have been
satisfied as to the purchase by such Purchaser (or, to the extent permitted,
waived by the party or parties entitled to the benefit thereof) and (B) 15
Business Days after the date hereof or at such other time and date as the
parties hereto shall agree in writing (such date and time, the "Closing Date"),
at the offices of O'Sullivan Graev & Karabell, LLP, 30 Rockefeller Plaza, New
York, New York 10112 or at such other place as the parties hereto shall agree in
writing.
At the Closing:
(a) Each Purchaser shall deliver:
(i) against delivery of a certificate or certificates
representing the Shares and the Warrants being purchased by such Purchaser
pursuant to Section 2.1, an amount equal to the aggregate Purchase Price of
such Securities via wire transfer of immediately available funds to such
bank account as the Company shall designate not later than two Business
Days prior to the Closing Date;
(ii) a copy of the Registration Rights Agreement executed by such
Purchaser.
(b) The Company shall deliver to each Purchaser:
7
<PAGE>
(i) against payment of the Purchase Price therefor, a
certificate or certificates representing the Shares and Warrants being
purchased by such Purchaser pursuant to Section 2.1, which shall be in
definitive form and registered in the name of such Purchaser or its nominee
or designee and in a single certificate or in such other denominations as
such Purchaser shall request not later than two Business Days prior to the
Closing Date;
(ii) an opinion of (A) H. Don Teague, General Counsel of the
Company and (B) O'Sullivan Graev & Karabell, LLP, special counsel to the
Company, in each case dated the Closing Date, covering the matters set
forth on Exhibit D, in form and substance reasonably acceptable to the
Purchasers;
(iii) an officer's certificate of the Company as contemplated by
Section 7.2(f);
(iv) a certificate of the secretary of the Company covering such
matters as are customarily covered by such certificates, in form and
substance reasonably acceptable to the Purchasers;
(v) a long-form good standing certificate of the Company issued
by the Secretary of State of the State of Delaware; and
(vi) a copy of the Registration Rights Agreement executed by the
Company.
(c) The Company shall deliver to each Purchaser (or its designee) a
transaction fee equal to 3% of the Purchase Price of the Shares purchased by
such Purchaser, in immediately available funds by wire transfer to an account
designated by Purchasers at least two Business Days prior to the Closing Date.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company hereby represents and warrants to each Purchaser on the date
hereof and on and as of the Closing Date as follows:
3.1 Organization and Standing.
-------------------------
(a) Each of the Company and its material Subsidiaries (the "ICG
Subsidiaries") is duly organized, validly existing and in good standing under
the laws of its state of organization and has all corporate, limited liability
company and partnership power and authority to own its properties and assets and
to carry on its business as it is now being conducted. Each of the Company and
the ICG Subsidiaries is duly qualified to transact business as a foreign entity
and is in good standing in each jurisdiction in which the character of the
properties owned or leased by it or the nature of its business makes such
qualification necessary, except for any such failures to so qualify or be in
good standing that would not, individually or in the aggregate, reasonably be
expected to have a Material Adverse Effect.
8
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(b) All of the outstanding shares of Capital Stock of each ICG
Subsidiary have been validly issued and are fully paid and non-assessable and
are owned directly or indirectly by the Company, free and clear of all Liens.
The Company does not own any equity interest in any corporation, partnership,
limited liability company, joint venture, or other entity except as provided on
Schedule 3.1(b) hereof.
(c) The Company has delivered to each Purchaser true and complete
copies of the Company's Certificate of Incorporation, as amended to date, and
By-laws, as in effect on the date hereof.
3.2 Capital Stock.
(a) As of the date of this Agreement, the authorized Capital Stock of
the Company consists solely of (i) 100,000,000 shares of Common Stock, par value
$0.01 per share, of which 48,208,955 shares were issued and outstanding as of
the close of business on February 24, 2000 and (ii) 1,000,000 shares of
preferred stock, par value $0.01 per share, of which 12,650.25 shares are issued
and outstanding. Each share of Capital Stock of the Company that will be issued
and outstanding immediately following the Closing, including without limitation
the Shares, will be duly authorized and validly issued and fully paid and
nonassessable, and the issuance thereof will not have been subject to any
preemptive rights or made in violation of any Applicable Law.
(b) Except as set forth on Schedule 3.2, as of the date of this
Agreement, there are (i) no outstanding options, warrants, agreements,
conversion rights, exchange rights, preemptive rights or other rights (whether
contingent or not) to subscribe for, purchase or acquire any issued or unissued
shares of Capital Stock of the Company or any ICG Subsidiary, (ii) no authorized
or outstanding stock appreciation, phantom stock, profit participation, or
similar rights with respect to the Company or any Subsidiary, (iii) no rights,
contracts, commitments or arrangements (contingent or otherwise) obligating the
Company or any ICG Subsidiary to either (A) redeem, purchase or otherwise
acquire, or offer to purchase, redeem, or otherwise acquire, any outstanding
shares of, or any outstanding warrants or rights of any kind to acquire any
shares of, or any outstanding securities that are convertible into or
exchangeable for any shares of, Capital Stock of the Company, or (B) pay any
dividend or make any distribution in respect of any shares of, or any
outstanding securities that are convertible or exchangeable for any shares of,
Capital Stock of the Company, (iv) no agreements or arrangements under which the
Company or any ICG Subsidiary is obligated to register the sale of any of its
securities under the Securities Act (except as provided hereunder) and (v) no
restrictions upon, or Contracts or understandings of the Company or any
Subsidiary, or, to the knowledge of the Company, Contracts or understandings of
any other Person, with respect to, the voting or transfer of any shares of
Capital Stock of the Company or any Subsidiary. Except as set forth on Schedule
3.2, there are no securities or instruments containing antidilution or similar
provisions that will be triggered by the consummation of the Transactions.
Except as set forth on Schedule 3.2, no party has any right of first refusal,
right of first offer, right of co-sale or other similar right regarding the
Company's securities. Except as set forth on Schedule 3.2, there are no
provisions of the Certificate of Incorporation, as amended, or the By-laws of
the Company, no agreements to which the Company is a party and no agreements by
which the Company or any ICG Subsidiary are bound, that would (a) require the
vote of the holders of more than a majority of the shares of
9
<PAGE>
the Company's issued and outstanding Common Stock, voting together as a single
class, to take or prevent any corporate action, other than those matters
requiring a class vote under General Corporation Law of the State of Delaware
(the "DGCL"), or (b) entitle any party to nominate or elect any director of the
Company or require any of the Company's stockholders to vote for any such
nominee or other person as a director of the Company.
(c) The Conversion Shares and Warrant Shares have been duly
authorized and adequately reserved in contemplation of the conversion of the
Series A Preferred Stock and the exercise of the Warrants, respectively, and,
when issued and delivered in accordance with the terms of the Certificate of
Designation or the Warrants, as the case may be, will have been validly issued
and will be fully paid and nonassessable, and the issuance thereof will not have
been subject to any preemptive rights or made in violation of any Applicable
Law.
(d) The holders of the Series A Preferred Stock will, upon issuance
thereof, have the rights set forth in the Certificate of Designation (subject to
the limitations and qualifications set forth therein and under the DGCL).
3.3 Authorization; Enforceability.
-----------------------------
The Company has the power and authority to execute, deliver and perform its
obligations under each of the Equity Documents to which it is a party, and has
taken all action necessary to authorize the execution, delivery and performance
by it of each of such Equity Documents and to consummate the Transactions. No
other corporate or stockholder proceeding on the part of the Company or any ICG
Subsidiary is necessary for such authorization, execution, delivery and
consummation. The Company has duly executed and delivered this Agreement and, at
the Closing, the Company will have duly executed and delivered each of the other
Equity Documents to which it is a party to be executed and delivered at or prior
to Closing. This Agreement constitutes, and each of the other Equity Documents
to which it is a party, when executed and delivered by the Company, will
constitute, a legal, valid and binding obligation of the Company enforceable
against the Company in accordance with its terms, except as such enforceability
may be limited by (a) applicable bankruptcy, insolvency, reorganization, or
other laws of general application affecting enforcement of creditors' rights or
(b) general principles of equity that restrict the availability of equitable
remedies.
3.4 No Violation; Consents.
----------------------
(a) The execution, delivery and performance by the Company of each of
the Equity Documents and the consummation by the Company of the Transactions do
not and will not contravene any Applicable Law, except for any such
contravention that would not, individually or in the aggregate, reasonably be
expected to have a Material Adverse Effect. The execution, delivery and
performance by the Company of each of the Equity Documents and the consummation
of the Issuance (i) will not (A) violate, result in a breach of or constitute
(with or without due notice or lapse of time or both) a default (or give rise to
any right of termination, cancellation or acceleration) under any Contract to
which the Company is a party or by which the Company is bound or to which any of
its assets is subject, or (B) result in the creation or imposition of any Lien
upon any of the assets of the Company, except for any such violations, breaches,
defaults or Liens that would not, individually or in the aggregate, reasonably
be
10
<PAGE>
expected to have a Material Adverse Effect and (ii) will not conflict with or
violate any provision of the certificate of incorporation or bylaws of the
Company currently in effect or in effect as of the Closing.
(b) Except for (i) the filings by the Company, if any, required by
the HSR Act, (ii) applicable filings, if any, required by applicable federal and
state securities laws, (iii) applicable filings, if any, required by the Federal
Communication Commission and state public utility commissions and (iv) filing of
the Certificate of Designation with the Secretary of State of the State of
Delaware, which, in each case referred to in clauses (i) - (iv), shall be made
(or are not required to be made) on or prior to the Closing Date, no consent,
authorization or order of, or filing or registration with, any Governmental
Authority or other Person is required to be obtained or made by the Company or
the ICG Subsidiaries for the execution and delivery of the Equity Documents or
the consummation by the Company of the Transactions except where the failure to
obtain such consents, authorizations or orders, or make such filings or
registrations, would not, individually or in the aggregate, reasonably be
expected to have a Material Adverse Effect or a material adverse effect on the
ability of the Company to consummate the Transactions.
3.5 Commission Filings; Financial Statements.
----------------------------------------
(a) The Company has filed all reports, registration statements and
other filings, together with any amendments or supplements required to be made
with respect thereto, that it has been required to file with the Commission
under the Securities Act and the Exchange Act. As of the respective dates of
their filing with the Commission, the Commission Filings complied in all
material respects with the applicable provisions of the Securities Act and the
Exchange Act and did not contain any untrue statement of a material fact or omit
to state a material fact required to be stated therein or necessary to make the
statements made therein, in the light of the circumstances under which they were
made, not misleading.
(b) Each of the historical consolidated financial statements of the
Company (including any related notes or schedules) included in the Commission
Filings was prepared in accordance with GAAP (except as may be disclosed
therein), and complied in all material respects with the rules and regulations
of the Commission. Such financial statements fairly present the consolidated
financial position of the Company and its consolidated Subsidiaries as of the
dates thereof and the consolidated results of operations, cash flows and changes
in stockholders' equity for the periods then ended (subject, in the case of the
unaudited interim financial statements, to normal, recurring year-end audit
adjustments). Except as reflected in the Commission Filings filed prior to the
date hereof, the Company does not have any liabilities or obligations of any
nature (whether accrued, absolute, contingent, unasserted or otherwise) that
individually or in the aggregate would be expected to have a Material Adverse
Effect.
3.6 Private Offering.
----------------
Based, in part, on the Purchasers' representations in Section 4.2, the
offer and sale of the Securities is exempt from the registration and prospectus
delivery requirements of the Securities Act. Neither the Company, nor anyone
acting on behalf of it, has offered or sold or will offer or sell any
securities, or has taken or will take any other action (including, without
limitation, any offering of any securities of the Company under circumstances
that would require, under the
11
<PAGE>
Securities Act, the integration of such offering with the offering and sale of
the Securities), that would subject the Issuance to the registration provisions
of the Securities Act.
3.7 Provided Information.
--------------------
To the knowledge of the Company, all written information (excluding
information of a general economic nature and financial projections) concerning
the Company and the Transactions (the "Information") that has been prepared by
or on behalf of the Company or any of the Company's authorized representatives
and that has been provided to the Purchasers or any of their authorized
representatives in connection with the Issuance, when taken as a whole, was, at
the time made available, correct in all material respects and did not, at the
time made available, contain any untrue statement of a material fact or omit to
state a material fact necessary in order to make the statements contained
therein not misleading in light of the circumstances under which such statements
are made. All financial projections concerning the Company and the Transactions
(the "Projections") that have been prepared by or on behalf of the Company or
any of the Company's authorized representatives and that have been delivered to
the Purchasers or any of their authorized representatives in connection with the
Transactions have been reasonably prepared on a basis reflecting the best
currently available estimates and judgments of the Company's management as to
the future financial performance of the Company and the individual business
segments thereof.
3.8 Material Adverse Change.
-----------------------
Except as disclosed in the Commission Filings filed prior to the date
hereof, since September 30, 1999, there has not been any event, occurrence or
development of a state of circumstances or facts that has had, or could have
reasonably been expected to have, (i) a Material Adverse Effect or (ii) a
material adverse effect on the ability of the Company to perform its obligations
under this Agreement or the other Equity Documents.
3.9 Litigation.
----------
Except as disclosed in Commission Filings filed prior to the date hereof,
there are not any (a) outstanding judgments against or affecting the Company or
any of the ICG Subsidiaries, (b) proceedings pending or, to the knowledge of the
Company, threatened against or affecting the Company or any of the ICG
Subsidiaries or (c) investigations by any Governmental Authority that are, to
the knowledge of the Company, pending or threatened against or affecting the
Company or any of the ICG Subsidiaries that (i) in any manner challenge or seek
to prevent, enjoin, alter or materially delay the Transactions or (ii) if
resolved adversely to the Company or any ICG Subsidiary, would have,
individually or in the aggregate, a Material Adverse Effect.
3.10 Permits and Licenses.
--------------------
The Company and the ICG Subsidiaries have obtained all governmental
permits, licenses, franchises and authorizations required for the Company and
its Subsidiaries to conduct their respective businesses as currently conducted,
except for those of which the failure to obtain would not have a Material
Adverse Effect.
12
<PAGE>
3.11 Intellectual Property, etc.
--------------------------
The Company and the ICG Subsidiaries have all right, title and interest
in, or a valid and binding license to use, all Company Intellectual Property (as
defined below). The Company and the ICG Subsidiaries (i) have not defaulted in
any material respect under any license to use any Company Intellectual Property,
(ii) are not the subject of any proceeding or litigation for infringement of any
third party intellectual property, (iii) have no knowledge of circumstances that
would be reasonably expected to give rise to any such proceeding or litigation
and (iv) have no knowledge of circumstances that are causing or would be
reasonably expected to cause the loss or impairment of any Company Intellectual
Property, other than a default, proceeding, litigation, loss or impairment that
is not having or would not be reasonably expected to have, individually or in
the aggregate, a Material Adverse Effect. "ICG Communications, Inc." is a
registered trademark of the Company in the United States and such registration
has been duly maintained by the Company.
For purposes of this Agreement, "Company Intellectual Property" means
patents and patent rights, trademarks and trademark rights, tradenames and
tradename rights, service marks and service mark rights, copyrights and
copyright rights, trade secret and trade secret rights, and other intellectual
property rights, and all pending applications for and registrations of any of
the foregoing that are used in the conduct of the business of the Company and
the ICG Subsidiaries as presently conducted.
3.12 Board Approval.
--------------
Prior to the execution of this Agreement, the Board of Directors of the
Company has approved the Transactions, including without limitation the
acquisition of the Shares, the Warrants, the Conversion Shares and the Warrant
Shares by the Purchasers and their respective "affiliates" and "associates" (as
those terms are defined in Section 203 of the DGCL) for all purposes, including
without limitation Section 203 of the DGCL, and no Purchaser or affiliate or
associate (as so defined) of a Purchaser shall as a result of the execution of
this Agreement or consummation of the transactions contemplated by this
Agreement, be subject to any of the restrictions of Section 203 of the DGCL or
any similar provisions of Applicable Law.
3.13 British Telecommunications.
--------------------------
As of the date hereof, the Company and its Subsidiaries do not, directly
or indirectly, beneficially own (within the meaning of Rule 13d-3 promulgated
under the Exchange Act) any shares of any class of capital stock of British
Telecommunications plc, a company organized under the laws of England and Wales
("BT"), or any of its Subsidiaries, or any direct or indirect rights or options
to acquire (through purchase, exchange, conversion or otherwise) any shares of
any class of capital stock of BT or any of its Subsidiaries.
3.14 Share Exchange Agreement.
------------------------
The representations and warranties of the Subsidiary of the Company that
will be a party to the Share Exchange Agreement to be set forth in the Share
Exchange Agreement will be true and correct when made.
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ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE PURCHASERS
Each Purchaser severally as to itself only, and not jointly, hereby
represents and warrants to the Company as of the date hereof and as of the
Closing Date as follows:
4.1 Organization; Authorization; Enforceability.
-------------------------------------------
Such Purchaser is duly organized, validly existing and in good standing
under the laws of the jurisdiction of its organization and has all corporate or
limited liability company power and authority to own its properties and assets
and to carry on its business as it is now being conducted and as currently
proposed to be conducted. Such Purchaser has the power to execute, deliver and
perform its obligations under each of the Equity Documents to which it is a
party and has taken all action necessary to authorize the execution, delivery
and performance by it of such Equity Documents and to consummate the
Transactions. No other proceedings on the part of such Purchaser are necessary
for such authorization, execution, delivery and consummation. Such Purchaser has
duly executed and delivered this Agreement and, at the Closing, such Purchaser
will have duly executed and delivered each of the other Equity Documents to be
executed and delivered by it at or prior to Closing. This Agreement constitutes,
and each of the other Equity Documents to which such Purchaser is a party, when
executed and delivered by such Purchaser, will constitute, a legal, valid and
binding obligation of such Purchaser enforceable against such Purchaser in
accordance with its terms, except as such enforceability may be limited by (a)
applicable bankruptcy, insolvency, reorganization, or other laws of general
application affecting enforcement of creditors' rights or (b) general principles
of equity that restrict the availability of equitable remedies.
4.2 Private Placement.
-----------------
(a) Such Purchaser understands that (i) the offering and sale of the
Securities, the Conversion Shares and the Warrant Shares in the Issuance by the
Company is intended to be exempt from registration under the Securities Act
pursuant to Section 4(2) thereof and (ii) there is no existing public or other
market for the Securities.
(b) Such Purchaser (either alone or together with its advisors) has
sufficient knowledge and experience in financial and business matters so as to
be capable of evaluating the merits and risks of its investment in the
Securities, the Conversion Shares and the Warrant Shares, and is capable of
bearing the economic risks of such investment.
(c) Such Purchaser is acquiring the Securities, the Conversion Shares
and the Warrant Shares to be acquired hereunder for its own account (or for
accounts over which it exercises investment authority or as otherwise provided
herein), for investment and not with a view to the public resale or distribution
thereof in violation of any securities law.
(d) Such Purchaser understands that the Securities, the Conversion
Shares and the Warrant Shares will be issued in a transaction exempt from the
registration or qualification requirements of the Securities Act and applicable
state securities laws, and that such securities must be held indefinitely unless
a subsequent disposition thereof is registered or qualified under
14
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the Securities Act and such state securities laws or is exempt from such
registration or qualification.
(e) Such Purchaser (A) has been furnished with or has had full access
to all of the information that it considers necessary or appropriate to make an
informed investment decision with respect to the Securities, the Conversion
Shares and the Warrant Shares and that it has requested from the Company, (B)
has had an opportunity to discuss with management of the Company the intended
business and financial affairs of the Company and to obtain information (to the
extent the Company possessed such information or could acquire it without
unreasonable effort or expense) necessary to verify any information furnished to
it or to which it had access and (C) can bear the economic risk of (x) an
investment in the Securities, the Conversion Shares and the Warrant Shares
indefinitely and (y) a total loss in respect of such investment, and (D) has
such knowledge and experience in business and financial matters so as to enable
it to understand and evaluate the risks of and form an investment decision with
respect to its investment in the Securities, the Conversion Shares and the
Warrant Shares and to protect its own interest in connection with such
investment.
(f) The foregoing representations with respect to the Conversion
Shares and the Warrant Shares are made only if and to the extent the offering of
the Shares and the Warrants constitutes an offering of the Conversion Shares and
the Warrant Shares.
4.3 No Violation; Consents.
----------------------
(a) Subject to making the filings and obtaining the consents and
approvals referred to in Section 4.3(b), the execution, delivery and performance
by such Purchaser of each of the Equity Documents to which it is a party and the
consummation of the Transactions, do not and will not contravene any Applicable
Law, except for such contraventions as would not, individually or in the
aggregate, reasonably be expected to have a material adverse effect on the
ability of such Purchaser to timely perform its obligations under this
Agreement. The execution, delivery and performance by such Purchaser of each of
the Equity Documents to which it is a party and the consummation of the
Transactions (i) will not (A) violate, result in a breach of or constitute (with
or without due notice or lapse of time or both) a default (or give rise to any
right of termination, cancellation or acceleration) under any Contract to which
such Purchaser is party or by which such Purchaser is bound or to which any of
its assets is subject, or (B) result in the creation or imposition of any Lien
upon any of the assets of such Purchaser, except for any such violations,
breaches, defaults or Liens that would not, individually or in the aggregate,
reasonably be expected to have a material adverse effect on the ability of such
Purchaser to timely perform its obligations under this Agreement, and (ii) will
not conflict with or violate any provision of the certificate of incorporation
or bylaws or other governing documents of such Purchaser.
(b) Except for (i) the filings by the Purchaser, if any, required by
the HSR Act, and (ii) applicable filings, if any, with the Commission pursuant
to the Exchange Act, which, in each case, shall be made (or are not required to
be made) on or prior to the Closing Date, no consent, authorization or order of,
or filing or registration with, any Governmental Authority or other Person is
required to be obtained or made by such Purchaser for the execution, delivery
and performance of any of the Equity Documents to which it is a party or the
consummation of the
15
<PAGE>
Transactions, except where the failure to obtain such consents, authorizations
or orders, or make such filings or registrations, would not, individually or in
the aggregate, reasonably be expected to have a material adverse effect on the
ability of such Purchaser to timely perform its obligations under this
Agreement.
4.4 No Litigation.
-------------
There are not any (a) outstanding judgments against or affecting the
Purchaser or any of its Subsidiaries, (b) proceedings pending or, to the
knowledge of the Purchaser, threatened against or affecting the Purchaser or any
of its Subsidiaries or (c) investigations by any Governmental Authority that
are, to the knowledge of the Purchaser, pending or threatened against or
affecting the Purchaser or any of its Subsidiaries that, in any case,
individually or in the aggregate, would reasonably be expected to have a
material adverse effect on the ability of such Purchaser to timely perform its
obligations under this Agreement.
4.5 No Group Status.
---------------
Neither the Liberty Group, on the one hand, nor the HMTF Group, on the
other hand, is acting as a "group" (within the meaning of Rule 13d-5(b)(1) under
the Exchange Act) together with, in the case of the Liberty Group, the HMTF
Group, and in the case of the HTMF Group, the Liberty Group, in each case, with
respect to acquiring, holding, voting or disposing of the Securities.
ARTICLE V
COVENANTS OF THE COMPANY
5.1 Operation of Business.
---------------------
(a) From the date hereof until the Closing Date, the Company shall, and
shall cause each of the ICG Subsidiaries to:
(i) operate its business in all material respects in the
ordinary course and in compliance with Applicable Laws;
(ii) not adopt any amendment to its charter or bylaws or
comparable organizational documents;
(iii) not split, combine or reclassify any shares of the
Company's Capital Stock;
(iv) except as set forth on Schedule 5.1(iv), not declare or pay
any dividend or distribution (whether in cash, stock or property) in
respect of its Capital Stock or increase the number of shares subject to
the Company's stock incentive and option plan;
(v) not take any action, or knowingly omit to take any action,
that would, or that would reasonably be expected to, result in (A) any of
the representations and warranties of the Company set forth in Article III
becoming untrue or (B) any of the
16
<PAGE>
conditions to the obligations of the Purchasers set forth in Section 7.2
not being satisfied or (C) the triggering of any of the anti-dilution
adjustments contained in the Certificate of Designation (had such
Certificate been in effect); or
(vi) enter into any agreement or commitment to do any of the
foregoing.
(b) Without the consent of Liberty, neither the Company nor any of its
Subsidiaries will voluntarily acquire or agree to acquire (through purchase,
exchange, conversion or otherwise) beneficial ownership (within the meaning of
Rule 13d-3 promulgated under the Exchange Act) of any shares of any class of
capital stock of BT or its Subsidiaries or any direct or indirect rights or
options to so acquire any shares of any class of capital stock of BT or any of
its Subsidiaries.
5.2 HMTF and Liberty Directors.
--------------------------
(a) For so long as members of the HMTF Group own any combination of
shares of Common Stock and Series A Preferred Stock representing an amount of
Common Stock (on an as-converted basis) that, taken together, equals at least
the amount of Common Stock that would then have been issuable upon conversion of
50% or more of the shares of Series A Preferred Stock issued to members of the
HMTF Group on the Closing Date under this Agreement (the "HMTF Issued Series A
Preferred Shares"), the holders of a majority of the then outstanding HMTF
Shares shall have the right to designate one member of the Company's Board of
Directors or, if greater, such number of members of the Company's Board of
Directors (rounded up to the next whole number) equal to 10% of the then
authorized number of members of the Company's Board of Directors (each such
director an "HMTF Director"); provided, however, that the right to designate an
HMTF Director under this Section 5.2 shall be suspended at any time that the
HMTF Holders have the right to elect a person to the Board of Directors under
the terms of the Series A Preferred Stock set forth in the Certificate of
Designation. In the event the holders of a majority of the then outstanding HMTF
Shares are entitled under this Section 5.2 to designate an HMTF Director for
election to the Company's Board of Directors and elect to have the Board of
Directors appoint an HMTF Director, they shall so notify the Company in writing
and the Company shall (a) increase the size of the Board of Directors by one and
fill the vacancy created thereby by electing an HMTF Director and (b) in
connection with the meeting of stockholders of the Company next following such
election, nominate an HMTF Director for election as a director by the
stockholders and use its commercially reasonable efforts to cause the HMTF
Director to be so elected. If the holders of a majority of the then outstanding
HMTF Shares are entitled under this Section 5.2 to designate an HMTF Director
for election to the Company's Board of Directors and a vacancy shall exist in
the office of an HMTF Director, the holders of a majority of the then
outstanding HMTF Shares shall be entitled to designate a successor and the Board
of Directors shall elect such successor and, in connection with the meeting of
stockholders of the Company next following such election, nominate such
successor for election as director by the stockholders and use its commercially
reasonable efforts to cause the successor to be elected.
(b) (i) For so long as members of the Liberty Group in the aggregate
own any combination of shares of Common Stock and Series A Preferred Stock
representing an amount of Common Stock (on an as-converted basis) that, taken
together, equals at least the amount of Common Stock that would then have been
issuable upon conversion of 15% of the shares of
17
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Series A Preferred Stock issued to members of the Liberty Group on the Closing
Date under this Agreement (the "Liberty Issued Series A Preferred Shares"), the
members of the Liberty Group voting together as a single class, by a plurality
of the votes cast or by the written consent of a majority in interest of such
members, shall have a right to designate one member of the Company's Board of
Directors or, if greater, such number of members of the Company's Board of
Directors (rounded up to the next whole number) equal to 10% of the then
authorized number of members of the Company's Board of Directors (each such
director a "Liberty Director"); provided, however, that the right to designate a
Liberty Director under this Section 5.2 shall be suspended at any time that the
Liberty Holders have the right to elect a person to the Board of Directors under
the terms of the Series A Preferred Stock set forth in the Certificate of
Designation. In the event the members of the Liberty Group are entitled under
this Section 5.2 to designate the Liberty Director for election to the Company's
Board of Directors and elect to have the Board of Directors appoint a Liberty
Director, they shall so notify the Company in writing and the Company shall (a)
increase the size of the Board of Directors by one and fill the vacancy created
thereby by electing a Liberty Director and (b) in connection with the meeting of
stockholders of the Company next following such election, nominate a Liberty
Director for election as director by the stockholders and use its commercially
reasonable efforts to cause the Liberty Director to be so elected. If the
members of the Liberty Group are entitled under this Section 5.2 to designate a
Liberty Director for election to the Company's Board of Directors and a vacancy
shall exist in the office of a Liberty Director, the members of the Liberty
Group voting together as a single class, by a plurality of the votes cast or by
the written consent of a majority in interest of such members, shall be entitled
to designate a successor and the Board of Directors shall elect such successor
and, in connection with the meeting of stockholders of the Company next
following such election, nominate such successor for election as director by the
stockholders and use its commercially reasonable efforts to cause the successor
to be elected.
(ii) For so long as members of the Liberty Group in the aggregate own
any combination of shares of Common Stock and Series A Preferred Stock
representing an amount of Common Stock (on an as-converted basis) that, taken
together, equals at least the amount of Common Stock that would then have been
issuable upon conversion of 50% of the Liberty Issued Series A Preferred Shares,
the members of the Liberty Group voting together as a single class, by a
plurality of the votes cast or by the written consent of a majority in interest
of such members, shall have a right, in addition to the rights set forth in
clause (i) above, to designate one additional member of the Company's Board of
Directors or, if greater, such number of additional members of the Company's
Board of Directors (rounded up to the next whole number) equal to 10% of the
then authorized number of members of the Company's Board of Directors (each such
director an "Additional Liberty Director"); provided, however, that the right to
designate an Additional Liberty Director under this Section 5.2 shall be
suspended at any time that the Liberty Holders have the right to elect a person
to the Board of Directors under the terms of the Series A Preferred Stock set
forth in the Certificate of Designation. In the event the members of the
Liberty Group are entitled under this Section 5.2 to designate an Additional
Liberty Director for election to the Company's Board of Directors and elect to
have the Board of Directors appoint an Additional Liberty Director, they shall
so notify the Company in writing and the Company shall (a) increase the size of
the Board of Directors by one and fill the vacancy created thereby by electing
an Additional Liberty Director and (b) in connection with the meeting of
stockholders of the Company next following such election, nominate an Additional
Liberty Director for election as director by the stockholders and use its
commercially reasonable
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efforts to cause an Additional Liberty Director to be so elected. If the members
of the Liberty Group are entitled under this Section 5.2 to designate an
Additional Liberty Director for election to the Company's Board of Directors and
a vacancy shall exist in the office of an Additional Liberty Director, the
members of the Liberty Group voting together as a single class, by a plurality
of the votes cast or by the written consent of a majority in interest of such
members, shall be entitled to designate a successor and the Board of Directors
shall elect such successor and, in connection with the meeting of stockholders
of the Company next following such election, nominate such successor for
election as director by the stockholders and use its commercially reasonable
efforts to cause the successor to be elected.
5.3 Access to Books and Records.
---------------------------
(a) The Company shall afford to each of the Purchasers and the
Purchasers' accountants, counsel and representatives full access upon reasonable
notice during normal business hours throughout the period prior to the Closing
Date (or the earlier termination of this Agreement pursuant to Section 8.4) to
all its properties, books, Contracts, commitments and records (including, but
not limited to, tax returns) and, during such period, shall, upon request,
furnish promptly to each of the Purchasers (i) a copy of each report, schedule
and other document filed or received by any of them pursuant to the requirements
of Federal or state securities laws and (ii) all other information concerning
its business, properties and personnel as the Purchasers may reasonably request,
provided that no investigation or receipt of information pursuant to this
Section 5.3 shall affect any representation or warranty of the Company or the
conditions to the obligations of the Purchasers.
(b) The Company shall supplement the Information and the Projections
from time to time until the Closing Date if there is a material change in the
Information and the Projections previously provided, but no such supplement
shall be given effect for purposes of determining whether the Company has
breached any representations or warranties for purposes of Section 7.2 and
Section 8.1.
5.4 Agreement to Take Necessary and Desirable Actions.
-------------------------------------------------
The Company shall (a) subject to the satisfaction of the conditions set
forth in Section 7.1, execute and deliver the Equity Documents and such other
documents, certificates, agreements and other writings, and (b) take such other
actions, in each case, as may be reasonably necessary, desirable or requested
by the Purchasers in order to consummate or implement the Issuance in accordance
with the terms of this Agreement.
5.5 Compliance with Conditions; Commercially Reasonable Efforts.
-----------------------------------------------------------
The Company shall use all commercially reasonable efforts to cause all of
the obligations imposed upon it in this Agreement to be duly complied with, and
to cause the conditions precedent to the obligations of the Purchasers in
Sections 7.2(a) and (b) to be satisfied. Upon the terms and subject to the
conditions of this Agreement, the Company will use all commercially reasonable
efforts to take, or cause to be taken, all action, and to do, or cause to be
done, all things necessary, proper or advisable consistent with Applicable Law
to consummate and make
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<PAGE>
effective in the most expeditious manner practicable the Issuance in accordance
with the terms of this Agreement.
5.6 HSR Act Notification.
--------------------
To the extent required by the HSR Act, the Company shall, to the extent it
has not already done so, (a) use all commercially reasonable efforts to file or
cause to be filed, as promptly as practicable after the execution and delivery
of this Agreement, with the United States Federal Trade Commission and the
Antitrust Division of the United States Department of Justice, all reports and
other documents required to be filed by it under the HSR Act concerning the
Transactions and (b) use all commercially reasonable efforts to promptly comply
with or cause to be complied with any requests by the United States Federal
Trade Commission or the Antitrust Division of the United States Department of
Justice for additional information concerning such Transactions, in each case so
that the waiting period applicable to this Agreement and the Transactions under
the HSR Act shall expire as soon as practicable after the execution and delivery
of this Agreement. The Company agrees to request, and to cooperate with the
Purchasers in requesting, early termination of any applicable waiting period
under the HSR Act.
5.7 Consents and Approvals.
----------------------
The Company (a) shall use all commercially reasonable efforts to obtain all
necessary consents, waivers, authorizations and approvals of all Governmental
Authorities and of all other Persons required in connection with the execution,
delivery and performance by the Company of the Equity Documents or the
consummation of the Issuance and (b) shall diligently assist and cooperate with
the Purchasers in preparing and filing all documents required to be submitted by
the Purchasers to any Governmental Authority in connection with the Issuance
(which assistance and cooperation shall include, without limitation, timely
furnishing, upon written requests, to the Purchasers all information concerning
the Company and the Subsidiaries that counsel to the Purchasers reasonably
determines is required to be included in such documents or would be helpful in
obtaining any such required consent, waiver, authorization or approval).
5.8 Reservation of Shares.
---------------------
The Company shall:
(a) cause to be authorized and reserve and keep available at all
times during which any of the Shares and Warrants remain outstanding, free from
preemptive rights, out of its treasury stock or authorized but unissued shares
of Capital Stock, or both, solely for the purpose of effecting the conversion or
exercise of the Shares or Warrants pursuant to the terms of the Certificate of
Designation or the Warrants, sufficient shares of Common Stock to provide for
the issuance of the maximum number of shares issuable upon conversion and
exercise of outstanding Shares and Warrants;
(b) issue and cause the transfer agent to deliver such shares of
Common Stock as required upon conversion or exercise of the Shares and Warrants;
and
20
<PAGE>
(c) if any shares of Common Stock reserved for the purpose of
issuance upon conversion of the Shares and exercise of the Warrants require
registration with or approval of any Governmental Authority under any Applicable
Law before such shares may be validly issued or delivered, secure such
registration or approval, as the case may be, and maintain such registration or
approval in effect so long as so required.
5.9 Use of Proceeds.
---------------
The Company shall use the proceeds from the Issuance for building out its
network, payment of expenses incurred in connection with the Transactions and
for general corporate purposes.
5.10 Filing of Certificate of Designation.
------------------------------------
Prior to the Issuance, the Company shall file the Certificate of
Designation with the Secretary of State of the State of Delaware pursuant to
Section 151(g) of the DGCL.
5.11 Listing of Shares.
-----------------
The Company shall use all commercially reasonable efforts to cause the
Conversion Shares and the Warrant Shares to be listed or otherwise eligible for
trading on the NASDAQ National Market System or other national securities
exchange.
5.12 Periodic Information.
--------------------
For so long as the Securities are outstanding the Company shall file all
reports required to be filed by the Company under Section 13 or 15(d) of the
Exchange Act and shall provide the holders of the Securities and prospective
purchasers of such shares with the information specified in Rule 144A(d) under
the Securities Act.
5.13 Legends.
-------
So long as applicable, each certificate representing any portion of the
Securities, shall contain, be stamped or otherwise imprinted with a legend in
the following form (in addition to any legend required under applicable state
securities laws):
"THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE
"SECURITIES ACT") OR THE SECURITIES LAWS OF ANY STATE OF THE
UNITED STATES. SUCH SHARES MAY NOT BE OFFERED, SOLD,
TRANSFERRED, PLEDGED, HYPOTHECATED OR OTHERWISE DISPOSED OF
IN THE ABSENCE OF SUCH REGISTRATION OTHER THAN PURSUANT TO
AN EXEMPTION FROM SUCH REGISTRATION REQUIREMENTS."
After the above requirement for a legend is no longer applicable with respect to
all or any of the Securities because the applicable Securities are freely
transferable under the Securities Act, the
21
<PAGE>
Company shall remove such legend upon request from a holder of the applicable
Securities, if outside counsel for such holder reasonably determines that the
transfer of such Securities is no longer restricted by the Securities Act and
outside counsel for the Company reasonably concurs in such determination.
5.14 Payment; Paying Agent; Certain Information.
------------------------------------------
The Company shall:
(a) make any required payments on the Securities;
(b) maintain (i) an office or agency where the Securities may be
presented for payment (the "Paying Agent"), (ii) an office or agency where the
Securities may be presented for conversion (the "Conversion Agent"), and (iii) a
Registrar, which shall be an office or an agency where the Securities may be
presented for transfer; and
(c) provide certain information to the Purchasers, including such
information and notices as may be necessary for the Purchasers to exercise their
rights under this Agreement and in connection with conversion or exercise of the
Securities.
5.15 Rights Plan.
-----------
The Company shall not adopt a "poison pill" shareholder rights plan unless
(a) the Company distributes to holders of the shares of Series A Preferred
Stock, and to the holders of the Warrant Shares upon exercise of the Warrants,
such number of rights as such holders would have received had they converted
their Shares immediately prior to the record date for such distribution and (b)
the terms of such rights plan exempt the ownership and acquisition of securities
of the Company (i) by the Liberty Group, or any member thereof, and (ii) by the
HMTF Group, or any member thereof, in each case subject to compliance with
Section 6.6.
5.16 Proportional Purchase Right.
----------------------------
The Liberty Holders, the HMTF Holders and the Gleacher Holders shall each
have the right, for a period beginning on the Closing Date and ending on the
second anniversary of the Closing Date, to purchase from the Company their pro
rata portion (based on the percentage of the outstanding shares of Common Stock
then held by the Liberty Holders, the HMTF Holders or the Gleacher Holders, as
the case may be, on an as-converted basis) of any securities issued by the
Company so that such Holders, after giving effect to such issuance and
corresponding purchase by such Holders, shall be able to maintain their
proportional ownership interest in the Company. The purchase price for such
purchases shall be equal to the price per share received by the Company in the
issuance giving rise to the purchase right. This proportional purchase right
shall not apply to shares issued pursuant to the Share Exchange Agreement, any
rights or obligations referenced on Schedule 3.2, any shares of capital stock
issued by the Company in lieu of any fees payable in connection with the
Transaction to the Company's financial advisors, or any shares issued pursuant
to any stock option plan or employee benefit plan existing as of the date hereof
or approved by the Board of Directors of the Company. In the event the shares
are issued in connection with an acquisition or other transaction not involving
a financing, the Company will permit the Liberty Holders, the HMTF Holders and
the Gleacher Holders to
22
<PAGE>
purchase the appropriate number of shares in a separate transaction, with the
purchase price per share equal to the valuation per share of the Common Stock
established by the Board of Directors of the Company in the transaction giving
rise to the purchase right.
5.17 Modification of Share Exchange Agreement.
----------------------------------------
The Company shall not, and shall cause its Subsidiaries not to, amend,
modify or terminate the Share Exchange Agreement without the prior written
consent of the Liberty Holders and the HMTF Holders.
ARTICLE VI
COVENANTS OF THE PURCHASERS
Each Purchaser, severally as to itself only and not jointly with any other
Purchaser, hereby covenants as follows:
6.1 Agreement to Take Necessary and Desirable Actions.
-------------------------------------------------
Each Purchaser shall (a) subject to the satisfaction of the conditions set
forth in Section 7.2, execute and deliver each of the Equity Documents to which
it is a party and such other documents, certificates, agreements and other
writings and (b) take such other actions, in each case, as may be reasonably
necessary, desirable or requested by the Company in order to consummate or
implement the Transactions in accordance with the terms of this Agreement.
6.2 Compliance with Conditions; Commercially Reasonable Efforts.
-----------------------------------------------------------
Each Purchaser shall use all commercially reasonable efforts to cause all
of the obligations imposed upon it in this Agreement to be duly complied with,
and to cause the conditions precedent to the obligations of the Company in
Sections 7.1(a) and (b) (as they relate to such Purchaser) to be satisfied. Upon
the terms and subject to the conditions of this Agreement, each Purchaser will
use all commercially reasonable efforts to take, or cause to be taken, all
action, and to do, or cause to be done, all things necessary, proper or
advisable consistent with Applicable Law to consummate and make effective in the
most expeditious manner practicable the Transactions in accordance with the
terms of this Agreement. Nothing herein shall be construed to require a
Purchaser or any of its Affiliates to divest or otherwise rearrange the
composition of any assets or agree to any conditions or requirements which are,
or are reasonably likely to be, materially adverse or burdensome to such
Purchaser or its Affiliates, as applicable. Nothing set forth in this Section
6.2 shall impose any obligations with respect to any filing or approval under
the HSR Act, which requirements are the subject of Section 6.3.
6.3 HSR Act Notification.
--------------------
To the extent required by the HSR Act, each Purchaser shall, if it has not
already done so, (a) use all commercially reasonable efforts to file or cause to
be filed, as promptly as practicable after the execution and delivery of this
Agreement, with the United States Federal Trade Commission and the Antitrust
Division of the United States Department of Justice, all reports and other
documents required to be filed by it under the HSR Act concerning the
transactions
23
<PAGE>
contemplated hereby and (b) use all commercially reasonable efforts to promptly
comply with or cause to be complied with any requests by the United States
Federal Trade Commission or the Antitrust Division of the United States
Department of Justice for additional information concerning such transactions in
each case so that the waiting period applicable to this Agreement and the
transactions contemplated hereby under the HSR Act shall expire as soon as
practicable after the execution and delivery of this Agreement. Each Purchaser
agrees to request, and to cooperate with the Company in requesting, early
termination of any applicable waiting period under the HSR Act.
6.4 Consents and Approvals.
----------------------
Each Purchaser (a) shall use all commercially reasonable efforts to obtain
all necessary consents, waivers, authorizations and approvals of all
Governmental Authorities other than as expressly set forth in Section 6.3
regarding the HSR Act, and of all other Persons required in connection with the
execution, delivery and performance by such Purchaser of this Agreement or the
consummation of the Transactions and (b) shall diligently assist and cooperate
with the Company in preparing and filing all documents required to be submitted
by the Company to any Governmental Authority in connection with such
Transactions (which assistance and cooperation shall include, without
limitation, timely furnishing to the Company all information concerning such
Purchaser that counsel to the Company reasonably determines is required to be
included in such documents or would be helpful in obtaining any such required
consent, waiver, authorization or approval). Nothing herein shall be construed
to require a Purchaser or any of its Affiliates to divest or otherwise rearrange
the composition of any assets or agree to any conditions or requirements which
are, or are reasonably likely to be, materially adverse or burdensome to such
Purchaser or its Affiliates, as applicable.
6.5 Restrictions on Transfer.
------------------------
No Purchaser shall sell, assign, transfer, pledge, hypothecate, deposit in
a voting trust or otherwise dispose of any portion of the Securities (any such
disposition, a "Securities Transfer"), other than (a) to a Permitted Transferee
of such Purchaser that has agreed in writing (each, a "Permitted Transferee
Agreement") to be bound by the terms and provisions of this Section 6.5 to the
same extent that the transferring Purchaser would be bound if it beneficially
owned the Securities transferred to such Permitted Transferee or (b)(i) in any
transaction in compliance with Rule 144 under the Securities Act or any
successor rule or regulation, (ii) in a transaction exempt from the registration
requirements of the Securities Act or (iii) pursuant to a registration
statement. Each Purchaser shall promptly notify the Company of any Securities
Transfer to a Permitted Transferee of such Purchaser, which notification shall
include a Permitted Transferee Agreement executed by each Permitted Transferee
of such Purchaser to whom any Securities have been transferred.
6.6 Standstill.
----------
(a) Prior to the fifth anniversary of the Closing Date, no Liberty
Holder shall purchase any shares of Common Stock (or securities convertible into
or exchangeable for shares of Common Stock), other than from the Company, if
after giving effect thereto and to the shares of Common Stock that the Liberty
Holders would have the right to acquire on or prior to the fifth
24
<PAGE>
anniversary of the Closing Date upon conversion or exercise of securities
acquired by such Holders on the Closing Date, the Liberty Holders, taken as a
whole, would beneficially own more than 37% of the outstanding shares of Common
Stock (assuming that all shares of Common Stock that would be issuable upon the
conversion, on the fifth anniversary of the Closing Date, of all shares of
Series A Preferred Stock issued on the Closing Date are outstanding, but
otherwise calculated in accordance with Rule 13d-3(d)(1)(i) promulgated under
the Exchange Act). In no event will any Liberty Holder be deemed to be in
violation of the foregoing provision at any time that the aggregate voting power
of the outstanding voting securities of the Company owned by the Liberty
Holders, taken as a whole, does not exceed 25.1% of the aggregate voting power
of all outstanding voting securities of the Company.
(b) Prior to the fifth anniversary of the Closing Date, no HMTF
Holder shall purchase any shares of Common Stock (or securities convertible into
or exchangeable for shares of Common Stock), other than from the Company, if
after giving effect thereto and to the shares of Common Stock that the HMTF
Holders would have the right to acquire on or prior to the fifth anniversary of
the Closing Date upon conversion or exercise of securities acquired by such
Holders on the Closing Date, the HMTF Holders, taken as a whole, would
beneficially own more than 17.5% of the outstanding shares of Common Stock
(assuming that all shares of Common Stock that would be issuable upon the
conversion, on the fifth anniversary of the Closing Date, of all shares of
Series A Preferred Stock issued on the Closing Date are outstanding, but
otherwise calculated in accordance with Rule 13d-3(d)(1)(i) promulgated under
the Exchange Act).
(c) Prior to the fifth anniversary of the Closing Date, no Gleacher
Holder shall purchase any shares of Common Stock (or securities convertible into
or exchangeable for shares of Common Stock), other than from the Company, if
after giving effect thereto and to the shares of Common Stock that the Gleacher
Holders would have the right to acquire on or prior to the fifth anniversary of
the Closing Date upon conversion or exercise of securities acquired by such
Holders on the Closing Date, the Gleacher Holders, taken as a whole, would
beneficially own more than 3% of the outstanding shares of Common Stock
(assuming that all shares of Common Stock that would be issuable upon the
conversion, on the fifth anniversary of the Closing Date, of all shares of
Series A Preferred Stock issued on the Closing Date are outstanding, but
otherwise calculated in accordance with Rule 13d-3(d)(1)(i) promulgated under
the Exchange Act).
ARTICLE VII
CONDITIONS PRECEDENT TO CLOSING
7.1 Conditions to the Company's Obligations.
---------------------------------------
The obligations of the Company with respect to a Purchaser hereunder
required to be performed on the Closing Date shall be subject to the
satisfaction or waiver, at or prior to the Closing, of the following conditions:
(a) The representations and warranties of such Purchaser contained in
this Agreement shall have been true and correct when made and, in addition,
shall be repeated and
25
<PAGE>
true and correct in all material respects on and as of the Closing Date with the
same force and effect as though made on and as of the Closing Date.
(b) Such Purchaser shall have performed in all material respects all
obligations and agreements, and complied in all material respects with all
covenants contained in this Agreement to be performed and complied with by such
Purchaser at or prior to the Closing Date.
(c) Any applicable waiting period under the HSR Act with respect to
the purchase by such Purchaser shall have expired or been terminated.
(d) The Company shall have obtained all necessary consents, waivers,
authorizations and approvals of all Governmental Authorities and of all other
Persons required in connection with the execution, delivery and performance of
the Equity Documents or the consummation of the Issuance, such waivers to be
satisfactory in form and substance to the Company.
(e) Such Purchaser shall have entered into the Registration Rights
Agreement.
(f) The Shares to be purchased at the Closing shall be issued for an
aggregate amount of no less than $600,000,000.00.
7.2 Conditions to Each Purchaser's Obligations.
------------------------------------------
The obligations of a Purchaser hereunder required to be performed on the
Closing Date shall be subject to the satisfaction or waiver, at or prior to the
Closing, of the following conditions:
(a) The representations and warranties of the Company contained in
this Agreement (i) shall have been true and correct when made and (ii) shall be
(A) in the case of representations and warranties that are qualified as to
materiality or Material Adverse Effect, true and correct and (B) in all other
cases, true and correct in all material respects, in the case of clauses (A) and
(B), as of the Closing Date with the same force and effect as though made on and
as of the Closing Date.
(b) The Company shall have performed in all material respects all of
its obligations and agreements and complied in all material respects with all
covenants contained in this Agreement to be performed and complied with at or
prior to the Closing Date.
(c) The Company shall have entered into the Registration Rights
Agreement.
(d) The Company shall have filed the Certificate of Designation with
the Secretary of State of the State of Delaware.
(e) Any applicable waiting period under the HSR Act with respect to
the purchase by such Purchaser shall have expired or been terminated and no
litigation arising therefrom shall have been commenced and remain outstanding.
26
<PAGE>
(f) The Company shall have delivered to such Purchaser a certificate
executed on its behalf by a duly authorized representative, dated the Closing
Date, to the effect that each of the conditions specified in paragraph (a)
through (e) of this Section 7.2 has been satisfied.
(g) No provision of any Applicable Law, injunction, order or decree
of any Governmental Entity shall be in effect which has the effect of making the
Transactions illegal or shall otherwise restrain or prohibit the consummation of
the Transactions.
(h) Such Purchaser shall have received an opinion of (i) H. Don
Teague, General Counsel of the Company and (ii) O'Sullivan Graev & Karabell,
LLP, special counsel to the Company, in each case dated the Closing Date, and
addressed to such Purchaser, covering the matters set forth in Exhibit D, in
form and substance reasonably acceptable to the Purchaser.
(i) Such Purchaser shall have received certificates representing the
Securities purchased by such Purchaser concurrently with the Company's receipt
of the Purchase Price for such Securities.
(j) There shall not have occurred (i) any event, circumstance,
condition, fact, effect or other matter which has had or could reasonably be
expected to have a material adverse effect (x) on the business, assets,
financial condition, prospects, or results of operations of the Company and its
Subsidiaries taken as a whole or (y) on the ability of the Company and its
Subsidiaries to perform on a timely basis any material obligation under this
Agreement or the other Equity Documents or to consummate the Issuance
contemplated hereby; or (ii) any material disruption of or material adverse
change in financial, banking or capital market conditions.
(k) The Share Exchange Agreement shall be in full force and effect
and there shall not have been any amendment or waiver of any of its material
terms or conditions.
(l) The Company shall have delivered duly executed copies of the
Management Rights Agreements to the HMTF Funds.
(m) The Company shall have made all filings with, given all notices
to, and received all approvals from, all Governmental Authorities (including,
without limitation, the Federal Communications Commission and state public
utility commissions) required in connection with the consummation of the
Transactions, unless the failure to make such filings, give such notices or
receive such approvals would not, individually or in the aggregate, have a
Material Adverse Effect or a material adverse effect on the ability of the
Company to consummate the Transactions.
ARTICLE VIII
MISCELLANEOUS
8.1 Survival; Indemnification.
-------------------------
(a) All representations, warranties, covenants and agreements
contained in this Agreement shall survive the Closing for 18 months (except (i)
covenants and agreements that are required to be performed after the Closing
Date (including without limitation the covenants and
27
<PAGE>
agreements contained in Sections 5.1(b), 5.2, 5.8, 5.9, 5.11, 5.12, 5.13, 5.14,
5.15, 5.16, 5.17, 6.5 and 6.6) and (ii) Sections 3.12 and 3.13 and the last
sentence of Section 3.2(a), which shall survive indefinitely). Notwithstanding
the foregoing, with respect to claims asserted pursuant to this Section before
the expiration of the applicable representation, warranty, covenant or
agreement, such claims shall survive until the date they are finally adjudicated
or otherwise resolved.
(b) The Company agrees to indemnify and hold harmless each Purchaser
and each Purchaser Affiliate (each an "Indemnified Person"), from and against
(and to reimburse each indemnified person as the same are incurred) any and all
losses (including, but not limited to, impairment of the value of the Shares and
Warrants as of the date such loss first becomes known, but excluding
consequential damages), claims, damages, liabilities, costs and expenses
(collectively, "Losses") to which any Indemnified Person may become subject or
which any Indemnified Person may incur based upon, arising out of, or in
connection with (i) a breach of any representation, warranty or covenant of this
Agreement by the Company or (ii) any claim, litigation, investigation or
proceeding brought by or on behalf of any Person other than the Company relating
to the Issuance, and to reimburse each Indemnified Person upon demand for any
reasonable legal or other reasonable out of pocket expenses incurred in
connection with investigating or defending any of the foregoing, provided the
maximum amount indemnifiable to each Purchaser (and its successors or assigns)
under clause (i) shall not exceed the purchase price of the Securities purchased
by such Purchaser.
(c) If a Person entitled to indemnity hereunder (an "Indemnified
Party") asserts that the Company (the "Indemnifying Party") has become obligated
to the Indemnified Party pursuant to Section 8.1(b), or if any suit, action,
investigation, claim or proceeding is begun, made or instituted as a result of
which the Indemnifying Party may become obligated to the Indemnified Party
hereunder, the Indemnified Party shall notify the Indemnifying Party promptly
and shall cooperate with the Indemnifying Party, at the Indemnifying Party's
expense, to the extent reasonably necessary for the resolution of such claim or
in the defense of such suit, action or proceedings, including making available
any information, documents and things in the possession of the Indemnified
Party. Notwithstanding the foregoing notice requirement, the right to
indemnification hereunder shall not be affected by any failure to give, or delay
in giving, notice unless, and only to the extent that, the rights and remedies
of the Indemnifying Party shall have been materially prejudiced as a result of
such failure or delay.
(d) In fulfilling its obligations under this Section 8.1, after the
Indemnifying Party has provided each Indemnified Party with a written notice of
its acceptance of liability under this Section 8.1, as between such Indemnified
Party and the Indemnifying Party, the Indemnifying Party shall have the right to
investigate, defend, settle or otherwise handle, with the aforesaid cooperation,
any claim, suit, action or proceeding brought by a third party in such manner as
the Indemnifying Party may in its sole discretion reasonably deem appropriate;
provided, that (i) counsel retained by the Indemnifying Party is reasonably
satisfactory to the Indemnified Party and (ii) the Indemnifying Party will not
consent to any settlement or entry of judgment imposing any obligations on any
other party hereto other than financial obligations for which such party will be
indemnified hereunder, unless such party has consented in writing to such
settlement or judgment (which consent may be given or withheld in its sole
discretion) and (iii) the Indemnifying Party will not consent to any settlement
or entry of judgment unless, in connection
28
<PAGE>
therewith, the Indemnifying Party obtains a full and unconditional release of
the Indemnified Party from all liability with respect to such suit, action,
investigation claim or proceeding. Notwithstanding the Indemnifying Party's
election to assume the defense or investigation of such claim, action or
proceeding, the Indemnified Party shall have the right to employ separate
counsel and to participate in the defense or investigation of such claim, action
or proceeding, which participation shall be at the expense of the Indemnifying
Party, if (i) on the advice of counsel to the Indemnified Party use of counsel
of the Indemnifying Party's choice could reasonably be expected to give rise to
a material conflict of interest, (ii) the Indemnifying Party shall not have
employed counsel reasonably satisfactory to the Indemnified Party to represent
the Indemnified Party within a reasonable time after notice of the assertion of
any such claim or institution of any such action or proceeding, (iii) if the
Indemnifying Party shall authorize the Indemnified Party to employ separate
counsel at the Indemnifying Party's expense or (iv) such action shall seek
relief other than monetary damages against the Indemnified Party.
(e) The Company and the Purchasers agree that any payment of Losses
made hereunder will be treated by the parties on their tax returns as an
adjustment to the Purchase Price. If, notwithstanding such treatment by the
parties, a final determination (which shall include the form 870-AD or successor
form) with respect to the Indemnified Party or any of its Affiliates causes any
such payment not to be treated as an adjustment to Purchase Price, then the
Indemnifying Party shall indemnify the Indemnified Party for any taxes payable
by the Indemnified Party or any subsidiary by reason of the receipt of such
payment (including any payments under this Section 8.1(e)), determined at an
assumed marginal tax rate equal to the highest marginal tax rate then in effect
for corporate taxpayers in the relevant jurisdiction.
8.2 Notices.
-------
All notices, demands, requests, consents, approvals or other communications
(collectively, "Notices") required or permitted to be given hereunder or which
are given with respect to this Agreement shall be in writing and shall be
personally served, delivered by reputable air courier service with charges
prepaid, or transmitted by hand delivery, telegram, telex or facsimile,
addressed as set forth below, or to such other address as such party shall have
specified most recently by written notice. Notice shall be deemed given on the
date of service or transmission if personally served or transmitted by telegram,
telex or facsimile. Notice otherwise sent as provided herein shall be deemed
given on the next business day following delivery of such notice to a reputable
air courier service.
29
<PAGE>
To the Company:
ICG Communications, Inc.
161 Inverness Drive West
P.O. Box 6742
Englewood, Colorado 80155-6742
Attn: H. Don Teague, Executive Vice President,
General Counsel and Secretary
Telephone: (303) 414-5444
Fax: (303) 414-8839
with a copy to:
O'Sullivan Graev & Karabell, LLP
30 Rockefeller Plaza
New York, New York 10112
Attn: Audrey A. Rohan
Telephone: (212) 408-2419
Fax: (212) 728-5950
To the Purchasers:
(as to matters relating to the HMTF Purchasers)
To the appropriate member of the HMTF Group
c/o Hicks, Muse, Tate & Furst Incorporated
1325 Avenue of the Americas
25th Floor
New York, New York 10019
Attn: Michael J. Levitt
Telephone: (212) 424-1400
Fax: (212) 424-1450
30
<PAGE>
with a copy to:
Hicks, Muse, Tate & Furst Incorporated
200 Crescent Court, Suite 1600
Dallas, Texas 75201
Attn: Lawrence D. Stuart
Telephone: (214) 740-7300
Fax: (214) 720-7888
with a copy to:
Vinson & Elkins L.L.P.
1325 Avenue of the Americas (17th Floor)
New York, New York 10019
Attn: Eric S. Shube
Telephone: (917) 206-8005
Fax: (917) 206-8100
(as to matters relating to Liberty)
To:
Liberty Media Corporation
9197 South Peoria Street
Englewood, Colorado 80112
Attn: Gary S. Howard
Telephone: (720) 875-5400
Fax: (720) 875-5268
with copies to:
Liberty Media Corporation
9197 South Peoria Street
Englewood, Colorado 80112
Attn: Legal Department
Telephone: (720) 875-5400
Fax: (720) 875-5382
and:
Baker Botts, L.L.P.
599 Lexington Avenue
New York, New York 10022
Attn: Elizabeth M. Markowski
Telephone: (212) 705-5000
Fax: (212) 705-5125
31
<PAGE>
(as to matters relating to the Gleacher Purchaser)
To:
Gleacher & Co.
660 Madison Avenue, 17th Floor
New York, New York 10019
Attn: Micheal E. Garstin
Telephone: (212) 418-4200
Fax: (212) 418-4599
8.3 Governing Law.
-------------
This Agreement shall be governed by, interpreted under, and construed in
accordance with the laws of the State of New York, regardless of the laws that
might otherwise govern under applicable principles of conflicts of law thereof.
8.4 Termination.
-----------
(a) This Agreement may be terminated as between the Company and any
Purchaser (i) at any time prior to the Closing Date by mutual written agreement
of the Company and such Purchaser, (ii) if the Closing shall not have occurred
on or prior to May 31, 2000 either the Company or such Purchaser, at any time
after May 31, 2000, provided that the right to terminate this Agreement under
this Section 8.4(a)(ii) shall not be available to any party whose failure to
fulfill any obligation under this Agreement was the cause of or resulted in the
failure of the Closing to occur on or before such date, (iii) if any
Governmental Authority shall have issued a nonappealable final order, decree or
ruling or taken any other action having the effect of permanently restraining,
enjoining or otherwise prohibiting the Transactions, by either the Company or
such Purchaser, (iv) if either the Company or such Purchaser shall have breached
any of its material obligations under this Agreement, by the non-breaching
party, or (v) if an event described in Section 7.2(j) shall have occurred, by
such Purchaser. Any party desiring to terminate this Agreement pursuant to
clauses 8.4(a)(ii), (iii), (iv) or (v) shall promptly give notice of such
termination to the other party.
(b) If this Agreement is terminated as between the Company and a
Purchaser, as permitted by Section 8.4(a), such termination shall be without
liability of any party (or any stockholder, director, officer, partner,
employee, agent, consultant or representative of such party) to any other party
to this Agreement; provided that if such termination shall result from the
willful (a) failure of any party to fulfill a condition to the performance of
the obligations of the other party, (b) failure to perform a covenant of this
Agreement or (c) breach by any party hereto of any representation or warranty
contained herein, such failing or breaching party shall be fully liable for any
and all losses (excluding consequential damages) incurred or suffered by the
other party as a result of such failure or breach. The provisions of Sections
8.1(b)-(d), 8.2, 8.3, this Section 8.4, Sections 8.5, 8.8, 8.10, 8.11, 8.12,
8.13, 8.14, 8.16, 8.17, 8.18 and 8.20 shall survive any termination hereof
pursuant to Section 8.4(a).
32
<PAGE>
8.5 Entire Agreement.
----------------
As between the Company and each Purchaser, this Agreement and the other
Equity Documents (including all agreements entered into pursuant hereto and
thereto and all certificates and instruments delivered pursuant hereto and
thereto) constitute the entire agreement of the parties with respect to the
subject matter hereof and supersede all prior and contemporaneous agreements,
representations, understandings, negotiations and discussions between the
parties, whether oral or written, with respect to the subject matter hereof.
8.6 Modifications and Amendments.
----------------------------
No amendment, modification or termination of this Agreement as between the
Company and a Purchaser shall be binding unless executed in writing by the
Company and such Purchaser intending to be bound thereby.
8.7 Waivers and Extensions.
----------------------
Any party to this Agreement may waive any condition, right, breach or
default that such party has the right to waive, provided that such waiver will
not be effective against the waiving party unless it is in writing, is signed by
such party, and specifically refers to this Agreement. Waivers may be made in
advance or after the right waived has arisen or the breach or default waived has
occurred. Any waiver may be conditional. No waiver of any breach of any
agreement or provision herein contained shall be deemed a waiver of any
preceding or succeeding breach thereof nor of any other agreement or provision
herein contained. No waiver or extension of time for performance of any
obligations or acts shall be deemed a waiver or extension of the time for
performance of any other obligations or acts.
8.8 Titles and Headings.
-------------------
Titles and headings of sections of this Agreement are for convenience only
and shall not affect the construction of any provision of this Agreement.
8.9 Exhibits and Schedules.
----------------------
Each of the exhibits and schedules referred to herein and attached hereto
is an integral part of this Agreement and is incorporated herein by reference.
8.10 Expenses.
--------
All costs and expenses incurred in connection with this Agreement shall be
paid by the party incurring such cost or expense; provided, however, that the
-------- -------
Company shall pay the filing fees in respect of any filings pursuant to the HSR
Act.
8.11 Press Releases and Public Announcements.
---------------------------------------
All public announcements or disclosures relating to the Issuance or this
Agreement shall be made only if mutually agreed upon by the Company and the
Purchasers, except to the extent such disclosure is, in the opinion of counsel,
required by law or by regulation of any applicable
33
<PAGE>
national stock exchange or Commission recognized trading market; provided that
(a) any such required disclosure shall only be made, to the extent consistent
with law and regulation of any applicable national stock exchange or Commission
recognized trading market, after consultation with each Purchaser and the
Company and (b) no such announcement or disclosure (except as required by law or
by regulation of any applicable national stock exchange or Commission recognized
trading market) shall identify any Purchaser without such Purchaser's prior
consent.
8.12 Assignment; No Third Party Beneficiaries.
----------------------------------------
This Agreement and the rights, duties and obligations hereunder may not be
assigned or delegated by the Company without the prior written consent of the
Purchasers, and may not assigned or delegated by any Purchaser without the
Company's prior written consent except that each Purchaser may assign any or all
of its rights and obligations under this Agreement to any one or more of its
Affiliates. Any assignment or delegation of rights, duties or obligations
hereunder made by the Company without the prior written consent of the
Purchasers, shall be void and of no effect. This Agreement and the provisions
hereof shall be binding upon and shall inure to the benefit of each of the
parties and their respective successors and permitted assigns. This Agreement is
not intended to confer any rights or benefits on any Persons other than the
parties hereto, except as expressly set forth in Section 5.2, Section 8.1, this
Section 8.12 or Section 8.20.
8.13 Severability.
------------
This Agreement shall be deemed severable, and the invalidity or
unenforceability of any term or provision hereof shall not affect the validity
or enforceability of this Agreement or of any other term or provision hereof.
Furthermore, in lieu of any such invalid or unenforceable term or provision, the
parties hereto intend that there shall be added as a part of this Agreement a
provision as similar in terms to such invalid or unenforceable provision as may
be possible and be valid and enforceable.
8.14 Counterparts.
------------
This Agreement may be executed in counterparts, each of which shall be
deemed an original, but all of which taken together shall constitute one and the
same instrument.
8.15 Further Assurances.
------------------
As between the Company and a Purchaser, each party hereto, upon the
request of any other party hereto, shall do all such further acts and execute,
acknowledge and deliver all such further instruments and documents as may be
necessary or desirable to carry out the transactions contemplated by this
Agreement, including, in the case of the Company, such acts, instruments and
documents as may be necessary or desirable to convey and transfer to each
Purchaser the Shares and Warrants to be purchased by it hereunder.
8.16 Remedies Cumulative.
-------------------
The remedies provided herein shall be cumulative and shall not preclude
the assertion by any party hereto of any other rights or the seeking of any
remedies against the other party hereto.
34
<PAGE>
8.17 Several Liability of the Purchasers.
-----------------------------------
Nothing in this Agreement (including, without limitation, Article VI)
shall be construed to impose on any Purchaser any liability for any action or
failure to act of any other Purchaser, including any breach of this Agreement by
any such other Purchaser.
8.18 No Duty to Other Purchasers.
---------------------------
Each Purchaser confirms with each other Purchaser that such Purchaser has
conducted its own due diligence in connection with its investment in the
Securities and the other Purchasers may therefore have information different
from, or additional to, the information possessed by such Purchaser. In
addition, although certain of such other Purchasers (the "Supplying Purchasers")
may have shared information received by them (including information contained in
third party reports prepared for such other Purchasers) with such Purchaser, no
representation or warranty is being made with respect to such information by any
Supplying Purchaser or any such third party. Nothing in this Section 8.18 is
meant to limit any duty, obligation or liability the Company may have to any
Purchaser under this Agreement or otherwise.
8.19 Specific Performance.
--------------------
The parties hereto agree that the remedy at law for any breach of this
Agreement may be inadequate, and that as between the Company and a Purchaser any
party by whom this Agreement is enforceable shall be entitled to specific
performance in addition to any other appropriate relief or remedy. Such party
may, in its sole discretion, apply to a court of competent jurisdiction for
specific performance or injunctive or such other relief as such court may deem
just and proper in order to enforce this Agreement as between the Company and a
Purchaser, or prevent any violation hereof, and, to the extent permitted by
applicable as between the Company and a Purchaser law, each party waives any
objection to the imposition of such relief.
8.20 No Purchaser Affiliate Liability.
--------------------------------
No Purchaser Affiliate shall have any liability or obligation of any
nature whatsoever in connection with or under this Agreement or the transactions
contemplated hereby, and the Company hereby waives and releases all claims of
any such liability and obligation, it being understood that no such Person or
entity (other than Purchaser) shall be liable for or in respect of Purchaser's
obligations under this Agreement or with respect to the transactions
contemplated hereby.
35
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date first above written.
ICG COMMUNICATIONS, INC.
By: ____________________________________
Name:
Title:
HMTF BRIDGE ICG, LLC
By: ____________________________________
Name:
Title:
LIBERTY MEDIA CORPORATION
By: ____________________________________
Name:
Title:
GLEACHER/ICG INVESTORS, LLC
By: ____________________________________
Name: Jeffrey Tepper
Title: Managing Director
<PAGE>
SCHEDULE I
Number of Number of
Purchaser Shares Warrants Purchase Price
- -------------------------- --------- ----------- ----------------
HMTF Bridge ICG, LLC 230,000 3,066,667 $230,000,000
Liberty Media Corporation 500,000 6,666,667 $500,000,000
Gleacher/ICG Investors LLC 20,000 266,666 $ 20,000,000
<PAGE>
Exhibit 7(d)
AMENDMENT, dated as of April 10, 2000 (the
"Agreement"), between ICG Communications, Inc., a
---------
Delaware corporation (the "Company"), and the
-------
Purchasers whose signatures appear below (the
"Purchasers").
----------
WHEREAS, reference is made to the Preferred Stock and Warrant Purchase
Agreement dated as of February 27, 2000 (the "Purchase Agreement"), by and
------------------
between the Company and the Purchasers. Capitalized terms used herein but not
otherwise defined shall be given the meaning ascribed to them in the Purchase
Agreement;
WHEREAS, pursuant to an Assignment of Rights Under Preferred Stock and
Warrant Purchase Agreement dated as of March 8, 2000, HM4 ICG Qualified Fund,
LLC, HM4 ICG Private Fund, LLC, HM PG-IV ICG, LLC, HM 4-SBS ICG Coinvestors,
LLC, and HM 4-EQ ICG Coinvestors became parties to the Purchase Agreement;
WHEREAS, in accordance with Section 8.6 of the Purchase Agreement, the
parties hereto desire to amend the Purchase Agreement as more fully set forth
below in order to reflect (1) the redesignation of the Series A Preferred Stock
into Series A-1 Preferred Stock (as defined below), Series A-2 Preferred Stock
(as defined below) and Series A-3 Preferred Stock (as defined below), (2) the
increase of the initial Liquidation Preference per share of Series A Preferred
Stock from $1,000 to $10,000 per share and the concomitant reduction in the
number of shares of Series A Preferred Stock being issued by the Company and
purchased by the Purchasers and (3) related conforming changes;
NOW, THEREFORE, in consideration of the foregoing, and of the
covenants and agreements contained herein, the parties hereby agree as follows:
1. Amendment of Recitals. The recitals of the Purchase Agreement shall be
---------------------
amended by deleting the first "Whereas" clause in its entirety and substituting,
in lieu thereof, the following:
"WHEREAS, the Company proposes, subject to the terms and
conditions set forth herein, to issue and sell to the
Purchasers 50,000 shares of its 8% Series A-1 Convertible
Preferred Stock due 2015, initial liquidation preference
$10,000 per share, par value $0.01 per share (the "Series A-
1 Preferred Stock"), 23,000 shares of its 8% Series A-2
Convertible Preferred Stock due 2015, initial liquidation
preference $10,000 per share, par value $0.01 per share (the
"Series A-2 Preferred Stock") and 2,000 shares of its 8%
Series A-3 Convertible Preferred Stock due 2015, initial
liquidation preference $10,000 per share, par value $0.01
per share (the "Series A-3 Preferred Stock" and together
with the Series A-1 Preferred Stock and the Series A-2
Preferred Stock, the "Series A Preferred Stock");"
<PAGE>
2. Amendment of Definitions. Section (a) of Article I is hereby amended
------------------------
by inserting or amending, as the case may be, the following definitions:
""Amending Agreement" means the Amendment dated as of April 10,
------------------
2000 by and among the Company and the other parties listed on the signature
pages thereof."
""Equity Documents" means this Agreement, the Registration Rights
----------------
Agreement, the Certificate of Designation, the Management Rights Agreements, the
Share Exchange Agreement, the Warrants and the Amending Agreement."
""HMTF Issued Series A Preferred Shares" shall mean the shares of
-------------------------------------
Series A-2 Preferred Stock issued to members of the HMTF Group on the Closing
Date under this Agreement."
""Liberty Issued Series A Preferred Shares" shall mean the shares
----------------------------------------
of Series A-1 Preferred Stock issued to members of the Liberty Group on the
Closing Date under this Agreement."
""Registration Rights Agreement" means the Registration Rights
-----------------------------
Agreement dated as of April 7, 2000, by and among the Company and the
Purchasers, in the form attached hereto as Exhibit C."
""Series A-1 Preferred Stock" has the meaning set forth in the
--------------------------
first recital to this Agreement."
""Series A-2 Preferred Stock" has the meaning set forth in the
--------------------------
first recital to this Agreement."
""Series A-3 Preferred Stock" has the meaning set forth in the
--------------------------
first recital to this Agreement."
3. Amendment of Section 2.1. The Purchase Agreement is hereby amended by
------------------------
deleting "one thousand dollars ($1,000) per share" in the fifth line of Section
2.1 and substituting, in lieu thereof, "ten thousand dollars ($10,000) per
share."
4. Amendment of Section 5.2.
------------------------
(a) The Purchase Agreement is hereby amended by deleting Section
5.2(a) in its entirety and substituting, in lieu thereof, the following:
"For so long as the members of the HMTF Group in the
aggregate own any combination of shares of Common Stock and
Series A-2 Preferred Stock representing an amount of Common
Stock (on an as-converted basis) that, taken together,
equals at least 4,107,143 shares of Common Stock (as
adjusted for any stock dividends, splits and combinations
and similar events affecting the Common Stock from time to
time), the holders of a majority of the then outstanding
HMTF Shares shall have the right to designate one
2
<PAGE>
person for election to the Company's Board of Directors or,
if greater, such number of persons (rounded up to the next
whole number) equal to 10% of the then authorized number of
members of the Company's Board of Directors (each such
person an "HMTF Director"); provided, however, that the
right to designate an HMTF Director under this Section 5.2
shall be suspended at any time that the holders of the
Series A-2 Preferred Stock have the right to elect a person
to the Board of Directors under the terms of the Series A-2
Preferred Stock set forth in the Certificate of Designation.
In the event the holders of a majority of the then
outstanding HMTF Shares are entitled under this Section 5.2
to designate an HMTF Director for election to the Company's
Board of Directors and so designate an HMTF Director, they
shall so notify the Company in writing and the Company shall
use its best efforts (a) to cause the size of the Board of
Directors to be increased by one and the vacancy created
thereby to be filled by electing an HMTF Director and (b) in
connection with the meeting of stockholders of the Company
next following such election, to cause an HMTF Director to
be nominated for election as a director by the stockholders
and to cause the HMTF Director to be so elected. If the
holders of a majority of the then outstanding HMTF Shares
are entitled under this Section 5.2 to designate an HMTF
Director for election to the Company's Board of Directors
and a vacancy shall exist in the office of an HMTF Director,
the holders of a majority of the then outstanding HMTF
Shares shall be entitled to designate a successor and the
Board of Directors shall use its best efforts to (x) elect
such successor and (y) in connection with the meeting of
stockholders of the Company next following such election,
cause such successor to be nominated for election as
director by the stockholders and to be elected."
(b) The Purchase Agreement is hereby amended by deleting Section 5.2(b)(i)
in its entirety and substituting, in lieu thereof, the following:
"For so long as the members of the Liberty Group in the
aggregate own any combination of shares of Common Stock and
Series A-1 Preferred Stock representing an amount of Common
Stock (on an as-converted basis) that, taken together,
equals at least 2,687,571 shares of Common Stock (as
adjusted for any stock dividends, splits and combinations
and similar events affecting the Common Stock from time to
time), the members of the Liberty Group, voting together as
a single class by a plurality of the votes cast or by the
written consent of a majority in interest of such members,
shall have a right to designate one person for election to
the Company's Board of Directors or, if greater, such number
of persons (rounded up to the next whole number) equal to
10% of the then authorized number of members of the
Company's Board
3
<PAGE>
of Directors (each such person a "Liberty Director");
provided, however, that the right to designate a Liberty
Director under this Section 5.2 shall be suspended at any
time that the holders of the Series A-1 Preferred Stock have
the right to elect a person to the Board of Directors under
the terms of the Series A-1 Preferred Stock set forth in the
Certificate of Designation. In the event the members of the
Liberty Group are entitled under this Section 5.2 to
designate the Liberty Director for election to the Company's
Board of Directors and elect to so designate a Liberty
Director, they shall so notify the Company in writing and
the Company shall use its best efforts (a) to cause the size
of the Board of Directors to be increased by one and the
vacancy created thereby to be filled by electing a Liberty
Director and (b) in connection with the meeting of
stockholders of the Company next following such election, to
cause a Liberty Director to be nominated for election as
director by the stockholders and to cause the Liberty
Director to be so elected. If the members of the Liberty
Group are entitled under this Section 5.2 to designate a
Liberty Director for election to the Company's Board of
Directors and a vacancy shall exist in the office of a
Liberty Director, the members of the Liberty Group, voting
together as a single class by a plurality of the votes cast
or by the written consent of a majority in interest of such
members, shall be entitled to designate a successor and the
Board of Directors shall use its best efforts to (x) elect
such successor and (y) in connection with the meeting of
stockholders of the Company next following such election,
cause such successor to be nominated for election as
director by the stockholders and to be elected."
(c) The Purchase Agreement is hereby amended by deleting Section
5.2(b)(ii) in its entirety and substituting, in lieu thereof, the following:
"For so long as the members of the Liberty Group own any
combination of shares of Common Stock and Series A-1
Preferred Shares representing an amount of Common Stock (on
an as-converted basis) that, taken together, equals
8,928,571 shares of Common Stock (as adjusted for any stock
dividends, splits and combinations and similar events
affecting the Common Stock from time to time), the members
of the Liberty Group, voting together as a single class by a
plurality of the votes cast or by the written consent of a
majority in interest of such members, shall have a right, in
addition to the rights set forth in clause (i) above, to
designate one additional person for election to the
Company's Board of Directors or, if greater, such number of
additional persons (rounded up to the next whole number)
equal to 10% of the then authorized number of members of the
Company's Board of Directors (each such person an
"Additional Liberty Director"); provided, however, that the
right to designate an Additional
4
<PAGE>
Liberty Director under this Section 5.2 shall be suspended
at any time that the holders of the Series A-1 Preferred
Stock have the right to elect a person to the Board of
Directors under the terms of the Series A-1 Preferred Stock
set forth in the Certificate of Designation. In the event
the members of the Liberty Group are entitled under this
Section 5.2 to designate an Additional Liberty Director for
election to the Company's Board of Directors and elect to so
designate an Additional Liberty Director, they shall so
notify the Company in writing and the Company shall use its
best efforts (a) to cause the size of the Board of Directors
to be increased by one and the vacancy created thereby to be
filled by electing an Additional Liberty Director and (b) in
connection with the meeting of stockholders of the Company
next following such election, to cause an Additional Liberty
Director to be nominated for election as director by the
stockholders and to cause an Additional Liberty Director to
be so elected. If the members of the Liberty Group are
entitled under this Section 5.2 to designate an Additional
Liberty Director for election to the Company's Board of
Directors and a vacancy shall exist in the office of an
Additional Liberty Director, the members of the Liberty
Group, voting together as a single class by a plurality of
the votes cast or by the written consent of a majority in
interest of such members, shall be entitled to designate a
successor and the Board of Directors shall use its best
efforts to (x) elect such successor and (y) in connection
with the meeting of stockholders of the Company next
following such election, cause such successor to be
nominated for election as director by the stockholders and
to be elected."
5. Amendment of Section 5.16. Section 5.16 of the Purchase Agreement is
-------------------------
hereby amended by deleting the third sentence in it entirety and substituting,
in lieu thereof, the following sentence:
"This proportional purchase right shall not apply to shares
issued pursuant to the Share Exchange Agreement, any rights
or obligations referenced on Schedule 3.2, any shares of
capital stock issued by the Company in lieu of any fees
payable in connection with the Transaction to the Company's
financial advisors, any shares issued pursuant to any stock
option plan or arrangement or employee benefit plan or
arrangement existing as of the date hereof or hereafter
approved by the Board of Directors of the Company or the
shares of Common Stock issued from time to time upon
conversion of the Series A Preferred Stock or upon exercise
of the Warrants."
6. Amendment of Schedule I. Schedule I to the Purchase Agreement is
-----------------------
hereby amended by deleting it in its entirety and substituting, in lieu thereof,
Schedule I attached hereto.
5
<PAGE>
7. No Other Waivers. Except as expressly provided in this Agreement, each
----------------
of the terms and provisions of the Purchase Agreement shall remain in full force
and effect in accordance with its terms.
8. Counterparts. This Agreement may be executed in one or more
------------
counterparts, each of which shall be deemed to be an original, but all of which
taken together shall constitute one and the same instrument.
9. Governing Law. This Agreement shall be governed by, and construed in
-------------
accordance with, the laws of the State of New York (without giving effect to
principles of conflicts of law).
10. Headings. The headings used herein are for convenience of reference
--------
only and shall not affect the construction of, nor shall they be taken in
consideration in interpreting, this Agreement.
6
<PAGE>
IN WITNESS WHEREOF, the undersigned have duly executed and delivered
this Amendment as of the date first written above.
ICG COMMUNICATIONS, INC.
By:______________________________________
Name: H. Don Teague
Title: Executive Vice President
HMTF BRIDGE ICG, LLC
By:______________________________________
Name:
Title:
HM4 ICG QUALIFIED FUND, LLC
By:______________________________________
Name:
Title:
HM4 ICG PRIVATE FUND, LLC
By:______________________________________
Name:
Title:
HM PG-IV ICG, LLC
By:______________________________________
Name:
Title:
HM 4-SBS ICG COINVESTORS, LLC
By:______________________________________
Name:
Title:
HM 4-EQ ICG COINVESTORS, LLC
By:______________________________________
Name:
Title:
LIBERTY MEDIA CORPORATION
By:______________________________________
Name:
Title:
GLEACHER/ICG INVESTORS, LLC
By:______________________________________
Name:
Title:
<PAGE>
SCHEDULE I
<TABLE>
<CAPTION>
Series of Number
Preferred of Preferred Number of Purchase Price
Purchasers Stock Shares Warrants of the Shares
- ---------- ------------- ------------------ --------------- -------------------
<S> <C> <C> <C> <C>
Liberty Media Corporation Series A-1 50,000 6,666,667 $500,000,000
HMTF Bridge ICG, LLC Series A-2 11,500 1,533,334 $115,000,000
HM4 ICG Qualified Fund, LLC Series A-2 10,464 1,395,253 $104,644,000
HM4 ICG Private Fund, LLC Series A-2 74 9,885 $ 741,000
HM PG-IV ICG, LLC Series A-2 557 74,281 $ 5,571,000
HM 4-SBS ICG Coinvestors, LLC Series A-2 251 33,412 $ 2,506,000
HM 4-EQ ICG Coinvestors, LLC Series A-2 154 20,502 $ 1,538,000
Gleacher/ICG Investors LLC Series A-3 2,000 266,666 $ 20,000,000
</TABLE>
<PAGE>
EXHIBIT 7(e)
================================================================================
REGISTRATION RIGHTS AGREEMENT
between
ICG COMMUNICATIONS, INC.
AND
THE PURCHASERS LISTED ON SCHEDULE I
dated as of April 7, 2000
================================================================================
TABLE OF CONTENTS
<TABLE>
<CAPTION>
<S> <C>
ARTICLE I DEFINITIONS............................................... 1
1.1 Definitions.................................................. 1
1.2 Internal References.......................................... 3
ARTICLE II REGISTRATION RIGHTS...................................... 3
2.1 Demand Registration.......................................... 3
2.2 Piggyback Registration....................................... 6
2.3 Shelf Registration........................................... 7
ARTICLE III REGISTRATION PROCEDURES................................. 9
3.1 Filings; Information......................................... 9
3.2 Registration Expenses........................................ 13
ARTICLE IV INDEMNIFICATION AND CONTRIBUTION......................... 14
4.1 Indemnification by the Company............................... 14
4.2 Indemnification by Selling Holders........................... 15
4.3 Conduct of Indemnification Proceedings....................... 15
4.4 Contribution................................................. 16
ARTICLE V MISCELLANEOUS............................................. 16
5.1 Participation in Underwritten Registrations.................. 16
5.2 Rule 144..................................................... 17
5.3 Holdback Agreements.......................................... 17
5.4 Termination.................................................. 18
5.5 Amendments, Waivers, Etc..................................... 18
5.6 Counterparts................................................. 18
5.7 Entire Agreement............................................. 18
5.8 Governing Law................................................ 18
5.9 Assignment of Registration Rights............................ 18
</TABLE>
<PAGE>
This REGISTRATION RIGHTS AGREEMENT (the
"Agreement"), is made as of April 7, 2000, by and
---------
between ICG Communications, Inc., a Delaware
corporation (the "Company") and the entities
-------
listed on Schedule I to this Agreement.
WHEREAS, the Company, Liberty Media Corporation, HMTF Bridge ICG, LLC
and Gleacher/ICG Investors LLC entered into a Preferred Stock and Warrant
Purchase Agreement dated as of February 27, 2000 (the "Stock Purchase
--------------
Agreement");
- ---------
WHEREAS, pursuant to an Assignment of Rights under Preferred Stock and
Warrant Purchase Agreement dated as of March 8, 2000, the remaining Initial HMTF
Holders (as defined below) became parties to the Stock Purchase Agreement;
WHEREAS, it is a condition precedent to the closing of the
transactions contemplated in the Stock Purchase Agreement that the parties
hereto execute and deliver this Agreement;
NOW THEREFORE, in consideration of the premises, mutual promises and
covenants contained in this Agreement and intending to be legally bound, the
parties hereto hereby agree as follows:
ARTICLE I
DEFINITIONS
1.1 Definitions.
-----------
Terms defined in the Stock Purchase Agreement are used herein as therein
defined except as otherwise indicated below. In addition, the following terms,
as used herein, have the following meanings:
"Commission" means the Securities and Exchange Commission.
----------
"Demand Registration" means a registration under the Securities Act
-------------------
requested in accordance with Section 2.1.
"Gleacher Holder" means Gleacher/ICG Investors LLC.
---------------
"HMTF Holders" means the Initial HMTF Holders and any direct or
------------
indirect transferee of any Registrable Securities initially held by the Initial
HMTF Holders.
"Holders" means, collectively, the HMTF Holders, the Liberty Holders
-------
and the Gleacher Holder (including their respective Affiliates) and any direct
or indirect transferee of any Registrable Securities held by any of such
Persons.
-2-
<PAGE>
"Initial Amount," on any particular date and with respect to the
--------------
Liberty Holders or the HMTF Holders, as applicable, means the number of shares
of Common Stock that would have been issuable on such date upon conversion of
all of the shares of Series A Preferred Stock and the exercise of all Warrants
issued to the Liberty Holders or the HMTF Holders, respectively, on the Closing
Date (as adjusted for stock splits, stock dividends and similar events affecting
the Series A Preferred Stock).
"Initial HMTF Holders" means HM4 ICG Qualified Fund, LLC, HM4 ICG
--------------------
Private Fund, LLC, HM PG-IV ICG, LLC, HM 4-SBS ICG Coinvestors, LLC, HM 4-EQ ICG
Coinvestors, LLC, and HMTF Bridge ICG, LLC.
"Liberty Holders" means Liberty and each of its Affiliates.
---------------
"Piggyback Registration" has the meaning set forth in Section 2.2.
----------------------
"Registrable Common Stock" means (a) shares of Common Stock issued or
------------------------
issuable upon conversion of the Series A Preferred Stock purchased pursuant to
the Stock Purchase Agreement, plus any additional shares of Series A Preferred
Stock issued in respect thereof in connection with any stock split, stock
dividend or similar event with respect to the Series A Preferred Stock, plus any
additional shares of Common Stock issued with respect to such issued shares of
Common Stock in connection with any stock splits, stock dividends, or similar
events with respect to the Common Stock, (b) shares of Common Stock issued or
issuable upon exercise of the Warrants, plus any additional shares of Common
Stock issued in respect of such issued shares of Common Stock in connection with
any stock split, stock dividend or similar event with respect to the Common
Stock and (c) any shares of Common Stock owned by a Holder that are restricted
securities within the meaning of Rule 144 or all such shares if such Holder
reasonably believes at such time that it may be deemed to be an "affiliate" (as
that term is defined in Rule 144) of the Company.
"Registrable Securities" means (a) the Registrable Common Stock and
----------------------
(b) any securities of the Company or any successor entity into which Registrable
Common Stock may hereafter be converted or changed. As to any particular
Registrable Securities, such securities shall cease to be Registrable Securities
when (i) a registration statement with respect to the sale of such securities
shall have become effective under the Securities Act and such securities shall
have been disposed of under such registration statement, (ii) such securities
shall have been transferred pursuant to Rule 144, (iii) such securities shall
have been otherwise transferred or disposed of, and new certificates therefor
not bearing a legend restricting further transfer shall have been delivered by
the Company, and subsequent transfer or disposition of them shall not require
their registration or qualification under the Securities Act or any similar
state law then in force, or (iv) such securities shall have ceased to be
outstanding.
"Requesting Holders" means the Holders requesting a Demand
------------------
Registration, and shall include parties deemed "Requesting Holders" pursuant to
Section 2.1(a)(iv).
"Rule 144" means Rule 144 (or any successor rule of similar effect)
--------
promulgated under the Securities Act.
-3-
<PAGE>
"Selling Holder" means any Holder who is selling Registrable
--------------
Securities pursuant to a public offering registered hereunder.
"Series A Preferred Stock" means collectively the Company's (i) 8%
------------------------
Series A-1 Convertible Preferred Stock, par value $0.01 per share, (ii) 8%
Series A-2 Convertible Preferred Stock, par value $0.01 per share, and (iii) 8%
Series A-3 Convertible Preferred Stock, par value $0.01 per share.
"Shelf Registration" has the meaning set forth in Section 2.3(b).
------------------
"Underwriter" means a securities dealer who purchases any Registrable
-----------
Securities as principal and not as part of such dealer's market-making
activities.
"Warrants" means the Warrants (as defined in the Stock Purchase
--------
Agreement) to purchase Common Stock.
1.2 Internal References
Unless the context indicates otherwise, references to Articles, Sections
and paragraphs shall refer to the corresponding articles, sections and
paragraphs in this Agreement, and references to the parties shall mean the
parties to the Stock Purchase Agreement.
ARTICLE II
REGISTRATION RIGHTS
2.1 Demand Registration
(a)
(i) Holders of a majority of the Registrable Securities held by
the HMTF Holders may make up to three (3) written requests for a Demand
Registration of all or any part of the Registrable Securities held by the
HMTF Holders and their direct or indirect transferees; provided, that (A)
each such Demand Registration by the HMTF Holders must be in respect of
Registrable Securities with a fair market value of at least $50,000,000 or
all of the Registrable Securities held by the requesting HMTF Holders if
the aggregate fair market value of all of such Registrable Securities is
less than $50,000,000 and (B) the HMTF Holders shall not be entitled to a
Demand Registration if, during the 120 days preceding such request, the
HMTF Holders had requested a Demand Registration unless the Company
preempted such Demand Registration in accordance with Section 2.1(e) or the
Company postponed the filing thereof in accordance with Section 3.1(a) and
the requesting HMTF Holders withdrew the request for such Demand
Registration. Upon exercise of all or any portion of the Warrants held by
the HMTF Holders, the Holders of a majority of the Registrable Securities
held by the HMTF Holders may make one (1) additional written request for a
Demand Registration, subject to the proviso set forth in the foregoing
sentence.
-4-
<PAGE>
(ii) Holders of a majority of the Registrable Securities held by
the Liberty Holders may make up to six (6) written requests for a Demand
Registration of all or any part of the Registrable Securities held by the
Liberty Holders and their direct or indirect transferees; provided, that
(A) each such Demand Registration by the Liberty Holders must be in respect
of Registrable Securities with a fair market value of at least $50,000,000
or all of the Registrable Securities held by the requesting Liberty Holders
if the aggregate fair market value of all of such Registrable Securities is
less than $50,000,000, and (B) the Liberty Holders shall not be entitled to
a Demand Registration if, during the 120 days preceding such request, the
Liberty Holders had requested a Demand Registration unless the Company
preempted such Demand Registration in accordance with Section 2.1(e) or the
Company postponed the filing thereof in accordance with Section 3.1(a) and
the requesting Liberty Holders withdrew the request for such Demand
Registration. Upon exercise of all or any portion of the Warrants held by
the Liberty Holders, the Holders of a majority of the Registrable
Securities held by the Liberty Holders may make up to two (2) additional
written requests for a Demand Registration, subject to the proviso set
forth in the foregoing sentence.
(iii) Any request for a Demand Registration will specify the
aggregate number of shares of Registrable Securities proposed to be sold by
the Requesting Holders and will also specify the intended method of
disposition thereof. A registration will not count as a Demand Registration
until it has become effective. Should a Demand Registration not become
effective due to the failure of a Holder to perform its obligations under
this Agreement or the inability of the Requesting Holders to reach
agreement with the Underwriters for the proposed sale on price or other
customary terms for such transaction, or in the event the Requesting
Holders withdraw or do not pursue the request for the Demand Registration
(in each of the foregoing cases, provided that at such time the Company is
in compliance in all material respects with its obligations under this
Agreement), then, subject to Section 2.1(b), such Demand Registration shall
be deemed to have been effected (provided that (i) if, the Demand
Registration does not become effective because a material adverse change
has occurred, or is reasonably likely to occur, in the condition (financial
or otherwise), business, assets or results of operations of the Company and
its subsidiaries taken as a whole subsequent to the date of the written
request made by the Requesting Holders (ii) if the Company withdraws the
Demand Registration for any reason or preempts the request for the Demand
Registration or (iii) if, after the Demand Registration has become
effective, an offering of Registrable Securities pursuant to a registration
is interfered with by any stop order, injunction, or other order or
requirement of the Commission or other governmental agency or court or (iv)
if the Demand Registration is withdrawn at the request of the Requesting
Holders pursuant to Section 2.1(f) or Section 3.1(a), then the Demand
Registration shall not be deemed to have been effected and will not count
as a Demand Registration).
(iv) Upon receipt of any request for a Demand Registration by
holders of a majority of the Registrable Securities held by the HMTF
Holders or the Liberty Holders, as the case may be, the Company shall
promptly (but in any event within ten (10) days) give written notice of
such proposed Demand Registration to the HMTF Holders, in the case of a
request by an HMTF Holder, and to the Liberty Holders, in the case of a
request by a Liberty Holder, and all such HMTF Holders or Liberty Holders,
as the case may be
-5-
<PAGE>
(including their respective direct or indirect transferees) shall have the
right, exercisable by written notice to the Company within twenty (20) days
of their receipt of the Company's notice, to elect to include in such
Demand Registration such portion of their Registrable Securities as they
may request. All such Holders requesting to have their Registrable
Securities included in a Demand Registration in accordance with the
preceding sentence shall be deemed to be "Requesting Holders" for purposes
of this Section 2.1.
(b) In the event that the Requesting Holders withdraw or do not
pursue a request for a Demand Registration and, pursuant to Section 2.1(a)
hereof, such Demand Registration is deemed to have been effected, the Holders
may reacquire such Demand Registration (such that the withdrawal or failure to
pursue a request will not count as a Demand Registration hereunder) if the
Selling Holders reimburse the Company for any and all Registration Expenses
incurred by the Company in connection with such request for a Demand
Registration that was withdrawn or not pursued.
(c) If the Requesting Holders so elect, the offering of such
Registrable Securities pursuant to such Demand Registration shall be in the form
of a "firm commitment" underwritten offering. A majority in interest of the
Requesting Holders shall have the right to select the managing Underwriters and
any additional investment bankers and managers to be used in connection with any
offering under this Section 2.1, subject to the Company's approval, which
approval shall not be unreasonably withheld.
(d) The Requesting Holders will inform the Company of the time and
manner of any disposition of Registrable Common Stock, and agree to reasonably
cooperate with the Company in effecting the disposition of the Registrable
Common Stock in a manner that does not unreasonably disrupt the public trading
market for the Common Stock; provided, however, that the Holders' only right to
a shelf registration statement shall be pursuant to Section 2.3.
(e) The Company will have the right to preempt any Demand
Registration with a primary registration by delivering written notice (within
seven business days after the Company has received a request for such Demand
Registration) of such intention to the Requesting Holders indicating that the
Company has identified a specific business need and use for the proceeds of the
sale of such securities and had contemplated such sale of securities prior to
receiving the Requesting Holders' notice, and the Company shall use commercially
reasonable efforts to effect a primary registration within 90 days of such
notice. In the ensuing primary registration, the Holders will have such
piggyback registration rights as are set forth in Section 2.2 hereof. Upon the
Company's preemption of a requested Demand Registration, such requested
registration will not count as the Holders' Demand Registration. If the Company
thereafter decides to abandon its intention to pursue such sale of securities,
it shall give notice thereof to any preempted Holders within two business days
following the Company's decision. The Company may exercise the right to preempt
a Demand Registration only once in any 360-day period; provided, that during any
360-day period the Company shall use its reasonable best efforts to permit a
period of at least 180 consecutive days during which the Selling Holders may
effect a Demand Registration.
-6-
<PAGE>
(f) Securities to be sold for the account of any Person (including
the Company) other than a Requesting Holder shall not be included in a Demand
Registration if the managing Underwriter or Underwriters shall advise the
Company and the Requesting Holders in writing that the inclusion of such
securities will materially and adversely affect the price of the offering (a
"Material Adverse Effect"). Furthermore, in the event the managing Underwriter
-----------------------
or Underwriters shall advise the Company or the Requesting Holders that even
after exclusion of all securities of other Persons (including the Company)
pursuant to the immediately preceding sentence, the amount of Registrable
Securities proposed to be included in such Demand Registration by Requesting
Holders is sufficiently large to cause a Material Adverse Effect, the
Registrable Securities of the Requesting Holders to be included in such Demand
Registration shall equal the number of shares which the Company and the
Requesting Holders are so advised can be sold in such offering without a
Material Adverse Effect and such shares shall be allocated pro rata among the
Requesting Holders on the basis of the number of Registrable Securities
requested to be included in such registration by each such Requesting Holder;
provided, however, that if any Registrable Securities requested to be registered
pursuant to a Demand Registration under Section 2.1 are excluded from
registration hereunder, then the Holder(s) having shares excluded ("Excluded
--------
Holders") shall have the right to withdraw all, or any part, of their shares
- -------
from such registration and if withdrawn in full such Demand Registration shall
not be deemed to have been effected and will not count as a Demand Registration.
2.2 Piggyback Registration
(a) If the Company proposes to file a registration statement under
the Securities Act with respect to an offering of Common Stock for its own
account or for the account of another Person (other than a registration
statement on Form S-4 or S-8, or, except as provided for in Section 2.3,
pursuant to Rule 415 (or any substitute form or rule, respectively, that may be
adopted by the Commission)), the Company shall give written notice of such
proposed filing to the Holders at the address set forth in the share register of
the Company as soon as reasonably practicable (but in no event less than 15 days
before the anticipated filing date), undertaking to provide each Holder the
opportunity to register on the same terms and conditions such number of shares
of Registrable Securities as such Holder may request (a "Piggyback
---------
Registration"). Each Holder will have seven business days after receipt of any
- ------------
such notice to notify the Company as to whether it wishes to participate in a
Piggyback Registration (which notice shall not be deemed to be a request for a
Demand Registration); provided that should a Holder fail to provide timely
notice to the Company, such Holder will forfeit any rights to participate in the
Piggyback Registration with respect to such proposed offering other than as
described in Section 2.1(a)(iv). In the event that the registration statement is
filed on behalf of a Person other than the Company, the Company will use its
best efforts to have the shares of Registrable Securities that the Holders wish
to sell included in the registration statement. If the Company or the Person for
whose account such offering is being made shall determine in its sole discretion
not to register or to delay the proposed offering, the Company may, at its
election, provide written notice of such determination to the Holders and (i) in
the case of a determination not to effect the proposed offering, shall thereupon
be relieved of the obligation to register such Registrable Securities in
connection therewith, and (ii) in the case of a determination to delay a
proposed offering, shall thereupon be permitted to delay registering such
Registrable Securities for the same period as the delay in respect of the
proposed offering. As between the Company and the Selling Holders, the
-7-
<PAGE>
Company shall be entitled to select the Underwriters in connection with any
Piggyback Registration.
(b) If the Registrable Securities requested to be included in the
Piggyback Registration by any Holder differ from the type of securities proposed
to be registered by the Company and the managing Underwriter advises the Company
that due to such differences the inclusion of such Registrable Securities would
cause a Material Adverse Effect, then (i) the number of such Holders'
Registrable Securities to be included in the Piggyback Registration shall be
reduced to an amount which, in the opinion of the managing Underwriter, would
eliminate such Material Adverse Effect or (ii) if no such reduction would, in
the opinion of the managing Underwriter, eliminate such Material Adverse Effect,
then the Company shall have the right to exclude all such Registrable Securities
from such Piggyback Registration, provided, that no other securities of such
type are included and offered for the account of any other Person in such
Piggyback Registration. Any partial reduction in number of Registrable
Securities of any Holder to be included in the Piggyback Registration pursuant
to clause (i) of the immediately preceding sentence shall be effected pro rata
based on the ratio which such Holder's requested shares bears to the total
number of shares requested to be included in such Piggyback Registration by all
Persons other than the Company who have the contractual right to request that
their shares be included in such registration statement and who have requested
that their shares be included. If the Registrable Securities requested to be
included in the registration statement are of the same type as the securities
being registered by the Company and the managing Underwriter advises the Company
that the inclusion of such Registrable Securities would cause a Material Adverse
Effect, the Company will be obligated to include in such registration statement,
as to each Holder only a portion of the shares such Holder has requested be
registered equal to the ratio which such Holder's requested shares bears to the
total number of shares requested to be included in such registration statement
by all Persons (other than the Person or Persons initiating such registration
request) who have the contractual right to request that their shares be included
in such registration statement and who have requested their shares be included.
If the Company initiated the registration, then the Company may include all of
its securities in such registration statement before any such Holder's requested
shares are included. If another security holder initiated the registration, then
the Company may not include any of its securities in such registration statement
unless all Registrable Securities requested to be included in the registration
statement by all Holders are included in such registration statement. If as a
result of the provisions of this Section 2.2(b) any Holder shall not be entitled
to include all Registrable Securities in a registration that such Holder has
requested to be so included, such Holder may withdraw such Holder's request to
include Registrable Securities in such registration statement prior to its
effectiveness.
2.3 Shelf Registration
(a) Holders of a majority of the Registrable Securities held by the
Liberty Holders ("Majority Liberty Holders") may, at any time after the first
anniversary of the Closing Date, make a written request that the Company effect
a shelf registration of a portion of the Registrable Securities held by the
Liberty Holders and their direct or indirect transferees (the "Liberty Shelf
-------------
Registration") pursuant to Rule 415; provided, that the aggregate amount of
- ------------
Registrable Securities that may be included in such Liberty Shelf Registration
may not exceed 25% of the Liberty Holders' Initial Amount. Upon receipt of a
request for the Liberty Shelf Registration, the
-8-
<PAGE>
Company shall promptly (but in any event within 10 business days) give written
notice of the proposed Liberty Shelf Registration to all other Liberty Holders,
and all such Holders (including their direct and indirect transferees) shall
have the right to include Registrable Securities in the Liberty Shelf
Registration subject to the foregoing limitation. From and after the second
anniversary of the Closing Date, the Majority Liberty Holders may make a written
request that the Company amend the Liberty Shelf Registration to include in the
Liberty Shelf Registration no more than 50% of the Liberty Holders' Initial
Amount. Upon receipt of such request, the Company shall promptly (but in any
event within 10 business days) give written notice of the proposed amendment to
all other Liberty Holders, and all such Holders (including their direct and
indirect transferees) shall have the right to include Registrable Securities in
the amended Liberty Shelf Registration subject to the foregoing limitation. From
and after the third anniversary of the Closing Date, the Majority Liberty
Holders' may make a written request that the Company amend the Liberty Shelf
Registration to include in the Liberty Shelf Registration no more than 75% of
the Liberty Holders' Initial Amount. Upon receipt of such request, the Company
shall promptly (but in any event within 10 business days) give written notice of
the proposed amendment to all other Liberty Holders, and all such Holders
(including their direct and indirect transferees) shall have the right to
include Registrable Securities in the amended Liberty Shelf Registration subject
to the foregoing limitation. From and after the fourth anniversary of the
Closing Date, the Majority Liberty Holders may make a written request that the
Company amend the Liberty Shelf Registration to include in the Liberty Shelf
Registration up to 100% of the Liberty Holders' Initial Amount. Upon receipt of
such request, the Company shall promptly (but in any event within 10 business
days) give written notice of the proposed amendment to all other Liberty
Holders, and all such Holders (including their direct and indirect transferees)
shall have the right to include Registrable Securities in the amended Liberty
Shelf Registration up to 100% of the Liberty Holders' Initial Amount.
(b) Holders of a majority of the Registrable Securities held by the
HMTF Holders ("Majority HMTF Holders") may, at any time after the first
anniversary of the Closing Date, make a written request that the Company effect
a shelf registration of a portion of the Registrable Securities held by the HMTF
Holders and their direct or indirect transferees (the "HMTF Shelf Registration")
-----------------------
pursuant to Rule 415; provided, that the aggregate amount of Registrable
Securities that may be included in such HMTF Shelf Registration may not exceed
25% of the HMTF Holders' Initial Amount. Upon receipt of a request for the HMTF
Shelf Registration, the Company shall promptly (but in any event within 10
business days) give written notice of the proposed HMTF Shelf Registration to
all other HMTF Holders, and all such Holders (including their direct and
indirect transferees) shall have the right to include Registrable Securities in
the HMTF Shelf Registration subject to the foregoing limitation. From and after
the second anniversary of the Closing Date, the Majority HMTF Holders may make a
written request that the Company amend the HMTF Shelf Registration to include in
the HMTF Shelf Registration no more than 50% of the HMTF Holders' Initial
Amount. Upon receipt of such request, the Company shall promptly (but in any
event within 10 business days) give written notice of the proposed amendment to
all other HMTF Holders, and all such Holders (including their direct and
indirect transferees) shall have the right to include Registrable Securities in
the amended HMTF Shelf Registration subject to the foregoing limitation. From
and after the third anniversary of the Closing Date, the Majority HMTF Holders'
may make a written request that the Company amend the HMTF Shelf Registration to
include in the HMTF Shelf Registration no more than 75% of the HMTF Holders'
Initial Amount. Upon receipt of such request, the Company shall promptly
-9-
<PAGE>
(but in any event within 10 business days) give written notice of the proposed
amendment to all other HMTF Holders, and all such Holders (including their
direct and indirect transferees) shall have the right to include Registrable
Securities in the amended HMTF Shelf Registration subject to the foregoing
limitation. From and after the fourth anniversary of the Closing Date, the
Majority HMTF Holders may make a written request that the Company amend the HMTF
Shelf Registration to include in the HMTF Shelf Registration up to 100% of the
HMTF Holders' Initial Amount. Upon receipt of such request, the Company shall
promptly (but in any event within 10 business days) give written notice of the
proposed amendment to all other HMTF Holders, and all such Holders (including
their direct and indirect transferees) shall have the right to include
Registrable Securities in the amended HMTF Shelf Registration up to 100% of the
HMTF Holders' Initial Amount.
(c) If the Company's ability to amend the registration statement for
the Liberty Shelf Registration or the HMTF Shelf Registration (each, a "Shelf
Registration") to increase the number of Registrable Securities included therein
(or to file a new shelf registration statement in respect thereof) in accordance
with this Section 2.3 is subject to any contractual limitations that could delay
the Company's ability to file or cause to become effective such registration
statement, then, if requested by the Majority Liberty Holders (in the case of
Section 2.3(a)) or the Majority HMTF Holders (in the case of Section 2.3(b)) the
Company shall, in lieu of following the procedure set forth in Section 2.3(a) or
Section 2.3(b), as the case may be, file a single registration statement for the
Shelf Registration referred to in the applicable provisions of such Sections
(and cause such registration statement to become and remain effective for the
period set forth in Section 3.1) that would permit the offering of such portion
of the Registrable Securities (up to 100%) as may be requested by the Majority
Liberty Holders (in the case of Section 2.3(a)) or the Majority HMTF Holders (in
the case of Section 2.3(b)), (it being understood and agreed that the Holders of
the Registrable Securities would not have the right to offer and sell from such
Shelf Registration Registrable Securities other than in accordance with the
schedule and amounts set forth in Section 2.3(a) or Section 2.3(b), as
applicable).
ARTICLE III
REGISTRATION PROCEDURES
3.1 Filings; Information
In connection with the registration of Registrable Securities pursuant to
Section 2.1, Section 2.2 and Section 2.3 hereof, the Company will use its
reasonable best efforts to effect the registration of such Registrable
Securities as promptly as is reasonably practicable, and in connection with any
such request:
(a) The Company will expeditiously prepare and file with the
Commission a registration statement on any form for which the Company then
qualifies and which counsel for the Company shall deem appropriate and available
for the sale of the Registrable Securities to be registered thereunder in
accordance with the intended method of distribution thereof, and use its
reasonable best efforts to cause such filed registration statement to become and
remain effective (i) with respect to any Demand Registration or Piggyback
Registration, for such period, not to exceed 60 days, as may be reasonably
necessary to effect the sale of such securities, (ii) with
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<PAGE>
respect to a Shelf Registration, until the earlier of the sale of all
Registrable Securities thereunder and the fifth anniversary of the Closing Date
(or if such Shelf Registration is filed or amended on or after the fourth
anniversary of the Closing Date, then the earlier of the sale of all Registrable
Securities thereunder and the second anniversary of the effective date of such
Shelf Registration) (it being understood that if at any time all the Registrable
Securities then permitted to be sold under such Shelf Registration pursuant to
Section 2.3 have been sold but the Holders have the right to request the
addition of additional Registrable Securities to the Shelf Registration in the
future pursuant to Section 2.3, the Company may (at its option) either cause the
registration statement to remain effective (notwithstanding the fact that all
securities then registrable on such shelf registration statement shall have been
sold) and file post-effective amendments when required to permit the sale of the
additional Registrable Securities or prepare and file, and cause to become and
remain effective, a new shelf registration statement to effect the registration
of the additional Registrable Securities when required pursuant to Section 2.3);
provided that if the Company shall furnish to the Selling Holder a certificate
signed by the Company's Chairman, President or any Executive Vice-President or
Vice-President stating that the Company's Board of Directors has determined in
good faith that it would be detrimental or otherwise disadvantageous to the
Company or its stockholders for such a registration statement to be filed as
expeditiously as possible because the sale of Registrable Securities covered by
such Registration Statement or the disclosure of information in any related
prospectus or prospectus supplement would materially interfere with any
acquisition, financing or other material event or transaction which is then
intended or the public disclosure of which at the time would be materially
prejudicial to the Company, the Company may postpone the filing or effectiveness
of a registration statement for a period of not more than 120 days; provided
that during any 360-day period the Company shall use its reasonable best efforts
to permit a period of at least 180 consecutive days during which the Company
will make a registration statement available under this Agreement; and provided
further that if (i) the effective date of any registration statement filed
pursuant to a Demand Registration would otherwise be at least 45 calendar days,
but fewer than 90 calendar days, after the end of the Company's fiscal year, and
(ii) the Securities Act requires the Company to include audited financials as of
the end of such fiscal year, the Company may delay the effectiveness of such
registration statement for such period as is reasonably necessary to include
therein its audited financial statements for such fiscal year. If the Company
exercises its right to postpone the filing or effectiveness of a registration
statement, the applicable Requesting Holders shall be entitled to withdraw their
request for such Demand Registration and it shall not count as a Demand
Registration.
(b) Anything in this Agreement to the contrary notwithstanding, it is
understood and agreed that the Company shall not be required to keep any shelf
registration effective or useable for offers and sales of the Registrable
Securities, file a post effective amendment to a shelf registration statement or
prospectus supplement or to supplement or amend any registration statement, if
the Company is then involved in discussions concerning, or otherwise engaged in,
any material financing or investment, acquisition or divestiture transaction or
other material business purpose if the Company determines in good faith that the
making of such a filing, supplement or amendment at such time would interfere
with such transaction or purpose. The Company shall promptly give the Holders of
Registrable Securities written notice of such postponement containing a general
statement of the reasons for such postponement and an approximation of the
anticipated delay. Upon receipt by a Holder of Registrable Securities of notice
of an event of the kind described in this Section 3.1(b), such Holder shall
forthwith
-11-
<PAGE>
discontinue such Holder's disposition of Registrable Securities until such
Holder's receipt of notice from the Company that such disposition may continue
and of any supplemented or amended prospectus indicated in such notice. The
Company shall use its reasonable best efforts to permit sales of Registrable
Securities on such shelf registration statement for at least 180 days during any
360-day period. In the event the Company shall give notice of an event of the
kind described in this Section 3.1(b), the Company shall extend the period
during which the applicable registration statement shall be maintained effective
as provided in Section 3.1(a) hereof by the number of days during the period
from and including the date of the giving of such notice to the date when the
Company shall give notice to the Selling Holders that such dispositions of such
Registrable Securities may continue and shall have made available to the Selling
Holders any such supplemented or amended prospectus.
(c) The Company will, if requested, prior to filing such registration
statement or any amendment or supplement thereto, furnish to the Selling
Holders, and each applicable managing Underwriter, if any, copies thereof, and
thereafter furnish to the Selling Holders and each such Underwriter, if any,
such number of copies of such registration statement, amendment and supplement
thereto (in each case including all exhibits thereto and documents incorporated
by reference therein) and the prospectus included in such registration statement
(including each preliminary prospectus) as the Selling Holders or each such
Underwriter may reasonably request in order to facilitate the sale of the
Registrable Securities by the Selling Holders.
(d) After the filing of the registration statement, the Company will
promptly notify the Selling Holders of any stop order issued or, to the
Company's knowledge, threatened to be issued by the Commission and take all
reasonable actions required to prevent the entry of such stop order or to remove
it if entered.
(e) The Company will use its commercially reasonable efforts to
qualify the Registrable Securities for offer and sale under such other
securities or blue sky laws of such jurisdictions in the United States as the
Selling Holders reasonably request; keep each such registration or qualification
(or exemption therefrom) effective during the period in which such registration
statement is required to be kept effective; and do any and all other acts and
things which may be reasonably necessary or advisable to enable each Selling
Holder to consummate the disposition of the Registrable Securities owned by such
Selling Holder in such jurisdictions; provided that the Company will not be
required to (i) qualify generally to do business in any jurisdiction where it
would not otherwise be required to qualify but for this paragraph 3.1(e), (ii)
subject itself to taxation in any such jurisdiction or (iii) consent to general
service of process in any such jurisdiction.
(f) The Company will as promptly as is practicable notify the Selling
Holders, at any time when a prospectus relating to the sale of the Registrable
Securities is required by law to be delivered in connection with sales by an
Underwriter or dealer, of the occurrence of any event requiring the preparation
of a supplement or amendment to such prospectus so that, as thereafter delivered
to the purchasers of such Registrable Securities, such 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 the light of the circumstances under which they were made, not misleading and
promptly make available to the Selling Holders and to the Underwriters any such
supplement or amendment. Upon receipt of any notice of the occurrence
-12-
<PAGE>
of any event of the kind described in the preceding sentence, Selling Holders
will forthwith discontinue the offer and sale of Registrable Securities pursuant
to the registration statement covering such Registrable Securities until receipt
by the Selling Holders and the Underwriters of the copies of such supplemented
or amended prospectus and, if so directed by the Company, the Selling Holders
will deliver to the Company all copies, other than permanent file copies then in
the possession of Selling Holders, of the most recent prospectus covering such
Registrable Securities at the time of receipt of such notice. In the event the
Company shall give such notice, the Company shall extend the period during which
such registration statement shall be maintained effective as provided in Section
3.1(a) hereof by the number of days during the period from and including the
date of the giving of such notice to the date when the Company shall make
available to the Selling Holders such supplemented or amended prospectus.
(g) The Company will enter into customary agreements (including an
underwriting agreement in customary form) and take such other actions
(including, without limitation, participation in road shows and investor
conference calls) as are required in order to expedite or facilitate the sale of
such Registrable Securities.
(h) At the request of any Underwriter in connection with an
underwritten offering the Company will furnish (i) an opinion of counsel,
addressed to the Underwriters, covering such customary matters as the managing
Underwriter may reasonably request and (ii) a comfort letter or comfort letters
from the Company's independent public accountants covering such customary
matters as the managing Underwriter may reasonably request.
(i) If requested by the managing Underwriter or any Selling Holder,
the Company shall promptly incorporate in a prospectus supplement or post
effective amendment such information as the managing Underwriter or any Selling
Holder reasonably requests to be included therein, including without limitation,
with respect to the Registrable Securities being sold by such Selling Holder,
the purchase price being paid therefor by the Underwriters and with respect to
any other terms of the underwritten offering of the Registrable Securities to be
sold in such offering, and promptly make all required filings of such prospectus
supplement or post effective amendment.
(j) The Company shall promptly make available for inspection by any
Selling Holder or Underwriter participating in any disposition pursuant to any
registration statement, and any attorney, accountant or other agent or
representative retained by any such Selling Holder or Underwriter (collectively,
the "Inspectors"), all financial and other records, pertinent corporate
----------
documents and properties of the Company (collectively, the "Records"), as shall
-------
be reasonably necessary to enable them to exercise their due diligence
responsibility, and cause the Company's officers, directors and employees to
supply all information requested by any such Inspector in connection with such
registration statement; provided, however, that unless the disclosure of such
Records is necessary to avoid or correct a misstatement or omission in the
registration statement or the release of such Records is ordered pursuant to a
subpoena or other order from a court of competent jurisdiction, the Company
shall not be required to provide any information under this subparagraph (j) if
(A) the Company believes, after consultation with counsel for the Company, that
to do so would cause the Company to forfeit an attorney-client privilege that
was applicable to such information or (B) if either (1) the Company has
requested and been granted from the Commission confidential treatment of such
information contained in any filing with the
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<PAGE>
Commission or documents provided supplementally or otherwise or (2) the Company
reasonably determines in good faith that such Records are confidential and so
notifies the Inspectors in writing unless prior to furnishing any such
information with respect to (A) or (B) such Holder of Registrable Securities
requesting such information agrees to enter into a confidentiality agreement in
customary form and subject to customary exceptions; provided further, however,
that each Holder of Registrable Securities agrees that it will, upon learning
that disclosure of such Records is sought in a court of competent jurisdiction,
give notice to the Company and allow the Company, at its expense, to undertake
appropriate action and to prevent disclosure of the Records deemed confidential.
(k) The Company shall cause the Registrable Securities included in
any registration statement to be (A) listed on each securities exchange, if any,
on which similar securities issued by the Company are then listed, or (B)
authorized to be quoted and/or listed (to the extent applicable) on the Nasdaq
National Market if the Registrable Securities so qualify.
(l) The Company shall provide a CUSIP number for the Registrable
Securities included in any registration statement not later than the effective
date of such registration statement.
(m) The Company shall cooperate with each Selling Holder and each
Underwriter participating in the disposition of such Registrable Securities and
their respective counsel in connection with any filings required to be made with
the National Association of Securities Dealers, Inc.
(n) The Company shall during the period when the prospectus is
required to be delivered under the Securities Act, promptly file all documents
required to be filed with the Commission pursuant to Sections 13(a), 13(c), 14
or 15(d) of the Exchange Act.
(o) The Company will make generally available to its security
holders, as soon as reasonably practicable, an earnings statement covering a
period of 12 months, beginning within three months after the effective date of
the registration statement, which earnings statement shall satisfy the
provisions of Section 11(a) of the Securities Act and the rules and regulations
of the Commission thereunder.
The Company may require Selling Holders promptly to furnish in writing to
the Company such information regarding such Selling Holders, the plan of
distribution of the Registrable Securities and other information as the Company
may from time to time reasonably request or as may be legally required in
connection with such registration.
3.2 Registration Expenses
In connection with any Registration effected hereunder, the Company shall
pay the following expenses incurred in connection with such registration (the
"Registration Expenses"): (i) registration and filing fees with the Commission
---------------------
and the National Association of Securities Dealers, Inc., (ii) fees and expenses
of compliance with securities or blue sky laws (including reasonable fees and
disbursements of counsel in connection with blue sky qualifications of the
Registrable Securities), (iii) printing expenses, (iv) fees and expenses
incurred in connection with the listing or quotation of the Registrable
Securities, (v) fees and expenses of counsel to the
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<PAGE>
Company and the reasonable fees and expenses of independent certified public
accountants for the Company (including fees and expenses associated with the
special audits or the delivery of comfort letters), (vi) the reasonable fees and
expenses of any additional experts retained by the Company in connection with
such registration, (vii) all roadshow costs and expenses not paid by the
Underwriters and (viii) the reasonable fees and expenses of one counsel for the
Selling Holders.
ARTICLE IV
INDEMNIFICATION AND CONTRIBUTION
4.1 Indemnification by the Company
The Company agrees to indemnify and hold harmless each Selling Holder and
its Affiliates and their respective officers, directors, partners, stockholders,
members, employees, agents and representatives and each Person (if any) which
controls a Selling Holder within the meaning of either Section 15 of the
Securities Act or Section 20 of the Exchange Act, from and against any and all
losses, claims, damages, liabilities, costs and expenses (including reasonable
attorneys' fees) caused by, arising out of, resulting from or related to any
untrue statement or alleged untrue statement of a material fact contained or
incorporated by reference in any registration statement or prospectus relating
to the Registrable Securities (as amended or supplemented if the Company shall
have furnished any amendments or supplements thereto) or any preliminary
prospectus, or caused by any omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the statements
therein not misleading, except insofar as such losses, claims, damages or
liabilities are caused by or based upon any information furnished in writing to
the Company by or on behalf of such Selling Holder expressly for use therein or
by the Selling Holder's failure to deliver a copy of the registration statement
or prospectus or any amendments or supplements thereto after the Company has
furnished the Selling Holder with copies of the same; provided, however, that
the Company shall have no obligation to indemnify under this sentence to the
extent any such losses, claims, damages or liabilities have been finally and
non-appealably determined by a court to have resulted from such Selling Holder's
willful misconduct or gross negligence. The Company also agrees to indemnify
any Underwriters of the Registrable Securities, their officers and directors and
each person who controls such Underwriters on substantially the same basis as
that of the indemnification of the Selling Holders provided in this Section 4.1,
except insofar as such losses, claims, damages or liabilities are caused by or
based upon any information furnished in writing to the Company by or on behalf
of such Underwriter expressly for use therein or by the Underwriter's failure to
deliver a copy of the registration statement or prospectus or any amendments or
supplements thereto after the Company has furnished the Underwriter with copies
of the same; provided, however, that the Company shall have no obligation to
indemnify under this sentence to the extent any such losses, claims, damages or
liabilities have been finally and non-appealably determined by a court to have
resulted from any such Underwriter's willful misconduct or gross negligence.
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<PAGE>
4.2 Indemnification by Selling Holders
Each Selling Holder agrees to indemnify and hold harmless the Company, its
officers and directors, and each Person, if any, which controls the Company
within the meaning of either Section 15 of the Securities Act or Section 20 of
the Exchange Act to the same extent as the foregoing indemnity from the Company
to each Selling Holder, but only with reference to information furnished in
writing by or on behalf of such Selling Holder expressly for use in any
registration statement or prospectus relating to the Registrable Securities, or
any amendment or supplement thereto, or any preliminary prospectus. Each
Selling Holder also agrees to indemnify and hold harmless any Underwriters of
the Registrable Securities, their officers and directors and each person who
controls such Underwriters on substantially the same basis as that of the
indemnification of the Company provided in this Section 4.2, but only with
reference to information furnished in writing by or on behalf of such Selling
Holder expressly for use in any registration statement or prospectus relating to
the Registrable Securities, or any amendment or supplement thereto, or any
preliminary prospectus. Each such Selling Holder's liability under this Section
4.2 shall be limited to an amount equal to the net proceeds (after deducting the
underwriting discount and expenses) received by such Selling Holder from the
sale of such Registrable Securities by such Selling Holder. The obligation of
each Selling Holder shall be several and not joint.
4.3 Conduct of Indemnification Proceedings
In case any proceeding (including any governmental investigation) shall be
instituted involving any Person in respect of which indemnity may be sought
pursuant to Section 4.1 or Section 4.2, such Person (the "Indemnified Party")
-----------------
shall promptly notify the Person against whom such indemnity may be sought (the
"Indemnifying Party") in writing and the Indemnifying Party, upon the request of
------------------
the Indemnified Party, shall retain counsel reasonably satisfactory to such
Indemnified Party to represent such Indemnified Party and any others the
Indemnifying Party may designate in such proceeding and shall pay the fees and
disbursements of such counsel related to such proceeding. In any such
proceeding, any Indemnified Party shall have the right to retain its own
counsel, but the fees and expenses of such counsel shall be at the expense of
such Indemnified Party unless (i) the Indemnifying Party and the Indemnified
Party shall have mutually agreed to the retention of such counsel or (ii) the
named parties to any such proceeding (including any impleaded parties) include
both the Indemnified Party and the Indemnifying Party and, in the written
opinion of counsel for the Indemnified Party, representation of both parties by
the same counsel would be inappropriate due to actual or potential differing
interests between them. It is understood that the Indemnifying Party shall not,
in connection with any proceeding or related proceedings in the same
jurisdiction, be liable for the fees and expenses of more than one separate firm
of attorneys (in addition to any local counsel) at any time for all such
Indemnified Parties, and that all such fees and expenses shall be reimbursed as
they are incurred. In the case of any such separate firm for the Indemnified
Parties, such firm shall be designated in writing by the Indemnified Parties.
The Indemnifying Party shall not be liable for any settlement of any proceeding
effected without its written consent, but if settled with such consent (not to
be unreasonably withheld), or if there be a final judgment for the plaintiff,
the Indemnifying Party shall indemnify and hold harmless such Indemnified
Parties from and against any loss or liability (to the extent stated above) by
reason of such settlement or judgment.
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<PAGE>
4.4 Contribution
If the indemnification provided for in this Article IV is unavailable to an
Indemnified Party in respect of any losses, claims, damages or liabilities in
respect of which indemnity is to be provided hereunder, then each such
Indemnifying Party, in lieu of indemnifying such Indemnified Party, shall to the
fullest extent permitted by law contribute to the amount paid or payable by such
Indemnified Party as a result of such losses, claims, damages or liabilities in
such proportion as is appropriate to reflect the relative fault of such party in
connection with the statements or omissions that resulted in such losses,
claims, damages or liabilities, as well as any other relevant equitable
considerations. The relative fault of the Company, a Selling Holder and the
Underwriters 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
such party and the parties' relative intent, knowledge, access to information
and opportunity to correct or prevent such statement or omission.
The Company and each Selling Holder agrees that it would not be just and
equitable if contribution pursuant to this Section 4.4 were determined by pro
rata allocation (even if the Underwriters were treated as one entity for such
purpose) or by any other method of allocation that does not take account of the
equitable considerations referred to in the immediately preceding paragraph.
The amount paid or payable by an Indemnified Party as a result of the losses,
claims, damages or liabilities referred to in the immediately preceding
paragraph shall be deemed to include, subject to the limitations set forth
above, 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 Article IV, no Underwriter shall be
required to contribute any amount in excess of the amount by which the total
price at which the securities underwritten by it and distributed to the public
were offered to the public exceeds the amount of any damages which such
Underwriter has otherwise been required to pay by reason of such untrue or
alleged untrue statement or omission or alleged omission, and each Selling
Holder shall not be required to contribute any amount in excess of the amount by
which the net proceeds of the offering (before deducting expenses) received by
such Selling Holder exceeds the amount of any damages which such Selling Holder
has 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.
ARTICLE V
MISCELLANEOUS
5.1 Participation in Underwritten Registrations
No Person may participate in any underwritten registered offering
contemplated hereunder unless such Person (a) agrees to sell its securities on
the basis provided in any underwriting arrangements approved by the Persons
entitled hereunder to approve such arrangements, (b) completes and executes all
questionnaires, powers of attorney, custody arrangements, indemnities,
underwriting agreements and other documents reasonably required
-17-
<PAGE>
under the terms of such underwriting arrangements and this Agreement and (c)
furnishes in writing to the Company such information regarding such Person, the
plan of distribution of the Registrable Securities and other information as the
Company may from time to time request or as may be legally required in
connection with such registration; provided, however, that no such Person shall
be required to make any representations or warranties in connection with any
such registration other than representations and warranties as to (i) such
Person's ownership of his or its Registrable Securities to be sold or
transferred free and clear of all liens, claims and encumbrances, (ii) such
Person's power and authority to effect such transfer and (iii) such matters
pertaining to compliance with securities laws as may be reasonably requested;
provided further, however, that the obligation of such Person to indemnify
pursuant to any such underwriting agreements shall be several, not joint and
several, among such Persons selling Registrable Securities, and the liability of
each such Person will be in proportion to, and provided further that such
liability will be limited to, the net amount received by such Person from the
sale of such Person's Registrable Securities pursuant to such registration.
5.2 Rule 144
The Company covenants that it will file any reports required to be filed by
it under the Securities Act and the Exchange Act and that it will take such
further action as the Holders may reasonably request to the extent required from
time to time to enable the Holders to sell Registrable Securities without
registration under the Securities Act within the limitation of the exemptions
provided by Rule 144 under the Securities Act, as such Rule may be amended from
time to time, or any similar rule or regulation hereafter adopted by the
Commission. Upon the request of any Holder, the Company will deliver to such
Holder a written statement as to whether it has complied with such reporting
requirements.
5.3 Holdback Agreements
The Liberty Holders, for so long as they collectively own Registrable
Securities representing 10% or more of the voting power of the outstanding
voting securities of the Company, and the HMTF Holders, for so long as they
collectively own Registrable Securities representing 10% or more of the voting
power of the outstanding voting securities of the Company, severally agree, in
the event of an underwritten offering by the Company (whether for the account of
the Company or otherwise) not to offer, sell, contract to sell or otherwise
dispose of any Registrable Securities, or any securities convertible into or
exchangeable or exercisable for such securities, including any sale pursuant to
Rule 144 under the Securities Act (except as part of such underwritten
offering), during the 14 days prior to, and during the 90-day period (or such
lesser period as the lead or managing underwriters may require) beginning on,
the effective date of the registration statement for such underwritten offering
(or, in the case of an offering pursuant to an effective shelf registration
statement pursuant to Rule 415, the pricing date for such underwritten
offering), provided that in connection with such underwritten offering each
officer and director of the Company and holder of 10% or more of the Common
Stock is subject to restrictions substantially equivalent to those imposed on
the Liberty Holders and the HMTF Holders.
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<PAGE>
5.4 Termination
The registration rights granted under this Agreement will terminate on
April 10, 2015, or such earlier time as there shall no longer be any Registrable
Securities; provided, however, that if all shares of Series A Preferred Stock
outstanding on such date shall not have been redeemed in full in accordance with
Section 10 of the Certificate of Designations, this Agreement shall remain in
full force and effect with respect to the Registrable Securities until such time
as the shares of Series A Preferred Stock have been so redeemed in full.
5.5 Amendments, Waivers, Etc.
This Agreement may not be amended, waived or otherwise modified or
terminated except by an instrument in writing signed by the Company and the
Holders of at least 50% of the Registrable Securities then held by all the
Holders, if the amendment is to be effective against the Holders.
5.6 Counterparts
This Agreement may be executed in one or more counterparts, all of which
shall be considered one and the same agreement. Each party need not sign the
same counterpart.
5.7 Entire Agreement
This Agreement (i) constitutes the entire agreement and supersedes all
prior agreements and understandings, both written and oral, among the parties
with respect to the subject matter hereof.
5.8 Governing Law
This Agreement shall be governed by, and construed in accordance with, the
laws of the State of New York regardless of the laws that might otherwise govern
under applicable principles of conflicts of law thereof.
5.9 Assignment of Registration Rights
Each Holder of the Registrable Securities may assign all or any part of its
rights under this Agreement to any person to whom such Holder sells, transfers,
assigns or pledges such Registrable Securities. In the event that the Holder
shall assign its rights pursuant to this Agreement in connection with the
transfer of less than all its Registrable Securities, the Holder shall also
retain its rights with respect to its remaining Registrable Securities.
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<PAGE>
IN WITNESS WHEREOF, the Company and each Holder has caused this
Agreement to be signed on its behalf by its officer thereunto duly authorized as
of the date first written above.
ICG COMMUNICATIONS, INC.
By:_______________________________
Name: H. Don Teague
Title: Executive Vice President
HMTF BRIDGE ICG, LLC
By:________________________________
Name:
Title:
HM4 ICG QUALIFIED FUND, LLC
By:________________________________
Name:
Title:
HM4 ICG PRIVATE FUND, LLC
By:________________________________
Name:
Title:
HM PG-IV ICG, LLC
By:________________________________
Name:
Title:
HM 4-SBS ICG COINVESTORS, LLC
By:________________________________
Name:
Title:
HM 4-EQ ICG COINVESTORS, LLC
By:________________________________
Name:
Title:
LIBERTY MEDIA CORPORATION
By:________________________________
Name:
Title:
GLEACHER/ICG INVESTORS LLC
By:________________________________
Name:
Title:
<PAGE>
SCHEDULE I
<TABLE>
<CAPTION>
Series of Number
Purchasers Preferred of Preferred Number of Purchase Price
- ---------
Stock Shares Warrants of the Shares
---------- ------------ --------- --------------
<S> <C> <C> <C> <C>
Liberty Media Corporation Series A-1 50,000 6,666,667 $500,000,000
HMTF Bridge ICG, LLC Series A-2 11,500 1,533,334 $115,000,000
HM4 ICG Qualified Fund, LLC Series A-2 10,464 1,395,253 $104,644,000
HM4 ICG Private Fund, LLC Series A-2 74 9,885 $ 741,000
HM PG-IV ICG, LLC Series A-2 557 74,281 $ 5,571,000
HM 4-SBS ICG Coinvestors, LLC Series A-2 251 33,412 $ 2,506,000
HM 4-EQ ICG Coinvestors, LLC Series A-2 154 20,502 $ 1,538,000
Gleacher/ICG Investors LLC Series A-3 2,000 266,666 $ 20,000,000
</TABLE>
<PAGE>
Exhibit 7(f)
ICG COMMUNICATIONS, INC.
CERTIFICATE OF DESIGNATION OF THE POWERS,
PREFERENCES AND RELATIVE, PARTICIPATING, OPTIONAL
AND OTHER SPECIAL RIGHTS OF 8% SERIES A-1
CONVERTIBLE PREFERRED STOCK, 8% SERIES A-2
CONVERTIBLE PREFERRED STOCK AND 8% SERIES A-3
CONVERTIBLE PREFERRED STOCK, AND
QUALIFICATIONS, LIMITATIONS
AND RESTRICTIONS THEREOF
8% Series A-1 Convertible
Preferred Stock due 2015
8% Series A-2 Convertible
Preferred Stock due 2015
8% Series A-3 Convertible
Preferred Stock due 2015
ICG COMMUNICATIONS, INC., a company organized and existing under the
General Corporation Law of the State of Delaware (the "Company"), certifies that
pursuant to the authority contained in its Certificate of Incorporation (the
"Certificate of Incorporation") and its By-laws (the "By-laws"), and in
accordance with Section 151 of the General Corporation Law of the State of
Delaware (the "DGCL"), the board of directors of the Company (the "Board of
Directors") at a meeting duly called and held on April 6, 2000 duly approved and
adopted the following resolution, which resolution remains in full force and
effect on the date hereof:
RESOLVED, that pursuant to the authority vested in the Board of
Directors by the Certificate of Incorporation and By-laws, the Board of
Directors does hereby create, authorize and provide for the issue of three
series of the Company's preferred stock, par value $0.01 per share ("Preferred
Stock"), having the following designation, voting powers, preferences and
relative, participating, optional and other special rights:
Certain capitalized terms used herein are defined in Section 17.
1. Number and Designation.
----------------------
The Company shall have a series of Preferred Stock, which shall be
designated as its 8% Series A-1 Convertible Preferred Stock due 2015 (the
"Series A-1 Preferred Stock"). The number of shares constituting the Series A-1
Preferred Stock shall be 50,000. The Company shall have a series of Preferred
Stock, which shall be designated as its 8% Series A-2 Convertible Preferred
Stock due 2015 (the "Series A-2 Preferred Stock"). The number of shares
constituting the Series A-2 Preferred Stock shall be 23,000. The Company shall
have a series of Preferred Stock, which shall be designated as its 8% Series A-3
Convertible Preferred Stock due 2015 (the "Series A-3 Preferred Stock"). The
number of shares constituting the Series A-3 Preferred Stock shall be 75,000.
The Series A-1 Preferred Stock, Series A-2 Preferred Stock and Series A-3
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Preferred Stock are referred to collectively herein, either conjunctively or
disjunctively as appropriate from the context, as the "Series A Preferred
Stock." Except to the extent otherwise specified in this Certificate of
Designation, the powers, preferences and relative, participating, optional and
other special rights of the Series A-1 Preferred Stock, Series A-2 Preferred
Stock and Series A-3 Preferred Stock shall be identical and, except as provided
herein or as may be required by applicable law, the Series A-1 Preferred Stock,
Series A-2 Preferred Stock and Series A-3 Preferred Stock shall be treated as a
single class. Unless otherwise specified, references herein to any "Section"
refer to the Section number specified in this Certificate of Designation.
2. Issuance.
--------
The Company may issue up to 50,000 shares of Series A-1 Preferred
Stock, 23,000 shares of Series A-2 Preferred Stock and 75,000 shares of Series
A-3 Preferred Stock, each in accordance with the Purchase Agreement; provided,
however, that without the unanimous consent of the holders of the Series A
Preferred Stock the Company shall not issue (i) any additional shares of Series
A Preferred Stock such that the aggregate number of shares of Series A-1
Preferred Stock, Series A-2 Preferred Stock and Series A-3 Preferred Stock at
any one time outstanding exceeds 75,000 shares, (ii) more than 2,000 shares of
Series A-3 Preferred Stock to the initial purchaser thereof in accordance with
the Purchase Agreement or (iii) more than 73,000 shares of Series A-3 Preferred
Stock from time to time upon automatic conversion of shares of Series A-1
Preferred Stock or Series A-2 Preferred Stock into Series A-3 Preferred Stock as
provided in Section 12(i).
3. Registered Form; Liquidation Preference; Registrar.
--------------------------------------------------
Certificates for shares of Series A Preferred Stock shall be
issuable only in registered form. The initial Liquidation Preference per share
of Series A Preferred Stock shall be $10,000 per share plus accrued and unpaid
dividends. The Company shall serve as initial Registrar and Transfer Agent (the
"Registrar") for the Series A Preferred Stock.
4. Registration; Transfer.
----------------------
Shares of the Series A Preferred Stock have not been registered
under the Securities Act of 1933, as amended (the "Securities Act"), and may not
be resold, pledged or otherwise transferred prior to the date when they may be
resold pursuant to Rule 144 under the Securities Act other than (i) to the
Company, (ii) pursuant to an exemption from registration under the Securities
Act or (iii) pursuant to an effective registration statement under the
Securities Act, in each case in accordance with any applicable securities laws
of any state of the United States. Until such time as it is no longer required
pursuant to the Securities Act, certificates evidencing the Series A Preferred
Stock shall contain a legend (the "Restricted Shares Legend") evidencing the
foregoing restrictions in substantially the form set forth on the form of Series
A Preferred Stock attached hereto as Exhibit A. In the event of certain
transfers of shares of Series A-1 Preferred Stock or Series A-2 Preferred Stock,
the transferred shares shall automatically be converted into shares of Series A-
3 Preferred Stock as provided in Section 12(i).
5. Paying Agent and Conversion Agent.
---------------------------------
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(a) The Company shall maintain (i) an office or agency where shares of
Series A Preferred Stock may be presented for payment (the "Paying Agent"), (ii)
an office or agency where shares of Series A Preferred Stock may be presented
for conversion (the "Conversion Agent"), and (iii) a Registrar, which shall be
an office or an agency where shares of Series A Preferred Stock may be presented
for transfer. The Company may appoint the Registrar, the Paying Agent and the
Conversion Agent and may appoint one or more additional paying agents and one or
more additional conversion agents in such other locations as it shall determine.
The term "Paying Agent" includes any additional paying agent, and the term
"Conversion Agent" includes any additional conversion agent. The Company may
change any Paying Agent or Conversion Agent without prior notice to any holder.
The Company shall notify the Registrar of the name and address of any Paying
Agent or Conversion Agent appointed by the Company. If the Company fails to
appoint or maintain another entity as Paying Agent or Conversion Agent, the
Registrar shall act as such. Notwithstanding the foregoing, the Company or any
of its Affiliates may act as Paying Agent, Registrar, coregistrar or Conversion
Agent.
(b) Neither the Company nor the Registrar shall be required (A) to
issue, countersign or register the transfer of or exchange any share of Series A
Preferred Stock during a period beginning at the opening of business 15 days
before any Redemption Date (as defined under Section 10(d)) and ending at the
close of business on such Redemption Date or (B) to register the transfer of or
exchange any share of Series A Preferred Stock so selected for redemption.
(c) If shares of Series A Preferred Stock are issued upon the
transfer, exchange or replacement of shares of Series A Preferred Stock bearing
the Restricted Shares Legend, or if a request is made to remove such Restricted
Shares Legend on shares of Series A Preferred Stock, the shares of Series A
Preferred Stock so issued shall bear the Restricted Shares Legend, or the
Restricted Shares Legend shall not be removed, as the case may be, unless the
holders of such shares shall request such Legend be removed, and outside counsel
for such holders reasonably determines that the transfer of such shares is no
longer restricted by the Securities Act and outside counsel for the Company
reasonably concurs in such determination.
(d) Each holder of a share of Series A Preferred Stock agrees to
indemnify the Company and the Registrar against any liability that directly
results from the transfer, exchange or assignment by such holder of such
holder's share of Series A Preferred Stock in violation of any provision of this
Certificate of Designation and/or applicable Federal or state securities law;
provided, however, that such indemnity shall not apply to acts of willful
misconduct or gross negligence on the part of the Company or the Registrar, as
the case may be.
(e) Payments due on the shares of Series A Preferred Stock shall be
payable at the office or agency of the Paying Agent maintained for such purpose
in The City of New York and at any other office or agency maintained by the
Paying Agent for such purpose. If any such payment is in cash, it shall be
payable in United States dollars by check drawn on, or wire transfer (provided
that appropriate wire instructions have been received by the Paying Agent at
least 15 days prior to the applicable date of payment) to a United States dollar
account maintained by the holder with, a bank located in New York City; provided
that at the option of the Company payment of dividends in cash may be made by
check mailed to the address of the person entitled thereto as such address shall
appear in the Series A Preferred Share Register; and
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provided further that any payment to a holder in excess of $100,000 shall be
made by wire transfer at the request of such holder.
6. Dividend Rights.
---------------
(a) The holders of Series A Preferred Stock shall be entitled to
cumulative dividends, in preference to dividends on any Junior Shares, which
shall accrue as provided herein. Dividends on each share of Series A Preferred
Stock will accrue on a daily basis at the rate of 8.00% per annum of the then
effective Liquidation Preference of such share from and including the Closing
Date to the first to occur of (i) the date on which such share is redeemed in
accordance with Section 10, (ii) the date on which such share is converted in
accordance with Section 12 (except for a conversion of shares of Series A-1
Preferred Stock or Series A-2 Preferred Stock into shares of Series A-3
Preferred Stock pursuant to Section 12(i))or (iii) the date the Company is
liquidated, dissolved or wound up in accordance with Section 9(c). Dividends
shall accrue as provided herein whether or not such dividends have been
declared, whether or not there are any unrestricted funds of the Company legally
available for the payment of dividends and whether or not such dividends are
then payable in cash as provided in Section 11. The Company will take all
actions required or permitted under the DGCL to permit the payment or accrual of
dividends on the Series A Preferred Stock. On each Dividend Payment Date,
commencing June 30, 2000, to and including the June 30, 2005 Dividend Payment
Date, accrued dividends on a share of the Series A Preferred Stock for the
preceding Dividend Period shall be added cumulatively to and thereafter remain a
part of the Liquidation Preference of such share. Thereafter, accrued dividends
shall be payable quarterly on each Dividend Payment Date, commencing on
September 30, 2005, as and when declared out of funds legally available
therefor, to the holders of record of the Series A Preferred Stock as of the
close of business on the applicable Dividend Record Date. Accrued dividends that
are not paid in full in cash on any such Dividend Payment Date (whether or not
declared and whether or not there are sufficient funds legally available for the
payment thereof) shall be added cumulatively to the Liquidation Preference on
the applicable Dividend Payment Date and thereafter remain a part thereof.
Accrued dividends added to the Liquidation Preference of a share of Series A
Preferred Stock in accordance with the foregoing provisions of this Section 6(a)
are sometimes referred to in this Certificate as "Accumulated Dividends". For
purposes of determining the amount of dividends "accrued" (i) as of the first
Dividend Payment Date and as of any date that is not a Dividend Payment Date,
such amount shall be calculated on the basis of the rate per annum specified
above in this paragraph for the actual number of days elapsed from and including
the Closing Date (in case of the first Dividend Payment Date and any date prior
to the first Dividend Payment Date) or the last preceding Dividend Payment Date
(in case of any other date) to the date as of which such determination is to be
made, based on a 360-day year, and (ii) as of any Dividend Payment Date after
the first Dividend Payment Date, such amount shall be calculated on the basis of
such rate per annum based on a 360-day year of twelve 30-day months. Whenever
the Company shall declare or pay any dividend on any Series A Preferred Stock,
the holders of each share of Series A Preferred Stock shall be entitled to
receive such dividend on a per share basis.
(b) If a Change of Control occurs prior to June 30, 2005 (the time
and date such Change of Control occurs being the "Change of Control Date"), an
amount equal to the Special Dividend shall be added to the Liquidation
Preference of each share of the Series A Preferred
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Stock as of the Change of Control Date and thereafter remain a part thereof. The
Special Dividend shall be added to the Liquidation Preference without regard to
whether or not the Company has made or intends to make a Change of Control Offer
or Purchase Offer.
(c) In addition to all dividends provided for above, whenever the
Company shall declare or pay any dividend in cash on any Common Stock, the
holders of Series A Preferred Stock shall be entitled to receive such dividend
on an as converted basis. Dividends payable pursuant to this Section 6(c) shall
not reduce any dividends otherwise payable pursuant to Section 6(a) or 6(b).
7. Payment of Dividend; Mechanics of Payment; Dividend Rights Preserved.
--------------------------------------------------------------------
(a) Subject to Sections 6 and 11, dividends on any share of Series A
Preferred Stock that are payable, and are punctually paid or duly provided for,
on any Dividend Payment Date shall be paid in cash to the person in whose name
such share of Series A Preferred Stock (or one or more predecessor shares of
Series A Preferred Stock) is registered at the close of business on the next
preceding March 15, June 15, September 15 and December 15 (each, a "Dividend
Record Date").
(b) Except as required by instruments governing the Preferred Stock
Mandatorily Redeemable 2009 of the Company in accordance with their terms on the
date hereof, unless full cumulative dividends on all outstanding shares of
Series A Preferred Stock 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) with respect to Junior Shares,
a dividend payable solely in Junior Shares, (B) with respect to Parity
Shares, a dividend payable solely in Junior Shares or Parity Shares or (C)
with respect to Parity Shares, a partial dividend paid pro rata on such
Parity Shares and the shares of Series A Preferred Stock) shall be declared
or paid upon, or any sum set apart for the payment of dividends upon, any
Junior Shares or Parity Shares, respectively;
(ii) no other distribution shall be declared or made upon, or
any sum set apart for the payment of any distribution upon, any Junior
Shares or Parity Shares;
(iii) no Junior Shares or Parity Shares or any warrants, rights,
calls or options (other than any cashless exercises of options or buybacks
of options or restricted stock from present or former employees, directors
or consultants) exercisable for or convertible into any Parity Share or
Junior Share shall be purchased, redeemed or otherwise acquired (other than
in exchange for or conversion of other Junior Shares or Parity Shares,
respectively) by the Company or any of its subsidiaries;
(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 of any Junior Shares or Parity Shares or any warrants, rights,
calls or options exercisable for or convertible into any Parity Shares or
Junior Shares by the Company or any of its subsidiaries (other than any
cashless exercises of options or option buybacks); and
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<PAGE>
(v) other than in accordance with Section 13 or 14 of this
Certificate of Designation, no Series A Preferred Stock shall be purchased,
redeemed or otherwise acquired by the Company or any of its subsidiaries
and no monies shall be paid into, or set apart or made available for a
sinking or other like fund for any such purpose, unless all outstanding
shares of Series A Preferred Stock shall be purchased, redeemed or
otherwise acquired by the Company.
Except as provided in Sections 6, 12 or 13, holders of Series A
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.
(c) The Company will notify the Registrar and make a public
announcement no later than the close of business on the tenth Business Day prior
to the Record Date for each dividend as to whether it will pay such dividend.
(d) Subject to the foregoing provisions of this Section 7, each share
of Series A Preferred Stock delivered under this Certificate of Designation upon
registration of transfer of or in exchange for or in lieu of any other share of
Series A Preferred Stock shall carry the rights to dividends accumulated and
unpaid, and to accrue, that were carried by such other shares of Series A
Preferred Stock.
(e) The holder of record of a share of Series A Preferred Stock at
the close of business on a Dividend Record Date with respect to the payment of
dividends on the shares of Series A Preferred Stock will be entitled to receive
such dividends with respect to such share of Series A Preferred Stock on the
corresponding Dividend Payment Date, notwithstanding the conversion of such
share after such Dividend Record Date and prior to such Dividend Payment Date.
8. Voting Rights.
-------------
(a) The holders of record of shares of Series A Preferred Stock shall
not be entitled to any voting rights except as hereinafter provided in this
Section 8 or as otherwise provided by law.
(b) The holders of record of shares of Series A Preferred Stock shall
be entitled to vote on all matters that the holders of the Company's Common
Stock are entitled to vote upon.
(c) In addition to the voting rights set forth above, the approval of
the holders of at least the Applicable Percentage of the then Outstanding shares
of Series A Preferred Stock voting or consenting, as the case may be, as one
separate class, will be required for the Company to:
(i) amend the Certificate of Incorporation, this Certificate of
Designation or the By-Laws so as to (A) affect adversely the rights,
preferences (including, without limitation, liquidation preferences,
conversion price, dividend rate and Optional Redemption provisions),
privileges or voting rights of holders of any shares of Series A Preferred
Stock, or (B) increase or decrease the number of authorized shares of
Series A Preferred Stock, or (C) alter the relative rights, preferences
(including, without limitation,
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<PAGE>
liquidation preferences, conversion price, dividend rate and Optional
Redemption provisions), privileges or voting rights as among holders of the
shares of Series A-1 Preferred Stock, Series A-2 Preferred Stock or Series
A-3 Preferred Stock;
(ii) in a single transaction or series of related transactions,
consolidate or merge with or into, or sell, assign, transfer, lease, convey
or otherwise dispose of all or substantially all of its assets to, any
person or adopt a plan of liquidation or dissolution;
(iii) enter into, or permit any of its subsidiaries to enter
into, any agreement or transaction that would impose material restrictions
on the Company's ability to honor the exercise of any rights of the holders
of the Series A Preferred Stock or on the ability of a holder of shares of
Series A Preferred Stock to exercise full rights of ownership thereof;
(iv) other than as contemplated by Section 12(d)(vi) and Section
12(d)(vii) or as otherwise required by instruments governing securities of
the Company in existence on the date of the Purchase Agreement in
accordance with their terms on such date, authorize, create, modify the
terms of, increase the authorized amount of or issue any shares of any
class or series of equity of the Company that would be deemed to be Parity
Shares or Senior Shares with respect to rights relating to (a) payments of
dividends or distributions, (b) rights to redemption, or (c) distribution
of assets upon liquidation, dissolution or winding-up, other than issuances
of shares of Series A-3 Preferred Stock upon the conversion of shares of
Series A-1 Preferred Stock or Series A-2 Preferred Stock in accordance with
Section 12(i); or
(v) commence or effect any tender or exchange offer for all or
any portion of the Common Stock or permit any subsidiary to do so.
As used in this Section 8(c), the "Applicable Percentage" shall mean
(A) in the case of clauses (i) and (iii), 75%; (B) in the case of clause (ii) in
the case of a transaction that constitutes a "Qualifying Transaction", a
majority, and in the case of a transaction that does not constitute a Qualifying
Transaction, 69%; (C) in the case of clause (iv) with respect to Senior Shares,
75%, and with respect to Parity Shares, 69%; and (D) in the case of clause (v),
a majority. As used herein, a "Qualifying Transaction" shall mean a transaction
in which the Company consolidates or merges with or into, or sells, assigns,
transfers, leases, conveys or otherwise disposes of all or substantially all of
its assets to, a person (i) if the Company is the surviving or continuing person
and the Series A Preferred Stock shall remain outstanding without any amendment
that would adversely affect the preferences, rights or powers of the Series A
Preferred Stock, or (ii) if the Company is not the surviving or continuing
person, (a) the entity formed by such consolidation or merger or to which such
sale, assignment, transfer, lease, conveyance or other disposition shall have
been made (in any such case, the "resulting entity") is a corporation or limited
liability company organized and existing under the laws of Bermuda, the United
States or any State thereof or the District of Columbia; and (b) the shares of
Series A Preferred Stock are converted into or exchanged for and become shares
of such resulting entity, having in respect of such resulting entity the same
(or more favorable) powers, preferences and relative, participating, optional or
other special rights that the shares of Series A Preferred Stock had immediately
prior to such transaction; and, in either case, the Company shall have delivered
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to the Registrar an Officers' Certificate and an opinion of counsel, reasonably
satisfactory in form and content, each stating that such consolidation, merger,
conveyance or transfer complies with this Section 8 and that all conditions
precedent herein provided for relating to such transaction have been complied
with.
In addition to, and not in lieu of, any approval otherwise required
pursuant to Section 8(c)(i), the approval of the holders of a majority of the
outstanding shares of Series A-1 Preferred Stock, Series A-2 Preferred Stock or
Series A-3 Preferred Stock, as the case may be, shall be required for the
Company to amend the Certificate of Incorporation, this Certificate of
Designation or the By-laws so as to affect adversely the rights, preferences
(including, without limitation, liquidation preferences, conversion price,
dividend rate and Optional Redemption provisions), privileges or voting rights
of the holders of Series A-1 Preferred Stock, Series A-2 Preferred Stock or
Series A-3 Preferred Stock, respectively.
(d) (i) For so long as the members of the HMTF Group in the aggregate
own any combination of shares of Common Stock and Series A-2 Preferred Stock
representing an amount of Common Stock (on an as-converted basis) that, taken
together, equals at least 4,107,143 shares of Common Stock (as adjusted for any
stock dividends, splits and combinations and similar events affecting the Common
Stock from time to time), the holders of the Series A-2 Preferred Stock, voting
as a single class by a plurality of the votes cast, shall be entitled to elect,
at any annual meeting of stockholders or special meeting held in place thereof,
or at a special meeting of the holders of the Series A-2 Preferred Stock called
as hereinafter provided, one director, or if greater, such number (rounded up to
the next whole number) equal to 10% of the then authorized number of members of
the Company's Board of Directors, to serve on the Board of Directors. At any
time after voting power to elect such director(s) shall have become vested and
be continuing in the holders of the Series A-2 Preferred Stock pursuant to this
paragraph, or if a vacancy shall exist in the office of a director elected by
the holders of the Series A-2 Preferred Stock at a time when the holders of the
Series A-2 Preferred Stock are entitled to elect a director pursuant to this
paragraph, a proper officer of the Company may, and upon the written request of
the holders of record of at least twenty-five percent (25%) of the Series A-2
Preferred Stock then outstanding addressed to the Secretary of the Company
shall, call a special meeting of the holders of the Series A-2 Preferred Stock
for the sole purpose of electing the director that such holders are entitled to
elect. If such meeting shall not be called by a proper officer of the Company
within twenty (20) days after personal service of said written request upon the
Secretary of the Company, or within twenty (20) days after mailing the same
within the United States by certified mail, addressed to the Secretary of the
Company at its principal executive offices, then the holders of at least twenty-
five percent (25%) of the Series A-2 Preferred Stock then outstanding may
designate in writing one of their number 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 meeting of stockholders of the Company and shall
be held at the place for holding the annual meetings of stockholders. As used
herein, "HMTF Group" means Hicks, Muse, Tate & Furst Incorporated, a Texas
corporation, and its Affiliates and their respective officers, directors,
partners, members, stockholders and employees (and members of their respective
families and trusts for the primary benefit of such family members) and HM4 ICG
Qualified Fund, LLC; HM4 ICG Private Fund, LLC; HM PG-IV ICG, LLC; HM 4-SBS ICG
Coinvestors, LLC; HM4-EQ ICG Coinvestors, LLC and HMTF Bridge ICG, LLC; and
their respective Affiliates. The action permitted or required to be taken by the
holders of the Series A-
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2 Preferred Stock pursuant to this Section 8(d)(i) may be taken (1) at any
annual or special meeting of stockholders or at a special meeting of the holders
of the Series A-2 Preferred Stock, or (2) without a meeting, without prior
notice, and without a vote if a consent or consents in writing, setting forth
the action so taken, shall be signed by the holders of the Series A-2 Preferred
Stock having not less than the minimum number of votes that would be necessary
to authorize or take such action at a meeting at which all shares held by the
holders of the Series A-2 Preferred Stock entitled to vote thereon were present
and voted and shall be delivered to the Company by delivery to its address
listed in Section 8.2 of the Purchase Agreement.
(ii) For so long as the members of the Liberty Group in the
aggregate own any combination of shares of Common Stock and Series A-1
Preferred Stock representing an amount of Common Stock (on an as-converted
basis) that, taken together, equals 2,687,571 shares of Common Stock (as
adjusted for any stock dividends, splits and combinations and similar
events affecting the Common Stock from time to time), the holders of the
Series A-1 Preferred Stock, voting as a single class by a plurality of the
votes cast or by written consent of a majority in interest of the holders
of the Series A-1 Preferred Stock, shall be entitled to elect one director,
or if greater, such number (rounded up to the next whole number) equal to
10% of the then authorized number of members of the Company's Board of
Directors, to serve on the Board of Directors, at any annual meeting of
stockholders or special meeting held in place thereof, or at a special
meeting of the holders of the Series A-1 Preferred Stock called as
hereinafter provided. At any time after voting power to elect such
director(s) shall have become vested and be continuing in the holders of
the Series A-1 Preferred Stock pursuant to this paragraph, or if a vacancy
shall exist in the office of a director elected by the holders of the
Series A-1 Preferred Stock at a time when the holders of the Series A-1
Preferred Stock are entitled to elect a director pursuant to this
paragraph, a proper officer of the Company may, and upon the written
request of the holders of record of at least twenty-five percent (25%) of
the Series A-1 Preferred Stock then outstanding addressed to the Secretary
of the Company shall, call a special meeting of the holders of the Series
A-1 Preferred Stock for the sole purpose of electing the director that such
holders are entitled to elect. If such meeting shall not be called by a
proper officer of the Company within twenty (20) days after personal
service of said written request upon the Secretary of the Company, or
within twenty (20) days after mailing the same within the United States by
certified mail, addressed to the Secretary of the Company at its principal
executive offices, then the holders of at least twenty-five percent (25%)
of the Series A-1 Preferred Stock then outstanding may designate in writing
one of their number 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 meeting of stockholders of the Company and shall be
held at the place for holding the annual meetings of stockholders. As used
herein, (i) "Liberty Group" means Liberty and its Affiliates, and (ii)
"Liberty" means Liberty Media Corporation, a Delaware corporation, provided
that if substantially all of the assets of Liberty Media Corporation are at
any time thereafter contributed to Liberty Media Group LLC, a Delaware
limited liability company, then from and after such contribution, Liberty
shall mean Liberty Media Group LLC. The action permitted or required to be
taken by the holders of the Series A-1 Preferred Stock pursuant to this
Section 8(d)(ii) may be taken (1) at any annual or special meeting of
stockholders or at a special meeting of the holders of the Series A-1
Preferred Stock, or (2) without a meeting, without prior
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notice, and without a vote if a consent or consents in writing, setting
forth the action so taken, shall be signed by the holders of the Series A-1
Preferred Stock having not less than the minimum number of votes that would
be necessary to authorize or take such action at a meeting at which all
shares held by the holders of the Series A-1 Preferred Stock entitled to
vote thereon were present and voted and shall be delivered to the Company
by delivery to its address listed in Section 8.2 of the Purchase Agreement.
(iii) For so long as the members of the Liberty Group own any
combination of shares of Common Stock and Series A-1 Preferred Stock
representing an amount of Common Stock (on an as-converted basis) that,
taken together, equals 8,928,571 shares of Common Stock (as adjusted for
any stock dividends, splits and combinations and similar events affecting
the Common Stock from time to time), the holders of the Series A-1
Preferred Stock, voting as a single class by plurality of the votes cast or
by written consent of a majority in interest of the holders of the Series
A-1 Preferred Stock, shall be entitled to elect one additional director, or
if greater, such number (rounded up to the next whole number) of additional
directors equal to 10% of the then authorized number of members of the
Company's Board of Directors, to serve on the Board of Directors, at any
annual meeting of stockholders or special meeting held in place thereof, or
at a special meeting of the holders of the Series A-1 Preferred Stock
called as hereinafter provided. At any time after voting power to elect
such director(s) shall have become vested and be continuing in the holders
of the Series A-1 Preferred Stock pursuant to this paragraph, or if a
vacancy shall exist in the office of a director elected by the holders of
the Series A-1 Preferred Stock at a time when the holders of the Series A-1
Preferred Stock are entitled to elect a director pursuant to this
paragraph, a proper officer of the Company may, and upon the written
request of the holders of record of at least twenty-five percent (25%) of
the Series A-1 Preferred Stock then outstanding addressed to the Secretary
of the Company shall, call a special meeting of the holders of the Series
A-1 Preferred Stock for the sole purpose of electing the director that such
holders are entitled to elect. If such meeting shall not be called by a
proper officer of the Company within twenty (20) days after personal
service of said written request upon the Secretary of the Company, or
within twenty (20) days after mailing the same within the United States by
certified mail, addressed to the Secretary of the Company at its principal
executive offices, then the holders of at least twenty-five percent (25%)
of the Series A-1 Preferred Stock then outstanding may designate in writing
one of their number 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 meeting of stockholders of the Company and shall be
held at the place for holding the annual meetings of stockholders. The
action permitted or required to be taken by the holders of the Series A-1
Preferred Stock pursuant to this Section 8(d)(iii) may be taken (1) at any
annual or special meeting of stockholders or at a special meeting of the
holders of the Series A-1 Preferred Stock, or (2) without a meeting,
without prior notice, and without a vote if a consent or consents in
writing, setting forth the action so taken, shall be signed by the holders
of the Series A-1 Preferred Stock having not less than the minimum number
of votes that would be necessary to authorize or take such action at a
meeting at which all shares held by the holders of the Series A-1 Preferred
Stock entitled to vote thereon were present and voted and shall be
delivered to the Company by delivery to its address listed in Section 8.2
of the Purchase Agreement.
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(e) In exercising the voting rights set forth in Section 8(b), each
share of Series A Preferred Stock shall be entitled to vote on an as-converted
basis with the holders of the Company's Common Stock. Except as set forth in the
preceding sentence and in Section 8(d), each share of Series A Preferred Stock
entitled to vote shall have one vote per share, provided, however, that if the
Company issues any other series of preferred stock which has the right to vote
with the Series A Preferred Stock as a single class on any matter not specified
in this Section 8, then the Series A Preferred Stock shall have with respect to
such matters one vote per $10,000 of the aggregate liquidation preference of all
shares of Series A Preferred Stock; and provided further that without the
unanimous consent of the holders of the Series A Preferred Stock, the Company
shall not issue any other series of preferred stock which has the right to vote
with the Series A Preferred Stock as a single class on any matter not specified
in this Section 8, unless such other series of preferred stock shall have with
respect to such matters one vote per $10,000 of the aggregate liquidation
preference of all shares of such other series of preferred stock and such
issuance is otherwise permitted hereunder. Except as otherwise required by
applicable law or as set forth herein, the shares of Series A Preferred Stock
shall not have any relative, participating, optional or other special voting
rights and powers and the consent of the holders thereof shall not be required
for the taking of any corporate action.
9. Ranking; Liquidation.
--------------------
(a) The shares of Series A Preferred Stock will, with respect to
dividend rights and rights on liquidation, winding-up and dissolution, rank (i)
senior to all shares of Common Stock (whether issued in one or more classes) and
to each other class of capital stock or series of Preferred Stock of the Company
(other than the Preferred Stock Mandatorily Redeemable 2009 of the Company) the
terms of which do not expressly provide that it ranks senior to or on a parity
with the shares of Series A Preferred Stock as to dividend rights and rights on
liquidation, winding-up and dissolution of the Company (collectively referred
to, together with all shares of Common Stock (whether issued in one or more
classes) of the Company, as "Junior Shares"); (ii) on a parity with the
Preferred Stock Mandatorily Redeemable 2009 of the Company and with each other
class of capital stock or series of Preferred Stock of the Company issued by the
Company in compliance with Section 8, the terms of which expressly provide that
such class or series will rank on a parity with the shares of Series A Preferred
Stock as to dividend rights and rights on liquidation, winding-up and
dissolution of the Company (collectively referred to as "Parity Shares"); and
(iii) junior to each class of capital stock or series of Preferred Stock of the
Company issued by the Company in compliance with Section 8, the terms of which
expressly provide that such class or series will rank senior to the shares of
Series A Preferred Stock as to dividend rights and rights upon liquidation,
winding-up and dissolution of the Company (collectively referred to as "Senior
Shares"). The Series A-2 Preferred Stock and Series A-3 Preferred Stock shall be
deemed to be Parity Shares with respect to the Series A-1 Preferred Stock; the
Series A-1 Preferred Stock and Series A-3 Preferred Stock shall be deemed to be
Parity Shares with respect to the Series A-2 Preferred Stock; and the Series A-1
Preferred Stock and Series A-2 Preferred Stock shall be deemed to be Parity
Shares with respect to the Series A-3 Preferred Stock.
(b) No dividend whatsoever shall be declared or paid upon, or any sum
set apart for the payment of dividends upon, any outstanding shares of Series A
Preferred Stock with respect to any dividend period unless all dividends for all
preceding dividend periods have been
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declared and paid, or declared and a sufficient sum set apart for the payment of
such dividends, upon all outstanding Senior Shares.
(c) In the event of any liquidation, dissolution or winding-up of the
Company, whether voluntary or involuntary, the holders of the shares of Series A
Preferred Stock then Outstanding shall be entitled to receive, prior and in
preference to any distribution of any of the assets of the Company to the
holders of shares of Common Stock or Junior Shares by reason of their ownership
thereof, an amount equal to the greater of (i) the then effective Liquidation
Preference of their shares of Series A Preferred Stock, plus an amount equal to
all dividends accrued and unpaid thereon from the last Dividend Payment Date to
the date fixed for liquidation, dissolution or winding-up or (ii) the amount
such holders would receive if such holders converted their shares of Series A
Preferred Stock into Common Stock immediately prior to such liquidation,
dissolution or winding up. If upon the occurrence of such event the assets of
the Company shall be insufficient to permit the payment to such holders of the
full preferential amount and all liquidating payments on all shares of Series A
Preferred Stock and any Parity Shares, the entire assets of the Company legally
available for distribution shall be distributed among the holders of the shares
of Series A Preferred Stock and the holders of all Parity Shares ratably in
accordance with the respective amounts that would be payable on such shares of
Series A Preferred Stock and any such Parity Shares if all amounts payable
thereon were paid in full. After payment of the full preferential amount (and,
if applicable, an amount equal to a pro rata dividend to the holders of
Outstanding shares of Series A Preferred Stock), such holders shall not be
entitled to any additional distribution of assets of the Company.
10. Redemption.
----------
(a) The shares of Series A Preferred Stock may be redeemed by the
Company at any time commencing on or after June 30, 2005, in whole or from time
to time in part, at the election of the Company (an "Optional Redemption"), at a
redemption price (the "Redemption Price") payable in cash equal to 100% of the
then effective Liquidation Preference (after giving effect to the Special
Dividend, if applicable), plus accrued and unpaid dividends thereon from the
last Dividend Payment Date to the date of redemption (the "Optional Redemption
Date").
(b) Shares of Series A Preferred Stock (if not earlier redeemed or
converted) shall be mandatorily redeemed by the Company on June 30, 2015 (the
"Mandatory Redemption Date"); provided, however, that if such date is not a
Business Day, then the Mandatory Redemption Date shall be the next Business Day,
at a Redemption Price per share in cash equal to the then effective Liquidation
Preference (after giving effect to the Special Dividend, if applicable), plus
accrued and unpaid dividends thereon from the last Dividend Payment Date to the
Mandatory Redemption Date.
(c) In the event of a redemption of fewer than all the shares of
Series A Preferred Stock, the shares of Series A Preferred Stock will be chosen
for redemption by the Registrar from the Outstanding shares of Series A
Preferred Stock not previously called for redemption, pro rata or by lot or by
such other method as the Registrar shall deem fair and appropriate; provided,
that the Company may redeem (an "Odd-lot Redemption") all shares held by holders
of fewer than 100 shares of Series A Preferred Stock (or by holders that would
hold fewer than 100 shares of Series A Preferred Stock following such
redemption) prior to its redemption of
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other shares of Series A Preferred Stock; provided, further, that the Company
may not redeem a portion of any share without redeeming the entire share.
Notwithstanding the foregoing, the Company may not effect an Odd-lot Redemption
with respect to any shares of Series A Preferred Stock held by the members of
the Liberty Group or the HMTF Group. If fewer than all the shares of Series A
Preferred Stock represented by any share certificate are so to be redeemed, (i)
the Company shall issue a new certificate for the shares not redeemed and (ii)
if any shares represented thereby are converted before termination of the
conversion right with respect to such shares, such converted shares shall be
deemed (so far as may be) to be the shares represented by such share certificate
that was selected for redemption. Shares of Series A Preferred Stock that have
been converted during a selection of shares of Series A Preferred Stock to be
redeemed shall be treated by the Registrar as outstanding for the purpose of
such selection but not for the purpose of the payment of the Redemption Price.
(d) In the event the Company elects to effect an Optional Redemption,
the Company shall (i) make a public announcement of the redemption and (ii) give
a redemption notice (the "Redemption Notice") to the holders not fewer than 30
days nor more than 60 days before the redemption date (the "Redemption Date").
Whenever a Redemption Notice is required to be delivered to the holders, such
notice shall provide the information set forth below and be given by first class
mail, postage prepaid to each holder of shares of Series A Preferred Stock to be
redeemed, at such holder's address appearing in the Series A Preferred Share
Register. All Redemption Notices shall identify the shares of Series A Preferred
Stock to be redeemed (including CUSIP number) and shall state:
(i) the Redemption Date;
(ii) the applicable Redemption Price;
(iii) if fewer than all the outstanding shares of Series A
Preferred Stock are to be redeemed, the identification (and, in the case of
partial redemption, the certificate number, the total number of shares
represented thereby and the number of such shares being redeemed on the
Redemption Date) of the particular shares of Series A Preferred Stock to be
redeemed;
(iv) that on the Redemption Date the Redemption Price,
together with all accrued and unpaid dividends from the last Dividend
Payment Date to the Redemption Date, will become due and payable upon each
such share of Series A Preferred Stock to be redeemed and that dividends
thereon will cease to accrue on and after said date;
(v) the conversion price, the date on which the right to
convert shares of Series A Preferred Stock to be redeemed will terminate
and the place or places where such shares of Series A Preferred Stock may
be surrendered for conversion; and
(vi) the place or places where such shares of Series A
Preferred Stock are to be surrendered for payment of the Redemption Price
and the other amounts which are then payable.
The Redemption Notice shall be given by the Company or, at the
Company's request, by the Registrar in the name and at the expense of the
Company; provided that if the
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Company so requests, it shall provide the Registrar adequate time, as reasonably
determined by the Registrar, to deliver such notices in a timely fashion.
(e) Prior to any Redemption Date, the Company shall deposit with the
Registrar or with a Paying Agent (or, if the Company is acting as its own Paying
Agent, segregate and hold in trust) an amount of consideration sufficient to pay
the Redemption Price of all the shares of Series A Preferred Stock that are to
be redeemed on that date plus all accrued and unpaid dividends thereon from the
last Dividend Payment Date to the Redemption Date. If any share of Series A
Preferred Stock called for redemption is converted, any consideration deposited
with the Registrar or with any Paying Agent or so segregated and held in trust
for the redemption of such share of Series A Preferred Stock shall be paid or
delivered to the Company upon Company Order or, if then held by the Company,
shall be discharged from such trust.
(f) Notice of redemption having been given as aforesaid, the shares
of Series A Preferred Stock so to be redeemed shall, on the Redemption Date,
become due and payable at the Redemption Price therein specified plus all
accrued and unpaid dividends thereon from the last Dividend Payment Date to the
Redemption Date, and from and after such date (unless the Company shall default
in the payment of the Redemption Price and accrued but unpaid dividends)
dividends on such shares of Series A Preferred Stock shall cease to accrue and
such shares shall cease to be convertible into shares of Common Stock. Upon
surrender of any such shares of Series A Preferred Stock for redemption in
accordance with said notice, such shares of Series A Preferred Stock shall be
redeemed by the Company at the applicable Redemption Price, together with all
accrued and unpaid dividends thereon from the last Dividend Payment Date to the
Redemption Date. If any share of Series A Preferred Stock called for redemption
shall not be so paid upon surrender thereof for redemption, the Redemption Price
thereof, and all accrued and unpaid dividends thereon from the last Dividend
Payment Date to the Redemption Date, shall, until paid, bear interest from the
Redemption Date at the dividend rate payable on the shares of Series A Preferred
Stock and such shares shall remain convertible.
(g) Any certificate that represents more than one share of Series A
Preferred Stock and is to be redeemed only in part shall be surrendered at any
office or agency of the Company designated for that purpose (with, if the
Company or the Registrar so requires, due endorsement by, or a written
instrument of transfer in form satisfactory to the Company and the Registrar
duly executed by, the holder thereof or his attorney duly authorized in
writing), and the Company shall execute, and the Registrar shall countersign and
deliver to the holder of such share of Series A Preferred Stock without service
charge, a new Series A Preferred Stock certificate or certificates, representing
any number of shares of Series A Preferred Stock as requested by such holder, in
aggregate amount equal to and in exchange for the number of shares not redeemed
and represented by the Series A Preferred Stock certificate so surrendered.
(h) If a share of Series A Preferred Stock is redeemed subsequent to
a Dividend Record Date with respect to any Dividend Payment Date and on or prior
to such Dividend Payment Date, then the accrued dividends payable on such
Dividend Payment Date will be paid to the person in whose name such share of
Series A Preferred Stock is registered at the close of business on such Dividend
Record Date.
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(i) Any redemption pursuant to this Section 10 shall be made only
to the extent the Company has sufficient funds legally available therefor;
provided that if the shares of Series A Preferred Stock are not redeemed on the
Mandatory Redemption Date because sufficient funds are not available, the
Company shall have a continuing obligation to redeem such shares as and when
sufficient funds become available.
11. Method of Payments.
------------------
The Company may make any dividend payments in cash with respect to
any dividend period beginning after June 30, 2005. Any dividends not paid in
cash on a current basis on the applicable Dividend Payment Date with respect to
all periods after June 30, 2005, and all dividends with respect to periods prior
to June 30, 2005, shall not be paid in cash but rather shall constitute
Accumulated Dividends. No payment may be made in respect of Accumulated
Dividends as dividends. Rather, Accumulated Dividends shall be added to the
Liquidation Preference. Dividends may not be paid by delivery of shares of
Series A Preferred Stock.
12. Conversion.
----------
(a) Subject to and upon compliance with the provisions of this
Certificate of Designation, at the option of the holder thereof, any share of
Series A Preferred Stock (including without limitation any share of Series A-3
Preferred Stock issued upon automatic conversion of a share of Series A-1
Preferred Stock or Series A-2 Preferred Stock pursuant to Section 12(i)) may be
converted at any time into a number of fully paid and nonassessable shares of
Common Stock (calculated as to each conversion to the nearest 1/100 of a share)
equal to (i) the then effective Liquidation Preference thereof plus accrued and
unpaid dividends to the date of conversion divided by (ii) the Conversion Price
in effect at the time of conversion. Such conversion right shall expire at the
close of business on the Business Day next preceding the Mandatory Redemption
Date. In case a share of Series A Preferred Stock is called for redemption, such
conversion right in respect of the share so called shall expire at the close of
business on the Business Day next preceding the Redemption Date, unless the
Company defaults in making the payment due upon redemption.
The Conversion Price shall initially be $28.00 per share of Common
Stock. The Conversion Price shall be adjusted in certain instances as provided
in Section 12(d) and Section 12(e).
(b) In order to exercise the conversion privilege, the holder of
any share of Series A Preferred Stock to be converted shall surrender the
certificate for such share, duly endorsed or assigned to the Company or in
blank, at any office or agency of the Company maintained for that purpose,
accompanied by written notice to the Company at such office or agency that the
holder elects to convert such share or, if fewer than all the shares of Series A
Preferred Stock represented by a single share certificate are to be converted,
the number of shares represented thereby to be converted.
Shares of Series A Preferred Stock shall be deemed to have been
converted immediately prior to the close of business on the day of surrender of
such shares for conversion in accordance with the foregoing provisions, and at
such time the rights of the holders of such
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<PAGE>
shares as holders shall cease, and the person or persons entitled to receive the
shares of Common Stock issuable upon conversion shall be treated for all
purposes as the record holder or holders of such shares of Common Stock at such
time. As promptly as practicable on or after the conversion date, the Company
shall issue and shall deliver at such office or agency a certificate or
certificates for the number of full shares of Common Stock issuable upon
conversion.
In the case of any conversion of fewer than all the shares of Series
A Preferred Stock evidenced by a certificate, upon such conversion the Company
shall execute and the Registrar shall countersign and deliver to the holder
thereof, at the expense of the Company, a new certificate or certificates
representing the number of unconverted shares of Series A Preferred Stock.
(c) No fractional shares of Common Stock shall be issued upon the
conversion of a share of Series A Preferred Stock. If more than one share of
Series A Preferred Stock shall be surrendered for conversion at one time by the
same holder, the number of full shares of Common Stock which shall be issuable
upon conversion thereof shall be computed on the basis of the aggregate number
of shares of Series A Preferred Stock so surrendered. Instead of any fractional
shares of Common Stock which would otherwise be issuable upon conversion of any
share of Series A Preferred Stock, the Company shall round down to the nearest
whole share if such fraction is an amount less than 0.5 and round up to the
nearest whole share if such fraction is an amount equal to or greater than 0.5
and shall issue the appropriate number of full shares of Common Stock which
shall be issuable upon conversion in accordance with the foregoing.
(d) The Conversion Price shall be adjusted from time to time by the
Company as follows:
(i) If the Company shall hereafter pay a dividend or make a
distribution to all holders of the outstanding shares of Common Stock in
shares of Common Stock, the Conversion Price 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 reduced by multiplying such Conversion Price by a fraction of which the
numerator shall be the number of shares of Common Stock outstanding at the
close of business on the Common Stock Record Date (as defined in Section
12(d)(vi)) fixed for such determination and the denominator shall be the
sum of such number of shares and the total number of shares constituting
such dividend or other distribution, such reduction to become effective
immediately after the opening of business on the day following the Common
Stock Record Date. If any dividend or distribution of the type described
in this Section 12(d)(i) is declared but not so paid or made, the
Conversion Price shall again be adjusted to the Conversion Price which
would then be in effect if such dividend or distribution had not been
declared.
(ii) (a) In case the Company shall issue or sell any Common
Stock, or securities convertible into or exercisable or exchangeable for
shares of Common Stock (other than Common Stock, or securities convertible
into or exercisable or exchangeable for shares of Common Stock, issued (A)
pursuant to the Company's existing or future stock option plans or pursuant
to any other existing or future Common Stock-related director or employee
compensation plan or arrangement of the Company approved by the
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Board of Directors (provided that, with respect to any stock option or
other right granted after April 7, 2000, the per share exercise price of
such option or right is equal to or greater than the per share Closing
Price of the Common Stock on the date of the grant thereof), (B) as
consideration for the acquisition of a business or of assets (provided that
the fair market value of such business or assets, as determined by the
Board of Directors in good faith, is equal to or greater than the aggregate
Current Market Price of the Common Stock to be issued as consideration for
such acquisition, in each case determined at the time the Company enters
into a binding agreement with respect to such acquisition), (C) pursuant to
warrants outstanding on the date hereof, (D) upon the conversion of any
shares of Series A Preferred Stock pursuant to Section 12(a), (E) upon the
automatic conversion of shares of Series A-1 Preferred Stock or Series A-2
Preferred Stock pursuant to Section 12(i) or (F) upon exercise or
conversion of any security the issuance of which caused an adjustment under
the provisions hereof or the issuance of which did not require adjustments
hereunder), for a consideration per share (or, in the case of convertible
or exchangeable securities having a conversion or exchange price per share
of Common Stock) less than the Current Market Price of the Common Stock on
the date of such issuance the Conversion Price in effect immediately prior
to such issuance or sale shall be reduced effective as of immediately
following such issuance or sale by multiplying such Conversion Price by a
fraction, (1) the numerator of which shall be the sum of (x) the number of
shares of Common Stock outstanding immediately prior to such issuance or
sale and (y) the number of shares of Common Stock which the aggregate
consideration receivable by the Company for the total number of additional
shares of Common Stock so issued or sold (or issuable on conversion,
exercise or exchange) would purchase at the Current Market Price in effect
immediately prior to such issuance or sale and (2) the denominator of which
shall be the sum of the number of shares of Common Stock outstanding
immediately prior to such issuance or sale and the number of additional
shares of Common Stock to be issued or sold (or, in the case of convertible
or exchangeable securities, issuable on conversion, exercise or exchange);
(b) If the Company shall offer or issue rights or warrants to
all holders of its outstanding shares of Common Stock entitling them to
subscribe for or purchase shares of Common Stock at a price per share less
than the Current Market Price (as defined in Section 12(d)(viii)) on the
Common Stock Record Date fixed for the determination of shareholders
entitled to receive such rights or warrants, the Conversion Price shall be
adjusted so that the same shall equal the price determined by multiplying
the Conversion Price in effect at the opening of business on the date after
such Common Stock Record Date by a fraction of which the numerator shall be
the number of shares of Common Stock outstanding at the close of business
on the Common Stock 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 or warrants would purchase at such Current
Market Price and of which the denominator shall be the number of shares of
Common Stock outstanding at the close of business on the Common Stock
Record Date plus the total number of additional shares of Common Stock
subject to such rights or warrants for subscription or purchase. Such
adjustment shall become effective immediately after the opening of business
on the day following the Common Stock 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
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<PAGE>
to such rights or warrants, upon the expiration or termination of such
rights or warrants the Conversion Price shall again be adjusted to be the
Conversion Price 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 Price shall
again be adjusted to be the Conversion Price 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
shares of 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 (x) any consideration received for such
rights or warrants, with the value of such consideration and the amount of
such exercise or subscription price, if other than cash, to be determined
by the Board of Directors and (y) the amount of any exercise price or
subscription price required to be paid upon exercise of such warrants or
rights.
(iii) If the outstanding shares of Common Stock shall be
subdivided into a greater number of shares of Common Stock, the Conversion
Price in effect at the opening of business on the day following the day
upon which such subdivision becomes effective shall be proportionately
reduced, and, conversely, if the outstanding shares of Common Stock shall
be combined into a smaller number of shares of Common Stock, the Conversion
Price in effect at the opening of business on the day following the day
upon which such combination becomes effective shall be proportionately
increased, such reduction or increase, 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.
(iv) If the Company shall, by dividend or otherwise, distribute
to all holders of its shares of Common Stock any class of capital stock of
the Company (other than any dividends or distributions to which Section
12(d)(i) applies) or evidences of its indebtedness, cash or other assets
(including securities, but excluding any rights or warrants of a type
referred to in Section 12(d)(ii)(b) and Spinoff Securities and dividends
and distributions paid exclusively in cash and excluding any capital stock,
evidences of indebtedness, cash or assets distributed upon a merger or
consolidation to which Section 12(e) applies) (the foregoing hereinafter in
this Section 12(d)(iv) called the "Distributed Securities"), then, in each
such case, the Conversion Price shall be reduced so that the same shall be
equal to the price determined by multiplying the Conversion Price in effect
immediately prior to the close of business on the Common Stock Record Date
(as defined in Section 12(d)(viii) with respect to such distribution by a
fraction of which the numerator shall be the Current Market Price
(determined as provided in Section 12(d)(viii)) on such date less the fair
market value (as determined by the Board of Directors, whose good faith
determination shall be conclusive and described in a resolution of the
Board of Directors) on such date of the portion of the Distributed
Securities so distributed applicable to one share of Common Stock and the
denominator shall be such Current Market Price, such reduction to become
effective immediately prior to the opening of business on the day following
the Common Stock 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
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<PAGE>
Stock is equal to or greater than the Current Market Price on the Common
Stock Record Date, in lieu of the foregoing adjustment, adequate provision
shall be made so that each holder of shares of Series A Preferred Stock
shall have the right to receive upon conversion of a share of Series A
Preferred Stock(or any portion thereof) the amount of Distributed
Securities such holder would have received had such holder converted such
share of Series A Preferred Stock(or portion thereof) immediately prior to
such Common Stock Record Date. If such dividend or distribution is not so
paid or made, the Conversion Price shall again be adjusted to be the
Conversion Price 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 of this Section
12(d)(iv) by reference to the actual or when issued trading market for any
securities constituting 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 Section 12(d)(vi) to the
extent possible.
Rights or warrants distributed by the Company to all holders of shares
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"): (A) are deemed to be transferred
with such shares of Common Stock; (B) are not exercisable; and (C) are also
issued in respect of future issuances of shares of Common Stock, shall be deemed
not to have been distributed for purposes of this Section 12(d)(iv) (and no
adjustment to the Conversion Price under this Section 12(d)(iv) shall be
required) until the occurrence of the earliest Dilution Trigger Event, whereupon
such rights or warrants shall be deemed to have been distributed and an
appropriate adjustment to the Conversion Price under this Section 12(d)(iv)
shall be made. If any such rights or warrants, including any such existing
rights or warrants distributed prior to the first issuance of shares of Series A
Preferred Stock, are subject to subsequent events, upon the occurrence of each
of which such rights or warrants shall become exercisable to purchase
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 Price under this Section 12(d)(iv) 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 Price 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 to which this Section 12(d)(iv) were applicable, equal to the
per share redemption or repurchase price received by a holder or holders of
shares of Common Stock with respect to such rights or warrants (assuming such
holder had retained such rights or warrants), made to all holders of shares 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 Price shall be
readjusted as if such rights and warrants had not been issued.
Notwithstanding any other provision of this Section 12(d)(iv) to the
contrary, rights, warrants, evidences of indebtedness, other securities, cash or
other assets (including,
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without limitation, any rights distributed pursuant to any shareholder rights
plan) shall be deemed not to have been distributed for purposes of this Section
12(d)(iv) if the Company makes proper provision so that each holder of shares of
Series A Preferred Stock on the date fixed for determination of shareholders
entitled to receive such distribution shall receive upon such distribution, 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 Series A Preferred Stock into a share of Common Stock.
For purposes of this Section 12(d)(iv) and Sections 12(d)(i) and (ii),
any dividend or distribution to which this Section 12(d)(iv) is applicable that
also includes shares of Common Stock, or rights or warrants to subscribe for or
purchase shares of Common Stock to which Section 12(d)(ii) applies (or both),
shall be deemed instead to be (A) a dividend or distribution of the evidences of
indebtedness, assets, shares of capital stock, rights or warrants other than
such shares of Common Stock or rights or warrants to which Section 12(d)(ii)
applies (and any Conversion Price reduction required by this Section 12(d)(iv)
with respect to such dividend or distribution shall then be made) immediately
followed by (B) a dividend or distribution of such shares of Common Stock or
such rights or warrants (and any further Conversion Price reduction required by
Sections 12(d)(i) or 12(d)(ii) with respect to such dividend or distribution
shall then be made), except that (1) the Common Stock Record Date of such
dividend or distribution shall be substituted as "the date fixed for the
determination of stockholders entitled to receive such dividend or other
distribution", "the Common Stock Record Date fixed for such determination" and
"the Common Stock Record Date" within the meaning of Section 12(d)(i) and as
"the date fixed for the determination of shareholders entitled to receive such
rights or warrants", "the Common Stock Record Date fixed for the determination
of the share holders entitled to receive such rights or warrants" and "such
Common Stock Record Date" for purposes of Section 12(d)(ii), and (2) any shares
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"
for the purposes of Section 12(d)(i).
(v) If a tender offer made by the Company or any of its
subsidiaries for all or any portion of the Common Stock expires and such
tender 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) of an aggregate
consideration having a fair market value (as determined by the Board of
Directors, whose good faith determination shall be conclusive and described
in a resolution of the Board of Directors) that, combined together with the
aggregate of the cash plus the fair market value (as determined by the
Board of Directors, whose good faith determination shall be conclusive and
described in a resolution of the Board of Directors) 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 shares of Common Stock expiring within the 12 months
preceding the expiration of such tender offer and in respect of which no
adjustment pursuant to this Section 12(d)(v) has been made, exceeds 5% of
the net income of the Company reported for the 12 month period ending with
the fiscal quarter next preceding such payment (the "12 Month Net Income")
(determined as of the last time (the "Expiration Time") tenders could have
been made pursuant to such tender offer (as it may be amended)), then, and
in each such case, immediately prior to the opening of business on the day
after the date of the Expiration
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Time, the Conversion Price shall be adjusted so that the same shall equal
the price determined by multiplying the Conversion Price in effect
immediately prior to the close of business on the date of the Expiration
Time by a fraction of which the numerator 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 a share of Common Stock on
the trading day next succeeding the Expiration Time and the denominator
shall be the sum of (x) the fair market value (determined as aforesaid) 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 shares of 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 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 Price shall again be adjusted to be the
Conversion Price which would then be in effect if such tender offer had not
been made. If the application of this Section 12(d)(v) to any tender offer
would result in an increase in the Conversion Price, no adjustment shall be
made for such tender offer under this Section 12(d)(v).
(vi) If the Company effects a Spinoff, the Company shall make
appropriate provision so that the holders of Series A Preferred Stock have
the right to exchange their shares of Series A Preferred Stock on the
effective date of the Spinoff for (a) shares of Exchange Preferred Stock of
the Company and (b) shares of Mirror Preferred Stock of the issuer of the
Spinoff Securities. The sum of the initial liquidation preference of the
shares of Exchange Preferred Stock and Mirror Preferred Stock delivered in
exchange for a share of Series A Preferred Stock will equal the Liquidation
Preference of, plus accrued and unpaid dividends on, a share of Series A
Preferred Stock on the effective date of the Spinoff. The Mirror Preferred
Stock will have an aggregate initial liquidation preference equal to the
product of the aggregate Liquidation Preference of, plus accrued and unpaid
dividends on, the shares of Series A Preferred Stock exchanged therefor and
the quotient of (x) the product of the number (or fraction) of Spinoff
Securities that would have been receivable upon such Spinoff by a holder of
the number of shares of Common Stock issuable upon conversion of a share of
Series A Preferred Stock immediately prior to the record date for the
Spinoff and the average of the daily Closing Prices of the Spinoff
Securities for the period of ten consecutive trading days commencing on the
tenth trading day following the effective date of the Spinoff, divided by
(y) the sum of the amount determined pursuant to clause (x), plus the fair
value of the shares of Common Stock and other securities or property (other
than Spinoff Securities) that would have been receivable by a holder of a
share of Series A Preferred Stock upon conversion thereof immediately prior
to the record date for the Spinoff (such fair value to be determined in the
case of Common Stock or other securities with a Closing Price in the same
manner as provided in clause (x) and otherwise by the Board of Directors in
the exercise of its judgment). The shares of Exchange Preferred Stock will
have an aggregate initial
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liquidation preference equal to the difference between the aggregate
Liquidation Preference of plus accrued and unpaid dividends on the shares
of Series A Preferred Stock exchanged therefor and the aggregate initial
liquidation preference of the Mirror Preferred Stock. From and after the
effective date of such Spinoff, the holders of any shares of Series A
Preferred Stock that have not been exchanged for Mirror Preferred Stock and
Exchange Preferred Stock as provided above shall have no conversion rights
under these provisions with respect to such Spinoff Securities.
(vii) If the Company or a subsidiary of the Company (the
applicable of the foregoing being the "Offeror") makes an Exchange Offer,
the Offeror shall concurrently therewith make an equivalent offer to the
holders of Series A Preferred Stock pursuant to which such holders may
tender Series A Preferred Stock, based upon the number of shares of Common
Stock into which such tendered shares of Series A Preferred Stock are then
convertible (and in lieu of tendering outstanding shares of Common Stock),
together with any other consideration that may be required to be tendered
pursuant to the Exchange Offer, and receive in exchange therefor, in lieu
of Exchange Securities (and other property, if applicable), Mirror
Preferred Stock with an aggregate liquidation preference equal to the
aggregate Liquidation Preference of plus accrued and unpaid dividends on
the shares of Series A Preferred Stock exchanged therefor. Whether or not a
holder of Series A Preferred Stock elects to accept the offer and tender
Series A Preferred Stock, no adjustment to the Conversion Price will be
made in connection with the Exchange Offer. If an Exchange Offer is made as
discussed above, the Offeror shall, concurrently with the distribution of
the offering circular or prospectus and related documents to holders of
Common Stock, provide each holder of Series A Preferred Stock with a notice
setting forth the offer described herein and describing the Exchange Offer,
the Exchange Securities and the Mirror Preferred Stock. Such notice shall
be accompanied by the offering circular, prospectus or similar document
provided to holders of Common Stock in respect of the Exchange Offer and a
copy of the certificate of designations (or similar document) proposed to
be filed by the Offeror in order to establish the Mirror Preferred Stock.
No failure to mail the notice contemplated herein or any defect therein or
in the mailing thereof shall affect the validity of the applicable Exchange
Offer.
(viii) For purposes of this Section 12(d), the following terms
shall have the meaning indicated:
"Closing Price" with respect to any securities on any day means the
closing sale price as of 4:00 p.m. Eastern Time on such day or any earlier final
closing on such day or, if no such sale takes place on such day, the average of
the reported high and low bid prices on such day, in each case on the Nasdaq
National Market, or the New York Stock Exchange, as applicable, or, if such
security is not listed or admitted to trading on such national market or
exchange, on the national stock exchange or Commission recognized trading market
in the United States on which such security is quoted or listed or admitted to
trading, or, if not quoted or listed or admitted to trading on any national
stock exchange or Commission recognized trading market in the United States, the
average of the high and low bid prices of such security on the over-the-counter
market on the day in question as reported by the National Quotation Bureau
Incorporated or a similar generally accepted reporting service in the United
States, or, if
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not so available, in such manner as furnished by any New York Stock Exchange
member firm selected from time to time by the Board of Directors for that
purpose, or a price determined in good faith by the Board of Directors, whose
determination shall be conclusive and described in a resolution of the Board of
Directors.
"Common Stock Record Date" means, 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).
"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; provided, however, that (A) if the "ex" date (as
hereinafter defined) for any event (other than the issuance or distribution
requiring such computation) that requires an adjustment to the Conversion Price
pursuant to Section 12(d)(i), (ii), (iii), (iv), (v) or (vi) occurs during such
10 consecutive trading days, the Closing Price for each trading day prior to the
"ex" date for such other event shall be adjusted by multiplying such Closing
Price by the same fraction by which the Conversion Price is so required to be
adjusted as a result of such other event, (B) if the "ex" date for any event
(other than the issuance or distribution requiring such computation) that
requires an adjustment to the Conversion Price pursuant to Section 12(d)(i),
(ii), (iii), (iv),(v) or (vi) occurs on or after the "ex" date for the issuance
or distribution requiring such computation and prior to the day in question, the
Closing Price for each trading day on and after the "ex" date for such other
event shall be adjusted by multiplying such Closing Price by the reciprocal of
the fraction by which the Conversion Price is so required to be adjusted as a
result of such other event and (C) if the "ex" date for the issuance or
distribution requiring such computation is prior to the day in question, after
taking into account any adjustment required pursuant to clause (A) or (B) of
this proviso, the Closing Price for each trading day on or after such "ex" date
shall be adjusted by adding thereto the amount of any cash and the fair market
value (as determined by the Board of Directors in a manner consistent with any
good faith determination of such value for purposes of Section 12(d)(iv), whose
good faith determination shall be conclusive and described in a resolution of
the Board of Directors) of the evidences of indebtedness, shares of capital
stock or assets being distributed applicable to one share of Common Stock as of
the close of business on the day before such "ex" date. For purposes of any
computation under Section 12(d)(v), the Current Market Price on any date shall
be deemed to be the average of the daily Closing Prices per share of Common
Stock for such day and the next two succeeding trading days; provided, however,
that, if the "ex" date for any event (other than the tender offer requiring such
computation) that requires an adjustment to the Conversion Price pursuant to
Section 12(d)(i), (ii), (iii), (iv), (v) or (vi) occurs on or after the
Expiration Time for the tender or exchange offer requiring such computation and
prior to the day in question, the Closing Price for each trading day on and
after the "ex" date for such other event shall be adjusted by multiplying such
Closing Price by the reciprocal of the fraction by which the Conversion Price is
so required to be adjusted as a result of such other event. For purposes of this
paragraph, the term "ex" date (1) when used with respect to any issuance or
distribution, means the first date on which the shares of Common Stock trade
regular way on the relevant exchange or in the relevant market from which the
Closing Price was obtained without the right to receive such issuance or
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distribution, (2) when used with respect to any subdivision or combination of
shares of Common Stock, means the first date on which the shares of Common Stock
trade regular way on such exchange or in such market after the time at which
such subdivision or combination becomes effective and (3) when used with respect
to any tender or exchange offer means the first date on which the shares of
Common Stock trade regular way on such exchange or in such market after the
Expiration Time of such offer. Notwithstanding the foregoing, whenever
successive adjustments to the Conversion Price are called for pursuant to this
Section 12(d), such adjustments shall be made to the Current Market Price as may
be necessary or appropriate to effectuate the intent of this Section 12(d) and
to avoid unjust or inequitable results, as determined in good faith by the Board
of Directors.
"Exchange Offer" means an issuer tender offer (within the meaning of
Rule 13e-4(a)(2) of the rules and regulations promulgated by the Securities and
Exchange Commission under the Securities Exchange Act of 1934, as amended, as
such Rule is in effect on the date hereof), including, without limitation, one
that is effected through the distribution of rights or warrants, made to holders
of Common Stock (or to holders of other stock of the Company receivable by a
holder of Series A Preferred Stock upon conversion thereof), to issue stock of
the Company or of a subsidiary of the Company and/or other property to a
tendering stockholder in exchange for shares of Common Stock (or such other
stock) validly tendered pursuant to such issuer tender offer.
"Exchange Preferred Stock" means a series of convertible preferred
stock of the Company, having terms, conditions, designations, dividend rights,
voting powers, rights on liquidation and other preferences and relative,
participating, optional or other special rights, and qualifications, limitations
or restrictions thereof that are identical, or as nearly so as is practicable in
the judgment of the Company's Board of Directors, to those of the Series A
Preferred Stock for which such Exchange Preferred Stock is exchanged, except
that (a) the liquidation preference will be determined as provided in Section
12(d)(vi), (b) the running of any time periods pursuant to the terms of the
Series A Preferred Stock shall be tacked to the corresponding time periods in
the Exchange Preferred Stock and (c) the Exchange Preferred Stock will not be
convertible into, and the holders will have no conversion rights thereunder with
respect to the Spinoff Securities.
"Exchange Securities" means stock of the Company or of a subsidiary of
the Company that is issued in exchange for shares of Common Stock (or other
stock of the Company receivable by a holder of Series A Preferred Stock upon
conversion thereof) pursuant to an Exchange Offer.
"Fair Market Value" means the amount which a willing buyer would pay a
willing seller in an arm's-length transaction.
"Mirror Preferred Stock" means convertible preferred stock issued by
(a) in the case of a Spinoff, the issuer of the applicable Spinoff Securities,
and (b) in the case of an Exchange Offer, the issuer of the applicable Exchange
Securities, and having terms, conditions, designations, dividend rights, voting
powers, rights on liquidation and other preferences and relative, participating,
optional or other special rights, and qualifications, limitations or
restrictions thereof that are identical, or as nearly so as practicable in the
judgment of the Company's Board of Directors, to those of the Series A Preferred
Stock for which such Mirror
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Preferred Stock is exchanged, except that (i) the liquidation preference will be
determined as provided in Sections 12(d)(vi) or 12(d)(vii), as applicable, (ii)
the running of any time periods pursuant to the terms of the Series A Preferred
Stock shall be tacked to the corresponding time periods in the Mirror Preferred
Stock, and (iii) the Mirror Preferred Stock shall be convertible into the kind
and amount of Spinoff Securities or Exchange Securities, as applicable, and
other securities and property that the holder of Series A Preferred Stock in
respect of which such Mirror Preferred Stock is issued pursuant to the terms
hereof would have received (x) in the case of a Spinoff, in such Spinoff had
such Series A Preferred Stock been converted immediately prior to the record
date for such Spinoff and (y) in the case of an Exchange Offer, upon
consummation thereof had such Series A Preferred Stock that such holder elects
to tender been converted and the shares of Common Stock received upon such
conversion been tendered in full pursuant to such Exchange Offer prior to the
expiration thereof and the same percentage of such tendered shares had been
accepted for exchange as the percentage of validly tendered shares of Common
Stock were accepted for exchange pursuant to such Exchange Offer, as the case
may be.
"Spinoff" means the distribution in a transaction that is generally
not taxable to the recipients under the Internal Revenue Code of 1986 (as
amended or any equivalent successor statute) of stock of a subsidiary of the
Company as a dividend to all holders of Common Stock.
"Spinoff Securities" means stock of a subsidiary of the Company that
is distributed to holders of Common Stock in a Spinoff.
(ix) No adjustment in the Conversion Price shall be required
unless such adjustment would require an increase or decrease of at least 1%
in such price; provided, however, that any adjustments which by reason of
this Section 12(d)(ix) are not required to be made shall be carried forward
and taken into account in any subsequent adjustment. All calculations under
this Section 12 shall be made by the Company and shall be made to the
nearest cent. No adjustment need be made for a change in the par value or
no par value of the Common Stock.
(x) Whenever the Conversion Price is adjusted as herein
provided, the Company shall promptly file with the Registrar an Officer's
Certificate setting forth the Conversion Price 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 Price setting forth the
adjusted Conversion Price and the date on which each adjustment becomes
effective and shall mail such notice of such adjustment of the Conversion
Price to each holder of shares of Series A 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.
(xi) In any case in which this Section 12(d) provides that an
adjustment shall become effective immediately after a Common Stock Record
Date for an event, the Company may defer until the occurrence of such event
issuing to the holder of any share of Series A Preferred Stock converted
after such Common Stock Record Date and before
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the occurrence of such event the additional shares of Common Stock issuable
upon such conversion by reason of the adjustment required by such event
over and above the shares of Common Stock issuable upon such conversion
before giving effect to such adjustment.
(xii) For purposes of this Section 12(d), the number of shares
of Common Stock at any time outstanding shall not include shares held in
the treasury of the Company or by any of its Subsidiaries. The Company
shall not pay any dividend or make any distribution on shares of Common
Stock held in the treasury of the Company or by any of its Subsidiaries.
(xiii) In the event that a holder of Series A Preferred Stock
would be entitled to receive upon conversion thereof any Redeemable Capital
Stock and the Company redeems, exchanges or otherwise acquires all of the
outstanding shares or other units of such Redeemable Capital Stock (such
event being a "Redemption Event"), then, from and after the effective date
of such Redemption Event, the holders of shares of Series A Preferred Stock
then outstanding shall be entitled to receive upon conversion of such
shares, in lieu of shares or units of such Redeemable Capital Stock, the
kind and amount of shares of stock and other securities and property
receivable upon the Redemption Event by a holder of the number of shares or
units of such Redeemable Capital Stock into which such shares of Series A
Preferred Stock could have been converted immediately prior to the
effective date of such Redemption Event (assuming, to the extent
applicable, that such holder failed to exercise any rights of election with
respect thereto and received per share or unit of such Redeemable Capital
Stock the kind and amount of stock and other securities and property
received per share or unit by a plurality of the non-electing shares or
units of such Redeemable Capital Stock), and (from and after the effective
date of such Redemption Event) the holders of the Series A Preferred Stock
shall have no other conversion rights under these provisions with respect
to such Redeemable Capital Stock. For purposes of this Section 12(d)(xiii)
"Redeemable Capital Stock" means a class or series of capital stock of the
Company that provides by its terms a right in favor of the Company to call,
redeem, exchange or otherwise acquire all of the outstanding shares or
units of such class or series.
(e) In case of any consolidation of the Company with, or merger of
the Company into, any other Person, or in case of any merger of another Person
into the Company (other than a merger that does not result in any
reclassification, conversion, exchange or cancellation of outstanding shares of
Common Stock of the Company), or in case of any sale, conveyance or transfer of
all or substantially all the assets of the Company, the holder of each share of
Series A Preferred Stock shall have the right thereafter, during the period such
share of Series A Preferred Stock shall be convertible as specified in Section
12(a), to convert such share of Series A Preferred Stock into the kind and
amount of securities, cash and other property receivable upon such
consolidation, merger, conveyance or transfer by a holder of the number of
shares of Common Stock of the Company into which such share of Series A
Preferred Stock might have been converted immediately prior to such
consolidation, merger, conveyance or transfer, assuming such holder of shares of
Common Stock of the Company failed to exercise his rights of election, if any,
as to the kind or amount of securities, cash and other property receivable upon
such consolidation, merger, conveyance or transfer (provided that, if the kind
or amount of securities, cash and other property receivable upon such
consolidation, merger, conveyance or
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transfer is not the same for each share of Common Stock of the Company in
respect of which such rights of election shall not have been exercised
("nonelecting share"), then for the purpose of this Section 12 the kind and
amount of securities, cash and other property receivable upon such
consolidation, merger, conveyance or transfer by each nonelecting share shall be
deemed to be the kind and amount so receivable per share by a plurality of the
nonelecting shares). Such securities shall provide for adjustments which, for
events subsequent to the effective date of the triggering event, shall be as
nearly equivalent as may be practicable to the adjustments provided for in this
Section 12. The above provisions of this Section 12 shall similarly apply to
successive consolidations, mergers, conveyances or transfers.
(f) In case:
(i) the Company shall declare a dividend (or any other
distribution) on its Common Stock payable otherwise than in cash out of its
earned surplus; or
(ii) the Company shall authorize the granting to all holders
of its shares of Common Stock of rights or warrants to subscribe for or
purchase any shares of capital stock of any class or of any other rights;
or
(iii) of any reclassification of the Common Stock (other than
a subdivision or combination of the Company's outstanding shares of Common
Stock), or of any consolidation or merger to which the Company is a party
and for which approval of any shareholders of the Company is required, or
the sale, conveyance or transfer of all or substantially all the assets of
the Company; or
(iv) of the voluntary or involuntary dissolution, liquidation
or winding-up of the Company; or
(v) the Company shall take any other action referred to in
this Section 12; then the Company shall cause to be filed with the
Registrar and at each office or agency maintained for the purpose of
conversion of shares of Series A Preferred Stock, and shall cause to be
mailed to all holders at their last addresses as they shall appear in the
shares of Series A Preferred Stock Register, at least 20 Business Days (or
10 Business Days in any case specified in clause (i) or (ii) 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 shares 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 shares of Common Stock of record shall be entitled to exchange their
shares of 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 required
by this Section 12(f) or any defect therein shall not affect the legality
or validity of any dividend, distribution, right, warrant,
reclassification,
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consolidation, merger, sale, transfer, dissolution, liquidation or winding-
up, or the vote upon any such action.
(g) The Company shall at all times reserve and keep available, free
from preemptive rights, out of its authorized but unissued shares of Common
Stock, for the purpose of effecting the conversion of shares of Series A
Preferred Stock, the full number of shares of Common Stock then issuable upon
the conversion of all outstanding shares of Series A Preferred Stock.
(h) The Company will pay any and all taxes that may be payable in
respect of the issue or delivery of shares of Common Stock on conversion of
shares of Series A 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 Series A Preferred Stock or shares
of Series A 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 or is not payable.
(i) (i) Each share of (A) Series A-1 Preferred Stock transferred to
any person other than a member of the Liberty Group and (B) Series A-2 Preferred
Stock transferred to any person other than a member of the HMTF Group shall be
deemed to be automatically converted into a share of Series A-3 Preferred Stock
with the same Liquidation Preference and otherwise of the same tenor (except as
provided herein) as then in effect with respect to the share of the Series A-1
Preferred Stock or Series A-2 Preferred Stock transferred, such conversion to be
effected in accordance with this Section 12(i) and to be effective as of the
effective time of such transfer.
(ii) Upon any transfer of a share of Series A-1 Preferred Stock
or Series A-2 Preferred Stock triggering an automatic conversion into a
share of Series A-3 Preferred Stock pursuant to Section 12(i)(i), the
transferor shall surrender the certificate or certificates representing the
share or shares transferred (the "Converting Shares") at any office or
agency of the Company designated for that purpose together with written
notice stating the number of shares that are to be transferred to a person
other than a member of the Liberty Group (in the case of shares of Series
A-1 Preferred Stock) or a member of the HMTF Group (in the case of Series
A-2 Preferred Stock) and that are thus to be converted into an equal number
of shares of Series A-3 Preferred Stock (the "Converted Shares"). Such
notice shall also state the name or names (with addresses) of the
transferee and denominations in which the certificate or certificates for
Converted Shares are to be issued and shall include instructions for the
delivery thereof. Promptly after such surrender and the receipt of such
written notice, the Company will issue and deliver in accordance with the
transferor's instructions the certificate or certificates evidencing the
Converted Shares issuable upon such conversion, and the Company will
deliver to the transferor a certificate (which shall contain such legends
as were set forth on the surrendered certificate or certificates)
representing any shares which were represented by the certificate or
certificates that were delivered to the Company in connection with such
conversion, but which were not transferred. Upon issuance of shares in
accordance with this Section 12(i)(ii), such Converted Shares shall be duly
authorized, validly issued, fully paid and non-assessable and entitled to
the benefits of this Certificate of
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Designation. The Company shall take all such actions as may be necessary to
assure that all such shares of Series A-3 Preferred Stock may be so issued
without violation of any applicable law or governmental regulation or any
requirements of any domestic securities exchange upon which shares of
Series A-3 Preferred Stock may be listed (except for official notice of
issuance which will be immediately transmitted by the Company upon
issuance).
(iii) As used in this Section 12(i), the term "transfer" and
derivatives thereof refers to any sale, gift or other transfer, voluntary
or involuntary (except for transfers, pledges and security interests in
connection with bona fide financing or hedging transactions). A conversion
of Series A-1 Preferred Stock or Series A-2 Preferred Stock into Common
Stock pursuant to Section 12(a) hereof shall not constitute a transfer for
purposes of this Section 12(i).
(j) Without the unanimous consent of the holders of the Series A
Preferred Stock, the Company shall not in any manner subdivide (by stock split,
stock dividend or otherwise) or combine (by reverse stock split or otherwise)
the outstanding shares of the Series A-1 Preferred Stock, Series A-2 Preferred
Stock or Series A-3 Preferred Stock unless the outstanding shares of each other
series of Series A Preferred Stock shall be subdivided or combined, as the case
may be, to the same extent, share and share alike, and appropriate provision
shall be made for the protection of the conversion rights hereunder.
13. Change of Control.
(a) Upon the occurrence of a Change of Control, the Company shall
have the right, but not the obligation, to offer (the "Change of Control Offer")
to repurchase all, but not less than all, of the shares of Series A Preferred
Stock at a purchase price per share in cash equal to 101% of the Liquidation
Preference of each share of Series A Preferred Stock repurchased (after giving
effect to the Special Dividend, if applicable), plus an amount equal to 101% of
all dividends accrued and unpaid thereon to the date fixed for repurchase (the
"Change of Control Purchase Amount"). Within 20 days following the Change of
Control Date, the Company shall mail a notice to each holder of shares of Series
A Preferred Stock (with a copy to the Registrar) describing the transaction or
transactions that constitute the Change of Control and, if the Company so
elects, offering to repurchase shares of Series A Preferred Stock on a date
specified in such notice (the "Change of Control Purchase Date"), which date
shall be no earlier than 90 days and no later than 120 days from the date such
notice is mailed, pursuant to the procedures required by Section 10 and
described in such notice. The failure of the Company to make such Change of
Control Offer within such 20-day period shall constitute an irrevocable waiver
of the Company's right to make such Change of Control Offer solely with the
respect to the relevant Change of Control and shall result in the dividend rate
on the Series A Preferred Stock referred to in Section 6 hereof being increased
to 16% effective as of the Change of Control Date. The Company shall comply with
the requirements of Rule 14e-1 under the Exchange Act and any other securities
laws and regulations to the extent such laws and regulations are applicable in
connection with the repurchase of the Series A Preferred Stock as a result of a
Change of Control.
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<PAGE>
(b) On the Change of Control Purchase Date, the Company shall, to the
extent lawful:
(i) accept for payment all shares of Series A Preferred Stock
properly tendered pursuant to the Change of Control Offer;
(ii) deposit with the paying agent an amount equal to the
Change of Control Purchase Amount in respect of all shares of Series A
Preferred Stock so tendered; and
(iii) deliver or cause to be delivered to the Registrar all
certificates for shares of Series A Preferred Stock so accepted together
with an officer's certificate stating the aggregate number of shares being
purchased by the Company.
(c) The paying agent shall promptly mail to each holder of shares of
Series A Preferred Stock so tendered the Change of Control Purchase Amount for
such shares of Series A Preferred Stock, and the Registrar shall promptly
authenticate and mail (or cause to be transferred by book entry) to each holder
a new certificate for any shares of Series A Preferred Stock not tendered that
are represented by the surrendered certificate. The Company shall notify each
holder of Series A Preferred Stock the results of the Change of Control Offer on
or as soon as practicable after the Change of Control Purchase Date.
(d) The provisions of this paragraph that permit the Company to make
a Change of Control Offer shall be applicable regardless of whether any other
provisions of this certificate are applicable. Except as set forth in this
paragraph, no holder of shares of Series A Preferred Stock shall have any right
to require the Company to repurchase or redeem the shares of Series A Preferred
Stock in the event of a takeover, recapitalization or other similar transaction.
14. Purchase Offer.
(a) If the Company shall elect not to make, or shall fail to make,
the Change of Control Offer following the occurrence of a Change of Control
pursuant to Section 13 hereof within the 20-day period specified therein, then
in addition to the redemption rights that the Company may exercise pursuant to
Section 10 hereof after June 30, 2005, the Company shall also have the right
(but not the obligation), (i) at any time and from time to time prior to June
30, 2005, to offer (the "Purchase Offer") to repurchase all, but not less than
all, of the outstanding shares of Series A Preferred Stock at a purchase price
per share in cash equal to 101% of the Liquidation Preference of each share of
Series A Preferred Stock repurchased (after giving effect to the Special
Dividend, if any), plus an amount equal to 101% of all dividends accrued and
unpaid thereon from the last Dividend Payment Date to the date fixed for
repurchase (the "Purchase Payment") and (ii) at any time and from time to time
following June 30, 2005, to make a Purchase Offer to repurchase all, but not
less than all, of the outstanding shares of Series A Preferred Stock at a
purchase price per share in cash equal to 100% of the Liquidation Preference of
each share of Series A Preferred Stock repurchased (after giving effect to the
Special Dividend, if any), plus an amount equal to 100% of all dividends accrued
and unpaid thereon from the last Dividend Payment Date to the date fixed for
repurchase (the "Par Purchase Payment"). If the Company elects to make a
Purchase Offer, the Company shall mail a notice to
30
<PAGE>
each holder of shares of Series A Preferred Stock (with a copy to the Registrar)
offering to repurchase shares of Series A Preferred Stock on a date specified in
such notice (the "Purchase Payment Date"), which date shall be no earlier than
90 days and no later than 120 days from the date such notice is mailed, pursuant
to the procedures required by Section 6 and described in such notice. The
Company shall comply with the requirements of Rule 14e-1 under the Exchange Act
and any other securities laws and regulations to the extent such laws and
regulations are applicable in connection with the repurchase of the Series A
Preferred Stock hereunder.
(b) On the Purchase Payment Date, the Company shall, to the extent
lawful:
(i) accept for payment all shares of Series A Preferred Stock
properly tendered pursuant to the Purchase Offer;
(ii) deposit with the paying agent an amount equal to the
Purchase Payment or the Par Purchase Payment, as applicable, in respect of
all shares of Series A Preferred Stock so tendered; and
(iii) deliver or cause to be delivered to the Registrar all
certificates for shares of Series A Preferred Stock so accepted together
with an officer's certificate stating the aggregate number of shares being
purchased by the Company.
(c) The paying agent shall promptly mail or transmit by wire transfer
to each holder of shares of Series A Preferred Stock so tendered the Purchase
Payment or the Par Purchase Payment, as applicable, for such shares of Series A
Preferred Stock, and the Registrar shall promptly authenticate and mail (or
cause to be transferred by book entry) to each such holder a new certificate for
any shares of Series A Preferred Stock not tendered that are represented by the
surrendered certificate. The Company shall notify the holders of Series A
Preferred Stock the results of the Purchase Offer on or as soon as practicable
after the Purchase Payment Date.
(d) If a holder of shares of Series A Preferred Stock elects not to,
or otherwise fails to, properly tender shares of Series A Preferred Stock into
the Purchase Offer, then with respect to each share of Series A Preferred Stock
that such holder fails to tender, any dividends applicable to periods following
the expiration of the Purchase Offer with respect to each such share shall be
computed at a rate of eight percent (8%) per annum.
15. Special Covenant.
----------------
Without the vote or consent of the holders of a majority of the then
Outstanding shares of Series A Preferred Stock, the Company shall not make, or
permit any of its subsidiaries to make, any material capital expenditures,
acquisitions or divestitures outside the ordinary course of business unless such
expenditures, acquisitions or divestitures were otherwise approved by the Board
of Directors (including the affirmative vote of at least one director elected by
either the holders of the Series A-1 Preferred Stock or the holders of the
Series A-2 Preferred Stock).
16. SEC Reports; Reports by Company.
-------------------------------
31
<PAGE>
So long as any shares of Series A Preferred Stock are outstanding, the
Company shall file with the SEC and, within 15 days after it files them with the
SEC, with the Registrar and, if requested, furnish to each holder of shares of
Series A Preferred Stock all annual and quarterly reports and the information,
documents, and other reports that the Company is required to file with the SEC
pursuant to Section 13(a) or 15(d) of the Exchange Act ("SEC Reports"). In the
event the Company is not required or shall cease to be required to file SEC
Reports, pursuant to the Exchange Act, the Company will nevertheless file such
reports with the SEC (unless the SEC will not accept such a filing). Whether or
not required by the Exchange Act to file SEC Reports with the SEC, so long as
any shares of Series A Preferred Stock are Outstanding, the Company will furnish
or cause to be furnished reports equivalent to the SEC Reports to the holders of
shares of Series A Preferred Stock.
17. Definitions.
-----------
For purposes of this Certificate of Designation, the following terms
shall have the meaning set forth below:
"Accumulated Dividends" has the meaning set forth in Section 6.
"Affiliate" means, with respect to any Person, any other Person
directly or indirectly controlling, controlled by, or under direct or indirect
common control with, such Person. For the purposes of this definition, "control"
when used with respect to any Person means the power to direct the management
and policies of such Person, directly or indirectly, whether through the
ownership of voting securities, by contract or otherwise; and the terms
"controlling" and "controlled" have meanings correlative to the foregoing;
provided that neither AT&T Corp. ("AT&T") nor any subsidiary of AT&T which is
not included in AT&T's Liberty Media Group (as defined in AT&T's Certificate of
Incorporation) will be deemed to be an Affiliate of Liberty.
"Board of Directors" has the meaning set forth in the Recitals.
"Business Day" means each Monday, Tuesday, Wednesday, Thursday and
Friday which is not a day on which banking institutions in The City of New York
are authorized or obligated by law or executive order to be closed.
"By-laws" has the meaning set forth in the Recitals.
"Capital Stock" means, with respect to any person, any and all shares,
interests, participations, rights in, or other equivalents (however designated
and whether voting and/or non-voting) of such person's capital stock, whether
outstanding on the Closing Date or issued after the Closing Date, and any and
all rights (other than any evidence of indebtedness) or warrants exercisable or
exchangeable for or convertible into such capital stock.
"Certificate of Incorporation" has the meaning set forth in the
recitals.
"Change of Control" means the occurrence of any of the following
events: (a) any "person" or "group" (as such terms are used in Sections 13(d)
and 14(d) of the Exchange Act) is or becomes the "beneficial owner" (as defined
in Rule 13d-3 and 13d-5 under the
32
<PAGE>
Exchange Act, except that a person shall be deemed to have "beneficial
ownership" of all securities that such person has the right to acquire, whether
such right is exercisable immediately or only after the passage of time),
directly or indirectly, of more than 50% of the total Voting Capital Stock of
the Company or (b) the Company consolidates with, or merges with or into,
another person or sells, assigns, conveys, transfers, leases or otherwise
disposes of all or substantially all of its assets to any person, or any person
consolidates with, or merges with or into the Company, in any such event
pursuant to a transaction in which the holders of the outstanding Voting Capital
Stock of the Company immediately prior to such transaction hold less than 50% of
the outstanding Voting Capital Stock of the surviving or transferee company or
its parent company immediately after such transaction or immediately after such
transaction any "person" or "group" (as such terms are used in Sections 13(d)
and 14(d) of the Exchange Act), is the "beneficial owner" (as defined in Rules
13d-3 and 13d-5 under the Exchange Act, except that a person shall be deemed to
have "beneficial ownership" of all securities that such person has the right to
acquire, whether such right is exercisable immediately or only after the passage
of time), directly or indirectly, of more than 50% of the total Voting Capital
Stock of the surviving or transferee company or its parent company or (c) during
any consecutive two-year period, individuals who at the beginning of such period
constituted the Board of Directors (together with any new directors whose
election by the Board of Directors or whose nomination for election by the
stockholders of the Company was approved by a vote of a majority of the
directors then still in office who were either directors at the beginning of
such period or whose election or nomination for election was previously so
approved and together with any directors elected pursuant to Sections 8(d)(i),
(ii) and (iii)) cease for any reason to constitute a majority of the Board of
Directors then in office or (d) any transaction subject to Rule 13e-3 under the
Exchange Act if following such Rule 13e-3 transaction a person or group (as such
terms are used in Section 13(d) and 14(d) of the Exchange Act) owns more than
50% of the total Voting Capital Stock of the Company. Notwithstanding the
foregoing, any form of business combination between the Company and Teligent,
Inc. within the 24 month period following the Closing Date shall not be deemed
to be a Change of Control, unless after the date hereof and prior to such
business combination, there shall have occurred a "Teligent Change of Control."
For the purposes hereof, a Teligent Change of Control shall have the same
meaning as a Change of Control, substituting Teligent, Inc. for the Company in
such definition; provided, however, that a Teligent Change of Control shall not
occur with respect to any event or circumstance that involves an acquiror, 25%
or more of the Voting Capital Stock of which is beneficially owned by any member
of the HMTF Group or Liberty.
"Change of Control Date" has the meaning set forth in Section 6(b).
"Closing Date" means the Closing Date under the Purchase Agreement.
"Closing Price" has the meaning set forth in Section 12(d)(viii).
"Common Stock Record Date" has the meaning set forth in Section
12(d)(viii).
"Common Stock" means the common stock of the Company, par value $.01
per share and capital stock of any other class or series into which the Common
Stock may hereafter be changed.
33
<PAGE>
"Company" has the meaning set forth in the Recitals and includes any
successor to the Company hereunder.
"Company Order" means a written request or order signed in the name of
the Company by its Chairman of the Board, its President or a Vice President and
by its Treasurer, an Assistant Treasurer, its Secretary or an Assistant
Secretary.
"Conversion Agent" has the meaning set forth in Section 5(a).
"Conversion Price" means the price at which shares of Common Stock
shall be delivered upon conversion.
"Current Market Price" has the meaning set forth in Section
12(d)(viii).
"Dilution Trigger Event" has the meaning set forth in Section
12(d)(iv).
"Distributed Securities" has the meaning set forth in Section
12(d)(iv).
"Dividend Payment Date" shall mean the last day of March, June,
September and December of each year, commencing June 30, 2000, or the next
succeeding Business Day if any such day is not a Business Day.
"Dividend Period" shall mean the period from and including the Closing
Date to but excluding the first Dividend Payment Date and thereafter each
quarterly period from and including a Dividend Payment Date to but excluding the
next Dividend Payment Date.
"Dividend Record Date" has the meaning set forth in Section 7(a).
"Exchange Offer" has the meaning set forth in Section 12(d)(vi).
"Exchange Preferred Stock" has the meaning set forth in Section
12(d)(viii).
"Exchange Securities" has the meaning set forth in Section
12(d)(viii).
"Expiration Time" has the meaning set forth in Section 12(d)(v).
"Fair Market Value" has the meaning set forth in Section 12(d)(viii).
"Junior Shares" has the meaning set forth in Section 9(a).
"Liquidation Preference" means an amount initially equal to $10,000
per share of Series A Preferred Stock, subject to increase in accordance with
Section 6, Section 7 and Section 11 hereof, including, without limitation, by
the addition of Accumulated Dividends and, if applicable, the Special Dividend.
"Mandatory Redemption Date" has the meaning set forth in Section
10(b); provided, however, that if such date shall not be a Business Day, then
such date shall be the next Business Day.
34
<PAGE>
"Mirror Preferred Stock" has the meaning set forth in Section
12(d)(viii).
"Nonelecting Share" has the meaning set forth in Section 12(e).
"Odd-lot Redemption" has the meaning set forth in Section 10(c).
"Officers' Certificate" means a certificate of the Company signed in
the name of the Company by its Chairman of the Board, its President or a Vice
President and by its Treasurer, an Assistant Treasurer, its Secretary or an
Assistant Secretary.
"Optional Redemption" has the meaning set forth in Section 10(a).
"Optional Redemption Date" has the meaning set forth in Section 10(a).
"Outstanding" means when used with respect to shares of Series A
Preferred Stock, as of the date of determination, all shares of Series A
Preferred Stock theretofore delivered under this Certificate of Designation,
except (a) shares of Series A Preferred Stock theretofore converted into shares
of Common Stock in accordance with Section 12 and shares of Series A Preferred
Stock theretofore canceled by the Registrar or delivered to the Registrar for
cancellation; (b) shares of Series A Preferred Stock for whose payment or
redemption money in the necessary amount has been theretofore deposited with the
Registrar or any Paying Agent (other than the Company) in trust or set aside and
segregated in trust by the Company (if the Company shall act as its own Paying
Agent) for the holders of such shares of Series A Preferred Stock; provided
that, if such shares of Series A Preferred Stock are to be redeemed, notice of
such redemption has been duly given pursuant to this Certificate of Designation
or provision therefor satisfactory to the Registrar has been made; and (c)
shares of Series A Preferred Stock in exchange for or in lieu of which other
shares of Series A Preferred Stock have been delivered pursuant to this
Certificate of Designation; provided, however, that, in determining whether the
holders of the shares of Series A Preferred Stock have given any request,
demand, authorization, direction, notice, consent or waiver or taken any other
action hereunder, shares of Series A Preferred Stock owned by the Company or any
other obligor upon the shares of Series A Preferred Stock or any subsidiary of
the Company or of such other obligor shall be disregarded and deemed not to be
Outstanding, except that, in determining whether the Registrar shall be
protected in relying upon any such request, demand, authorization, direction,
notice, consent, waiver or other action, only shares of Series A Preferred Stock
which the Registrar has actual knowledge of being so owned shall be so
disregarded.
"Parity Shares" has the meaning set forth in Section 9(a).
"Paying Agent" has the meaning set forth in Section 5(a).
"Person" means an individual, partnership, corporation, limited
liability company, business trust, joint stock company, trust, unincorporated
association, joint venture, governmental authority or other entity of whatever
nature.
"Preferred Stock" means, with respect to any person, any and all
shares, interests, participations or other equivalents (however designated,
whether voting or non-voting)
35
<PAGE>
of such person's preferred or preference stock, whether now outstanding or
issued after the date hereof, including all series and classes of such preferred
or preference stock.
"Purchase Agreement" means the Preferred Stock and Warrant Purchase
Agreement dated as of February 27, 2000, among the Company and the Purchasers
named therein, as it may be amended from time to time.
"Purchased Shares" has the meaning set forth in Section 12(d)(v).
"Redemption Date" has the meaning set forth in Section 10(d).
"Redemption Notice" has the meaning set forth in Section 10(d).
"Redemption Price" has the meaning set forth in Section 10(a).
"Registrar" has the meaning set forth in Section 3.
"Registration Rights Agreement" means the Registration Rights
Agreement dated as of April 7, 2000, among the Company and the Purchasers.
"Restricted Shares Legend" has the meaning set forth in Section 4(a).
"SEC" means the Securities and Exchange Commission, as from time to
time constituted, created under the Securities Exchange Act of 1934, or, if at
any time after the adoption of this Certificate of Designation such commission
is not existing and performing the duties now assigned to it, then the body
performing such duties at such time.
"SEC Reports" has the meaning set forth in Section 16.
"Securities Act" has the meaning set forth in Section 4(a).
"Senior Shares" has the meaning set forth in Section 9(a).
"Series A Preferred Stock" has the meaning set forth in Section 1.
"Series A-1 Preferred Stock" has the meaning set forth in Section 1.
"Series A-2 Preferred Stock" has the meaning set forth in Section 1.
"Series A-3 Preferred Stock" has the meaning set forth in Section 1.
"Special Dividend" means, with respect to each share of Series A
Preferred Stock, the difference between (i) $14,859.47 (as such number shall be
appropriately adjusted for stock splits, stock dividends or similar events
affecting the Series A Preferred Stock) and (ii) the amount of the actual
Liquidation Preference of such share immediately prior to the Change of Control
Date.
"Voting Capital Stock" means with respect to any Person, securities of
any class or classes of Capital Stock in such Person ordinarily entitling the
holders thereof (whether at all
36
<PAGE>
times or at the times that such class of Capital Stock has voting power by
reason of the happening of any contingency) to vote in the election of members
of the board of directors or comparable governing body of such Person.
18. No Reissuances.
--------------
Subject to Section 12(i), any share of Series A Preferred Stock that
is purchased, redeemed or otherwise acquired by the Company or any subsidiary
shall be cancelled and restored to the status of authorized but unissued
Preferred Stock but shall not be reissued as Series A Preferred Stock.
37
<PAGE>
IN WITNESS WHEREOF, the Company has caused this Certificate of Designation
to be duly executed by H. Don Teague, Executive Vice President of the Company,
this 7th day of April, 2000.
ICG COMMUNICATIONS, INC.
By: _________________________________
Name: H. Don Teague
Title: Executive Vice President
<PAGE>
Exhibit 7 (g)
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT") OR THE SECURITIES
LAWS OF ANY STATE OF THE UNITED STATES. SUCH SECURITIES MAY NOT BE OFFERED,
SOLD, TRANSFERRED, PLEDGED, HYPOTHECATED OR OTHERWISE DISPOSED OF IN THE ABSENCE
OF SUCH REGISTRATION OTHER THAN PURSUANT TO AN EXEMPTION FROM SUCH REGISTRATION
REQUIREMENTS.
[HOLDER NAME]
COMMON STOCK WARRANT
Void after ___________, 2005
Warrant No. [A]-[1]
This certifies that, for value received, ________________________
or its permitted assigns is entitled, subject to the terms and conditions set
forth herein (including the exercise conditions of Section 2), to purchase from
ICG Communications, Inc., a Delaware corporation, up to _______________ fully
paid and nonassessable shares (the "Shares") of Common Stock (as defined herein)
at the exercise price of $34.00 per share (the "Exercise Price"). The Exercise
Price and number of Shares is subject to adjustment as provided in this Warrant.
The term "Warrant" as used herein shall include this Warrant and any warrants
delivered in substitution or exchange therefor as provided herein.
Section 1. Definitions
As used in this Warrant, the following terms, unless the context
otherwise requires, have the following meanings:
(a) "Business Day" means each Monday, Tuesday, Wednesday, Thursday
------------
and Friday that is not a day on which banking institutions in the City of New
York are authorized or obligated by law or executive order to be closed.
(b) "Capital Stock" or "capital stock" means, with respect to any
-------------
Person, any and all shares, interests, participations, rights in, or other
equivalents (however designated and whether voting and/or non-voting) of such
Person's capital stock, whether outstanding on the date of the Warrant or issued
after the date of the Warrant, and any and all rights (other than any evidence
of indebtedness) or warrants exercisable or exchangeable for or convertible into
such capital stock.
(c) "Common Stock" means shares of the Company's common stock, par
------------
value $0.01 per share, and capital stock of any other class or series into which
the Common Stock may hereafter be changed.
(d) "Company" means ICG Communications, Inc. and any Person that
-------
shall succeed to or assume the obligations of the Company under this Warrant.
<PAGE>
(e) "Person" means any individual, partnership, corporation, limited
------
liability company, joint venture, association, joint-stock company, trust,
unincorporated organization, government or agency or political subdivision
thereof, or other entity.
(f) "Warrantholder", "holder of Warrant", "holder", or similar terms
------------- ----------------- ------
refers to the holder of this Warrant.
Section 2. Exercise Provisions.
(a) Exercisability.
The holder of this Warrant may exercise it in whole or in part to
the extent then exercisable by surrender of this Warrant, with the form of
subscription at the end of this Warrant duly executed by the holder, to the
Company at its principal office (or to the office of the Warrant Agent as
contemplated in Section 6(b), if applicable), accompanied by payment, in lawful
money of the United States, of the amount obtained by multiplying the Exercise
Price (as adjusted from time to time pursuant to the terms of this Warrant) by
the number of shares of Common Stock designated in such completed subscription
form. This Warrant shall be deemed to have been exercised immediately prior to
the close of business on the day of surrender of such Warrant, and the person or
persons entitled to receive shares of Common Stock issuable upon exercise of
this Warrant shall be treated for all purposes as the record holder or holders
of such shares of Common Stock at such time.
(b) Payment of Exercise Price.
Payment shall be made by check payable to the Company.
(c) Net Issue Exercise.
Notwithstanding any provisions herein to the contrary, if the fair
market value (as defined below) of one share of Common Stock is greater than the
Exercise Price (on the date of exercise of this Warrant), in lieu of exercising
this Warrant in exchange for cash, the holder may elect to exercise all or a
portion of this Warrant by canceling all or a portion of this Warrant and
receiving in exchange therefor shares of Common Stock (as determined below)
equal to the value of this Warrant, or the portion thereof being canceled, by
surrender of this Warrant at the principal office of the Company (or the office
of the Warrant Agent contemplated by Section 6(b), if applicable) together with
a duly executed form of subscription, in which event the Company shall issue to
the holder a number of shares of Common Stock computed using the following
formula:
X=Y(A-B)
------
A
Where X = the number of shares of Common Stock to be
issued to the holder
Y = the number of shares of Common Stock
purchasable under the Warrant or, if only a
portion of the Warrant is being
-2-
<PAGE>
exercised, under the portion of the Warrant
being exercised (on the date of exercise)
A = the fair market value of one share of the
Common Stock (on the date of exercise)
B = the Exercise Price (as adjusted to the date of
exercise)
For purposes of the above calculation, "fair market value" of one share of
Common Stock shall be determined by the Company's Board of Directors in good
faith; provided, however, where a public market exists for the Common Stock at
the time of such exercise, the "fair market value", per share shall be equal to
the average for the five (5) trading days prior to the date of such exercise of
the average of the closing bid and asked prices of the Common Stock quoted in
the Over-The-Counter Market Summary or the last reported sale price of the
Common Stock quoted on the Nasdaq National Market System or the principal
exchange on which the Common Stock is then listed, whichever is applicable, as
published in The Wall Street Journal.
(d) Restrictions on Exercise.
This Warrant is exercisable at any time and from time to time from
the date hereof, provided this Warrant has not terminated pursuant to Section
10.
Section 3. Delivery of Stock Certificates.
As soon as possible after full or partial exercise of this Warrant
in accordance with the terms hereof and in any event within ten (10) days after
such exercise, the Company, at its expense, will cause to be issued in the name
of and delivered to the holder of this Warrant, a certificate or certificates
for the number of fully paid and nonassessable shares of Common Stock to which
that holder shall be entitled upon such exercise. In the event that this Warrant
is exercised in part, the Company at its expense will also execute and deliver a
new Warrant of like tenor exercisable for the number of Shares for which this
Warrant may then be exercised. No fractional shares or scrip representing
fractional shares will be issued upon exercise of this Warrant. If upon any
exercise of this Warrant a fraction of a share would otherwise be issuable, the
Company will, in lieu of issuing such fraction of a share, round down to the
nearest whole share if such fraction is an amount less than 0.5 and round up to
the nearest whole share if such fraction is an amount equal to or greater than
0.5 and shall issue the appropriate number of full shares of Common Stock that
shall be issuable upon exercise of this Warrant.
Section 4. Adjustment Provisions
The Exercise Price 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 to all holders of the outstanding shares of Common Stock in shares
of Common Stock, the Exercise Price in effect at the opening of business on the
date following the date fixed for the
-3-
<PAGE>
determination of shareholders entitled to such dividend or other distribution
shall be reduced by multiplying such Exercise Price by a fraction the numerator
of which shall be the number of shares of Common Stock outstanding at the close
of business on the Common Stock Record Date (as defined in Section 4(f)) fixed
for such determination and the denominator of which shall be the sum of such
number of shares and the total number of shares constituting such dividend or
other distribution, such reduction to become effective immediately after the
opening of business on the day following the Common Stock Record Date. If any
dividend or distribution of the type described in this Section 4(a) is declared
but not so paid or made, the Exercise Price shall again be adjusted to the
Exercise Price which would then be in effect if such dividend or distribution
had not been declared.
(b)
(i) In case the Company shall issue or sell any Common Stock, or
securities convertible into or exercisable or exchangeable for shares of
Common Stock (other than pursuant to employee stock options or pursuant to
other rights and warrants outstanding on the date hereof), for a
consideration per share (or, in the case of convertible or exchangeable
securities having a conversion or exercise price per share of Common Stock)
less than the Current Market Price of the Common Stock on the date of such
issuance, the Exercise Price in effect immediately prior to such issuance
or sale shall be reduced effective as of immediately following such
issuance or sale by multiplying such Exercise Price by a fraction, (1) the
numerator of which shall be the sum of (x) the number of shares of Common
Stock outstanding immediately prior to such issuance or sale and (y) the
number of shares of Common Stock which the aggregate consideration
receivable by the Company for the total number of additional shares of
Common Stock so issued or sold (or issuable on conversion, exercise or
exchange) would purchase at the Current Market Price in effect immediately
prior to such issuance or sale and (2) the denominator of which shall be
the sum of the number of shares of Common Stock outstanding immediately
prior to such issuance or sale and the number of additional shares of
Common Stock to be issued or sold (or, in the case of convertible or
exchangeable securities, issuable on conversion, exercise or exchange).
(ii) If the Company shall offer or issue rights or warrants to
all holders of its outstanding shares of Common Stock entitling them to
subscribe for or purchase shares of Common Stock at a price per share less
than the Current Market Price (as defined in Section 4(f)) on the Common
Stock Record Date fixed for the determination of shareholders entitled to
receive such rights or warrants, the Exercise Price shall be adjusted so
that the same shall equal the price determined by multiplying the Exercise
Price in effect at the opening of business on the date after such Common
Stock Record Date by a fraction of which the numerator shall be the number
of shares of Common Stock outstanding at the close of business on the
Common Stock 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 or warrants would purchase at such Current Market
Price and of which the denominator shall be the number of shares of Common
Stock outstanding at the close of business on the Common Stock Record Date
plus the total number of additional shares of Common Stock subject to such
rights or warrants for subscription or purchase. Such adjustment shall
become effective
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immediately after the opening of business on the day following the Common
Stock 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 or warrants, upon
the expiration or termination of such rights or warrants the Exercise Price
shall again be adjusted to be the Exercise Price 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 Exercise Price shall again be adjusted to be the Exercise Price
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 shares of 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 (x) any
consideration received for such rights or warrants, with the value of such
consideration and the amount of such exercise or subscription price, if
other than cash, to be determined by the Board of Directors and (y) the
amount of any exercise price or subscription price required to be paid upon
exercise of such warrants or rights.
(c) If the outstanding shares of Common Stock shall be subdivided
into a greater number of shares of Common Stock, the Exercise Price in effect at
the opening of business on the day following the day upon which such subdivision
becomes effective shall be proportionately reduced, and, conversely, if the
outstanding shares of Common Stock shall be combined into a smaller number of
shares of Common Stock, the Exercise Price in effect at the opening of business
on the day following the day upon which such combination becomes effective shall
be proportionately increased, such reduction or increase, 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.
(d)
(i) If the Company shall, by dividend or otherwise, distribute
to all holders of its shares of Common Stock any class of capital stock of
the Company (other than any dividends or distributions to which Section
4(a) applies) or evidences of its indebtedness, cash or other assets
(including securities, but excluding any rights or warrants of a type
referred to in Section 4(b)(ii) and dividends and distributions paid
exclusively in cash and excluding any capital stock, evidences of
indebtedness, cash or assets distributed upon a merger or consolidation to
which Section 4(k) applies) (the foregoing hereinafter in this Section 4(d)
called the "Distributed Securities"), then, in each such case, the Exercise
Price shall be reduced so that the same shall be equal to the price
determined by multiplying the Exercise Price in effect immediately prior to
the close of business on the Common Stock Record Date (as defined in
Section 4(f)) with respect to such distribution by a fraction of which the
numerator shall be the Current Market Price (determined as provided in
Section 4(f)) on such date less the fair market value (as determined by the
Board of Directors, whose good faith determination shall be conclusive and
described in a resolution of the Board of Directors) on such date of the
portion of the Distributed Securities so distributed applicable to one
share of Common Stock and the denominator shall be such Current Market
Price, such reduction to become effective immediately prior
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<PAGE>
to the opening of business on the day following the Common Stock 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 Common Stock Record Date, in lieu of the
foregoing adjustment, adequate provision shall be made so that a
Warrantholder shall have the right to receive upon exercise of this Warrant
(or any portion thereof) the amount of Distributed Securities such holder
would have received had such holder exercised this Warrant (or portion
thereof) immediately prior to such Common Stock Record Date. If such
dividend or distribution is not so paid or made, the Exercise Price shall
again be adjusted to be the Exercise Price 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
of this Section 4(d) by reference to the actual or when issued trading
market for any securities constituting 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 Section 4(f)) to the
extent possible.
(ii) Rights or warrants distributed by the Company to all holders of
shares 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"): (A) are deemed to be
transferred with such shares of Common Stock; (B) are not exercisable; and
(C) are also issued in respect of future issuances of shares of Common
Stock, shall be deemed not to have been distributed for purposes of this
Section 4(d) (and no adjustment to the Exercise Price under this Section
4(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 Exercise Price under
this Section 4(d) shall be made. If any such rights or warrants, including
any such existing rights or warrants distributed prior to the first
issuance of the Warrants, are subject to subsequent events, upon the
occurrence of each of which such rights or warrants shall become
exercisable to purchase 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
Exercise Price under this Section 4(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 Exercise Price 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 to which this Section 4(d) were applicable, equal
to the per share redemption or repurchase price received by a holder or
holders of shares of Common Stock with respect to such rights or warrants
(assuming such holder had retained such rights or warrants), made to all
holders of shares 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
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expired or been terminated without exercise by any holders thereof, the
Exercise Price shall be readjusted as if such rights and warrants had not
been issued.
(iii) Notwithstanding any other provision of this Section 4(d) to
the contrary, 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 Section 4(d) if the Company
makes proper provision so that a Warrantholder who exercises this Warrant
(or any portion thereof) after the date fixed for determination of
shareholders entitled to receive such distribution shall be entitled to
receive upon such exercise, in addition to the shares of Common Stock
issuable upon such exercise, the amount and kind of such distributions that
such Warrantholder would have been entitled to receive if such holder had
immediately prior to such determination date, exercised this Warrant.
(iv) For purposes of this Section 4(d) and Sections 4(a) and
4(b), any dividend or distribution to which this Section 4(d) is applicable
that also includes shares of Common Stock, or rights or warrants to
subscribe for or purchase shares of Common Stock to which 4(b) applies (or
both), shall be deemed instead to be (A) a dividend or distribution of the
evidences of indebtedness, assets, shares of capital stock, rights or
warrants other than such shares of Common Stock or rights or warrants to
which Section 4(b) applies (and any Exercise Price reduction required by
this Section 4(d) with respect to such dividend or distribution shall then
be made) immediately followed by (B) a dividend or distribution of such
shares of Common Stock or such rights or warrants (and any further Exercise
Price reduction required by Sections 4(a) or 4(b) with respect to such
dividend or distribution shall then be made), except that (1) the Common
Stock Record Date of such dividend or distribution shall be substituted as
"the date fixed for the determination of shareholders entitled to receive
such dividend or other distribution", "the Common Stock Record Date fixed
for such determination" and "the Common Stock Record Date" within the
meaning of Section 4(a) and as "the date fixed for the determination of
shareholders entitled to receive such rights or warrants", "the Common
Stock Record Date fixed for the determination of the shareholders entitled
to receive such rights or warrants" and "such Common Stock Record Date" for
purposes of Section 4(b), and (2) any shares 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" for the purposes of
Section 4(a).
(e) If a tender offer made by the Company or any of its subsidiaries
for all or any portion of the Common Stock expires and such tender 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) of an aggregate consideration having a fair market value
(as determined by the Board of Directors, whose good faith determination shall
be conclusive and described in a resolution of the Board of Directors) that,
combined together with the aggregate of the cash plus the fair market value (as
determined by the Board of Directors, whose good faith determination shall be
conclusive and described in a resolution of the Board of Directors) 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 shares of Common Stock expiring within the 12 months preceding
the
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<PAGE>
expiration of such tender offer and in respect of which no adjustment pursuant
to this Section 4(e) has been made, exceeds 5% of the net income of the Company
reported for the 12 month period ending with the fiscal quarter next preceding
such payment (the "12 Month Net Income") (determined as of the last time (the
"Expiration Time") tenders could have been made pursuant to such tender offer
(as it may be amended)), then, and in each such case, immediately prior to the
opening of business on the day after the date of the Expiration Time, the
Exercise Price shall be adjusted so that the same shall equal the price
determined by multiplying the Exercise Price in effect immediately prior to the
close of business on the date of the Expiration Time by a fraction of which the
numerator 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 a share of Common Stock on the trading day next succeeding the
Expiration Time and the denominator shall be the sum of (x) the fair market
value (determined as aforesaid) 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 shares of 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 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
Exercise Price shall again be adjusted to be the Exercise Price which would then
be in effect if such tender offer had not been made. If the application of this
Section 4(e) to any tender offer would result in an increase in the Exercise
Price, no adjustment shall be made for such tender offer under this Section
4(e).
(f) For purposes of this Section 4, the following terms shall have
the meaning indicated:
"Closing Price" with respect to any securities on any day
-------------
means the closing sale price as of 4:00 p.m. Eastern Time on such day or
any earlier final closing on such day or, if no such sale takes place on
such day, the average of the reported high and low bid prices on such day,
in each case on the Nasdaq National Market, or the New York Stock Exchange,
as applicable, or, if such security is not listed or admitted to trading on
such national market or exchange, on the national stock exchange or
Commission recognized trading market in the United States on which such
security is quoted or listed or admitted to trading, or, if not quoted or
listed or admitted to trading on any national stock exchange or Commission
recognized trading market in the United States, the average of the high and
low bid prices of such security on the over-the-counter market on the day
in question as reported by the National Quotation Bureau Incorporated or a
similar generally accepted reporting service in the United States, or, if
not so available, in such manner as furnished by any New York Stock
Exchange member firm selected from time to time by the Board of Directors
for that purpose, or a price determined in good faith by the Board of
Directors, whose determination shall be conclusive and described in a
resolution of the Board of Directors.
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<PAGE>
"Common Stock Record Date" means, 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).
"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; provided, however, that (A) if
-------- -------
the "ex" date (as hereinafter defined) for any event (other than the
issuance or distribution requiring such computation) that requires an
adjustment to the Exercise Price pursuant to Section 4(a), 4(b), 4(c), 4(d)
or 4(e) occurs during such 10 consecutive trading days, the Closing Price
for each trading day prior to the "ex" date for such other event shall be
adjusted by multiplying such Closing Price by the same fraction by which
the Exercise Price is so required to be adjusted as a result of such other
event, (B) if the "ex" date for any event (other than the issuance or
distribution requiring such computation) that requires an adjustment to the
Exercise Price pursuant to Section 4(a), 4(b), 4(c), 4(d) or 4(e) occurs on
or after the "ex" date for the issuance or distribution requiring such
computation and prior to the day in question, the Closing Price for each
trading day on and after the "ex" date for such other event shall be
adjusted by multiplying such Closing Price by the reciprocal of the
fraction by which the Exercise Price is so required to be adjusted as a
result of such other event and (C) if the "ex" date for the issuance or
distribution requiring such computation is prior to the day in question,
after taking into account any adjustment required pursuant to clause (A) or
(B) of this proviso, the Closing Price for each trading day on or after
such "ex" date shall be adjusted by adding thereto the amount of any cash
and the fair market value (as determined by the Board of Directors in a
manner consistent with any good faith determination of such value for
purposes of Section 4(d), whose good faith determination shall be
conclusive and described in a resolution of the Board of Directors) of the
evidences of indebtedness, shares of capital stock or assets being
distributed applicable to one share of Common Stock as of the close of
business on the day before such "ex" date. For purposes of any computation
under Section 4(e), the Current Market Price on any date shall be deemed to
be the average of the daily Closing Prices per share of Common Stock for
such day and the next two succeeding trading days; provided, however, that,
-------- -------
if the "ex" date for any event (other than the tender offer requiring such
computation) that requires an adjustment to the Exercise Price pursuant to
Section 4(a), 4(b), 4(c), 4(d) or 4(e) occurs on or after the Expiration
Time for the tender or exchange offer requiring such computation and prior
to the day in question, the Closing Price for each trading day on and after
the "ex" date for such other event shall be adjusted by multiplying such
Closing Price by the reciprocal of the fraction by which the Exercise Price
is so required to be adjusted as a result of such other event. For
purposes of this paragraph, the term "ex" date (1) when used with respect
to any issuance or distribution, means the first date on which the shares
of Common Stock trade regular way on the relevant exchange or in the
relevant market from which the Closing Price was obtained without the right
to receive such issuance or distribution, (2) when used with respect to any
subdivision or combination of shares of Common Stock, means the first date
on
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which the shares of Common Stock trade regular way on such exchange or in
such market after the time at which such subdivision or combination becomes
effective and (3) when used with respect to any tender or exchange offer
means the first date on which the shares of Common Stock trade regular way
on such exchange or in such market after the Expiration Time of such offer.
Notwithstanding the foregoing, whenever successive adjustments to the
Exercise Price are called for pursuant to this Section 4, such adjustments
shall be made to the Current Market Price as may be necessary or
appropriate to effectuate the intent of this Section 4 and to avoid unjust
or inequitable results, as determined in good faith by the Board of
Directors.
"Fair Market Value" means the amount which a willing buyer would
-----------------
pay a willing seller in an arm's-length transaction.
(g) No adjustment in the Exercise Price shall be required unless such
adjustment would require an increase or decrease of at least 1% in such price;
provided, however, that any adjustments which by reason of this Section 4(g) are
not required to be made shall be carried forward and taken into account in any
subsequent adjustment. All calculations under this Section 4 shall be made by
the Company and shall be made to the nearest cent. No adjustment need be made
for a change in the par value or no par value of the Common Stock.
(h) Whenever the Exercise Price is adjusted as herein provided, the
Company shall promptly file with the Warrant Agent an Officer's Certificate
setting forth the Exercise Price after such adjustment and the number of shares
of Common Stock for which this Warrant will be exercisable after such adjustment
pursuant to Section 4(l) 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 Exercise Price setting
forth the adjusted Exercise Price and the date on which each adjustment becomes
effective and shall mail such notice of such adjustment of the Exercise Price to
each Warrantholder 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.
(i) In any case in which this Section 4 provides that an adjustment
shall become effective immediately after a Common Stock Record Date for an
event, the Company may defer until the occurrence of such event issuing to the
holder of any Warrant exercised after such Common Stock Record Date and before
the occurrence of such event the additional shares of Common Stock issuable upon
such exercise by reason of the adjustment required by such event over and above
the shares of Common Stock issuable upon such exercise before giving effect to
such adjustment.
(j) For purposes of this Section 4, the number of shares of Common
Stock at any time outstanding shall not include shares held in the treasury of
the Company or by any of its subsidiaries. The Company shall not pay any
dividend or make any distribution on shares of Common Stock held in the treasury
of the Company or by any of its subsidiaries.
(k) In case of any consolidation of the Company with, or merger of the
Company into, any other Person, or in case of any merger of another Person into
the Company (other than a
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merger that does not result in any reclassification, conversion, exchange or
cancellation of outstanding shares of Common Stock of the Company), or in case
of any sale, conveyance or transfer of all or substantially all the assets of
the Company, the Warrantholders shall have the right thereafter, during the
period such Warrant shall be exercisable as specified in Section 2(d), to
convert such Warrants into the kind and amount of securities, cash and other
property receivable upon such consolidation, merger, conveyance or transfer by a
holder of the number of shares of Common Stock of the Company for which the
Warrants might have been exercised immediately prior to such consolidation,
merger, conveyance or transfer, assuming such holder of shares of Common Stock
of the Company failed to exercise his rights of election, if any, as to the kind
or amount of securities, cash and other property receivable upon such
consolidation, merger, conveyance or transfer (provided that, if the kind or
amount of securities, cash and other property receivable upon such
consolidation, merger, conveyance or transfer is not the same for each share of
Common Stock of the Company in respect of which such rights of election shall
not have been exercised ("nonelecting share"), then for the purpose of this
Section 4(k) the kind and amount of securities, cash and other property
receivable upon such consolidation, merger, conveyance or transfer by each
nonelecting share shall be deemed to be the kind and amount so receivable per
share by a plurality of the nonelecting shares). Such securities shall provide
for adjustments which, for events subsequent to the effective date of the
triggering event, shall be as nearly equivalent as may be practicable to the
adjustments provided for in this Section 4(k). The above provisions of this
Section 4(k) shall similarly apply to successive consolidations, mergers,
conveyances or transfers.
(l) Upon each adjustment of the Exercise Price as a result of the
operation of this Section 4, this Warrant shall thereafter evidence the right to
purchase, at the adjusted Exercise Price, that number of shares of Common Stock
obtained by multiplying the number of shares covered by this Warrant immediately
prior to this adjustment by the Exercise Price in effect immediately prior to
such adjustment and dividing the product so obtained by the Exercise Price in
effect immediately after such adjustment of the Exercise Price.
(m) In the event that a Warrantholder would be entitled to receive
upon exercise hereof any Redeemable Capital Stock and the Company redeems,
exchanges or otherwise acquires all of the outstanding shares or other units of
such Redeemable Capital Stock (such event being a "Redemption Event"), then,
from and after the effective date of such Redemption Event, the Warrantholder
shall be entitled to receive upon exercise, in lieu of shares or units of such
Redeemable Capital Stock, the kind and amount of shares of stock and other
securities and property receivable upon the Redemption Event by a holder of the
number of shares or units of such Redeemable Capital Stock for which this
Warrant could have been exercised immediately prior to the effective date of
such Redemption Event (assuming, to the extent applicable, that such holder
failed to exercise any rights of election with respect thereto and received per
share or unit of such Redeemable Capital Stock the kind and amount of stock and
other securities and property received per share or unit by a plurality of the
non-electing shares or units of such Redeemable Capital Stock), and (from and
after the effective date of such Redemption Event) the Warrantholder shall have
no other purchase rights under this Warrant with respect to such Redeemable
Capital Stock. For purposes of this Section 4(m) "Redeemable Capital Stock"
means a class or series of capital stock of the Company that provides by its
terms a right in favor of the Company to call, redeem, exchange or otherwise
acquire all of the outstanding shares or units of such class or series.
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Section 5. Notice of Certain Events.
In case:
(a) the Company shall declare a dividend (or any other distribution)
on its Common Stock payable otherwise than in cash out of its earned surplus; or
(b) the Company shall authorize the granting to all holders of its
shares of Common Stock of rights or warrants to subscribe for or purchase any
shares of capital stock of any class or of any other rights; or
(c) of any reclassification of the Common Stock (other than a
subdivision or combination of the Company's outstanding shares of Common Stock),
or of any consolidation or merger to which the Company is a party and for which
approval of any shareholders of the Company is required, or the sale, conveyance
or transfer of all or substantially all the assets of the Company;
(d) of the voluntary or involuntary dissolution, liquidation or
winding-up of the Company; or
(e) of the taking of any other action referred to in Section 4;
then the Company shall cause to be mailed to all Warrantholders at their last
addresses as they shall appear on the books of the Company, at least 20 Business
Days (or 10 Business Days in any case specified in clause (a) or (b) 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 shares 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 shares of Common Stock of record
shall be entitled to exchange their shares of 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 required by this Section 5 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.
Section 6. Transfer of Warrants.
(a) Warrant Register.
The Company shall maintain a register (the "Warrant Register")
containing the names, addresses and facsimile numbers of the holder(s). Any
holder of this Warrant or any portion thereof may change its address as shown on
the Warrant Register by written notice to the Company requesting such a change.
Until this Warrant is transferred on the Warrant Register, the Company may treat
the holder as shown on the Warrant Register as the absolute owner of this
Warrant for all purposes, notwithstanding any notice to the contrary.
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(b) Warrant Agent.
The Company may, by written notice to the holder, appoint an agent
for the purpose of maintaining the Warrant Register referred to in Section 6(a)
above, issuing any other securities then issuable upon the exercise of this
Warrant, exchanging this Warrant, replacing this Warrant or any or all of the
foregoing. Thereafter, any such registration, issuance or replacement, as the
case may be, shall be made at the office of such agent.
(c) Transferability and Negotiability of Warrant.
Title to this Warrant may be transferred by endorsement (by the
holder executing the Assignment Form attached hereto) and delivery in the same
manner as negotiable instruments transferable by endorsement and delivery.
(d) Exchange of Warrant Upon a Transfer.
On surrender of this Warrant for exchange, properly endorsed on the
Assignment Form and subject to the provisions of this Warrant with respect to
compliance with the Securities Act, the Company at its expense shall issue to or
on the order of the holder a new warrant or warrants of like tenor, in the name
of the holder or as the holders (on payment by the holder of any applicable
transfer taxes) may direct, exercisable for the number of Shares issuable upon
the exercise hereof.
Section 7. Registration Rights.
If the holder of this Warrant is a party to, or an assignee of
rights under, that certain Registration Rights Agreement, dated ___________ __,
2000 (the "Registration Rights Agreement"), such holder shall be entitled to
include any shares of Common Stock or other securities received upon exercise of
the Warrant with such holder's Registrable Securities (as such term is defined
in the Registration Rights Agreement), on the terms and conditions as set forth
in the Registration Rights Agreement.
Section 8. Amendment and Waivers.
No amendment, modification or termination of this Warrant shall be
binding unless executed in writing by the Company and the Warrantholder
intending to be bound thereby.
Section 9. Waivers and Extensions.
Any provision of this Warrant may be amended, waived or modified
only if such amendment, waiver or modification is in writing, is signed by the
party intending to be bound, and specifically refers to this Warrant. Waivers
may be made in advance or after the right waived has arisen or the breach or
default waived has occurred. Any waiver may be conditional. No waiver of any
breach of any agreement or provision herein contained shall be deemed a waiver
of any preceding or succeeding breach thereof nor of any other agreement or
provision herein contained. No waiver or extension of time for performance of
any obligations or acts
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<PAGE>
shall be deemed a waiver or extension of the time for performance of any other
obligations or acts.
Section 10. Termination.
The right to exercise this Warrant shall expire and shall be void
at 5:00 p.m., New York City time on __________ __, 2005.
Section 11. Reservation of Stock.
The Company covenants that it will at all times reserve and keep
available, solely for issuance upon exercise of this Warrant, all shares of
Common Stock or other securities from time to time issuable upon exercise of
this Warrant and, subject to any existing contractual limitations, from time to
time, will take all steps necessary to amend its Certificate of Incorporation to
provide sufficient reserves of shares of Common Stock or other securities
issuable upon exercise of this Warrant. The Company further covenants that all
shares that may be issued upon the exercise of rights represented by this
Warrant and payment of the Exercise Price, as set forth herein, will be fully
paid and non-assessable and free from all taxes, liens and charges in respect of
the issue thereof. The Company also agrees that its issuance of this Warrant
shall constitute full authority to its officers who are charged with the duty of
executing stock certificates to execute and issue the necessary certificates for
shares of Common Stock upon exercise of this Warrant.
Section 12. Replacement.
On receipt of evidence reasonably satisfactory to the Company of
the loss, theft, destruction, or mutilation of this Warrant and, in the case of
loss, theft, or destruction, on delivery of any indemnity agreement or bond
reasonably satisfactory in form and amount to the Company or, in the case of
mutilation, on surrender and cancellation of this Warrant, the Company at its
expense will execute and deliver, in lieu of this Warrant, a new Warrant of like
tenor.
Section 13. No Rights as Stockholder.
Except as provided in Section 2 or Section 4, no holder of this
Warrant, as such, shall be entitled to vote or receive dividends or be
considered a stockholder of the Company for any purpose, nor shall anything in
this Warrant be construed to confer on any holder of this Warrant as such, any
rights of a stockholder of the Company or any right to vote, give or withhold
consent to any corporate action, to receive notice of meeting of stockholders,
to receive dividends or subscription rights or otherwise.
Section 14. Miscellaneous Provisions.
(a) Governing Law.
This Warrant shall be governed by, interpreted under, and construed
in accordance with the laws of the State of New York, regardless of the laws
that might otherwise govern under applicable principles of conflicts of laws
thereof.
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(b) Notices.
All notices, demands, requests, consents, approvals or other
communications (collectively, "Notices") required or permitted to be given
hereunder or which are given with respect to this Warrant shall be in writing
and shall be personally served, delivered by reputable air courier service with
charges prepaid, or transmitted by hand delivery, telegram, telex or facsimile,
to such address as such party shall have specified most recently by written
notice. Notice shall be deemed given on the date of service or transmission if
personally served or transmitted by telegram, telex or facsimile. Notice
otherwise sent as provided herein shall be deemed given on the next business day
following delivery of such notice to a reputable air courier service.
(c) Binding Effect.
The provisions of this Warrant shall be binding upon the Company
and its successors and assigns.
(d) Remedies.
In the event of a breach of this Warrant, the holder shall be
entitled to injunctive relief and specific performance of its rights under this
Warrant, in addition to all of its rights granted by law, including, without
limitation, recovery of damages. The Company agrees that monetary damages would
not be adequate compensation for any loss incurred by reason of a breach of this
Warrant by the Company and hereby waives any defense in any action for
injunctive relief or specific performance that a remedy at law would be
adequate.
(e) Headings.
Titles and headings of sections of this Warrant are for convenience
only and shall not affect the construction of any provision of this Warrant.
ICG COMMUNICATIONS, INC.
By:_____________________________
Name:
Title:
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