UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 13D
UNDER THE SECURITIES EXCHANGE ACT OF 1934
NEXTLINK COMMUNICATIONS, INC.
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(Name of Issuer)
CLASS A COMMON STOCK, PAR VALUE $0.02 PER SHARE
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(Title of Class of Securities)
65333H707
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(CUSIP Number)
FRIED, FRANK, HARRIS, FORSTMANN LITTLE & CO. SUBORDINATED
SHRIVER & JACOBSON DEBT & EQUITY MANAGEMENT BUYOUT
ONE NEW YORK PLAZA PARTNERSHIP-VII, L.P.
NEW YORK, NY 10004 FORSTMANN LITTLE & CO. EQUITY
ATTN: ROBERT C. SCHWENKEL, ESQ. PARTNERSHIP-VI, L.P.
(212) 859-8000 FL FUND, L.P.
C/O FORSTMANN LITTLE & CO.
767 FIFTH AVENUE
NEW YORK, NY 10153
ATTN: WINSTON W. HUTCHINS
(212) 355-5656
(Name, Address and Telephone Number of Person Authorized
to Receive Notices and Communications)
JANUARY 20, 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 ss.ss.240.13d-1(e), 240.13d-1(f) or
240.13(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 ss.240.13d-7 for
other parties to whom copies are to be sent.
*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 disclosures provided in a prior cover page.
The information required on 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).
<PAGE>
SCHEDULE 13D
CUSIP No. 65333H707
1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
FORSTMANN LITTLE & CO. SUBORDINATED DEBT AND EQUITY MANAGEMENT BUYOUT
PARTNERSHIP-VII, L.P.
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) [ ]
(b) [X]
3 SEC USE ONLY
4 SOURCE OF FUNDS*
OO
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEMS 2(d) or 2(e) [ ]
6 CITIZENSHIP OR PLACE OF ORGANIZATION
DELAWARE
NUMBER OF 7 SOLE VOTING POWER
SHARES 9,239,130**
BENEFICIALLY 8 SHARED VOTING POWER
OWNED BY EACH 0
REPORTING 9 SOLE DISPOSITIVE POWER
PERSON WITH 9,239,130**
10 SHARED DISPOSITIVE POWER
0
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
9,239,130**
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) [ ]
EXCLUDES CERTAIN SHARES*
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
11.0%
14 TYPE OF REPORTING PERSON*
PN
*SEE INSTRUCTIONS BEFORE FILLING OUT!
INCLUDE BOTH SIDES OF THE COVER PAGE, RESPONSES TO ITEMS 1-7
(INCLUDING EXHIBITS) OF THE SCHEDULE, AND THE SIGNATURE ATTESTATION.
** Section 8(a)(i) of the Certificate of Designation of the Powers,
Preferences and Relative, Participating, Optional and Other Special
Rights of Series C Cumulative Convertible Participating Preferred
Stock (the "Series C Preferred") and Qualifications, Limitations and
Restrictions Thereof (the "Series C Certificate of Designation") sets
forth a formula for determining the number of shares of Class A Common
Stock issuable, as at any date, upon conversion of the Series C
Preferred. The number of shares referred to in items 7, 9 and 11 above
was calculated in accordance with such formula assuming that the
Conversion Price and the Net Realizable FMV (each such term as
defined in the Series C Certificate of Designation) equal $63.25.
<PAGE>
SCHEDULE 13D
CUSIP No. 65333H707
1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
FORSTMANN LITTLE & CO. EQUITY PARTNERSHIP-VI, L.P.
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) [ ]
(b) [X]
3 SEC USE ONLY
4 SOURCE OF FUNDS*
OO
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEMS 2(d) or 2(e) [ ]
6 CITIZENSHIP OR PLACE OF ORGANIZATION
DELAWARE
NUMBER OF 7 SOLE VOTING POWER
SHARES 4,190,909**
BENEFICIALLY 8 SHARED VOTING POWER
OWNED BY EACH 0
REPORTING 9 SOLE DISPOSITIVE POWER
PERSON WITH 4,190,909**
10 SHARED DISPOSITIVE POWER
0
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
4,190,909**
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) [ ]
EXCLUDES CERTAIN SHARES*
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
5.3%
14 TYPE OF REPORTING PERSON*
PN
*SEE INSTRUCTIONS BEFORE FILLING OUT!
INCLUDE BOTH SIDES OF THE COVER PAGE, RESPONSES TO ITEMS 1-7
(INCLUDING EXHIBITS) OF THE SCHEDULE, AND THE SIGNATURE ATTESTATION.
** Section 8(a)(i) of the Certificate of Designation of the Powers,
Preferences and Relative, Participating, Optional and Other Special
Rights of Series D Convertible Participating Preferred Stock (the
"Series D Preferred") and Qualifications, Limitations and Restrictions
Thereof (the "Series D Certificate of Designation") sets forth a
formula for determining the number of shares of Class A Common Stock
issuable, as at any date, upon conversion of the Series D Preferred.
The number of shares referred to in items 7, 9 and 11 above was
calculated in accordance with such formula assuming that the
Conversion Price and the Net Realizable FMV (each such term as
defined in the Series D Certificate of Designation) equal $63.25.
<PAGE>
SCHEDULE 13D
CUSIP No. 65333H707
1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
FL FUND, L.P.
2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) [ ]
(b) [X]
3 SEC USE ONLY
4 SOURCE OF FUNDS*
OO
5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEMS 2(d) or 2(e) [ ]
6 CITIZENSHIP OR PLACE OF ORGANIZATION
DELAWARE
NUMBER OF 7 SOLE VOTING POWER
SHARES 8,695**
BENEFICIALLY 8 SHARED VOTING POWER
OWNED BY EACH 0
REPORTING 9 SOLE DISPOSITIVE POWER
PERSON WITH 8,695**
10 SHARED DISPOSITIVE POWER
0
11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
8,695**
12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) [ ]
EXCLUDES CERTAIN SHARES*
13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
0.0%
14 TYPE OF REPORTING PERSON*
PN
*SEE INSTRUCTIONS BEFORE FILLING OUT!
INCLUDE BOTH SIDES OF THE COVER PAGE, RESPONSES TO ITEMS 1-7
(INCLUDING EXHIBITS) OF THE SCHEDULE, AND THE SIGNATURE ATTESTATION.
** Section 8(a)(i) of the Series D Certificate of Designation sets forth
a formula for determining the number of shares of Class A Common Stock
issuable, as at any date, upon conversion of the Series D Preferred.
The number of shares referred to in items 7, 9 and 11 above was
calculated in accordance with such formula assuming that the
Conversion Price and the Net Realizable FMV (each such term as
defined in the Series D Certificate of Designation) equal $63.25.
<PAGE>
ITEM 1. Security and Issuer
-------------------
This Statement on Schedule 13D relates to the Class A Common
Stock, par value $0.02 per share (the "Common Stock"), of NEXTLINK
Communications, Inc., a Delaware corporation ("NEXTLINK"). The principal
executive offices of NEXTLINK are located at 1505 Farm Credit Drive,
McLean, Virginia 22102.
ITEM 2. Identity and Background
-----------------------
This statement is filed by Forstmann Little & Co. Subordinated
Debt and Equity Management Buyout Partnership-VII, L.P., a Delaware limited
partnership ("MBO-VII"), Forstmann Little & Co. Equity Partnership-VI,
L.P., a Delaware limited partnership ("Equity-VI") and FL Fund, L.P., a
Delaware limited partnership ("FL Fund"; with MBO-VII and Equity-VI,
collectively, the "FL Partnerships").
ITEM 2. (a), (b), (c)
-------------
The FL Partnerships are limited partnerships which are private
investment firms. Information with respect to the identity, address and
background of the general partners of each of the FL Partnerships is set
forth on Schedule I attached hereto.
The address of the principal office of each of the FL
Partnerships is c/o Forstmann Little & Co., 767 Fifth Avenue, New York, New
York 10153.
ITEM 2. (d), (e)
--------
During the last five years, neither MBO-VII, Equity-VI or FL Fund
nor, to the knowledge of MBO-VII, Equity-VI and FL Fund, any person
identified in Schedule I has (i) been convicted in a criminal proceeding
(excluding traffic violations or similar misdemeanors) or (ii) been a party
to a civil proceeding of a judicial or administrative body of competent
jurisdiction and as a result of such proceeding was or is 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.
ITEM 3. Source and Amount of Funds or Other Consideration
-------------------------------------------------
As more fully described in Item 6 below, on January 20, 2000, the
FL Partnerships purchased from NEXTLINK (i) an aggregate of 584,375 shares
of NEXTLINK's Series C Preferred Stock, par value $.01 per share (the
"Series C Preferred"), for an aggregate purchase price of $584,375,000 and
(ii) an aggregate of 265,625 shares of NEXTLINK's Series D Preferred Stock,
par value $.01 per share (the "Series D Preferred"; with the Series C
Preferred, collectively, the "Preferred Stock"), for an aggregate purchase
price of $265,625,000. As of January 20, 2000, the shares of Series C
Preferred and Series D Preferred purchased by the FL Partnerships were
convertible into 13,438,734 shares of Common Stock.
The funds used by the FL Partnerships to purchase the Preferred
Stock were obtained from capital contributions made by the partners of each
of the FL Partnerships.
ITEM 4. Purpose of Transaction
----------------------
The FL Partnerships consummated the transactions described herein
in order to acquire an equity interest in NEXTLINK for investment purposes.
The FL Partnerships intend to review continuously their position in
NEXTLINK. Depending upon future evaluations of the business prospects of
NEXTLINK and upon other developments, including, but not limited to,
general economic and business conditions and stock market conditions, the
FL Partnerships may retain or from time to time increase their holdings or
dispose of all or a portion of their holdings, subject to any applicable
legal and contractual restrictions on their ability to do so, including the
terms and conditions of the Stock Purchase Agreement (as defined below).
In addition, the matters set forth in Item 6 below are
incorporated in this Item 4 by reference as if fully set forth herein.
Except as set forth above, neither MBO-VII, Equity-VI or FL Fund
nor, to the knowledge of MBO-VII, Equity-VI or FL Fund, any person
identified in Schedule I, has any plans or proposals which relate to or
would result in the types of transactions set forth in subparagraphs (a)
through (j) of Item 4 of Schedule 13D.
ITEM 5. Interest in Securities of the Issuer
------------------------------------
The following information is as of January 20, 2000:
(i) MBO-VII:
(a) Amount Beneficially Owned:
MBO-VII directly owns 584,375 shares of Series C Preferred, which
are convertible into 9,239,130 shares of Common Stock, assuming the
conversion of all Preferred Stock pursuant to Section 8(a)(i) of the
Certificate of Designation of the Powers, Preferences and Relative,
Participating, Optional and Other Special Rights of the Series C Preferred
(the "Series C Certificate of Designation"), which sets forth a formula for
determining the number of shares of Class A Common Stock issuable, as at
any date, upon conversion of the Series C Preferred. The number of shares
of Common Stock referred to above was calculated in accordance with such
formula assuming that the Conversion Price and the Net Realizable FMV
(each such term as defined in the Series C Certificate of Designation)
equal $63.25. FLC XXXIII Partnership ("FLC XXXIII"), a New York general
partnership having its principal business office at the address set forth
in response to Item 2(b) of this statement, is the general partner of
MBO-VII. Theodore J. Forstmann, Nicholas C. Forstmann, Sandra J. Horbach,
Thomas H. Lister, Winston W. Hutchins, S. Joshua Lewis, Jamie C. Nicholls
(each a United States citizen with his or her principal place of business
being at the address set forth in response to Item 2(b) of this statement),
and Tywana LLC, a North Carolina limited liability company having its
principal business office at 201 North Tryon Street, Suite 2450, Charlotte,
N.C. 28202, are the general partners of FLC XXXIII. Mr. Lewis does not have
any voting or investment power with respect to, or any economic interest
in, the shares of Series C Preferred held by MBO-VII; and, accordingly, Mr.
Lewis is not deemed to be the beneficial owner of these shares.
The shares of Series C Preferred owned by MBO-VII are convertible
into approximately 11.0% of the Common Stock outstanding, based on
calculations made in accordance with Rule 13d-3(d) of the Securities and
Exchange Act of 1934, as amended, and there being 74,571,080 shares of
Common Stock outstanding as of December 1, 1999, based on a representation
and warranty of NEXTLINK in the Stock Purchase Agreement (as defined
below).
(b) Assuming conversion of all Preferred Stock, number of shares
as to which MBO-VII has:
(i) sole power to vote or to direct the vote - 9,239,130.
(ii) shared power to vote or to direct the vote -- None.
(iii) sole power to dispose or to direct the disposition of
- 9,239,130.
(iv) shared power to dispose or to direct the disposition of
-- none.
(ii) Equity-VI:
(a) Amount Beneficially Owned:
Equity-VI directly owns 265,075 shares of Series D Preferred,
which are convertible into 4,190,909 shares of Common Stock, assuming the
conversion of all Preferred Stock pursuant to Section 8(a)(i) of the
Certificate of Designation of the Powers, Preferences and Relative,
Participating, Optional and Other Special Rights of the Series D Preferred
(the "Series D Certificate of Designation"), which sets forth a formula for
determining the number of shares of Class A Common Stock issuable, as at
any date, upon conversion of the Series D Preferred. The number of shares
of Common Stock referred to above was calculated in accordance with such
formula assuming that the Conversion Price and the Net Realizable FMV
(each such term as defined in the Series D Certificate of Designation)
equal $63.25. FLC XXXII Partnership, L.P. ("FLC XXXII"), a New York limited
partnership having its principal business office at the address set forth
in response to Item 2(b) of this statement, is the general partner of
Equity-VI. Theodore J. Forstmann, Nicholas C. Forstmann, Sandra J. Horbach,
Thomas H. Lister, Winston W. Hutchins, S. Joshua Lewis, Jamie C. Nicholls
(each a United States citizen with his or her principal place of business
being at the address set forth in response to Item 2(b) of this statement),
and Tywana LLC, a North Carolina limited liability company having its
principal business office at the address set forth in Item 5(i)(a) of this
statement, are the general partners of FLC XXXII. Mr. Lewis does not have
any voting or investment power with respect to, or any economic interest
in, the shares of Series D Preferred held by Equity-VI; and, accordingly,
Mr. Lewis is not deemed to be the beneficial owner of these shares.
The shares of Series D Preferred owned by Equity-VI are
convertible into approximately 5.3% of the Common Stock outstanding, based
on calculations made in accordance with Rule 13d-3(d) of the Exchange Act
and there being 74,571,080 shares of Common Stock outstanding as of
December 1, 1999, based on a representation and warranty of NEXTLINK in the
Stock Purchase Agreement (as defined below).
(b) Assuming conversion of all Preferred Stock, number of shares
as to which Equity-V has:
(i) sole power to vote or to direct the vote - 4,190,909.
(ii) shared power to vote or to direct the vote -- None.
(iii) sole power to dispose or to direct the disposition of
- 4,190,909.
(iv) shared power to dispose or to direct the disposition of
-- none.
(iii) FL Fund:
(a) Amount Beneficially Owned:
FL Fund directly owns 550 shares of Series D Preferred, which are
convertible into 8,695 shares of Common Stock, assuming the conversion of
all Preferred Stock pursuant to Section 8(a)(i) of the Certificate of
Designation of the Powers, Preferences and Relative, Participating,
Optional and Other Special Rights of the Series D Preferred (the "Series D
Certificate of Designation"), which sets forth a formula for determining
the number of shares of Class A Common Stock issuable, as at any date, upon
conversion of the Series D Preferred. The number of shares of Common Stock
referred to above was calculated in accordance with such formula assuming
that the Conversion Price and the Net Realizable FMV (each such term as
defined in the Series D Certificate of Designation) equal $63.25. FLC XXXI
Partnership, L.P. ("FLC XXXI"), a New York limited partnership having its
principal business office at the address set forth in response to Item 2(b)
of this statement, is the general partner of FL Fund. FLC XXIX Partnership,
L.P. ("FLC XXIX"), a New York limited partnership, and FLC XXXIII are the
general partners of FLC XXXI. Theodore J. Forstmann, Nicholas C. Forstmann,
Sandra J. Horbach, Thomas H. Lister, Winston W. Hutchins, S. Joshua Lewis,
Jamie C. Nicholls (each a United States citizen with his or her principal
place of business being at the address set forth in response to Item 2(b)
of this statement), and Tywana LLC, a North Carolina limited liability
company having its principal business office at the address set forth in
Item 5(i)(a) of this statement, are the general partners of each of FLC
XXIX and FLC XXXIII. Mr. Lewis does not have any voting or investment power
with respect to, or any economic interest in, the shares of Series D
Preferred held by FL Fund; and, accordingly, Mr. Lewis is not deemed to be
the beneficial owner of these shares.
The shares of Series D Preferred owned by FL Fund are convertible
into less than 0.1% of the Common Stock outstanding, based on calculations
made in accordance with Rule 13d-3(d) of the Exchange Act and there being
74,571,080 shares of Common Stock outstanding as of December 1, 1999, based
on a representation and warranty of NEXTLINK in the Stock Purchase
Agreement (as defined below).
(b) Assuming conversion of all Preferred Stock, number of shares
as to which FL Fund has:
(i) sole power to vote or to direct the vote - 8,695.
(ii) shared power to vote or to direct the vote -- None.
(iii) sole power to dispose or to direct the disposition of
- 8,695.
(iv) shared power to dispose or to direct the disposition of
-- none.
(iv) Except as set forth above, neither MBO-VII, Equity-VI or FL
Fund nor, to the knowledge of MBO-VII, Equity-VI or FL Fund, any person
identified in Schedule I, beneficially owns any shares of Common Stock or
has effected any transactions in shares of Common Stock during the
preceding 60 days.
(v) The right to receive dividends on, and proceeds from the sale
of, the shares of Common Stock beneficially owned by the FL Partnerships is
governed by the limited partnership agreements of each such entities, and
such dividends or proceeds may be distributed with respect to numerous
general and limited partnership interests.
ITEM 6. Contracts, Arrangements, Understandings or Relationships with
Respect to Securities of the Issuer
-----------------------------------
The responses to Items 3, 4 and 5 of this statement are
incorporated herein by reference.
Stock Purchase Agreement:
------------------------
Pursuant to the Stock Purchase Agreement (the "Stock Purchase
Agreement"), dated as of December 7, 1999, by and among NEXTLINK, MBO-VII
and Equity-VI, MBO-VII acquired 584,375 shares of the Series C Preferred
for an aggregate purchase price of $584,375,000 and Equity-VI acquired
265,625 shares of the Series D Preferred for an aggregate purchase price of
$265,625,000. On January 19, 2000, Equity-VI exercised its right under
Section 8.6 of the Stock Purchase Agreement to assign certain of its rights
and obligations to an affiliate by entering into an Assignment and
Assumption Agreement (the "Assignment Agreement") with its affiliate, FL
Fund, pursuant to which Equity-VI assigned and FL Fund assumed the rights
and obligations of Equity-VI relating to the purchase of 550 shares of
Series D Preferred under the Stock Purchase Agreement.
Voting Rights. Pursuant to the Stock Purchase Agreement and the
Assignment Agreement, MBO-VII is entitled, subject to the Series C
Certificate of Designation, to designate for election to the Board of
Directors of NEXTLINK (the "Board of Directors") one person, and Equity-VI
and FL Fund are entitled, subject to the Series D Certificate of
Designation, to designate for election to the Board of Directors one
person. Pursuant to these contractual rights, MBO-VII has designated
Nicholas C. Forstmann, and Equity-VI has designated Sandra J. Horbach, for
election to the Board of Directors.
Standstill Provisions. Pursuant to the Stock Purchase Agreement
and the Assignment Agreement, until the earlier of January 20, 2005 or the
occurrence of certain events, the FL Partnerships may not, subject to
certain exceptions, (i) acquire or become the beneficial owner of or obtain
any rights in respect of any capital stock of NEXTLINK, (ii) solicit
proxies or become a "participant" in a "solicitation" (as such terms are
defined in Regulation 14A under the Exchange Act) of proxies with respect
to any voting securities of NEXTLINK, (iii) initiate or become a
participant in any stockholder proposal or election contest with respect to
NEXTLINK or induce others to initiate the same, (iv) propose, solicit or
participate in the solicitation of any person to acquire NEXTLINK or a
substantial portion of its assets or more than 5% of its outstanding
capital stock, or (v) join in or in any way participate in a pooling
agreement or other arrangement with respect to NEXTLINK's voting
securities.
Lock-Up Provisions. Pursuant to the Stock Purchase Agreement and
the Assignment Agreement, until the earliest of (a) January 20, 2001, (b)
the occurrence of certain changes of control with respect to NEXTLINK or
(c) the breach by NEXTLINK in any material respect of any covenant or
agreement contained in the Stock Purchase Agreement or any other agreement
or document delivered in connection with the Stock Purchase Agreement (such
earliest date, a "Termination Event"), the FL Partnerships may not, subject
to certain exceptions, sell, transfer, assign, convey or otherwise dispose
of any of the Series C Preferred, Series D Preferred or Common Stock. In
addition, the FL Partnerships agreed that they may not exercise any
conversion rights with respect to the Preferred Stock until the occurrence
of a Termination Event. Nothing contained in the Stock Purchase Agreement,
however, will be deemed to limit the ability of the limited partners in the
FL Partnerships from transferring, directly or indirectly, their limited
partnership interests in the FL Partnerships or the general partners of the
FL Partnerships from transferring, directly or indirectly, up to 15% of the
equity interests in the FL Partnerships at any time or from time to time.
In addition, the FL Partnerships may not, prior to January 20, 2005,
without the prior written consent of NEXTLINK, transfer any of the
Preferred Stock to any person that is engaged in a business that competes
with any business conducted by NEXTLINK on the date of the proposed
transfer.
Right of First Purchase. Pursuant to the Stock Purchase Agreement
and the Assignment Agreement, NEXTLINK granted to the FL Partnerships a
right of first purchase with respect to certain issuances by NEXTLINK of
any shares of capital stock having a preference relative to the Common
Stock with respect to dividends or upon liquidation or winding up of
NEXTLINK, any rights, options or warrants to purchase such capital stock,
and securities of any type that are, or may become, convertible into such
capital stock ("Senior Capital Stock"). If NEXTLINK proposes to issue any
Senior Capital Stock, with certain exceptions, NEXTLINK must first make an
offering of such Senior Capital Stock to each of the FL Partnerships. Each
of the FL Partnerships, in turn, may elect to purchase all but not less
than all of such Senior Capital Stock. The conversion price of any such
Senior Capital Stock to which an FL Partnership's right of election applies
and which is convertible into shares of Common Stock will be an amount per
share no more than 115% of the closing sales price of the Common Stock on
the NASDAQ National Market System on the date the FL Partnerships elect to
purchase any such Senior Capital Stock, unless the FL Partnerships waive
such right.
Dividends. Pursuant to the Stock Purchase Agreement and the
Assignment Agreement, NEXTLINK agreed that it will pay cash dividends on
the Series C Preferred on a current basis so long as it is not precluded
from doing so under (a) its debt instruments, (b) the terms of its 14%
Senior Exchangeable Redeemable Preferred Shares (the "14% Senior Preferred
Shares") and its 6-1/2% Cumulative Convertible Preferred Stock (the "6-1/2%
Preferred Shares"), (c) Delaware law or any other laws applicable to
NEXTLINK or (d) any contracts, agreements, understandings or commitments to
which NEXTLINK is a party or by which NEXTLINK or any of its properties may
be bound. In furtherance thereof, NEXTLINK agreed to use its reasonable
best efforts to pay such dividends, including, without limitation, using
its reasonable best efforts to refrain from entering into any agreements
which would preclude such payments, to seek a waiver under any agreements
which would prevent such payments at any time and to take whatever actions
are necessary, including revaluing assets, to create surplus for the
purpose of paying such dividends.
The foregoing descriptions of the Stock Purchase Agreement and
Assignment Agreement are not intended to be complete and are qualified in
their entirety by the complete text of the Stock Purchase Agreement and the
Assignment Agreement, respectively, each of which is incorporated herein by
reference. The Stock Purchase Agreement and the Assignment Agreement are
filed as Exhibits 1 and 5 hereto, respectively.
Registration Rights Agreement.
-----------------------------
In connection with the purchase of shares of Series C Preferred
and Series D Preferred under the Stock Purchase Agreement, NEXTLINK and the
FL Partnerships entered into a Registration Rights Agreement, dated as of
January 20, 2000 (the "Registration Rights Agreement"). Pursuant to the
Registration Rights Agreement, NEXTLINK granted to the FL Partnerships
three demand rights to cause NEXTLINK to register under the Securities Act
of 1933, as amended (the "Securities Act"), all or part of the Registrable
Securities (as defined below) held by the FL Partnerships. NEXTLINK has the
right to delay any such registration once in any six-month period for a
reasonable period of time (but not exceeding 60 days) under certain
circumstances. If the FL Partnerships request that NEXTLINK effect a
registration of Registrable Securities by means of shelf registration
pursuant to Rule 415 under the Securities Act (a "Shelf Registration
Statement"), NEXTLINK will, at its cost, use its reasonable best efforts to
keep the Shelf Registration Statement continuously effective in order to
permit the prospectus forming part thereof to be usable by the FL
Partnerships until such time as all the Registrable Securities covered by
the Shelf Registration Statement have been sold pursuant to the Shelf
Registration Statement or cease to be outstanding.
In addition, if NEXTLINK proposes to register any of its
securities for the account of any other stockholder (other than in
connection with an employee benefit plan, dividend reinvestment plan,
merger or consolidation or incidental to an issuance of securities under
Rule 144A under the Securities Act), the FL Partnerships may require
NEXTLINK to include all or a portion of their Registrable Securities in
such registration, subject to certain priorities among them and to certain
limitations. All expenses incurred in connection with such registrations
(other than underwriting discounts and commissions) will be borne by
NEXTLINK.
"Registrable Securities" means (i) any shares of Common Stock
issued or issuable upon the conversion of any Preferred Stock held by the
FL Partnerships and (ii) any shares of Common Stock issued with respect to
the Common Stock referred to in clause (i) by way of a stock dividend,
stock split or reverse stock split or in connection with a combination of
shares, recapitalization, merger, consolidation or otherwise.
The foregoing description of the Registration Rights Agreement is
not intended to be complete and is qualified in its entirety by the
complete text of the Registration Rights Agreement, all of which is
incorporated herein by reference. The Registration Rights Agreement is
filed as Exhibit 2 hereto.
Series C Certificate of Designation
-----------------------------------
As contemplated by the Stock Purchase Agreement, immediately
prior to the Closing, NEXTLINK filed the Series C Certificate of
Designation to create the Series C Preferred.
Rank. Under the Series C Certificate of Designation, the Series C
Preferred and the Series D Preferred taken together will, with respect to
dividend rights and rights on liquidation and dissolution, rank (i) senior
to the 6-1/2% Preferred Shares, all classes of capital stock or series of
preferred stock of NEXTLINK established by the Board of Directors, the
terms of which do not expressly provide that such class or series ranks
senior to, or on a parity with, the Series C Preferred and Series D
Preferred (collectively referred to, together with all classes of Common
Stock, as "Junior Securities"), (ii) on a parity with each class of capital
stock or series of preferred stock of NEXTLINK established by the Board of
Directors, the terms of which expressly provide that such class or series
will rank on a parity with the Preferred Stock (collectively referred to as
"Parity Securities"), and (iii) junior as to the 14% Senior Preferred
Shares and to each class of capital stock or series of preferred stock of
NEXTLINK established by the Board of Directors, the terms of which
expressly provide that such class or series will rank senior to the
Preferred Stock (collectively referred to as "Senior Securities"). Creation
by NEXTLINK of Parity Securities or Senior Securities requires the vote of
holders of a majority of the outstanding shares of the Series C Preferred,
except for Senior Securities issued in accordance with paragraph (f)(ii) of
the Certificate of Designation of the 14% Senior Preferred Shares as in
effect on December 3, 1999.
Dividends. The holders of Series C Preferred will be entitled to
receive with respect to each share of Series C Preferred, when and if
declared by the Board of Directors, out of funds legally available for the
payment of dividends, dividends per annum equal to $54.5455 per share in
cash. Such dividends will be cumulative from the date of issuance of the
Series C Preferred (the "Issue Date") and will be payable quarterly in
arrears. In addition, so long as any shares of Series C Preferred are
outstanding, if NEXTLINK pays a dividend in cash, securities or other
property on the Common Stock, then each share of Series C Preferred will be
entitled to receive an amount equal to the Series C Per Share Participation
Amount. The "Series C Per Share Participation Amount" means, as at any
date, 37.5% of the amount of dividends that would be paid with respect to
the Series C Preferred and Series D Preferred taken together if converted
into Common Stock on the date established as the record date with respect
to such dividend on the Common Stock divided by the number of shares of
Series C Preferred then outstanding.
Liquidation. In the event of any liquidation, dissolution or
winding-up of NEXTLINK, after payment or distribution of the assets of
NEXTLINK is made to or set apart for the holders of Senior Securities, and
before any payment or distribution of the assets of NEXTLINK may be made to
or set apart for the holders of Junior Securities, the holders of the
shares of Series C Preferred and Series D Preferred taken together will be
entitled to receive an amount in cash equal to the greater of (x) the
aggregate Liquidation Preferences (as defined below) of the shares of
Series C Preferred and Series D Preferred as of the date of liquidation, or
(y) the aggregate amount that would have been received with respect to the
shares of Series C Preferred and Series D Preferred if such stock had been
converted to Common Stock immediately prior to such liquidation,
dissolution or winding-up. If, upon any liquidation, dissolution or
winding-up of NEXTLINK, the assets of NEXTLINK, or proceeds thereof, are
insufficient to pay in full the amounts under clause (x) of the preceding
sentence and liquidating payments on all Parity Securities, then such
assets, or proceeds thereof, will (i) be distributed among the shares of
Series C Preferred and the Series D Preferred taken together and all such
other Parity Securities ratably in accordance with the respective amounts
that would be payable on such shares of Preferred Stock and any such other
Parity Securities if all amounts payable thereon were paid in full and (ii)
the amount distributable under clause (i) to the Series C Preferred and
Series D Preferred taken together, will first be distributed to the Series
C Preferred until it has received an amount equal to the aggregate
Preference Amounts (as defined in the Series C Certificate of Designation)
of all Series C Preferred Stock outstanding as of the date of liquidation
and thereafter 37.5% to the Series C Preferred and 62.5% to the Series D
Preferred. If, upon any liquidation, dissolution or winding-up of NEXTLINK,
the assets of NEXTLINK, or proceeds thereof, distributable to the Series C
Preferred and Series D Preferred taken together are sufficient to pay in
full the amounts under clause (x) of the first sentence of this paragraph
then such amount will first be distributed to the Series C Preferred until
it has received an amount equal to the aggregate Preference Amounts of all
Series C Preferred outstanding as of the date of liquidation and thereafter
37.5% to the Series C Preferred and 62.5% to the Series D Preferred.
"Liquidation Preference" means with respect to a share of Series
C Preferred, as at any date, the sum of $1000.00 plus an amount generally
equal to any accrued and unpaid dividends with respect to such share
through such date.
Redemption. The Series C Preferred will not be redeemable by
NEXTLINK prior to the later of (i) January 20, 2005 and (ii) the date on
which NEXTLINK has redeemed indefeasibly or defeased in full its
obligations in respect of its 12-1/2% Senior Notes due April 15, 2006 or
defeased the covenants applicable thereto in accordance with their terms
(such later date, the "Redemption Trigger Date"). On and after the
Redemption Trigger Date, subject to the holders' conversion rights (as
described below), to the extent NEXTLINK has funds legally available for
such payment, NEXTLINK may redeem at its option shares of Series C
Preferred, at any time, at a redemption price equal to the Liquidation
Preference as of the date fixed for redemption; provided, however, that
NEXTLINK will only be entitled to redeem the Series C Preferred if the
Series D Preferred is also redeemed on a proportional basis based on the
percentage of each class of shares outstanding at the same time. In
addition, to the extent NEXTLINK has funds legally available therefor,
during the 180-day period commencing on January 20, 2010, the holders of
the Series C Preferred will have the right to cause NEXTLINK to redeem at
any time outstanding shares of Series C Preferred at a redemption price in
cash equal to the Liquidation Preference (the "Mandatory Redemption
Obligation").
Conversion. Under the Series C Certificate of Designation, the
holders of shares of Series C Preferred will have the right, generally, at
any time, to convert any or all outstanding shares of Series C Preferred
into fully paid and non-assessable shares of Common Stock; provided that
upon the exercise by any holder of Series C Preferred of the conversion
option, a proportional amount, based on the percentage of each class of
shares outstanding, of the Series D Preferred will automatically convert.
The outstanding shares of Series C Preferred and Series D Preferred taken
together will be convertible into a number of shares of Common Stock (the
"Aggregate Conversion Shares") equal to the aggregate Liquidation
Preferences of the shares of Series C Preferred and Series D Preferred as
of the date of conversion divided by $63.25, subject to certain
adjustments. The Series C Preferred outstanding as at any date will be
convertible into a number of shares of Common Stock equal to the sum of (i)
the aggregate Preference Amounts (as defined in the Series C Certificate of
Designation) with respect to all outstanding shares of Series C Preferred
divided by the Net Realizable FMV (as defined in the Series C Certificate
of Designation) of a share of Common Stock at the time of conversion plus
(ii) .375 times the excess, if any, of the Aggregate Conversion Shares over
the number determined pursuant to clause (i).
Voting Rights. Pursuant to the Series C Certificate of
Designation, the holders of record of shares of Series C Preferred are
entitled to vote on an as-converted basis with the Common Stock as a single
class on all matters presented to the holders of Common Stock for vote,
with certain exceptions. Additionally, so long as at least 40% of the
aggregate number of shares of Series C Preferred issued on the Issue Date
and of shares of Series D Preferred issued on the date of issuance of the
Series D Preferred (such aggregate number of shares of Series C Preferred
and Series D Preferred being referred to herein as the "Total C and D
Shares") remain outstanding, the holders of the Series C Preferred will be
entitled to elect one director to the Board of Directors. If less than 40%
of the Total C and D Shares remain outstanding, but at least one share of
Series C Preferred remains outstanding, the holders of Series C Preferred
will be entitled to designate a person as a non-voting observer (a "Board
Observer") to attend all meetings of the Board of Directors. If six
quarterly dividends payable on the Series C Preferred have not been paid in
full, NEXTLINK fails to discharge its Mandatory Redemption Obligation or if
it issues Parity Securities or Senior Securities without the requisite
consent of the holders of Series C Preferred, the total number of directors
then constituting the whole Board automatically will be increased by one
and the holders of outstanding shares of Series C Preferred, voting
separately as a single series, will be entitled to elect one additional
director to serve on the Board. Whenever all arrears in dividends have been
paid or declared and set apart for payment, or NEXTLINK fulfills its
Mandatory Redemption Obligation, the right of the holders of shares of
Series C Preferred to elect the additional director will cease.
Change of Control Put. Pursuant to the Series C Certificate of
Designation, within thirty days of a Change of Control (as defined in the
Series C Certificate of Designation), NEXTLINK must notify the holders of
the Series C Preferred of such occurrence and must make an offer (the
"Offer to Purchase") to each holder of shares of Series C Preferred to
repurchase such holder's shares of Series C Preferred at a price per share
in cash equal to 101% of the Liquidation Preference plus, without
duplication, an amount in cash equal to all accumulated and unpaid
dividends per share. If any holders of Series C Preferred tender their
shares pursuant to the Offer to Purchase, NEXTLINK will be required to
purchase a proportional amount of the Series D Preferred. Notwithstanding
anything to the contrary described above, NEXTLINK will not repurchase or
redeem any stock pursuant to the Offer to Purchase until it has repurchased
or repaid all outstanding debt obligations pursuant to rights triggered
pursuant to the terms thereof resulting from the Change of Control in
question.
The foregoing description of the Series C Certificate of
Designation is not intended to be complete and is qualified in its entirety
by the complete text of the Series C Certificate of Designation, all of
which is incorporated herein by reference. The Series C Certificate of
Designation is filed as Exhibit 3 hereto.
Series D Certificate of Designation
-----------------------------------
As contemplated by the Stock Purchase Agreement, immediately
prior to the Closing, NEXTLINK filed the Series D Certificate of
Designation to create the Series D Preferred.
Rank. Under the Series D Certificate of Designation, the Series C
Preferred and the Series D Preferred taken together will, with respect to
dividend rights and rights on liquidation and dissolution, rank (i) senior
to the 6-1/2% Preferred Shares and the Junior Securities, (ii) on a parity
with the Parity Securities, and (iii) junior as to the 14% Senior Preferred
Shares and to the Senior Securities. Creation by NEXTLINK of Parity
Securities or Senior Securities requires the vote of holders of a majority
of the outstanding shares of the Series D Preferred, except for Senior
Securities issued in accordance with paragraph (f)(ii) of the Certificate
of Designation of the 14% Senior Preferred Shares as in effect on December
3, 1999.
Dividends. So long as any shares of Series D Preferred are
outstanding, if NEXTLINK pays a dividend in cash, securities or other
property on the Common Stock, then each share of Series D Preferred will be
entitled to receive an amount equal to the Series D Per Share Participation
Amount. The "Series D Per Share Participation Amount" means, as at any
date, 62.5% of the amount of dividends that would be paid with respect to
the Series C Preferred and Series D Preferred taken together if converted
into Common Stock on the dividend record date divided by the number of
shares of Series D Preferred then outstanding.
Liquidation. In the event of any liquidation, dissolution or
winding-up of NEXTLINK, after payment or distribution of the assets of
NEXTLINK is made to or set apart for the holders of Senior Securities, and
before any payment or distribution of the assets of NEXTLINK may be made to
or set apart for the holders of Junior Securities, the holders of the
shares of Series C Preferred and Series D Preferred taken together will be
entitled to receive an amount in cash equal to the greater of (x) the
aggregate Liquidation Preferences (as defined below) of the shares of
Series C Preferred and Series D Preferred as of the date of liquidation, or
(y) the aggregate amount that would have been received with respect to the
shares of Series C Preferred and Series D Preferred if such stock had been
converted to Common Stock immediately prior to such liquidation,
dissolution or winding-up. If, upon any liquidation, dissolution or
winding-up of NEXTLINK, the assets of NEXTLINK, or proceeds thereof, are
insufficient to pay in full the amounts under clause (x) of the preceding
sentence and liquidating payments on all Parity Securities, then such
assets, or proceeds thereof, will (i) be distributed among the shares of
Series C Preferred and the Series D Preferred taken together and all such
other Parity Securities ratably in accordance with the respective amounts
that would be payable on such shares of Preferred Stock and any such other
Parity Securities if all amounts payable thereon were paid in full and (ii)
the amount distributable under clause (i) to the Series C Preferred and
Series D Preferred taken together, will first be distributed to the Series
C Preferred until it has received an amount equal to the aggregate
Preference Amounts (as defined in the Series C Certificate of Designation)
of all Series C Preferred Stock outstanding as of the date of liquidation
and thereafter 37.5% to the Series C Preferred and 62.5% to the Series D
Preferred. If, upon any liquidation, dissolution or winding-up of NEXTLINK,
the assets of NEXTLINK, or proceeds thereof, distributable to the Series C
Preferred and Series D Preferred taken together are sufficient to pay in
full the amounts under clause (x) of the first sentence of this paragraph
then such amount will first be distributed to the Series C Preferred until
it has received an amount equal to the aggregate Preference Amounts of all
Series C Preferred outstanding as of the date of liquidation and thereafter
37.5% to the Series C Preferred and 62.5% to the Series D Preferred.
"Liquidation Preference" means with respect to a share of Series
D Preferred, as at any date, the sum of $1000.00 plus an amount generally
equal to any accrued and unpaid dividends with respect to such share
through such date.
Redemption. The Series D Preferred will not be redeemable by
NEXTLINK prior to the Redemption Trigger Date. On and after the Redemption
Trigger Date, subject to the holders' conversion rights (as described
below), to the extent NEXTLINK has funds legally available for such
payment, NEXTLINK may redeem at its option shares of Series D Preferred, at
any time, at a redemption price equal to the Liquidation Preference as of
the date fixed for redemption; provided, however, that NEXTLINK will only
be entitled to redeem the Series D Preferred if the Series C Preferred is
also redeemed on a proportional basis based on the percentage of each class
of shares outstanding at the same time. In addition, to the extent the
holders of Series C Preferred choose to exercise their right to cause
NEXTLINK to redeem their shares pursuant to the Mandatory Redemption
Obligation, NEXTLINK will be required to redeem a proportional amount of
the Series D Preferred.
Conversion. Under the Series D Certificate of Designation, upon
the exercise by any holder of Series C Preferred of its conversion option,
a proportional amount, based on the percentage of each class of shares
outstanding, of the Series D Preferred will automatically convert. The
outstanding shares of Series C Preferred and Series D Preferred taken
together will be convertible into the Aggregate Conversion Shares. The
Series D Preferred will be convertible into a number of shares of Common
Stock equal to .625 times the excess, if any, of the sum of (i) the
Aggregate Conversion Shares over (ii) the aggregate Preference Amounts with
respect to all outstanding shares of Series C Preferred divided by the Net
Realizable FMV of a share of Common Stock at the time of conversion.
Voting Rights. Pursuant to the Series D Certificate of
Designation, the holders of record of shares of Series D Preferred are
entitled to vote on an as-converted basis with the Common Stock as a single
class on all matters presented to the holders of Common Stock for vote,
with certain exceptions. Additionally, so long as at least 20% of the Total
C and D Shares remain outstanding, the holders of the Series D Preferred
will be entitled to elect one director to the Board of Directors. If less
than 20% of the Total C and D Shares remain outstanding, but at least one
share of Series D Preferred remains outstanding, the holders of Series D
Preferred will be entitled to designate a Board Observer. If NEXTLINK fails
to discharge its Mandatory Redemption Obligation or if it issues Parity
Securities or Senior Securities without the requisite consent of the
holders of Series D Preferred, the total number of directors then
constituting the whole Board automatically will be increased by one and the
holders of outstanding shares of Series D Preferred, voting separately as a
single series, will be entitled to elect one additional director to serve
on the Board. Whenever NEXTLINK fulfills its Mandatory Redemption
Obligation, the right of the holders of shares of Series D Preferred to
elect the additional director will cease.
Change of Control Put. Pursuant to the Series C Certificate of
Designation, within thirty days of a Change of Control, NEXTLINK must
notify the holders of the Series C Preferred of such occurrence and must
make an offer (the "Offer to Purchase") to each holder of shares of Series
C Preferred to repurchase such holder's shares of Series C Preferred at a
price per share in cash equal to 101% of the Liquidation Preference plus,
without duplication, an amount in cash equal to all accumulated and unpaid
dividends per share. If any holders of Series C Preferred tender their
shares pursuant to the Offer to Purchase, NEXTLINK will be required to
purchase a proportional amount of the Series D Preferred. Notwithstanding
anything to the contrary described above, NEXTLINK will not repurchase or
redeem any stock pursuant to the Offer to Purchase until it has repurchased
or repaid all outstanding debt obligations pursuant to rights triggered
pursuant to the terms thereof resulting from the Change of Control in
question.
The foregoing description of the Series D Certificate of
Designation is not intended to be complete and is qualified in its entirety
by the complete text of the Series D Certificate of Designation, all of
which is incorporated herein by reference. The Series D Certificate of
Designation is filed as Exhibit 4 hereto.
Except as set forth or incorporated by reference herein, neither
MBO-VII, Equity-VI or FL Fund nor, to the knowledge of MBO-VII, Equity-VI
or FL Fund, any person identified in Schedule I, has any contracts,
arrangements, understandings or relationships (legal or otherwise) with any
person with respect to any securities of NEXTLINK.
ITEM 7. Material to be Filed as Exhibits
--------------------------------
1. Stock Purchase Agreement, dated December 7, 1999, among NEXTLINK,
MBO-VII and Equity-VI.
2. Registration Rights Agreement, dated as of January 20, 2000,
among NEXTLINK, MBO-VII and Equity-VI.
3. Certificate of Designation of the Powers, Preferences and
Relative, Participating, Optional and Other Special Rights of
Series C Cumulative Convertible Participating Preferred Stock and
Qualifications, Limitations and Restrictions Thereof.
4. Certificate of Designation of the Powers, Preferences and
Relative, Participating, Optional and Other Special Rights of
Series D Convertible Participating Preferred Stock and
Qualifications, Limitations and Restrictions Thereof.
5. Assignment and Assumption Agreement, dated January 19, 2000,
between Equity-VI and FL Fund.
6. Joint Filing Agreement.
<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: January 25, 2000 FORSTMANN LITTLE & CO. SUBORDINATED
DEBT AND EQUITY MANAGEMENT BUYOUT
PARTNERSHIP-VII, L.P.
By: FLC XXXIII Partnership
its general partner
By: /s/ Winston W. Hutchins
-------------------------------
Winston W. Hutchins,
a general partner
FORSTMANN LITTLE & CO. EQUITY
PARTNERSHIP-VI, L.P.
By: FLC XXXII Partnership, L.P.
its general partner
By: /s/ Winston W. Hutchins
-------------------------------
Winston W. Hutchins,
a general partner
FL FUND, L.P.
By: FLC XXXI Partnership, L.P.
its general partner
By: FLC XXIX Partnership, L.P.
a general partner
By: /s/ Winston W. Hutchins
---------------------------
Winston W. Hutchins,
a general partner
<PAGE>
Schedule I
----------
FLC XXXIII Partnership:
General Partner of
MBO-VII
-------
FLC XXXIII Partnership, a New York general partnership ("FLC XXXIII"),
is the general partner of MBO-VII. Its purpose is to act as general partner
of MBO-VII and other limited partnerships affiliated with MBO-VII. The
address of the principal office of FLC XXXIII is c/o Forstmann Little &
Co., 767 Fifth Avenue, New York, NY 10153.
Partners of
FLC XXXIII
----------
The following are the general partners of FLC XXXIII, the general
partner of MBO-VII. All of the persons listed below are general partners of
partnerships affiliated with Forstmann Little & Co., a private investment
firm. With the exception of Tywana LLC, the business address of each is 767
Fifth Avenue, New York, NY 10153 and each is a citizen of the United
States. Tywana LLC is a North Carolina limited liability company having its
principal business office at 201 North Tryon Street, Suite 2450, Charlotte,
N.C. 28202.
Theodore J. Forstmann
Nicholas C. Forstmann
Sandra J. Horbach
Winston W. Hutchins
Thomas H. Lister
Tywana LLC
S. Joshua Lewis
Jamie C. Nicholls
FLC XXXII Partnership, L.P.:
General Partner of
Equity-VI
---------
FLC XXXII Partnership, L.P., a New York limited partnership ("FLC
XXXII"), is the general partner of Equity-VI. Its purpose is to act as
general partner of Equity-VI and other limited partnerships affiliated with
Equity-VI. The address of the principal office of Equity-VI is c/o
Forstmann Little & Co., 767 Fifth Avenue, New York, NY 10153.
General Partners of
FLC XXXII
---------
The following are the general partners of FLC XXXII, the general
partner of Equity-VI. All of the persons listed below are general partners
of partnerships affiliated with Forstmann Little & Co., a private
investment firm. With the exception of Tywana LLC, the business address of
each is 767 Fifth Avenue, New York, NY 10153 and each is a citizen of the
United States. Tywana LLC is a North Carolina limited liability company
having its principal business office at 201 North Tryon Street, Suite 2450,
Charlotte, N.C. 28202.
Theodore J. Forstmann
Nicholas C. Forstmann
Sandra J. Horbach
Thomas H. Lister
Winston W. Hutchins
Tywana LLC
S. Joshua Lewis
Jamie C. Nicholls
FLC XXXI Partnership, L.P.:
General Partner of
FL Fund
-------
FLC XXXI Partnership, L.P., a New York limited partnership ("FLC
XXXI"), is the general partner of FL Fund. Its purpose is to act as general
partner of FL Fund and other limited partnerships affiliated with FL Fund.
The address of the principal office of FL Fund is c/o Forstmann Little &
Co., 767 Fifth Avenue, New York, NY 10153.
General Partners of
FLC XXXI
--------
FLC XXIX Partnership, L.P., a New York limited partnership ("FLC XXIX"),
and FLC XXXIII are the general partners of FLC XXXI, the general partner of
FL Fund. Their purpose is to act as general partner of FLC XXXI and other
limited partnerships affiliated with FLC XXXI. The address of the principal
office of each of FLC XXIX and FLC XXXIII is c/o Forstmann Little & Co.,
767 Fifth Avenue, New York, NY 10153.
General Partners of
FLC XXIX and FLC XXXIII
-----------------------
The following are the general partners of FLC XXIX and FLC XXXIII, the
general partners of FLC XXXI. All of the persons listed below are general
partners of partnerships affiliated with Forstmann Little & Co., a private
investment firm. With the exception of Tywana LLC, the business address of
each is 767 Fifth Avenue, New York, NY 10153 and each is a citizen of the
United States. Tywana LLC is a North Carolina limited liability company
having its principal business office at 201 North Tryon Street, Suite 2450,
Charlotte, N.C. 28202.
Theodore J. Forstmann
Nicholas C. Forstmann
Sandra J. Horbach
Thomas H. Lister
Winston W. Hutchins
Tywana LLC
S. Joshua Lewis
Jamie C. Nicholls
EXHIBIT 1
STOCK PURCHASE AGREEMENT
dated as of
December 7, 1999
by and between
NEXTLINK Communications, Inc.
and
The Purchasers Listed on the Signature Pages Hereto
<PAGE>
STOCK PURCHASE AGREEMENT
STOCK PURCHASE AGREEMENT (this "Agreement"), dated as of December
7, 1999, by and between NEXTLINK Communications, Inc., a Delaware
corporation (the "Company"), and the entities listed on the signature page
hereto under the caption "Purchasers" (each such entity, a "Purchaser" and
collectively, the "Purchasers").
W I T N E S S E T H :
WHEREAS, upon the terms and subject to the conditions set forth
in this Agreement, the Company wishes to sell to the Purchasers and the
Purchasers wish to purchase from the Company (i) an aggregate of 584,375
shares of the Company's Series C Preferred Stock, par value $.01 per share
(the "Series C Preferred Stock"), and (ii) an aggregate of 265,625 shares
of the Company's Series D Preferred Stock, par value $.01 per share (the
"Series D Preferred Stock" and, collectively with the Series C Preferred
Stock, the "Preferred Shares"); and
WHEREAS, the Purchasers and the Company desire to provide for the
purchase and sale of the Preferred Shares and to establish certain rights
and obligations in connection therewith.
NOW, THEREFORE, in consideration of the premises and the mutual
representations, warranties, covenants and agreements set forth in this
Agreement, the parties hereto agree as follows:
ARTICLE I
ISSUANCE AND SALE OF PREFERRED SHARES
1.1. Issuance, Purchase and Sale. Upon the terms and subject to
the conditions set forth herein, at the Closing (as defined below) the
Company shall sell to the Purchasers and the Purchasers shall purchase from
the Company (a) an aggregate of 584,375 shares of Series C Preferred Stock
for an aggregate purchase price of $584,375,000 in cash and (b) an
aggregate of 265,625 shares of Series D Preferred Stock for an aggregate
purchase price of $265,625,000 in cash (the cash amounts set forth in (a)
and (b) being collectively referred to herein as, the "Purchase Price").
The number of shares of Series C Preferred Stock and Series D Preferred
Stock being acquired by each Purchaser, and the portion of the Purchase
Price payable therefor is set forth opposite such Purchaser's name on the
signature page hereto; provided, that the Purchasers shall have the right
at any time prior to the Closing by delivering written notice to the
Company to reallocate among the Purchasers the Preferred Shares to be
purchased by each Purchaser so long as such reallocation does not change
the total number of Preferred Shares being acquired hereunder or the
Purchase Price.
1.2. The Closing; Deliveries. (a) The closing of the purchase and
sale of the Preferred Shares hereunder (the "Closing") shall take place at
the offices of Fried, Frank, Harris, Shriver & Jacobson, One New York
Plaza, New York, New York 10004 at 9:00 a.m. on the fifth business day
following the satisfaction or waiver of the conditions set forth in Article
V, but no earlier than January 18, 2000 (other than those conditions that
by their nature are to be satisfied at the Closing, but subject to the
satisfaction or waiver of those conditions) or at such other place, time
and/or date as shall be mutually agreed by the Company and the Purchasers
(the date of the Closing, the "Closing Date").
(b) At the Closing, the Company shall deliver to each Purchaser
certificates representing the Preferred Shares being purchased by such
Purchaser, each registered in the name of such Purchaser or its nominee or
designee in such amounts as such Purchaser shall specify to the Company
prior to the Closing. Delivery of such certificates shall be made against
receipt by the Company of the portion of the Purchase Price payable
therefor, which shall be paid by wire transfer to an account designated at
least three business days prior to the Closing Date by the Company. At the
Closing, the Company shall pay the Purchaser of the Series C Preferred
Stock a special dividend in the amount set forth on the signature page
hereto under the caption "Amount of Closing Dividend."
1.3. Capitalized Terms. Capitalized terms not otherwise defined
herein shall have the meanings ascribed to such terms in Section 8.1.
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company hereby represents and warrants to each Purchaser, as
of the date hereof and as of the Closing, as follows:
2.1. Organization; Subsidiaries. (a) The Company is a corporation
duly organized, validly existing and in good standing under the laws of the
State of Delaware and has the requisite corporate power and authority to
carry on its business as it is now being conducted. The Company is duly
qualified and licensed as a foreign corporation to do business, and is in
good standing (and has paid all relevant franchise or analogous taxes), in
each jurisdiction where the character of its assets owned or held under
lease or the nature of its business makes such qualification necessary and
where the failure to so qualify or be licensed would not individually or in
the aggregate reasonably be expected to have a Material Adverse Effect.
(b) The Company's Annual Report on Form 10-K for the year ended
December 31, 1998 (the "1998 10-K") and Schedule 2.1(b) sets forth a
complete and correct list as of the date hereof of each corporation,
limited liability company, partnership, business association or other
Person with respect to which the Company has, directly or indirectly,
ownership of or rights with respect to securities or other interests having
the power to elect a majority of such Person's board of directors or
analogous or similar governing body, or otherwise having the power to
direct the management, business or policies of that corporation, limited
liability company, partnership, business association or other Person which
is a "Significant Subsidiary" as defined in Rule 1-02(w) of Regulation S-X
(each, a "Significant Subsidiary" and, collectively, the "Significant
Subsidiaries"). Except as set forth in the 1998 10-K or on Schedule 2.1(b),
as of the date hereof (i) the Company owns, either directly or indirectly
through one or more Subsidiaries, all of the capital stock or other equity
interests of the Significant Subsidiaries free and clear of all liens,
charges, claims, security interests, restrictions, options, proxies, voting
trusts or other encumbrances ("Encumbrances") and (ii) there are no
outstanding subscription rights, options, warrants, convertible or
exchangeable securities or other rights of any character whatsoever
relating to issued or unissued capital stock or other equity interests of
any Significant Subsidiary, or any Commitments of any character whatsoever
relating to issued or unissued capital stock or other equity interests of
any Significant Subsidiary or pursuant to which any Significant Subsidiary
is or may become bound to issue or grant additional shares of its capital
stock or other equity interests or related subscription rights, options,
warrants, convertible or exchangeable securities or other rights, or to
grant preemptive rights. Except for any Subsidiaries which are not
Significant Subsidiaries and except as set forth in the 1998 10-K or on
Schedule 2.1(b), as of the date hereof the Company does not own, directly
or indirectly, any interest in any corporation, limited liability company,
partnership, business association or other Person.
2.2. Due Authorization. The Company has all right, corporate
power and authority to enter into this Agreement and each of the other
Transaction Documents to which it is a party and to consummate the
transactions contemplated hereby and thereby. The execution and delivery by
the Company of this Agreement and each of the other Transaction Documents
to which it is a party, the issuance, sale and delivery of the Preferred
Shares by the Company and the compliance by the Company with each of the
provisions of this Agreement and each of the other Transaction Documents to
which it is a party (including the reservation and issuance of the Shares
upon conversion of the Preferred Stock and the consummation by the Company
of the transactions contemplated hereby and thereby) (a) are within the
corporate power and authority of the Company, and (b) have been duly
authorized by all requisite corporate action of the Company. This Agreement
has been, and each of the other Transaction Documents to which the Company
is a party when executed and delivered by the Company will be, duly and
validly executed and delivered by the Company, and this Agreement
constitutes, and each of such other Transaction Documents when executed and
delivered by the Company will constitute, a valid and binding agreement of
the Company enforceable against the Company in accordance with its terms,
except as such enforcement is limited by bankruptcy, insolvency and other
similar laws affecting the enforcement of creditors' rights generally and
for limitations imposed by general principles of equity. The Shares have
been validly reserved for issuance, and upon issuance, will be duly
authorized and validly issued and outstanding, fully paid, and
nonassessable. The terms, designations, powers, preferences and relative
participation, optional and other special rights, qualifications,
limitations and restrictions of the Series C Preferred Stock and the Series
D Preferred Stock will be as set forth in the Certificate of Designation
for the Series C Preferred Stock and the Certificate of Designation for the
Series D Preferred Stock (the "Certificates of Designation"), the forms of
which are attached to this Agreement as Exhibits 2.2A and 2.2B. The
Preferred Shares issued to the Purchasers in accordance with the terms of
the Certificates of Designation, when issued and delivered in accordance
with the terms of this Agreement, will be duly authorized and validly
issued and outstanding, fully paid and nonassessable free and clear of any
Encumbrances and not subject to the preemptive or other similar rights of
any stockholders of the Company.
2.3. Capitalization. As of the date hereof, the authorized
capital stock of the Company consists of (a) 400,000,000 shares of Class A
Common Stock, par value $0.02 per share (the "Class A Common Stock"), of
which, 74,571,080 shares were issued and outstanding as of December 1,
1999, with any increase since that date being attributable solely to the
exercise of outstanding employee stock options listed on Schedule 2.3; (b)
60,000,000 shares of Class B Common Stock, par value $0.02 per share (the
"Class B Common Stock", and together with the Class A Common Stock, the
"Common Stock"), of which, 58,746,550 shares are issued and outstanding;
and (c) 25,000,000 shares of Preferred Stock, par value $0.01 per share, of
which (i) 8,324,904 shares are issued and outstanding as 14% Senior
Exchangeable Redeemable Preferred Shares (the "14% Preferred Stock") and
(ii) 4,000,000 shares are issued and outstanding as 6-1/2% Cumulative
Convertible Preferred Stock (the "6 1/2% Preferred Stock" and, collectively
with the 14% Preferred Stock, the "Existing Preferred Stock"). As of the
date hereof, the Shares would constitute approximately 7.28 percent of the
Company's fully diluted common equity (determined on the basis of all
outstanding equity and equity equivalents without giving effect to the
exercise price thereof) as of the Closing Date. All of the issued and
outstanding shares of Common Stock and Existing Preferred Stock have been
duly authorized and are validly issued and outstanding, fully paid and
nonassessable. No shares of capital stock of the Company are entitled to
preemptive or similar rights. Except as set forth on Schedule 2.3, as of
the date hereof, there are no outstanding subscription rights, options,
warrants, convertible or exchangeable securities or other rights of any
character whatsoever relating to issued or unissued capital stock of the
Company, or any Commitments of any character whatsoever relating to issued
or unissued capital stock of the Company or pursuant to which the Company
or any of the Subsidiaries is or may become bound to issue or grant
additional shares of its capital stock or related subscription rights,
options, warrants, convertible or exchangeable securities or other rights,
or to grant preemptive rights. Except as set forth on Schedule 2.3, as of
the date hereof, (i) the Company has not agreed to register any securities
under the Securities Act or under any state securities law or granted
registration rights to any Person or entity and (ii) there are no voting
trusts, stockholders agreements, proxies or other Commitments or
understandings in effect to which the Company is a party or of which it has
Knowledge with respect to the voting or transfer of any of the outstanding
shares of Common Stock or Existing Preferred Stock. To the extent that any
options, warrants or any of the other rights described above are
outstanding, neither the issuance and sale of the Preferred Shares nor any
issuance of Shares upon conversion thereof will result in an adjustment of
the exercise or conversion price or number of shares issuable upon the
exercise or conversion of any such options, warrants or other rights.
2.4. SEC Reports. The Company has timely filed all proxy
statements, reports and other documents required to be filed by it under
the Exchange Act and made available to the Purchasers complete copies of
all annual reports, quarterly reports, proxy statements and other reports
filed by the Company under the Exchange Act, each as filed with the SEC
(collectively, the "SEC Reports"). Each SEC Report was on the date of its
filing, in compliance in all material respects with the requirements of its
respective report form and the Exchange Act and did not, on the date of
filing, 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 therein, in the light of the circumstances under which they were
made, not misleading.
2.5. Financial Statements. The consolidated financial statements
of the Company (including any related schedules and/or notes) included in
the SEC Reports, have been prepared in accordance with United States
generally accepted accounting principles ("GAAP") consistently followed
throughout the periods involved (except as may be indicated in the notes
thereto) and fairly present in accordance with GAAP the consolidated
financial condition, results of operations, cash flows and changes in
stockholders' equity of the Company and the Subsidiaries as of the
respective dates thereof and for the respective periods then ended (in each
case subject, as to interim statements, to the absence of footnotes and as
permitted by Form 10-Q and subject to changes resulting from year-end
adjustments, none of which are material in amount or effect). Except as set
forth on Schedule 2.5 or disclosed in the SEC Reports, neither the Company
nor any Subsidiary has any liability or obligation (whether accrued,
absolute, contingent, unliquidated or otherwise, whether known or unknown,
whether due or to become due and regardless of when asserted), except (i)
liabilities and obligations in the respective amounts reflected or reserved
against in the audited consolidated balance sheet of the Company and the
Subsidiaries as of December 31, 1998 (the "1998 Balance Sheet") or (ii)
liabilities and obligations incurred in the ordinary course of business
since December 31, 1998 which individually or in the aggregate would not
reasonably be expected to have a Material Adverse Effect.
2.6. Absence of Certain Changes. Except as set forth on Schedule
2.6 or as disclosed in the SEC Reports, since December 31, 1998 neither the
Company nor any of the Subsidiaries has (a) suffered any change, event or
development or series of changes, events or developments which individually
or in the aggregate has had or would reasonably be expected to have a
Material Adverse Effect or an adverse effect on the ability of the Company
to perform its obligations under this Agreement or any of the Transaction
Documents to which it is a party or (b) been the subject of any Litigation
or threatened or commenced investigation by a Governmental Entity that
would reasonably be expected to have a Material Adverse Effect.
2.7. Litigation. (a) Except as set forth on Schedule 2.7(a) or as
disclosed in the SEC Reports, there is no claim, action, suit,
investigation or proceeding ("Litigation") pending or, to the Knowledge of
the Company, threatened against the Company or any of the Subsidiaries or
involving any of their respective properties or assets by or before any
court, arbitrator or other Governmental Entity which (i) in any manner
challenges or seeks to prevent, enjoin, alter or materially delay the
transactions contemplated by this Agreement or (ii) if resolved adversely
to the Company or a Subsidiary would reasonably be expected to have a
Material Adverse Effect.
(b) Except as set forth on Schedule 2.7(b) or as disclosed in the
SEC Reports, neither the Company nor any of the Subsidiaries is in default
under or in breach of any order, judgment or decree of any court,
arbitrator or other Governmental Entity, and neither the Company nor any of
the Subsidiaries is a party or subject to any order, judgment or decree of
any court, arbitrator or other Governmental Entity which in either case
would reasonably be expected to have a Material Adverse Effect.
2.8. Consents, No Violations. Except as set forth on Schedule
2.8, neither the execution, delivery or performance by the Company of this
Agreement or any of the other Transaction Documents to which it is a party
nor the consummation of the transactions contemplated hereby or thereby
will (a) conflict with, or result in a breach or a violation of, any
provision of the certificate of incorporation or by-laws or other
organizational documents of the Company or any of the Subsidiaries
including, without limitation, any of the provisions of the Certificates of
Designation for the Existing Preferred Stock; (b) constitute, with or
without notice or the passage of time or both, a breach, violation or
default, create an Encumbrance, or give rise to any right of termination,
modification, cancellation, prepayment, suspension, limitation, revocation
or acceleration, under (i) any Law or (ii) any provision of any agreement
or other instrument to which the Company or any of the Subsidiaries is a
party or pursuant to which any of them or any of their assets or properties
is subject, except, with respect to the matters set forth in this clause
(ii), for breaches, violations, defaults, Encumbrances, or rights of
termination, modification, cancellation, prepayment, suspension,
limitation, revocation or acceleration, which, individually or in the
aggregate, would not reasonably be expected to result in a Material Adverse
Effect or adversely affect the ability of the Company to perform its
obligations under this Agreement or any of the Transaction Documents to
which it is a party; or (c) except for the filings of the Certificates of
Designation with the Secretary of State of the State of Delaware or any
required filing under the HSR Act, the Exchange Act or the Securities Act,
require any consent, approval or authorization of, notification to, filing
with, or exemption or waiver by, any Governmental Entity or any other
Person on the part of the Company or any of the Subsidiaries. Without
limiting the generality of the foregoing (i) no consent or other approval
of the holders of the Existing Preferred Stock is required in connection
with the consummation of the transactions contemplated hereby or the
performance by the Company of any of its obligations under this Agreement
or any of the Transaction Documents to which it is a party, (ii) the
issuance of the Preferred Shares or any Shares upon conversion thereof will
not result in any anti-dilution or other adjustment to the conversion price
or the number of shares of Class A Common Stock issuable upon conversion of
the 6-1/2% Preferred Stock or (iii) the holders of the Existing Preferred
Stock will not be entitled to exercise any voting rights as a result of any
of the provisions contained in this Agreement or any other Transaction
Documents. Neither the Company nor any of the Subsidiaries is a party to
any agreement or bound by the terms of any instrument or security which
would prevent the Company from paying cash dividends on the Series C
Preferred Stock on a current basis in its current or currently anticipated
financial position.
2.9. Y2K. Each system of the Company and the Subsidiaries,
including, without limitation, software, hardware, databases or embedded
control systems, that constitutes any part of, or is used in connection
with the use, operation or enjoyment of, any tangible or intangible assets
or property of the Company or any of the Subsidiaries, whether used by the
Company or any of the Subsidiaries individually or forming part of the
procedure or services sold or furnished to others (collectively, a
"System"), (a) has been modified to the extent necessary to enable it to
operate from and after January 1, 2000, without error arising from the
creation, recognition, acceptance, calculation, display, storage,
retrieval, accessing, comparison, sorting, manipulation, processing or
other use of dates or date-based, date-dependent or date-related data,
including but not limited to century recognition, day-of-the-week
recognition, leap years, date values and interfaces of data functionalities
and (b) will not be adversely affected by the advent of the year 2000, the
advent of the twenty-first century or the transition from the twentieth
century through the year 2000 and into the twenty-first century
(collectively, items (a) and (b) are referred to herein as "Year 2000
Compliant") except, in either case, as would not reasonably be expected to
have a Material Adverse Effect. Except as would not reasonably be expected
to have a Material Adverse Effect, neither the Company nor any of the
Subsidiaries has received notice, or otherwise based on third party
information available to the Company or any of the Subsidiaries, has any
reason to believe, that any System receives data from or communicates with
any component or system external to itself (whether or not such component
or system is the Company's or any of the Subsidiaries') that is not itself
expected to be Year 2000 Compliant prior to December 31, 1999. Neither the
Company nor any Subsidiary has any reason to believe that it may incur
material expenses arising from or relating to the failure of any of its
Systems as a result of not being Year 2000 Compliant and the Company and
the Subsidiaries have requested and received assurances from each third
party whose systems failure would reasonably be expected to have a Material
Adverse Effect that such systems are Year 2000 Compliant.
2.10. Compliance with Laws. Except as set forth on Schedule 2.10
or as disclosed in the SEC Reports, the Company and the Subsidiaries are in
compliance in all material respects with all Laws, and neither the Company
nor any Subsidiary has received any notice of any alleged violation of Law
applicable to it that could reasonably be expected to have a Material
Adverse Effect. The Company holds all material licenses, franchise permits,
consents, registrations, certificates, and other governmental or regulatory
permits, authorizations or approvals required for the operation of the
business as presently conducted and for the ownership, lease or operation
of the Company's and its Subsidiaries' properties (collectively,
"Licenses"). Except as set forth on Schedule 2.10, the Company and the
Subsidiaries have all Licenses, and all of such Licenses are valid and in
full force and effect, and the Company and the Subsidiaries have duly
performed and are in compliance in all material respects with all of their
obligations under such Licenses.
2.11. Commitments. Schedule 2.11 sets forth a complete and
correct list as of the date hereof of each contract, agreement,
understanding, arrangement and commitment of any nature whatsoever, whether
written or oral, including all amendments thereof and supplements thereto
("Commitments") of the following types to which the Company or any
Subsidiary is a party or by or to which the Company or any Subsidiary or
any of their properties may be bound or subject: (i) Commitments containing
covenants purporting to limit the freedom of the Company or any Subsidiary
to compete in any line of business in any geographic area or to hire any
individual or group of individuals that could individually or in the
aggregate have a Material Adverse Effect; (ii) written Commitments relating
to planned or in process capital expenditures in excess of $20,000,000;
(iii) Commitments relating to indentures, mortgages, promissory notes, loan
agreements, guarantees, letters of credit or other agreements or
instruments of the Company or any Subsidiary involving amounts in excess of
$10,000,000; (iv) written Commitments relating to the acquisition or
disposition of any operating business or the capital stock of any Person in
each case having a purchase price in excess of $1 million that has not been
consummated or that has been consummated but contains representations,
warranties, covenants, guarantees, indemnities or other obligations that
remain in effect; (v) Commitments in respect of any joint venture,
partnership or other similar arrangement, but not including any
subsidiaries; (vi) except for performance bonds, Commitments with any
Governmental Entity involving payments by the Company or any subsidiaries
in excess of $1,000,000 and (vii) Commitments relating to interconnection
agreements with local carriers, Commitments with resellers and material
Commitments with customers in each case involving payments in 1999, or
reasonably expected to involve payments in 2000, in each case in excess of
$1,000,000.
2.12. Brokers or Finders. Except for Salomon Smith Barney Inc.,
whose fees will be paid by the Company, upon the consummation of the
transactions contemplated by this Agreement, no agent, broker, investment
banker or other Person is or will be entitled to any broker's or finder's
fee or any other commission or similar fee from the Company or any of the
Subsidiaries in connection with any of the transactions contemplated by
this Agreement or the other Transaction Documents.
2.13. Section 203 of the DGCL; Takeover Statute. The Board of
Directors has taken all actions necessary or advisable so that the
restrictions contained in Section 203 of the DGCL applicable to a "business
combination" (as defined in such Section) will not apply to the execution,
delivery or performance of this Agreement or any of the other Transaction
Documents or the consummation of the transactions contemplated hereby or
thereby. The execution, delivery and performance of this Agreement or any
of the other Transaction Documents and the consummation of the transactions
contemplated hereby or thereby will not cause to be applicable to the
Company any "fair price," "moratorium," "control share acquisition" or
other similar antitakeover statute or regulation enacted under state or
federal laws.
2.14. Offering of Preferred Shares. Neither the Company nor any
Person acting on its behalf has taken or will take any action (including,
without limitation, any offering of any securities of the Company under
circumstances which would require, under the Securities Act, the
integration of such offering with the offering and sale of the Preferred
Shares) which might reasonably be expected to subject the offering,
issuance or sale of the Preferred Shares to the registration requirements
of Section 5 of the Securities Act.
2.15. Network Assets. Schedule 2.15 sets forth a complete and
correct list, as of September 30, 1999, of the markets in which the Company
owns network assets and related equipment, a brief description of the
network in place in each such market (including the ownership thereof) and
the kind of switch (including the ownership thereof) in each such market.
2.16. Disclosure. Neither this Agreement nor any other
Transaction Document, nor any schedule or exhibit hereto or thereto, nor
any certificate furnished to the Purchasers by or on behalf of the Company
in connection with the transactions contemplated hereby and thereby, when
read in conjunction with the 1998 10-K and the SEC Reports filed at any
time after the 1998 10-K was filed with the SEC, contains any untrue
statement of a material fact or omits to state a material fact necessary in
order to make the statements contained herein or therein not misleading
(for purposes of the preceding sentence, any preliminary document or
written information shall be disregarded if a final or updated version of
such document or written information was delivered to the Purchasers by the
Company prior to the date hereof). The financial forecasts furnished by the
Company to the Purchasers are based upon assumptions deemed reasonable by
the Company, but do not give effect to the Pending Transactions referred to
in Schedule 4.1, it being understood that actual results may differ from
such forecasts and such differences may be material. As of the date hereof
there is no fact or information relating to the Company and/or any of its
Subsidiaries that, to the Company's Knowledge, would reasonably be expected
to be material to the Company and its Subsidiaries and that has not been
described in the SEC Reports or otherwise disclosed to the Purchasers.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE PURCHASERS
Each Purchaser hereby represents and warrants to the Company,
severally and not jointly, as of the date hereof and as of the Closing, as
follows:
3.1. Acquisition for Investment. Such Purchaser is acquiring the
Preferred Shares, for its own account, for investment and not with a view
to the distribution thereof within the meaning of the Securities Act.
3.2. Restricted Securities. Such Purchaser understands that (i)
the Preferred Shares and the Shares have not been registered under the
Securities Act or any state securities laws by reason of their issuance by
the Company in a transaction exempt from the registration requirements
thereof and (ii) the Preferred Shares and any Shares issued upon conversion
thereof may not be sold or otherwise disposed of unless such sale or
disposition is registered under the Securities Act and applicable state
securities laws or such sale or other disposition is exempt from
registration thereunder.
3.3. No Brokers or Finders. No agent, broker, investment banker
or other Person is or will be entitled to any broker's or finder's fee or
any other commission or similar fee from the Purchasers in connection with
the transactions contemplated by this Agreement or the other Transaction
Documents.
3.4. Accredited Investor. Such Purchaser is an "accredited
investor" (as defined in Rule 501(a) under the Securities Act). Such
Purchaser 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 Preferred Shares and is capable of bearing the economic
risks of such investment.
3.5 Organization. Such Purchaser is a limited partnership duly
organized, validly existing and in good standing under the laws of the
State of Delaware and has the requisite power and authority to carry on its
business as it is now being conducted.
3.6. Due Authorization. Such Purchaser has all right, power and
authority to enter into this Agreement and the other Transaction Documents
to which it is a party and to consummate the transactions contemplated
hereby and thereby. The execution and delivery by such Purchaser of this
Agreement and the other Transaction Documents to which it is a party and
the consummation by such Purchaser of the transactions contemplated hereby
and thereby (a) are within the power and authority of such Purchaser and
(b) have been duly authorized by all necessary action on the part of such
Purchaser. This Agreement constitutes, and each of the other Transaction
Documents to which it is a party will constitute upon execution and
delivery by such Purchaser, a valid and binding agreement of such Purchaser
enforceable against such Purchaser in accordance with their respective
terms, except as such enforcement is limited by bankruptcy, insolvency and
other similar laws affecting the enforcement of creditors' rights generally
and for limitations imposed by general principles of equity.
3.7. Consents, No Violations. Neither the execution, delivery or
performance by such Purchaser of this Agreement and the other Transaction
Documents to which it is a party nor the consummation of the transactions
contemplated hereby or thereby will (a) conflict with, or result in a
breach or a violation of, any provision of the organizational documents of
such Purchaser; (b) constitute, with or without notice or the passage of
time or both, a breach, violation or default, create an Encumbrance, or
give rise to any right of termination, modification, cancellation,
prepayment, suspension, limitation, revocation or acceleration, under (i)
any Law, or (ii) any Commitment of such Purchaser, or to which such
Purchaser or any of its assets or properties is subject, except, with
respect to the matters set forth in clause (ii), for breaches, violations,
defaults, Encumbrances, or rights of termination, modification,
cancellation, prepayment, suspension, limitation, revocation or
acceleration, which, individually or in the aggregate, would not have a
material adverse effect on the ability of such Purchaser to consummate the
transactions contemplated hereby; or (c) except for any required filing
under the HSR Act, require any consent, approval or authorization of,
notification to, filing with, or exemption or waiver by, any Governmental
Entity or any other Person on the part of the Purchaser.
3.8. Availability of Funds. Such Purchaser has available
sufficient funds to pay its portion of the Purchase Price.
3.9. Litigation. There is no Litigation pending or, to the
knowledge of such Purchaser, threatened against such Purchaser or any of
its Affiliates or involving any of its properties or assets by or before
any court, arbitrator or other Governmental Entity which in any manner
challenges or seeks to prevent, enjoin, alter or materially delay the
transactions contemplated by this Agreement.
ARTICLE IV
COVENANTS
4.1. Conduct of Business by the Company Pending the Closing. The
Company covenants and agrees that, except as set forth in Schedule 4.1,
during the period from the date of this Agreement and continuing until the
earlier of the termination of this Agreement or the Closing, unless the
Purchasers otherwise agree in writing, the Company shall, and shall cause
each of the Subsidiaries to, (i) conduct its business only in the ordinary
course and consistent with past practice; (ii) use reasonable best efforts
to preserve and maintain its assets and properties and its relationships
with its customers, suppliers, advertisers, distributors, agents, officers
and employees and other Persons with which it has significant business
relationships; (iii) use reasonable best efforts to maintain all of the
material assets it owns or uses in the ordinary course of business
consistent with past practice; (iv) use reasonable best efforts to preserve
the goodwill and ongoing operations of its business; (v) maintain its books
and records in the usual, regular and ordinary manner, on a basis
consistent with past practice; and (vi) comply in all material respects
with applicable Laws. Except as expressly contemplated by this Agreement or
as set forth on Schedule 4.1, between the date of this Agreement and the
Closing, the Company shall not, and shall cause each of the Subsidiaries
not to, do any of the following without the prior written consent of the
Purchaser:
(a) (i) issue any debt securities, (ii) incur any additional
indebtedness, (iii) assume, grant, guarantee or endorse, or make any other
accommodation or arrangement making the Company or any Subsidiary
responsible for, any liabilities or other obligations of any other Person
or (iv) make any loans, advances or capital contributions to, or
investments in, any Person;
(b) change any method of accounting or accounting practice used
by the Company or any Subsidiary, other than such changes required by GAAP;
(c) repurchase, redeem or otherwise acquire or exchange any share
of Common Stock or other equity interests other than in accordance with the
terms of the Existing Preferred Stock and Class B Common Stock; except for
issuances of Class A Common Stock pursuant to the exercise of options to
purchase Class A Common Stock outstanding on the date hereof and listed on
Schedule 2.3 or options issued in compliance with this clause (c), issue or
sell any additional shares of the capital stock of, or other equity
interests in, the Company or any Subsidiary, or securities convertible into
or exchangeable for such shares or other equity interests, or issue or
grant any subscription rights, options, warrants or other rights of any
character relating to shares of such capital stock, such other equity
interests or such securities, other than options to purchase Class A Common
Stock granted after the date hereof in the ordinary course of business
under the Company's existing stock option plans; or, except for dividends
required to be paid on the Existing Preferred Stock, declare, set aside,
make or pay any dividend, or make any distribution, in respect of any
shares of capital stock of the Company;
(d) amend the Company's or any Subsidiary's charter or by-laws or
other organizational documents except with respect to the filing of the
Certificates of Designation;
(e) take any action that is reasonably likely to result in (i)
any of the representations and warranties set forth in Article II becoming
false or inaccurate in any material respect as of the Closing Date or (ii)
any of the conditions to the obligations of the Purchasers set forth in
Section 5.2 not being satisfied; or
(f) agree to take any of the actions restricted by this Section
4.1.
4.2. Press Releases; Interim Public Filings. The Company shall,
and shall cause each Subsidiary to, deliver to the Purchasers complete and
correct copies of all press releases and public filings made between the
date hereof and the Closing Date, and, to the extent any such press
releases refer to the Purchasers or their Affiliates, shall give the
Purchasers the reasonable opportunity to review and comment on such
releases and filings (on a strictly confidential basis until such
information is released), in each case prior to release in the form in
which it will be issued.
4.3. HSR Act. Each of the Purchasers and the Company shall
cooperate in making filings under the HSR Act and shall use its reasonable
best efforts to take, or cause to be taken, all actions necessary, proper
or advisable to consummate and make effective as promptly as practicable
the transactions contemplated by this Agreement, including using its
reasonable best efforts to resolve such objections, if any, as the
Antitrust Division of the Department of Justice or the Federal Trade
Commission or state antitrust enforcement or other Governmental Entities
may assert under antitrust Laws with respect to the transactions
contemplated hereby.
4.4. Consents; Approvals. The Company shall use its reasonable
best efforts to obtain all consents, waivers, exemptions, approvals,
authorizations or orders (collectively, "Consents") required in connection
with the transactions contemplated by this Agreement or any of the other
Transaction Documents (including, without limitation (i) all Consents
required to avoid any breach, violation, default, encumbrance or right of
termination, modification, cancellation, prepayment, suspension,
limitation, revocation or acceleration of any material agreement or
instrument to which the Company or any Significant Subsidiary is a party or
by which any of their material assets are bound, (ii) all Consents pursuant
to the Company's or any Subsidiary's financing documents, including without
limitation, all indentures and credit agreements of the Company or any
Subsidiary, and (iii) all United States and foreign governmental and
regulatory rulings and approvals). The Company also shall use its
reasonable best efforts to obtain all necessary state securities laws or
blue sky permits and approvals required to carry out the transactions
contemplated hereby and shall furnish all information as may be reasonably
requested in connection with any such action.
4.5. Listing. The Company shall use its reasonable best efforts
to continue to have its Class A Common Stock listed on the NASDAQ National
Market System (the "NMS") or a national securities exchange for so long as
any Preferred Shares or any Shares are outstanding. Prior to the Closing,
the Company shall prepare and submit to the NMS a listing application
covering the shares of Class A Common Stock issuable upon conversion of the
Preferred Shares and shall obtain approval for the listing of such shares,
subject to official notice of issuance.
4.6. Board Representation; VCOC. (a) Section 9(b)(i) of the
Certificate of Designation for the Series C Preferred Stock provides that
the holders of Series C Preferred Stock shall be entitled to elect one
director to the Board of Directors subject to the terms set forth therein.
In addition, Section 9(b)(i) of the Certificate of Designation for the
Series D Preferred Stock provides that the holders of Series D Preferred
Stock shall be entitled to elect one director to the Board of Directors
subject to the terms set forth therein. Accordingly, subject to the
Certificate of Designation for the Series C Preferred Stock, the holders of
Series C Preferred Stock shall be entitled to designate for election to the
Board of Directors one person and, subject to the Certificate of
Designation for the Series D Preferred Stock, the holders of Series D
Preferred Stock shall be entitled to designate for election to the Board of
Directors one person (collectively, the "Purchasers' Directors"). Prior to
the Closing, the Company will take all action necessary for the Purchasers'
Directors to be elected to the Board of Directors. Thereafter, in
connection with any annual meeting of stockholders at which the term of a
Purchaser Director is to expire, the Company will take all necessary action
to cause a Purchaser Director to be nominated and use its reasonable best
efforts to cause such Purchaser Director to be elected to the Board of
Directors. In the event a vacancy shall exist in the office of a Purchaser
Director, the Purchasers 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 reasonable best efforts to cause the successor to be elected. The
Company shall furnish the Purchasers' Directors with such financial and
operating data and other information with respect to the business and
properties of the Company as the Purchasers' Directors may reasonably
request. The Company shall permit each of the Purchasers' Directors to
discuss the affairs, finances and accounts of the Company with, and to make
proposals and furnish advice with respect thereto, the principal officers
of the Company. Notwithstanding anything contained in this Section 4.6 to
the contrary, the provisions of the Certificates of Designation shall
govern the rights of holders of Preferred Shares to elect directors
(including any Purchasers' Directors) and the rights of holders of
Preferred Shares to designate non-voting board observers.
(b) The rights set forth in Section 4.6(a) are intended to
satisfy the requirement of contractual management rights for purposes of
qualifying each of the Purchaser's ownership interests in the Company as
venture capital investments for purposes of the Department of Labor's "plan
assets" regulations, and in the event such rights are not satisfactory for
such purpose as to any such Purchaser, the Company and such Purchaser shall
reasonably cooperate in good faith to agree upon mutually satisfactory
management rights which satisfy such regulations.
(c) The Company shall promptly reimburse the Purchasers'
Directors for all reasonable expenses incurred by them in connection with
their attendance at meetings and any other activities undertaken in their
capacity as directors consistent with the policies of the Company in effect
on the date hereof or as such policies may be modified and generally
applied to the Company's Board of Directors.
4.7. Certificates of Designation. The Company shall, prior to or
concurrently with the Closing, cause the Certificates of Designation, to be
filed with the Secretary of State of the State of Delaware.
4.8. Cooperation. Each of the Purchasers and the Company agrees
to use its reasonable best efforts to take, or cause to be taken, all such
further actions as shall be necessary to make effective and consummate the
transactions contemplated by this Agreement.
4.9. Access to Property; Records. Between the date hereof and the
Closing the Company shall afford the Purchasers and their employees,
counsel, accountants, partners, members, investors, and other authorized
representatives reasonable access, upon notice, during normal business
hours, to the assets, properties, offices and other facilities, Commitments
and books and records of the Company and of the Subsidiaries, and to the
outside auditors of the Company and their work papers relating to the
Company and the Subsidiaries. All such information shall be held in
confidence in accordance with the terms of the Confidentiality Agreement.
The parties hereto agree that no investigation by the Purchasers or their
representatives shall affect or limit the scope of the representations and
warranties of the Company contained in this Agreement or in any other
Transaction Document delivered pursuant hereto or limit the liability for
breach of any such representation or warranty.
4.10. Reserve Shares. The Company will at all times reserve and
keep available, solely for issuance and delivery upon conversion of the
Preferred Shares, the number of shares of Class A Common Stock from time to
time issuable upon conversion of all shares of the Preferred Shares at the
time outstanding. All shares of Class A Common Stock issuable upon
conversion of the Preferred Shares shall be duly authorized and, when
issued upon such conversion or exercise, shall be validly issued, fully
paid and nonassessable.
4.11. Use of Proceeds. The proceeds received by the Company
hereunder shall be used by the Company as set forth on Schedule 4.11.
4.12. Incurrence of Debt. The Company agrees that at such time as
the Standard & Poor's rating of the Company's senior unsecured debt
obligations falls below CCC+ and for such period of time as such down-grade
continues, the Company will not, and will not permit any of its
Subsidiaries to, incur any Indebtedness not permitted by the Indenture,
dated as of November 17, 1999 between the Company and United States Trust
Company of New York, as Trustee (the "Indenture"), relating to its 10 1/2%
Senior Notes due 2009, and any successor Indenture relating to Exchange
Notes to be issued in exchange therefor (capitalized terms being used in
this Section 4.12 as defined in the Indenture).
4.13. Dividends. The Company agrees that it shall pay cash
dividends on the Series C Preferred Stock on a current basis so long as it
is not precluded from doing so under its debt instruments, the terms of its
Existing Preferred Stock or other Commitments or Law. In furtherance
thereof, the Company agrees to use its reasonable best efforts to pay such
dividends, including, without limitation, using its best efforts to refrain
from entering into any agreements which would preclude (based on the
Company's financial position and anticipated financial position at that
time) such payments, to seek a waiver under any agreements which would
prevent such payments at any time and to take whatever actions are
necessary, including revaluing assets, to create surplus for the purpose of
paying such dividends. Without limiting the generality of the foregoing,
the Company agrees that it shall be a breach of this covenant if the final
executed version of its proposed senior credit facility to be syndicated by
Goldman, Sachs & Co. (the "Senior Credit Facility"), based on the Company's
financial position and anticipated financial position on the date of
execution of such final version, would prevent the Company from paying cash
dividends on the Series C Preferred Stock.
4.14. Right of First Purchase. (a) Subject to the terms and
conditions specified in this Section 4.14, the Company hereby grants to the
Purchasers a right of first purchase with respect to certain issuances by
the Company after the Closing of any Senior Capital Stock (as hereinafter
defined) as provided in this Section 4.14.
(b) For purposes of this Section 4, the term "Senior Capital Stock"
shall mean shares of any capital stock of the Company having a preference
relative to the Class A Common Stock with respect to dividends or upon
liquidation, distribution or winding up of the Company, whether now
authorized or not, and any rights, options or warrants to purchase such
capital stock, and securities of any type that are, or may become,
convertible into such capital stock; provided, however, that nothing
contained in this Section 4.14 shall be construed as permitting the Company
to authorize or issue any Senior Capital Stock in contravention of any of
the provisions of this Agreement or the other Transaction Documents,
including the Certificates of Designation.
(c) In the event the Company proposes to issue any Senior Capital
Stock (other than in a public offering registered under the Securities Act
or an offering pursuant to Rule 144A thereunder which contemplates a
subsequent registration, or other than a Strategic Senior Capital Stock
Issuance), the Company shall first make an offering of such Senior Capital
Stock to each of the Purchasers in accordance with the following
provisions:
(i) The Company shall deliver a notice by certified mail (the
"Notice") to each of the Purchasers stating (a) its bona fide intention to
issue such Senior Capital Stock, (b) the amount of such Senior Capital
Stock to be issued, (c) the price, if any, for which it proposes to issue
such Senior Capital Stock and the other terms of the proposed issuance
thereof, (d) the designation and all of the terms and provisions of the
Senior Capital Stock proposed to be issued and (e) a statement as to the
number of days from receipt of such Notice (which shall not be less than 5
calendar days) within which each Purchaser must respond to such Notice.
(ii) Within 5 calendar days after receipt of the Notice (or by
such later date as is specified in the Notice), each of the Purchasers may
elect to purchase, at the price and on the terms specified in the Notice,
all but not less than all of such Senior Capital Stock. Notwithstanding
anything to the contrary set forth in clause (c)(i) above, the conversion
price of any such Senior Capital Stock to which the Purchasers' right of
election applies and which is convertible into shares of Class A Common
Stock shall be an amount per share no more than 115% of the closing sales
price of the Class A Common Stock on the NASDAQ National Market System (or
on the principal securities exchange or market on which the Class A Common
Stock is then listed or traded) on the date the Purchasers elect to
purchase any such Senior Capital Stock unless the Purchasers shall have
waived such right. The closing of the purchases shall occur as promptly as
practicable after all elections to purchase shall have been made (or all
rights to make such elections shall have lapsed) and all consents or
governmental approvals or filings required to be obtained or made in
connection therewith (if any) shall have been obtained or made.
(d) If any portions of the Senior Capital Stock referred to in the
Notice are not elected to be purchased by the Purchasers as provided above,
the Company may, during the 180-day period following the expiration of the
period provided above, offer the remaining unsubscribed Senior Capital
Stock to any person or persons at a price not less than, and upon terms no
more favorable to the offeree than, those specified in the Notice. If the
Company does not enter into an agreement for the sale of the Capital Stock
within such period, or if such agreement is not consummated within 180 days
of the execution thereof, the right of first purchase provided hereunder
shall be deemed to be revived with respect to such Senior Capital Stock and
such Senior Capital Stock shall not be issued unless first reoffered to the
Purchasers in accordance herewith. Any issuance of Senior Capital Stock by
the Company without first giving the Purchasers the rights described in
this Section 4 shall be null and void and of no force and effect.
4.15. Restrictions on Transfer and Conversion. The Purchasers will
not, prior to the earliest of (a) the first anniversary of the Closing
Date, (b) the occurrence of a Change of Control (as defined in the
Certificates of Designation) or (c) the breach by the Company in any
material respect of any covenant or agreement contained in this Agreement
or in any other Transaction Document (each of the foregoing, a "Termination
Event"), sell, transfer, assign, convey, gift, mortgage, pledge, encumber,
hypothecate, or otherwise dispose of, directly or indirectly, ("Transfer")
any of the Preferred Shares or the Shares except for (i) Transfers between
and among the Purchasers and their Affiliates provided such Transfer is
done in accordance with the transfer restrictions applicable to the
Preferred Shares or the Shares under federal and state securities laws and
the Affiliate transferee agrees to be bound by the restrictions applicable
to such Preferred Shares or the Shares, including without limitation the
agreements set forth in this Section 4.15, and (ii) Transfers (w) required
to comply with applicable Law, (x) pursuant to a bona fide tender or
exchange offer made pursuant to a merger or other agreement approved by the
Board of Directors to acquire securities of the Company, (y) following any
stock merger or other business combination transaction to which the Company
is a party if such stock merger or other business combination results in a
Change of Control and (z) pursuant to any cash merger, or other business
combination transaction to which the Company is a party or involved in
which the Class A Common Stock of the Company's stockholders is exchanged
for cash upon consummation of such merger or other business combination.
Notwithstanding any other provision of this Section 4.15, no Purchaser
shall avoid the provisions of this Section 4.15 by making one or more
transfers to one or more Affiliates and then disposing of all or any
portion of such Purchaser's interest in any such Affiliate. Nothing
contained herein shall be deemed to limit the ability of the limited
partners in the Purchasers from transferring, directly or indirectly, their
limited partnership interests in the Purchasers or the general partners of
the Purchasers from transferring, directly or indirectly, up to 15% of the
equity interests in the Purchasers at any time or from time to time.
Notwithstanding anything to the contrary contained in the Certificates of
Designation, each Purchaser agrees that it may not exercise any conversion
rights with respect to the Preferred Shares until the occurrence of a
Termination Event. The Company agrees that, in connection with any proposed
transaction that would, if consummated, result in a Change of Control, the
Purchasers may provide the Company with a notice of their intention to
exercise their conversion rights with respect to the Preferred Shares the
effectiveness of which is conditional upon the consummation of the
transaction resulting in such Change of Control. In addition to the
Transfer restrictions described above, the Purchasers will not, prior to
the fifth anniversary of the Closing, without the prior written consent of
the Company, Transfer any of the Preferred Shares to any Person (or any
controlled Affiliate of such Person) that is engaged in a business that
competes with any business conducted by the Company on the date of the
proposed Transfer.
4.16. Standstill Agreement. (a) During the period commencing on
the date hereof and ending on the earlier of (i) the fifth anniversary of
the Closing Date (the "Standstill Period") or (ii) the date these
provisions terminate as provided herein, except as (x) specifically
permitted by this Agreement or (y) specifically approved in writing in
advance by the Board of Directors of the Company, the Purchasers shall not,
and shall cause any Affiliates controlled by them to not, in any manner,
directly or indirectly:
(i) acquire, or offer or agree to acquire, or become the
beneficial owner of or obtain any rights in respect of any capital
stock of the Company, except, for any shares of Class A Common Stock
that may be issuable upon the conversion of the Preferred Shares or
otherwise as permitted pursuant to this Agreement, provided, that the
foregoing limitation shall not prohibit the acquisition of securities
of the Company or any of its successors issued as dividends or as a
result of stock splits and similar reclassifications or received in a
consolidation, merger or other business combination in respect of, in
exchange for or upon conversion of Preferred Shares or Shares held by
the Purchasers or any of their Affiliates at the time of such
dividend, split or reclassification, consolidation or merger or
business combination;
(ii) solicit proxies or consents or become a "participant" in a
"solicitation" (as such terms are defined or used in Regulation 14A
under the Exchange Act) of proxies or consents with respect to any
voting securities of the Company or any of its successors or initiate
or become a participant in any stockholder proposal or "election
contest" (as such term is defined or used in Rule 14a-11 under the
Exchange Act) with respect to the Company or any of its successors or
induce others to initiate the same, or otherwise seek to advise or
influence any person with respect to the voting of any voting
securities of the Company or any of its successors (except for
activities undertaken by the Purchasers or the Purchasers' Directors
in connection with solicitations by the Board of Directors);
(iii) publicly or privately propose, encourage, solicit or
participate in the solicitation of any person or entity to acquire,
offer to acquire or agree to acquire, by merger, tender offer,
purchase or otherwise, the Company or a substantial portion of its
assets or more than 5% of the outstanding capital stock (except in
connection with the registration of securities pursuant to the
Registration Rights Agreement); and
(iv) directly or indirectly join in or in any way participate in
a pooling agreement, syndicate, voting trust or other arrangement with
respect to the Company's voting securities or otherwise act in concert
with any other Person (other than Affiliates), for the purpose of
acquiring, holding, voting or disposing of the Company's securities.
(b) Nothing contained in this Section 4.16 shall be deemed to
restrict the manner in which the Purchasers' Directors participate in
deliberations or discussions of the Board of Directors.
(c) The standstill provisions set forth herein shall terminate on
the earliest of (i) the last day of the Standstill Period, (ii) the
occurrence of a Change of Control, (iii) upon any breach by the Company in
any material respect of any covenant or agreement contained in this
Agreement or in any Transaction Document, or (iv) upon the filing of a
voluntary bankruptcy petition by the Company or on the 60th day following
the filing of an involuntary bankruptcy petition against the Company if
such petition is not discharged with prejudice during such 60-day period.
4.17. Business Combinations with Affiliates. For so long as the
Purchasers are holders of any Preferred Shares and a Purchaser Director is
a member of the Board of Directors, the Company shall not, authorize or
engage in, either in one or a series of related transactions, any purchase
or sale of stock, any purchase or sale of assets, any merger, consolidation
or other business combination transaction, in each case valued in excess of
$50 million, with or involving Craig O. McCaw, Wendy P. McCaw or any of his
or her Affiliates other than the Company or the Subsidiaries ("Affiliated
Parties") unless any such transaction is approved and authorized by a
special committee of the Board of Directors, consisting of at least one
Purchaser Director and other disinterested directors (within the meaning of
Section 144 of the Delaware General Corporation Law) constituted for the
purpose of negotiating, evaluating, approving and authorizing the Company
to engage in any such transaction. The provisions of this Section 4.17
shall also apply to transactions between Affiliated Parties and the
Company's Subsidiaries on the same basis as they apply to transactions
between Affiliated Parties and the Company.
ARTICLE V
CONDITIONS
5.1. Conditions to Obligations of the Purchasers and the Company.
The respective obligations of the Purchasers and the Company to consummate
the transactions contemplated hereby are subject to the satisfaction or
waiver at or prior to the Closing of each of the following conditions:
(a) No statute, rule or regulation or order of any court or
administrative agency shall be in effect which prohibits the consummation
of the transactions contemplated hereby; and
(b) Any waiting period (and any extension thereof) under the HSR
Act applicable to this Agreement and the transactions contemplated hereby
shall have expired or been terminated.
5.2. Conditions to Obligations of the Purchasers. The obligations
of the Purchasers to consummate the transactions contemplated hereby shall
be subject to the satisfaction or waiver at or prior to the Closing of each
of the following conditions:
(a) Each of the representations and warranties of the Company
contained in this Agreement shall be true and correct when made and as of
the Closing (except to the extent such representations and warranties are
affected by agreement to or consummation of any of the pending transactions
listed on Schedule 4.1 or made as of a particular date, in which case such
representations and warranties shall have been true and correct in all
material respects as of such date), except for failures to be true and
correct which individually or in the aggregate would not reasonably be
expected to have a Material Adverse Effect;
(b) The Company shall have performed, satisfied and complied in
all material respects with all of its covenants and agreements set forth in
this Agreement to be performed, satisfied and complied with prior to or at
the Closing;
(c) The Company shall have delivered to the Purchasers an
officer's certificate certifying as to the Company's compliance with the
conditions set forth in clauses (a) and (b) of this Section 5.2;
(d) The Company shall have executed and delivered a Registration
Rights Agreement in the form of Exhibit 5.2(d) hereto (the "Registration
Rights Agreement"), and the Registration Rights Agreement shall be in full
force and effect;
(e) The Certificates of Designation shall have been duly filed
with the Secretary of State of the State of Delaware in accordance with the
laws of the State of Delaware and the Certificates of Designation shall be
in full force and effect;
(f) The Shares issuable upon conversion of the Preferred Shares
shall have been duly authorized and reserved for issuance and such Shares
shall have been approved for listing on the NMS, subject to official notice
of issuance;
(g) The Company shall have entered into a binding agreement to
acquire all of the equity interest it does not currently own in Internext,
LLC, and the terms of such agreement shall be consistent with the term
sheet previously delivered to the Purchasers;
(h) The Purchasers shall have received an opinion of Willkie Farr
& Gallagher, outside counsel to the Company, with respect to the due
incorporation, due authorization, validity of the Preferred Shares,
securities act exemption and the valid and binding nature of this
Agreement, the Registration Rights Agreement and the Certificates of
Designation;
(i) The Company shall not have entered into any agreement or
become bound by the terms of any instrument or security, including without
limitation, the Senior Credit Facility, which would prevent the Company
from paying cash dividends on the Series C Preferred Stock on a current
basis; and
(j) There shall not have occurred (i) any event, circumstances,
condition, fact, effect, or other matter which has had or would 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
such Subsidiaries to perform on a timely basis any material obligation
under this Agreement or to consummate the transactions contemplated hereby;
or (ii) any material disruption of or material adverse change in financial,
banking or capital market conditions.
5.3. Conditions to Obligations of the Company. The obligations of
the Company to consummate the transactions contemplated hereby shall be
subject to the satisfaction or waiver at or prior to the Closing of each of
the following conditions:
(a) Each of the representations and warranties of the Purchasers
contained in this Agreement shall be true and correct when made and as of
the Closing (except to the extent such representations and warranties are
made as of a particular date, in which case such representations and
warranties shall have been true and correct in all material respects as of
such date), except for failures to be true and correct which individually
or in the aggregate would not have a material adverse effect on the ability
of the Purchasers to consummate the transactions contemplated hereby;
(b) The Purchasers shall have performed, satisfied and complied
in all material respects with all of their covenants and agreements set
forth in this Agreement to be performed, satisfied and complied with prior
to or at the Closing Date;
(c) The Purchasers shall have delivered to the Company an
officer's certificate certifying as to the Purchasers' compliance with the
conditions set forth in clauses (a) and (b) of this Section 5.3;
(d) The Purchasers, the Purchaser Directors and the Company shall
have entered into the Confidentiality Agreement, in the form attached
hereto as Exhibit 5.3(d); and
(e) The Company shall have received an opinion reasonably
acceptable to the Company from Fried, Frank, Harris, Shriver & Jacobson,
outside counsel to the Purchasers, with respect to non-contravention, due
formation, due authorization, and the valid and binding nature of this
Agreement and the Registration Rights Agreement.
ARTICLE VI
TERMINATION
6.1. Termination. This Agreement may be terminated at any time
prior to the Closing:
(a) by mutual written agreement of the Company and the
Purchasers; or
(b) by either the Purchasers or the Company if the Closing shall
not have been consummated on or before April 30, 2000 (provided that the
right to terminate this Agreement under this Section 6.1(b) shall not be
available to any party whose failure to fulfill any obligation under this
Agreement has been the cause of or resulted in the failure of the Closing
to occur on or before such date); or
(c) by either the Purchasers or the Company if a court of
competent jurisdiction or governmental, regulatory or administrative agency
or commission 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
contemplated by this Agreement; or
(d) by the Purchasers, if they determine in their sole
discretion, that any of the representations and warranties of the Company
contained in Section 2.9 is untrue or inaccurate in any respect.
6.2. Effect of Termination. In the event of the termination of
this Agreement pursuant to Section 6.1, this Agreement shall forthwith
become void and there shall be no liability on the part of any party hereto
(or any stockholder, director, officer, partner, employee, agent,
consultant or representative of such party) except as set forth in this
Section 6.2, provided that nothing contained in this Agreement shall
relieve any party from liability for any breach of this Agreement and
provided further that Sections 8.2, 8.3, 8.13, 8.14 and 8.15 shall survive
termination of this Agreement.
ARTICLE VII
INDEMNIFICATION
7.1. Survival. The representations and warranties of the parties
hereto contained in this Agreement or in any of the other Transaction
Documents shall expire on the 18-month anniversary of the Closing Date,
except that the representations and warranties set forth in Sections
2.1(a), 2.2, 2.3, 3.5 and 3.6 shall survive indefinitely. After the
expiration of such periods, any claim by a party hereto based upon any such
representation or warranty shall be of no further force and effect, except
to the extent a party has asserted a claim in accordance with this Article
VII for breach of any such representation or warranty prior to the
expiration of such period, in which event any representation or warranty to
which such claim relates shall survive with respect to such claim until
such claim is resolved as provided in this Article VII. The covenants and
agreements of the parties hereto contained in this Agreement in any of the
other Transaction Documents shall survive the Closing until performed in
accordance with their terms.
7.2. Indemnification. (a) The Company shall indemnify, defend and
hold harmless the Purchasers, their Affiliates, and their respective
officers, directors, partners, members, employees, agents, representatives,
successors and assigns (each a "Purchasers Indemnified Person") from and
against all Losses incurred or suffered by a Purchaser Indemnified Person
(whether incurred or suffered directly or indirectly through ownership of
capital stock of the Company or otherwise) arising from (i) the breach of
any of the representations or warranties made by the Company in this
Agreement or any other Transaction Document or (ii) the breach of any
covenant or agreement made by the Company in this Agreement or any other
Transaction Document. Notwithstanding the foregoing, (A) no claim may be
made against the Company for indemnification pursuant to Section 7.2(a)(i)
unless the aggregate liability of the Company exceeds $8.5 million, and the
Company shall then only be liable for Losses in excess of such amount and
(B) the Company's maximum liability for indemnification pursuant to Section
7.2(a)(i) shall not exceed $212.5 million.
(b) The Purchasers shall indemnify, defend and hold harmless the
Company, its Affiliates, and their respective officers, directors,
partners, members, employees, agents, representatives, successors and
assigns (each a "Company Indemnified Person") from and against all Losses
incurred or suffered by a Company Indemnified Person arising from (i) the
breach of any of the representations or warranties made by the Purchasers
in this Agreement or any other Transaction Document or (ii) the breach of
any covenant or agreement made by the Purchasers in this Agreement or any
other Transaction Document. Notwithstanding the foregoing, (A) no claim may
be made against the Purchasers for indemnification pursuant to Section
7.2(b)(i) unless the aggregate liability of the Purchasers exceeds $8.5
million, and the Purchasers shall then only be liable for Losses in excess
of such amount and (B) the Purchasers' maximum liability for
indemnification pursuant to Section 7.2(b)(i) shall not exceed $212.5
million.
(c) A party seeking indemnification under this Section 7.2 shall,
promptly upon becoming aware of the facts indicating that a claim for
indemnification may be warranted and in any event prior to the end of the
applicable survival period under Section 7.1, give to the party from whom
indemnification is being sought a notice of claim relating to such Loss (a
"Claim Notice"). Each Claim Notice shall specify the nature of the claim,
the applicable provision(s) of this Agreement or other instrument under
which the claim for indemnity arises, and, if possible, the amount or the
estimated amount thereof. No failure or delay in giving a Claim Notice (so
long as the same is given prior to expiration of the representation or
warranty upon which the claim is based) and no failure to include any
specific information relating to the claim (such as the amount or estimated
amount thereof) or any reference to any provision of this Agreement or
other instrument under which the claim arises shall affect the obligation
of the party from whom indemnification is sought.
7.3. Inspections; No Other Representations. The Purchasers are
informed and sophisticated purchasers, and have undertaken such
investigation and have been provided with and have evaluated such documents
and information as they deem necessary to enable them to make an informed
decision with respect to the execution, delivery and performance of this
Agreement. Each Purchaser will undertake prior to the Closing such further
investigation and request such additional documents and information as it
deems necessary. Each Purchaser agrees to accept the Preferred Shares based
upon its own inspection, examination and determination with respect thereto
as to all matters, and without reliance upon any express or implied
representations or warranties of any nature made by or on behalf or imputed
to the Company, except as expressly set forth in this Agreement. Without
limiting the generality of the foregoing, each Purchaser acknowledges that
the Company makes no representation or warranty with respect to any
projections, estimates or budgets delivered to or made available to
Purchasers of future revenues, future results of operations (or any
component thereof), future cash flows or future financial condition (or any
component thereof) of the Company and its Subsidiaries or the future
business and operations of the Company and the Subsidiaries except as
expressly set forth in this Agreement.
7.4. Exclusivity. Except as specifically set forth in this
Agreement and except in the case of fraud, effective as of the Closing,
each party hereby waives any rights and claims such party may have against
the other party hereto, whether in law or in equity, relating to any breach
of any representation or warranty by any party hereunder. After the
Closing, Sections 7.1, 7.2(a) and 7.2(b) will provide the exclusive remedy
for any misrepresentation or breach of warranty, except in the case of
fraud.
ARTICLE VIII
MISCELLANEOUS
8.1. Defined Terms; Interpretations. The following terms, as used
herein, shall have the following meanings:
"1998 Balance Sheet" shall have the meaning ascribed thereto in
Section 2.5.
"Affiliate" shall have the meaning ascribed to such term in Rule
12b-2 of the General Rules and Regulations under the Exchange Act.
"Agreement" shall have the meaning ascribed thereto in the
preamble.
"Board of Directors" shall mean the Board of Directors of the
Company.
"Certificates of Designation" shall have the meaning ascribed
thereto in Section 2.2.
"Claim Notice" shall have the meaning ascribed thereto in Section
7.2(c).
"Closing" shall have the meaning ascribed thereto in Section
1.2(a).
"Closing Date" shall have the meaning ascribed thereto in Section
1.2(a).
"Commitments" shall have the meaning ascribed thereto in Section
2.11.
"Common Stock" shall have the meaning ascribed thereto in Section
2.3 and shall include, as the context may require, Class A Common Stock,
Class B Common Stock and all Common Stock now or hereafter authorized to be
issued, and any and all securities of any kind whatsoever of the Company
which may be exchanged for or converted into Common Stock, and any and all
securities of any kind whatsoever of the Company which may be issued on or
after the date hereof in respect of in exchange for, or upon conversion of
shares of Common Stock pursuant to a merger, consolidation, stock split,
stock dividend, recapitalization of the Company or otherwise.
"Company" shall have the meaning ascribed thereto in the
preamble.
"Company Indemnified Person" shall have the meaning ascribed
thereto in Section 7.2(b).
"Confidentiality Agreement" shall have the meaning ascribed
thereto in Section 8.7.
"Consents" shall have the meaning ascribed thereto in Section
4.4.
"DGCL" shall mean the Delaware General Corporation Law.
"Encumbrances" shall have the meaning ascribed thereto in Section
2.1(b).
"ERISA" shall mean the Employee Retirement Income Securities Act
of 1974, as amended.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as
amended, or any successor federal statute, and the rules and regulations of
the SEC thereunder, all as the same shall be in effect at the time.
Reference to a particular section of the Securities Exchange Act of 1934,
as amended, shall include reference to the comparable section, if any, of
any such successor federal statute.
"Existing Preferred Stock" shall have the meaning ascribed
thereto in Section 2.3.
"14% Preferred Stock" shall have the meaning ascribed thereto in
Section 2.3.
"GAAP" shall have the meaning ascribed thereto in Section 2.5.
"Governmental Entity" shall mean any supernational, national,
foreign, federal, state or local judicial, legislative, executive,
administrative or regulatory body or authority.
"HSR Act" shall mean the Hart-Scott-Rodino Antitrust Improvements
Act of 1976, as amended, and the rules and regulations thereunder.
"Knowledge", with respect to the Company, shall mean the
knowledge of Daniel F. Akerson, Craig O. McCaw, Steven W. Hooper, Kathleen
H. Iskra, Peter Campbell, Gary Begeman, Douglas Carter, Noelle Beams, R.
Gerard Salemme, Dan Gonzales, David Goesling, Dennis O'Connell, Robert
Hopkins and Dennis Weibling, and the knowledge that any of the foregoing
persons would have after due and reasonable inquiry and investigation.
"Laws" shall include all foreign, federal, state, and local laws,
statutes, ordinances, rules, regulations, orders, judgments, decrees and
bodies of law.
"Licenses" shall have the meaning ascribed thereto in Section
2.10.
"Litigation" shall have the meaning ascribed thereto in Section
2.7.
"Losses" shall mean each and all of the following items: claims,
losses (including, without limitation, losses of earnings), liabilities,
obligations, payments, damages (actual or punitive but not consequential),
charges, judgments, fines, penalties, amounts paid in settlement, costs and
expenses (including, without limitation, interest which may be imposed in
connection therewith, costs and expenses of investigation, actions, suits,
proceedings, demands, assessments and fees, expenses and disbursements of
counsel, consultants and other experts).
"Material Adverse Effect" shall mean a material adverse effect on
the properties, business, prospects, operations, results of operations,
earnings, assets, liabilities or condition (financial or otherwise) of the
Company and its Subsidiaries taken as a whole.
"Person" shall mean any individual, firm, corporation, limited
liability company, partnership, company or other entity, and shall include
any successor (by merger or otherwise) of such entity.
"Preferred Shares" shall have the meaning ascribed thereto in the
recitals.
"Purchase Price" shall have the meaning ascribed thereto in
Section 1.1.
"Purchasers" shall have the meaning ascribed thereto in the
preamble.
"Purchasers Indemnified Person" shall have the meaning ascribed
thereto in Section 7.2(a).
"Registration Rights Agreement" shall have the meaning ascribed
thereto in Section 5.2(d).
"SEC" shall mean the Securities and Exchange Commission.
"SEC Reports" shall have the meaning ascribed thereto in Section
2.4.
"Securities Act" shall mean the Securities Act of 1933, as
amended, or any successor federal statute, and the rules and regulations of
the SEC thereunder, all as the same shall be in effect at the time.
Reference to a particular section of the Securities Act shall include
reference to the comparable section, if any, of such successor federal
statute.
"Series C Preferred Stock" shall have the meaning ascribed
thereto in the recitals.
"Series D Preferred Stock" shall have the meaning ascribed
thereto in the recitals.
"6 1/2%" Preferred Stock" shall have the meaning ascribed thereto
in Section 2.3.
"Shares" shall mean the shares of Class A Common Stock initially
issuable upon conversion of Preferred Shares.
"Significant Subsidiaries" shall have the meaning ascribed
thereto in Section 2.1(b).
"Strategic Investor" shall mean any Person directly engaged in a
related or complementary business to the business engaged in by the Company
and/or any of the Subsidiaries if, at the time such Strategic Investor
acquires Senior Capital Stock, a significant business or technological
relationship between the Company and such Person is contemplated pursuant
to a written agreement.
"Strategic Senior Capital Stock Issuance" shall mean the issuance
of any Senior Capital Stock to a Strategic Investor.
"Subsidiaries" shall mean the collective reference to the
Significant Subsidiaries and all other direct or indirect subsidiaries of
the Company.
"Transaction Documents" shall mean this Agreement, the
Certificates of Designation, the Registration Rights Agreement and all
other contracts, agreements, schedules, certificates and other documents
being delivered pursuant to or in connection with this Agreement or such
other documents or the transactions contemplated hereby or thereby.
8.2. Fees and Expenses. At the Closing, the Company shall pay, or
reimburse the Purchasers for, all reasonable costs and expenses incurred by
the Purchasers in connection with the negotiation, execution, delivery,
performance and consummation of this Agreement and the transactions
contemplated hereby; but in no event shall the Company pay or reimburse the
Purchasers for such costs and expenses in an amount in excess of
$1,500,000. The Company shall pay its own expenses incurred in connection
with the negotiation, execution, delivery, performance and consummation of
this Agreement and the transactions contemplated hereby.
8.3. Public Announcements. The Purchasers and the Company shall
consult with each other before issuing any press release with respect to
this Agreement or the transactions contemplated hereby and neither shall
issue any such press release or make any such public statement without the
prior consent of the other, which consent shall not be unreasonably
withheld; provided, however, that a party may, without the prior consent of
the other party, issue such press release or make such public statement as
may upon the advice of counsel be required by Law if it has used all
reasonable efforts to consult with the other party prior thereto.
8.4. Restrictive Legends. No Preferred Shares or Shares may be
transferred without registration under the Securities Act and applicable
state securities laws unless counsel to the Company shall advise the
Company that such transfer may be effected without such registration. Each
certificate representing any of the foregoing shall bear legends in
substantially the following form:
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE
NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933
OR THE SECURITIES LAWS OF ANY STATE AND MAY NOT BE
SOLD OR OTHERWISE DISPOSED OF EXCEPT PURSUANT TO AN
EFFECTIVE REGISTRATION STATEMENT UNDER SUCH ACT AND
APPLICABLE STATE SECURITIES LAWS OR AN APPLICABLE
EXEMPTION TO THE REGISTRATION REQUIREMENTS OF SUCH
ACT OR SUCH LAWS.
THE SALE, PLEDGE, TRANSFER, ASSIGNMENT OR OTHER
DISPOSITION OF THE SHARES REPRESENTED BY THIS
CERTIFICATE IS RESTRICTED BY AND SUBJECT TO THE
PROVISIONS OF A STOCK PURCHASE AGREEMENT DATED AS OF
DECEMBER 7, 1999, A COPY OF WHICH IS AVAILABLE UPON
REQUEST FOR INSPECTION AT THE OFFICES OF THE
CORPORATION. ANY SUCH REQUEST SHOULD BE ADDRESSED TO
THE SECRETARY OF THE CORPORATION.
8.5. Further Assurances. At any time or from time to time after
the Closing, the Company, on the one hand, and the Purchasers, on the other
hand, agree to cooperate with each other, and at the request of the other
party, to execute and deliver any further instruments or documents and to
take all such further action as the other party may reasonably request in
order to evidence or effectuate the consummation of the transactions
contemplated hereby or by the other Transaction Documents and to otherwise
carry out the intent of the parties hereunder or thereunder.
8.6. Successors and Assigns. This Agreement shall bind and inure
to the benefit of the Company and the Purchasers and the respective
successors, permitted assigns, heirs and personal representatives of the
Company and the Purchasers, provided that the Company may not assign its
rights or obligations under this Agreement to any Person without the prior
written consent of the Purchasers, and provided further that the Purchasers
may not assign their rights or obligations under this Agreement to any
Person (other than an Affiliate) without the prior written consent of the
Company, which consent shall not be unreasonably withheld or delayed. In
addition, and whether or not any express assignment has been made, the
provisions of this Agreement which are for the Purchasers' benefit as
purchasers or holders of Preferred Stock or Shares are also for the benefit
of, and enforceable by, any subsequent holder of such Preferred Stock or
Shares.
8.7. Entire Agreement. This Agreement and the other Transaction
Documents contain the entire agreement between the parties with respect to
the subject matter hereof and supersede all prior and contemporaneous
arrangements or understandings with respect thereto; provided that the
Confidentiality Agreement between the parties (or their Affiliates) will
remain in full force and effect in accordance with its terms (the
"Confidentiality Agreement").
8.8. Notices. All notices, requests, consents and other
communications hereunder to any party shall be deemed to be sufficient if
contained in a written instrument delivered in person or sent by telecopy,
nationally recognized overnight courier or first class registered or
certified mail, return receipt requested, postage prepaid, addressed to
such party at the address set forth below or such other address as may
hereafter be designated in writing by such party to the other parties:
(i) if to the Company, to:
NEXTLINK Communications, Inc.
1505 Farm Credit Drive
McLean, VA 22102
Attn: Gary Begeman, Esq.
with a copy to:
Willkie Farr & Gallagher
787 Seventh Avenue
New York, NY 10019
Attn: Bruce R. Kraus, Esq.
(ii) if to the Purchasers, to:
c/o Forstmann Little & Co.
767 Fifth Avenue
New York, NY 10153
Attention: Sandra J. Horbach
with a copy to:
Fried, Frank, Harris, Shriver & Jacobson
One New York Plaza
New York, NY 10004
Telecopy: (212) 859-8587
Attention: Robert C. Schwenkel, Esq.
All such notices, requests, consents and other communications
shall be deemed to have been given or made if and when delivered personally
or by overnight courier to the parties at the above addresses or sent by
electronic transmission, with confirmation received, to the telecopy
numbers specified above (or at such other address or telecopy number for a
party as shall be specified by like notice).
8.9. Amendments. The terms and provisions of this Agreement may
be modified or amended, or any of the provisions hereof waived, temporarily
or permanently, in a writing executed and delivered by the Company and the
Purchasers. No waiver of any of the provisions of this Agreement shall be
deemed to or shall constitute a waiver of any other provision hereof
(whether or not similar). No delay on the part of any party in exercising
any right, power or privilege hereunder shall operate as a waiver thereof.
8.10. Counterparts. This Agreement may be executed in any number
of counterparts, and each such counterpart hereof shall be deemed to be an
original instrument, but all such counterparts together shall constitute
but one agreement.
8.11. Headings. The headings of the sections of this Agreement
have been inserted for convenience of reference only and shall not be
deemed to be a part of this Agreement.
8.12. Nouns and Pronouns. Whenever the context may require, any
pronouns used herein shall include the corresponding masculine, feminine or
neuter forms, and the singular form of names and pronouns shall include the
plural and vice versa.
8.13. 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 THE PRINCIPLES OF CONFLICTS OF LAW.
8.14. Submission to Jurisdiction. Each of the parties hereto
hereby irrevocably and unconditionally consents to submit to the exclusive
jurisdiction of the courts of the State of New York and of the United
States of America, in each case located in the County of New York, for any
Litigation arising out of or relating to this Agreement or the other
Transaction Documents and the transactions contemplated hereby and thereby
(and agrees not to commence any Litigation relating hereto or thereto
except in such courts), and further agrees that service of any process,
summons, notice or document by U.S. registered mail to its respective
address set forth in this Agreement shall be effective service of process
for any Litigation brought against it in any such court. Each of the
parties hereto hereby irrevocably and unconditionally waives any objection
to the laying of venue of any Litigation arising out of this Agreement or
the transactions contemplated hereby in the courts of the State of New York
or the United States of America, in each case located in the County of New
York, hereby further irrevocably and unconditionally waives and agrees not
to plead or claim in any such court that any such Litigation brought in any
such court has been brought in an inconvenient forum.
8.15. WAIVER OF JURY TRIAL. THE COMPANY AND THE PURCHASERS HEREBY
WAIVE ANY RIGHT THEY MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY ACTION,
PROCEEDING OR LITIGATION DIRECTLY OR INDIRECTLY ARISING OUT OF, UNDER OR IN
CONNECTION WITH THIS AGREEMENT OR THE OTHER TRANSACTION DOCUMENTS.
8.16. Severability. Whenever possible, each provision of this
Agreement shall be interpreted in such manner as to be effective and valid,
but if any provision of this Agreement is held to be invalid or
unenforceable in any respect, such invalidity or unenforceability shall not
render invalid or unenforceable any other provision of this Agreement.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement as of the date first above written.
Purchasers
- ----------
FORSTMANN LITTLE & CO. EQUITY PARTNERSHIP VI, L.P.
By: /s/ Sandra J. Horbach
-----------------------------------------
Number of Series C Number of Series D
Preferred Shares Preferred Shares Purchase Price
---------------- ---------------- --------------
0 265,625 $265,625,000
FORSTMANN LITTLE & CO. SUBORDINATED DEBT AND EQUITY MANAGEMENT BUYOUT
PARTNERSHIP VII, L.P.
By: /s/ Sandra J. Horbach
-----------------------------------------
Number of Series C Number of Series D Amount of
Preferred Shares Preferred Shares Purchase Price Closing Dividend
---------------- ---------------- -------------- ----------------
584,375 0 $584,375,000 $8,765,180
NEXTLINK COMMUNICATIONS, INC.
By: /s/ Daniel F. Akerson
------------------------------------
Name: Daniel F. Akerson
Title: Chairman and Chief Executive
Officer
EXHIBIT 2
REGISTRATION RIGHTS AGREEMENT
Dated as of January 20, 2000
between
NEXTLINK Communications, Inc.
and
The Purchasers Listed on the Signature Pages Hereto
<PAGE>
REGISTRATION RIGHTS AGREEMENT, dated as of January 20, 2000
between NEXTLINK Communications, Inc., a Delaware corporation (the
"Company") and the entities listed on the signature pages hereto under the
caption "Purchasers" (each a "Purchaser" and, collectively, the
"Purchasers").
The Company and the Purchasers have entered it into a Securities
Purchase Agreement (the "Purchase Agreement") dated as of December 7, 1999
pursuant to which simultaneously herewith, the Purchasers are purchasing
(i) an aggregate of 584,375 shares of the Company's Series C Preferred
Stock, par value $0.01 per share (the "Series C Preferred Stock") and (ii)
an aggregate of 265,625 shares of the Company's Series D Preferred Stock,
par value $0.01 per share (the "Series D Preferred Stock" and, collectively
with the Series C Preferred Stock, the "Preferred Shares").
As part of, and as consideration for, the acquisition of the
Preferred Shares by the Purchasers from the Company on the date hereof and
from time to time hereafter, the Company hereby grants to the Purchasers
certain registration and other rights with respect to its shares of Class A
Common Stock as more fully set forth herein.
Accordingly, the parties hereto agree as follows:
1. Definitions. As used herein, unless the context otherwise
requires, the following terms have the following respective meanings:
"Certificate of Incorporation" means the Certificate of
Incorporation of the Company, as it may be amended or restated hereafter
from time to time.
"Commission" means the Securities and Exchange Commission or any
other Federal agency at the time administering the Securities Act.
"Common Stock" means any shares of Class A Common Stock, par
value $0.01 per share, of the Company, now or hereafter authorized to be
issued, and any and all securities of any kind whatsoever of the Company
which may be exchanged for or converted into Common Stock, any and all
securities of any kind whatsoever of the Company which may be issued on or
after the date hereof in respect of, in exchange for, or upon conversion of
shares of Common Stock pursuant to a merger, consolidation, stock split,
stock dividend, recapitalization of the Company or otherwise.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended, or any similar Federal statute, and the rules and regulations of
the Commission thereunder, all as the same shall be in effect at the time.
Reference to a particular section of the Exchange Act shall include a
reference to the comparable section, if any, of any such similar Federal
statute.
"Person" means a corporation, an association, a partnership, an
organization, a business, a trust, an individual, or any other entity or
organization, including a government or political subdivision or an
instrumentality or agency thereof.
"Registrable Securities" means (i) any shares of Common Stock
issued or issuable upon the conversion of any Preferred Shares held by the
Purchasers and (ii) any shares of Common Stock issued with respect to the
Common Stock referred to in clause (i) by way of a stock dividend, stock
split or reverse stock split or in connection with a combination of shares,
recapitalization, merger, consolidation or otherwise. As to any particular
Registrable Securities, such securities shall cease to be Registrable
Securities (a) when 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 in accordance with such
registration statement, (b) when such securities shall have been otherwise
transferred, new certificates for them not bearing a legend restricting
further transfer shall have been delivered by the Company and subsequent
public distribution of them shall not require registration of them under
the Securities Act, (c) when such securities are eligible for sale under
Rule 144(k) or any successor provision, or (d) when such securities shall
have been sold as permitted by, and in compliance with, the Securities Act.
"Registration Expenses" means all expenses incident to the
registration and disposition of the Registrable Securities pursuant to
Section 2 hereof, including, without limitation, all registration, filing
and applicable national securities exchange fees, all fees and expenses of
complying with state securities or blue sky laws (including fees and
disbursements of counsel to the underwriters or the Purchasers in
connection with "blue sky" qualification of the Registrable Securities and
determination of their eligibility for investment under the laws of the
various jurisdictions), all word processing, duplicating and printing
expenses, all messenger and delivery expenses, the fees and disbursements
of counsel for the Company and of its independent public accountants,
including the expenses of "cold comfort" letters or any special audits
required by, or incident to, such registration, all fees and disbursements
of underwriters (other than underwriting discounts and commissions), all
transfer taxes, and all fees and expenses of counsel to the Purchasers;
provided, however, that Registration Expenses shall exclude, and the
Purchasers shall pay, underwriting discounts and commissions in respect of
the Registrable Securities being registered.
"Securities Act" means the Securities Act of 1933, as amended, or
any similar Federal statute, and the rules and regulations of the
Commission thereunder, all as the same shall be in effect at the time.
References to a particular section of the Securities Act shall include a
reference to the comparable section, if any, of any such similar Federal
statute.
2. Registration Under Securities Act, etc.
--------------------------------------
2.1 Registration on Request.
-----------------------
(a) Request. At any time or from time to time after the
Purchasers are permitted to transfer Registrable Securities pursuant to
Section 4.15 of the Purchase Agreement, the Purchasers shall have the right
to require the Company to effect the registration under the Securities Act
of all or part of the Registrable Securities, by delivering a written
request therefor to the Company specifying the number of shares of
Registrable Securities and the intended method of distribution. The Company
shall (i) use its reasonable best efforts to effect the registration under
the Securities Act (including by means of a shelf registration pursuant to
Rule 415 under the Securities Act if so requested in such request and if
the Company is then eligible to use such a registration) of the Registrable
Securities which the Company has been so requested to register by the
Purchasers, for distribution in accordance with the intended method of
distribution set forth in the written request delivered by the Purchasers,
such registration to be effected as expeditiously as possible (but in any
event within 90 days of receipt of a written request), and (ii) if
requested by the Purchasers, use its reasonable best efforts to obtain
acceleration of the effective date of the registration statement relating
to such registration.
(b) Registration of Other Securities. Whenever the
Company shall effect a registration pursuant to this Section 2.1 in
connection with an underwritten offering by the Purchasers of Registrable
Securities, no securities other than Registrable Securities shall be
included among the securities covered by such registration if inclusion of
such other securities would result in a request by the managing
underwriters for a reduction in the number of Registrable Securities
requested to be so registered, except as required by the terms of
registration rights agreements in effect on the date hereof.
(c) Registration Statement Form. Registrations under
this Section 2.1 shall be on such appropriate registration form of the
Commission as, subject to clause (a)(i) above, shall be selected by the
Company and as shall be reasonably acceptable to the Purchasers. The
Company agrees to include in any such registration statement all
information which, in the opinion of counsel to the Purchasers and counsel
to the Company, is necessary or desirable to be included therein.
(d) Expenses. The Company shall pay all Registration
Expenses in connection with any registration requested pursuant to this
Section 2.1.
(e) Effective Registration Statement. A registration
requested pursuant to this Section 2.1 shall not be deemed to have been
effected (including for purposes of paragraph (h) of this Section 2.1) (i)
unless a registration statement with respect thereto has become effective
and has been kept continuously effective for a period of at least 365 days
(or such shorter period which shall terminate when all the Registrable
Securities covered by such registration statement have been sold pursuant
thereto), (ii) if after it has become effective, such registration is
interfered with by any stop order, injunction or other order or requirement
of the Commission or other governmental agency or court for any reason not
attributable to the Purchasers and has not thereafter become effective, or
(iii) if the conditions to closing specified in the underwriting agreement,
if any, entered into in connection with such registration are not satisfied
or waived.
(f) Selection of Underwriters. The underwriters of each
underwritten offering of the Registrable Securities so to be registered
shall be selected by the Purchasers, subject to the Company's approval,
which approval shall not be unreasonably withheld.
(g) Right to Withdraw. If the managing underwriter of
any underwritten offering shall advise the Purchasers that the Registrable
Securities covered by the registration statement cannot be sold in such
offering within a price range acceptable to the Purchasers, then the
Purchasers shall have the right to notify the Company in writing that they
have determined that the registration statement be abandoned or withdrawn,
in which event the Company shall abandon or withdraw such registration
statement. In the event of such abandonment or withdrawal, such request
shall not be counted for purposes of the requests for registration to which
the Purchasers are entitled pursuant to this Section 2.1, and the
Purchasers shall pay, or reimburse the Company for, all Registration
Expenses related thereto.
(h) Limitations on Registration on Request. The
Purchasers shall be entitled to require the Company to effect, and the
Company shall be required to effect, three registrations in the aggregate
pursuant to this Section 2.1.
(i) Postponement. The Company shall be entitled once in
any six-month period to postpone for a reasonable period of time (but not
exceeding 60 days) (the "Postponement Period") the filing of any
registration statement required to be prepared and filed by it pursuant to
this Section 2.1 if the Company determines, in its reasonable judgment,
that such registration and offering would materially interfere with any
material financing, corporate reorganization or other material transaction
involving the Company or any subsidiary, or would require premature
disclosure thereof, and promptly gives the Purchasers written notice of
such determination, containing a general statement of the reasons for such
postponement (which the Purchasers shall maintain in strict confidence in
accordance with the Confidentiality Agreement (as defined in the Purchase
Agreement)) and an approximation of the anticipated delay. If the Company
shall so postpone the filing of a registration statement, (i) the Company
shall use its reasonable best efforts to limit the delay to as short a
period as is practicable and (ii) the Purchasers shall have the right to
withdraw the request for registration by giving written notice to the
Company at any time and, in the event of such withdrawal, such request
shall not be counted for purposes of the requests for registration to which
the Purchasers are entitled pursuant to this Section 2.1.
(j) Shelf Registration. If the Purchasers request that
the Company effect a registration of Registrable Securities by means of
shelf registration pursuant to Rule 415 under the Securities Act (a "Shelf
Registration Statement"), in addition to the other requirements contained
herein, the Company shall, at its cost, use its reasonable best efforts to
keep the Shelf Registration Statement continuously effective in order to
permit the Prospectus forming part thereof to be usable by the Purchasers
until such time as all the Registrable Securities covered by the Shelf
Registration Statement have been sold pursuant to the Shelf Registration
Statement or cease to be outstanding (the "Effectiveness Period");
provided, however, that the Effectiveness Period in respect of the Shelf
Registration Statement shall be extended to the extent required to permit
dealers to comply with the applicable prospectus delivery requirements
under the Securities Act and as otherwise provided herein.
2.2 Incidental Registration.
-----------------------
(a) Right to Include Registrable Securities. If the
Company at any time proposes to register any of its securities for the
account of any other stockholder under the Securities Act by registration
on Form S-1, S-2 or S-3 or any successor or similar form(s) (except
registrations on any such Form or similar form(s) solely for registration
of securities in connection with an employee benefit plan or dividend
reinvestment plan or a merger or consolidation or incidental to an issuance
of securities under Rule 144A under the Securities Act), it will each such
time give prompt written notice to the Purchasers of its intention to do so
and of the Purchasers' rights under this Section 2.2. At any time or from
time to time after the Purchasers are permitted to transfer Registrable
Securities pursuant to Section 4.15 of the Purchase Agreement, upon the
written request of the Purchasers (which request shall specify the maximum
number of Registrable Securities intended to be disposed of by the
Purchasers), made as promptly as practicable and in any event within 30
days after the receipt of any such notice (10 days if the Company states in
such written notice or gives telephonic notice to the Purchasers, with
written confirmation to follow promptly thereafter, stating that (i) such
registration will be on Form S-3 and (ii) such shorter period of time is
required because of a planned filing date), the Company shall use its
reasonable best efforts to effect the registration under the Securities Act
of all Registrable Securities which the Company has been so requested to
register by the Purchasers; provided, however, that if, at any time after
giving written notice of its intention to register any securities and prior
to the effective date of the registration statement filed in connection
with such registration, the Company shall determine for any reason not to
register or to delay registration of such securities, the Company shall
give written notice of such determination and its reasons therefor (which
the Purchasers will hold in strict confidence in accordance with the
Confidentiality Agreement) to the Purchasers and (i) in the case of a
determination not to register, shall be relieved of its obligation to
register any Registrable Securities in connection with such registration
(but not from any obligation of the Company to pay the Registration
Expenses in connection therewith), without prejudice, however, to the
rights of the Purchasers to request that such registration be effected as a
registration under Section 2.1 and (ii) in the case of a determination to
delay registering, shall be permitted to delay registering any Registrable
Securities, for the same period as the delay in registering such other
securities. No registration effected under this Section 2.2 shall relieve
the Company of its obligation to effect any registration upon request under
Section 2.1. The Company will pay all Registration Expenses in connection
with any registration of Registrable Securities requested pursuant to this
Section 2.2.
(b) Right to Withdraw. The Purchasers shall have the
right to withdraw its request for inclusion of its Registrable Securities
in any registration statement pursuant to this Section 2.2 at any time
prior to the execution of an underwriting agreement with respect thereto by
giving written notice to the Company of its request to withdraw.
(c) Priority in Incidental Registrations. If the
managing underwriter of any underwritten offering shall inform the Company
by letter of its belief that the number of Registrable Securities requested
to be included in such registration, when added to the number of other
securities to be offered in such registration, would materially adversely
affect such offering, then the Company shall include in such registration,
to the extent of the number and type which the Company is so advised can be
sold in (or during the time of) such offering without so materially
adversely affecting such offering (the "Section 2.2 Sale Amount") and to
the fullest extent permitted by the terms of applicable registration rights
agreements in effect on the date hereof, the securities proposed by the
other stockholders triggering such incidental registration, the Registrable
Securities requested by the Purchasers to be included in such registration
pursuant to Section 2.2(a) and any other securities of the Company
requested to be included in such registration by any other holder having
the right to include securities on a pro rata basis (in an amount in the
aggregate equal to the Section 2.2 Sale Amount), based on the pro rata
amount of shares of Common Stock held, or obtainable by exercise or
conversion of other securities of the Company, by the Purchasers or such
holder.
(d) Plan of Distribution. Any participation by holders
of Registrable Securities in a registration by the Company shall be in
accordance with the Company's plan of distribution, provided that the
Purchasers shall in consultation with the Company have the right to select
a co-managing underwriter.
2.3 Registration Procedures. If and whenever the Company is
required to use its reasonable best efforts to effect the registration of
any Registrable Securities under the Securities Act as provided in Sections
2.1 and 2.2 hereof, the Company shall as expeditiously as possible:
(a) prepare and file with the Commission as soon as
practicable the requisite registration statement to effect such
registration (and shall include all financial statements required
by the Commission to be filed therewith) and thereafter use its
reasonable best efforts to cause such registration statement to
become effective; provided, however, that before filing such
registration statement (including all exhibits) or any amendment
or supplement thereto or comparable statements under securities
or blue sky laws of any jurisdiction, the Company shall as
promptly as practicable furnish such documents to the Purchasers
and each underwriter, if any, participating in the offering of
the Registrable Securities and their respective counsel, which
documents will be subject to the review and comments of the
Purchasers, each underwriter and their respective counsel; and
provided, further, however, that the Company may discontinue any
registration of its securities which are not Registrable
Securities at any time prior to the effective date of the
registration statement relating thereto;
(b) notify the Purchasers of the Commission's requests for
amending or supplementing the registration statement and the
prospectus, and prepare and file with the Commission such
amendments and supplements to such registration statement and the
prospectus used in connection therewith as may be necessary to
keep such registration statement effective and to comply with the
provisions of the Securities Act with respect to the disposition
of all Registrable Securities covered by such registration
statement for such period as shall be required for the
disposition of all of such Registrable Securities in accordance
with the intended method of distribution thereof; provided, that
except with respect to any such registration statement filed
pursuant to Rule 415 under the Securities Act, such period need
not exceed 365 days;
(c) furnish, without charge, to the Purchasers and each
underwriter such number of conformed copies of such registration
statement and of each such amendment and supplement thereto (in
each case including all exhibits), such number of copies of the
prospectus contained in such registration statement (including
each preliminary prospectus and any summary prospectus) and any
other prospectus filed under Rule 424 under the Securities Act,
in conformity with the requirements of the Securities Act, and
such other documents, as the Purchasers and such underwriters may
reasonably request;
(d) use its reasonable best efforts (i) to register or
qualify all Registrable Securities and other securities covered
by such registration statement under such securities or blue sky
laws of such States of the United States of America where an
exemption is not available and as the Purchasers or any managing
underwriter shall reasonably request, (ii) to keep such
registration or qualification in effect for so long as such
registration statement remains in effect, and (iii) to take any
other action which may be reasonably necessary or advisable to
enable the Purchasers to consummate the disposition in such
jurisdictions of the securities to be sold by the Purchasers,
except that the Company shall not for any such purpose be
required to qualify generally to do business as a foreign
corporation in any jurisdiction wherein it would not but for the
requirements of this subsection (d) be obligated to be so
qualified or to consent to general service of process in any such
jurisdiction;
(e) use its reasonable best efforts to cause all Registrable
Securities covered by such registration statement to be
registered with or approved by such other federal or state
governmental agencies or authorities as may be necessary in the
opinion of counsel to the Company and counsel to the Purchasers
to consummate the disposition of such Registrable Securities;
(f) furnish to the Purchasers and each underwriter, if any,
participating in the offering of the securities covered by such
registration statement, a signed counterpart of (i) an opinion of
counsel for the Company, and (ii) a "comfort" letter signed by
the independent public accountants who have certified the
Company's or any other entity's financial statements included or
incorporated by reference in such registration statement,
covering substantially the same matters with respect to such
registration statement (and the prospectus included therein) and,
in the case of the accountants' comfort letter, with respect to
events subsequent to the date of such financial statements, as
are customarily covered in opinions of issuer's counsel and in
accountants' comfort letters delivered to the underwriters in
underwritten public offerings of securities (and dated the dates
such opinions and comfort letters are customarily dated) and, in
the case of the legal opinion, such other legal matters;
(g) promptly notify the Purchasers and each managing
underwriter, if any, participating in the offering of the
securities covered by such registration statement (i) when such
registration statement, any pre-effective amendment, the
prospectus or any prospectus supplement related thereto or
post-effective amendment to such registration statement has been
filed, and, with respect to such registration statement or any
post-effective amendment, when the same has become effective;
(ii) of any request by the Commission for amendments or
supplements to such registration statement or the prospectus
related thereto or for additional information; (iii) of the
issuance by the Commission of any stop order suspending the
effectiveness of such registration statement or the initiation of
any proceedings for that purpose; (iv) of the receipt by the
Company of any notification with respect to the suspension of the
qualification of any of the Registrable Securities for sale under
the securities or blue sky laws of any jurisdiction or the
initiation of any proceeding for such purpose; (v) at any time
when a prospectus relating thereto is required to be delivered
under the Securities Act, upon discovery that, or upon the
happening of any event as a result of which, the prospectus
included in such registration statement, as then in effect,
includes an untrue statement of a material fact or omits to state
any material fact required to be stated therein or necessary to
make the statements therein not misleading, in the light of the
circumstances under which they were made, and in the case of this
clause (v), at the request of the Purchasers promptly prepare and
furnish to the Purchasers and each managing underwriter, if any,
participating in the offering of the Registrable Securities, a
reasonable number of copies of a supplement to or an amendment of
such prospectus as may be necessary so that, as thereafter
delivered to the purchasers of such securities, such prospectus
shall not include an untrue statement of a material fact or omit
to state a material fact required to be stated therein or
necessary to make the statements therein not misleading in the
light of the circumstances under which they were made; and (vi)
at any time when the representations and warranties of the
Company contemplated by Section 2.4(a) or (b) hereof cease to be
true and correct;
(h) otherwise comply with all applicable rules and
regulations of the Commission, and make available to its security
holders, as soon as reasonably practicable, an earnings statement
covering the period of at least twelve months beginning with the
first full calendar month after the effective date of such
registration statement, which earnings statement shall satisfy
the provisions of Section 11(a) of the Securities Act and Rule
158 promulgated thereunder, and promptly furnish to the
Purchasers a copy of any amendment or supplement to such
registration statement or prospectus;
(i) provide and cause to be maintained a transfer agent and
registrar (which, in each case, may be the Company) for all
Registrable Securities covered by such registration statement
from and after a date not later than the effective date of such
registration;
(j) (i) use its reasonable best efforts to cause all
Registrable Securities covered by such registration statement to
be listed on the NASDAQ "national market system" or the principal
securities exchange on which similar securities issued by the
Company are then listed (if any), if the listing of such
Registrable Securities is then permitted under the rules of such
exchange, or (ii) if no similar securities are then so listed,
use its reasonable best efforts to (x) cause all such Registrable
Securities to be listed on a national securities exchange or (y)
failing that, secure designation of all such Registrable
Securities as a NASDAQ "national market system security" within
the meaning of Rule 11Aa2-1 of the Commission or (z) failing
that, to secure NASDAQ authorization for such shares and, without
limiting the generality of the foregoing, to arrange for at least
two market makers to register as such with respect to such shares
with the National Association of Securities Dealers, Inc.;
(k) deliver promptly to counsel to the Purchasers and each
underwriter, if any, participating in the offering of the
Registrable Securities, copies of all correspondence between the
Commission and the Company, its counsel or auditors and all
memoranda relating to discussions with the Commission or its
staff with respect to such registration statement;
(l) use its reasonable best efforts to obtain the withdrawal
of any order suspending the effectiveness of the registration
statement;
(m) provide a CUSIP number for all Registrable Securities,
no later than the effective date of the registration statement;
and
(n) in connection with any underwritten public offering,
make available its senior executive officers, directors and
chairman and otherwise provide reasonable assistance to the
underwriters (taking into account the needs of the Company's
business) in their marketing of Registrable Securities.
The Company may require the Purchasers to furnish the Company such
information regarding the Purchasers and the distribution of the
Registrable Securities as the Company may from time to time reasonably
request in writing.
The Purchasers agrees that upon receipt of any notice from the
Company of the happening of any event of the kind described in paragraph
(g)(iii) or (v) of this Section 2.3, the Purchasers will, to the extent
appropriate, discontinue their disposition of Registrable Securities
pursuant to the registration statement relating to such Registrable
Securities until, in the case of paragraph (g)(v) of this Section 2.3,
their receipt of the copies of the supplemented or amended prospectus
contemplated by paragraph (g)(v) of this Section 2.3 and, if so directed by
the Company, will deliver to the Company (at the Company's expense) all
copies, other than permanent file copies, then in their possession, of the
prospectus relating to such Registrable Securities current at the time of
receipt of such notice. If the disposition by the Purchasers of their
securities is discontinued pursuant to the foregoing sentence, the Company
shall extend the period of effectiveness of the registration statement by
the number of days during the period from and including the date of the
giving of notice to and including the date when the Purchasers shall have
received copies of the supplemented or amended prospectus contemplated by
paragraph (g)(v) of this Section 2.3; and, if the Company shall not so
extend such period, the Purchasers' request pursuant to which such
registration statement was filed shall not be counted for purposes of the
requests for registration to which the Purchasers are entitled pursuant to
Section 2.1 hereof.
2.4 Underwritten Offerings.
----------------------
(a) Requested Underwritten Offerings. If requested by
the underwriters for any underwritten offering by the Purchasers pursuant
to a registration requested under Section 2.1, the Company shall enter into
a customary underwriting agreement (in the form of underwriting agreement
used at such time by the managing underwriter(s)) with a managing
underwriter or underwriters selected by the Purchasers. Such underwriting
agreement shall be satisfactory in form and substance to the Purchasers and
shall contain such representations and warranties by, and such other
agreements on the part of, the Company and such other terms as are
generally prevailing in agreements of the managing underwriter(s),
including, without limitation, their customary provisions relating to
indemnification and contribution. The Purchasers shall be party to such
underwriting agreement and may, at their option, require that any or all of
the representations and warranties by, and the other agreements on the part
of, the Company to and for the benefit of such underwriters shall also be
made to and for the benefit of the Purchasers and that any or all of the
conditions precedent to the obligations of such underwriters under such
underwriting agreement be conditions precedent to the obligations of the
Purchasers.
(b) Incidental Underwritten Offerings. In the case of a
registration pursuant to Section 2.2 hereof, if the Company shall have
determined to enter into any underwriting agreements in connection
therewith, all of the Registrable Securities to be included in such
registration shall be subject to such underwriting agreements. The
Purchasers may, at their option, require that any or all of the
representations and warranties by, and the other agreements on the part of,
the Company to and for the benefit of such underwriters shall also be made
to and for the benefit of the Purchasers and that any or all of the
conditions precedent to the obligations of such underwriters under such
underwriting agreement be conditions precedent to the obligations of the
Purchasers.
2.5 Preparation; Reasonable Investigation. In connection
with the preparation and filing of each registration statement under the
Securities Act pursuant to this Agreement, the Company will give the
Purchasers, their underwriters, if any, and their respective counsel,
accountants and other representatives and agents the opportunity to
participate in the preparation of such registration statement, each
prospectus included therein or filed with the Commission, and each
amendment thereof or supplement thereto, and give each of them such access
to its books and records and such opportunities to discuss the business of
the Company with its officers and employees and the independent public
accountants who have certified its financial statements, and supply all
other information reasonably requested by each of them, as shall be
necessary or appropriate, in the opinion of the Purchasers and such
underwriters' respective counsel, to conduct a reasonable investigation
within the meaning of the Securities Act.
2.6 Indemnification.
---------------
(a) Indemnification by the Company. The Company agrees
that in the event of any registration of any securities of the Company
under the Securities Act, the Company shall, and hereby does, indemnify and
hold harmless the Purchasers, their respective directors, officers,
members, partners, agents and affiliates and each other Person who
participates as an underwriter in the offering or sale of such securities
and each other Person, if any, who controls the Purchasers or any such
underwriter within the meaning of the Securities Act, against any losses,
claims, damages, or liabilities, joint or several, to which the Purchasers
or any such director, officer, member, partner, agent or affiliate or
underwriter or controlling person may become subject under the Securities
Act or otherwise, insofar as such losses, claims, damages or liabilities,
joint or several (or actions or proceedings, whether commenced or
threatened, in respect thereof), arise out of or are based upon (i) any
untrue statement or alleged untrue statement of any material fact contained
in any registration statement under which such securities were registered
under the Securities Act, any preliminary prospectus, final prospectus or
summary prospectus contained therein, or any amendment or supplement
thereto, (ii) any omission or alleged omission to state therein a material
fact required to be stated therein or necessary to make the statements
therein in light of the circumstances in which they were made not
misleading, or (iii) any violation by the Company of any federal, state or
common law rule or regulation applicable to the Company and relating to
action required of or inaction by the Company in connection with any such
registration, and the Company shall reimburse the Purchasers and each such
director, officer, member, partner, agent or affiliate, underwriter and
controlling Person for any legal or any other expenses reasonably incurred
by them in connection with investigating or defending any such loss, claim,
liability, action or proceeding; provided that the Company shall not be
liable in any such case to the Purchasers or any such director, officer,
member, partner, agent, affiliate, or controlling person to the extent that
any such loss, claim, damage, liability (or action or proceeding in respect
thereof) or expense arises out of or is based upon an untrue statement or
alleged untrue statement or omission or alleged omission made in such
registration statement, any such preliminary prospectus, final prospectus,
summary prospectus, amendment or supplement in reliance upon and in
conformity with written information furnished to the Company through an
instrument duly executed by or on behalf of the Purchasers, specifically
stating that it is for use in the preparation thereof. Such indemnity shall
remain in full force regardless of any investigation made by or on behalf
of the Purchasers or any such director, officer, member, partner, agent,
affiliate, underwriter or controlling Person and shall survive the transfer
of such securities by the Purchasers.
(b) Indemnification by the Purchasers. As a condition
to including any Registrable Securities in any registration statement, the
Company shall have received an undertaking reasonably satisfactory to it
from the Purchasers so including any Registrable Securities to indemnify
and hold harmless (in the same manner and to the same extent as set forth
in paragraph (a) of this Section 2.6) the Company, and each director of the
Company, each officer of the Company and each other Person, if any, who
controls the Company within the meaning of the Securities Act, with respect
to any statement or alleged statement in or omission or alleged omission
from such registration statement, any preliminary prospectus, final
prospectus or summary prospectus contained therein, or any amendment or
supplement thereto, but only to the extent such statement or alleged
statement or omission or alleged omission was made in reliance upon and in
conformity with written information furnished to the Company through an
instrument duly executed by the Purchasers specifically stating that it is
for use in the preparation of such registration statement, preliminary
prospectus, final prospectus, summary prospectus, amendment or supplement;
provided, however, that the liability of such indemnifying party under this
Section 2.6(b) shall be limited to the amount of proceeds (net of expenses
and underwriting discounts and commissions) received by such indemnifying
party in the offering giving rise to such liability. Such indemnity shall
remain in full force and effect, regardless of any investigation made by or
on behalf of the Company or any such director, officer or controlling
Person and shall survive the transfer of such securities by the Purchasers.
(c) Notices of Claims, etc. Promptly after receipt by
an indemnified party of notice of the commencement of any action or
proceeding involving a claim referred to in the preceding subsections of
this Section 2.6, such indemnified party shall, if a claim in respect
thereof is to be made against an indemnifying party, give written notice to
the latter of the commencement of such action or proceeding; provided,
however, that the failure of any indemnified party to give notice as
provided herein shall not relieve the indemnifying party of its obligations
under the preceding subsections of this Section 2.6, except to the extent
that the indemnifying party is actually prejudiced by such failure to give
notice, and shall not relieve the indemnifying party from any liability
which it may have to the indemnified party otherwise than under this
Section 2.6. In case any such action or proceeding is brought against an
indemnified party, the indemnifying party shall be entitled to participate
therein and, unless in the opinion of outside counsel to the indemnified
party a conflict of interest between such indemnified and indemnifying
parties may exist in respect of such claim, to assume the defense thereof,
jointly with any other indemnifying party similarly notified to the extent
that it may wish, with counsel reasonably satisfactory to such indemnified
party; provided, however, that if the defendants in any such action or
proceeding include both the indemnified party and the indemnifying party
and if in the opinion of outside counsel to the indemnified party there may
be legal defenses available to such indemnified party and/or other
indemnified parties which are different from or in addition to those
available to the indemnifying party, the indemnified party or parties shall
have the right to select separate counsel to defend such action or
proceeding on behalf of such indemnified party or parties, provided,
however, that the indemnifying party shall be obligated to pay for only one
counsel and one local counsel for all indemnified parties. After notice
from the indemnifying party to such indemnified party of its election so to
assume the defense thereof and approval by the indemnified party of such
counsel, the indemnifying party shall not be liable to such indemnified
party for any legal expenses subsequently incurred by the latter in
connection with the defense thereof other than reasonable costs of
investigation (unless the first proviso in the preceding sentence shall be
applicable). No indemnifying party shall be liable for any settlement of
any action or proceeding effected without its written consent. No
indemnifying party shall, without the consent of the indemnified party,
consent to entry of any judgment or enter into any settlement which does
not include as an unconditional term thereof the giving by the claimant or
plaintiff to such indemnified party of a release from all liability in
respect to such claim or litigation.
(d) Contribution. If the indemnification provided for
in this Section 2.6 shall for any reason be held by a court to be
unavailable to an indemnified party under subsection (a) or (b) hereof in
respect of any loss, claim, damage or liability, or any action in respect
thereof, then, in lieu of the amount paid or payable under subsection (a)
or (b) hereof, the indemnified party and the indemnifying party under
subsection (a) or (b) hereof shall contribute to the aggregate losses,
claims, damages and liabilities (including legal or other expenses
reasonably incurred in connection with investigating the same), (i) in such
proportion as is appropriate to reflect the relative fault of the
indemnifying party on the one hand, and the indemnified party on the other,
which resulted in such loss, claim, damage or liability, or action in
respect thereof, with respect to the statements or omissions which resulted
in such loss, claim, damage or liability, or action in respect thereof, as
well as any other relevant equitable considerations, or (ii) if the
allocation provided by clause (i) above is not permitted by applicable law
or if the allocation provided in this clause (ii) provides a greater amount
to the indemnified party than clause (i) above, in such proportion as shall
be appropriate to reflect not only the relative fault but also the relative
benefits received by the indemnifying party and the indemnified party from
the offering of the securities covered by such registration statement as
well as any other relevant equitable considerations. The parties hereto
agree that it would not be just and equitable if contributions pursuant to
this Section 2.6(d) were to be determined by pro rata allocation or by any
other method of allocation which does not take into account the equitable
considerations referred to in the preceding sentence of this Section
2.6(d). 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. In addition, no Person shall be obligated to contribute
hereunder any amounts in payment for any settlement of any action or claim
effected without such Person's consent, which consent shall not be
unreasonably withheld. Notwithstanding anything in this subsection (d) to
the contrary, no indemnifying party (other than the Company) shall be
required to contribute any amount in excess of the proceeds (net of
expenses and underwriting discounts and commissions) received by such party
from the sale of the Registrable Securities in the offering to which the
losses, claims, damages or liabilities of the indemnified parties relate.
(e) Other Indemnification. Indemnification and
contribution similar to that specified in the preceding subsections of this
Section 2.6 (with appropriate modifications) shall be given by the Company
and the Purchasers with respect to any required registration or other
qualification of securities under any federal, state or blue sky law or
regulation of any governmental authority other than the Securities Act. The
indemnification agreements contained in this Section 2.6 shall be in
addition to any other rights to indemnification or contribution which any
indemnified party may have pursuant to law or contract and shall remain
operative and in full force and effect regardless of any investigation made
by or on behalf of any indemnified party and shall survive the transfer of
any of the Registrable Securities by the Purchasers.
(f) Indemnification Payments. The indemnification and
contribution required by this Section 2.6 shall be made by periodic
payments of the amount thereof during the course of the investigation or
defense, as and when bills are received or expense, loss, damage or
liability is incurred.
2.7 Unlegended Certificates. In connection with the offering
of any Registrable Securities registered pursuant to this Section 2, the
Company shall (i) facilitate the timely preparation and delivery to the
Purchasers and the underwriters, if any, participating in such offering, of
unlegended certificates representing ownership of such Registrable
Securities being sold in such denominations and registered in such names as
requested by the Purchasers or such underwriters and (ii) instruct any
transfer agent and registrar of such Registrable Securities to release any
stop transfer orders with respect to any such Registrable Securities.
2.8 Manner of Sale. So long as the Purchasers own in excess
of 2.5% of the fully diluted Common Stock (after giving effect to the
exercise of all outstanding options, warrants and other rights to purchase
Common Stock whether or not such options, warrants or other rights are then
exercisable (the "Threshold Amount")), the Purchasers agree that, except as
provided below or except with the written consent of the Company (which
consent shall not be unreasonably withheld), the Purchasers shall sell or
otherwise effectuate a distribution of Registrable Securities only (i)
pursuant to one or more firm commitment underwritten public offerings or
(ii) in one or more block trades. Notwithstanding anything to the contrary
set forth above, at any time while the Purchasers own an amount of Common
Stock in excess of the Threshold Amount, the Purchasers shall have the
right to effectuate a distribution of Registrable Securities in any other
manner, including pursuant to a Shelf Registration Statement, if in the
opinion of a nationally recognized investment banker selected by the
Company and the Purchasers, distributions of Registrable Securities made in
the manner proposed by the Purchasers would not adversely affect the market
for the Common Stock. Nothing contained herein shall be deemed to restrict
the Purchasers from transferring any of the Common Stock at any time in
accordance with the terms of the Purchase Agreement.
2.9 No Required Sale. Nothing in this Agreement shall be
deemed to create an independent obligation on the part of the Purchasers to
sell any Registrable Securities pursuant to any effective registration
statement.
3. Rule 144. The Company shall take all actions reasonably
necessary to enable holders of Registrable Securities to sell such
securities without registration under the Securities Act within the
limitation of the exemptions provided by (i) Rule 144, or (ii) any similar
rule or regulation hereafter adopted by the Commission including, without
limiting the generality of the foregoing, filing on a timely basis all
reports required to be filed by the Exchange Act. Upon the request of the
Purchasers, the Company will deliver to such holder a written statement as
to whether it has complied with such requirements.
4. Amendments and Waivers. This Agreement may be amended,
modified or supplemented only by written agreement of the party against
whom enforcement of such amendment, modification or supplement is sought.
5. [INTENTIONALLY OMITTED].
6. Notice. All notices and other communications hereunder shall
be in writing and, unless otherwise provided herein, shall be deemed to
have been given when received by the party to whom such notice is to be
given at its address set forth below, or such other address for the party
as shall be specified by notice given pursuant hereto:
(a) If to the Purchasers, to:
c/o Forstmann Little & Co.
767 Fifth Avenue
New York, NY 10153
Attention: Sandra J. Horbach
With a copy to:
Fried, Frank, Harris, Shriver & Jacobson
One New York Plaza
New York, New York 10004
Attention: Robert C. Schwenkel, Esq.
(b) If to the Company, to it at:
NEXTLINK Communications, Inc.
1505 Farm Credit Drive
McLean, VA 22102
Attn: Gary Begeman, Esq.
with a copy to:
Willkie Farr & Gallagher
787 Seventh Avenue
New York, NY 10019
Attn: Bruce R. Kraus, Esq.
7. Assignment; Third Party Beneficiaries. This Agreement shall be
binding upon and inure to the benefit of and be enforceable by the parties
hereto and their respective successors and permitted assigns. This
Agreement may not be assigned by the Company, without the prior written
consent of the Purchasers. The Purchasers may, at their election, at any
time or from time to time, assign their rights under this Agreement, in
whole or in part, to any purchaser or other transferee of shares of Common
Stock held by them; provided, however, that any rights to withdraw shares
from inclusion in a registration statement pursuant to Section 2 shall be
made only by the Purchasers for themselves and all such purchasers and
transferees; and provided further, that no such assignment will increase
the total number of registrations pursuant to Section 2.1 or underwritten
offerings the Company is required to effect hereunder.
8. Remedies. The parties hereto agree that money damages or other
remedy at law would not be sufficient or adequate remedy for any breach or
violation of, or a default under, this Agreement by them and that, in
addition to all other remedies available to them, each of them shall be
entitled to an injunction restraining such breach, violation or default or
threatened breach, violation or default and to any other equitable relief,
including without limitation specific performance, without bond or other
security being required. In any action or proceeding brought to enforce any
provision of this Agreement (including the indemnification provisions
thereof), the successful party shall be entitled to recover reasonable
attorneys' fees in addition to its costs and expenses and any other
available remedy.
9. No Inconsistent Agreements. The Company will not, on or after
the date of this Agreement, enter into any agreement with respect to its
securities which is inconsistent with the rights granted to the Purchasers
in this Agreement or otherwise conflicts with the provisions hereof. The
Company further represents and warrants that the rights granted to the
Purchasers hereunder do not in any way conflict with and are not
inconsistent with any other agreements to which the Company is a party or
by which it is bound.
10. Descriptive Headings. The descriptive headings of the several
sections and paragraphs of this Agreement are inserted for reference only
and shall not control or otherwise affect the meaning hereof.
11. Governing Law. This Agreement shall be construed and enforced
in accordance with, and the rights and obligations of the parties hereto
shall be governed by, the laws of the State of New York, without giving
effect to the conflicts of law principles thereof. Each of the parties
hereto hereby irrevocably and unconditionally consents to submit to the
exclusive jurisdiction of the courts of the State of New York and the
United States of America located in the County of New York for any action
or proceeding arising out of or relating to this Agreement and the
transactions contemplated hereby (and agrees not to commence any action or
proceeding relating thereto except in such courts), and further agrees that
service of any process, summons, notice or document by U.S. registered mail
to its respective address set forth in Section 6 hereof shall be effective
service of process for any action or proceeding brought against it in any
such court. Each of the parties hereto hereby irrevocably and
unconditionally waives any objection to the laying of venue of any action
or proceeding arising out of this Agreement or the transactions
contemplated hereby in the courts of the State of New York or the United
States of America located in the County of New York, and hereby further
irrevocably and unconditionally waives and agrees not to plead or claim in
any such court that any such action or proceeding brought in any such court
has been brought in an inconvenient forum.
12. Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be deemed an original, but all such
counterparts shall together constitute one and the same instrument.
13. Invalidity of Provision. The invalidity or unenforceability
of any provision of this Agreement in any jurisdiction shall not affect the
validity or enforceability of the remainder of this Agreement in that
jurisdiction or the validity or enforceability of this Agreement, including
that provision, in any other jurisdiction. If any restriction or provision
of this Agreement is held unreasonable, unlawful or unenforceable in any
respect, such restriction or provision shall be interpreted, revised or
applied in a manner that renders it lawful and enforceable to the fullest
extent possible under law.
14. Further Assurances. Each party hereto shall do and perform or
cause to be done and performed all further acts and things and shall
execute and deliver all other agreements, certificates, instruments, and
documents as any other party hereto reasonably may request in order to
carry out the intent and accomplish the purposes of this Agreement and the
consummation of the transactions contemplated hereby.
15. Entire Agreement; Effectiveness. This Agreement constitutes
the entire agreement, and supersedes all prior agreements and
understandings, oral and written, between the parties hereto with respect
to the subject matter hereof.
<PAGE>
IN WITNESS WHEREOF, the parties have caused this Agreement to be
executed and delivered by their respective officers thereunto duly
authorized.
NEXTLINK COMMUNCATIONS, INC.
By: /s/ Daniel F. Akerson
--------------------------------------
Name: Daniel F. Akerson
Title: Chairman and Chief Executive
Officer
FORSTMANN LITTLE & CO.
SUBORDINATED DEBT AND EQUITY
MANAGEMENT BUYOUT PARTNERSHIP
VII, L.P.
By: FLC XXXIII Partnership
its general partner
By: /s/ Winston W. Hutchins
-------------------------------------
Winston W. Hutchins,
a general partner
FORSTMANN LITTLE & CO. EQUITY
PARTNERSHIP VI, L.P.
By: FLC XXXII Partnership, L.P.
its general partner
By: /s/ Winston W. Hutchins
-------------------------------------
Winston W. Hutchins,
a general partner
FL FUND, L.P.
By: FLC XXXI Partnership, L.P.
its general partner
By: FLC XXIX Partnership, L.P.
a general partner
By: /s/ Winston W. Hutchins
--------------------------------
Winston W. Hutchins,
a general partner
EXHIBIT 3
NEXTLINK COMMUNICATIONS, INC.
CERTIFICATE OF DESIGNATION OF THE POWERS, PREFERENCES AND RELATIVE,
PARTICIPATING, OPTIONAL AND OTHER SPECIAL RIGHTS OF SERIES C CUMULATIVE
CONVERTIBLE PARTICIPATING PREFERRED STOCK AND QUALIFICATIONS, LIMITATIONS AND
RESTRICTIONS THEREOF
- ---------------------------------------------------------------------------
Pursuant to Section 151 of the
General Corporation Law of the State of Delaware
- ---------------------------------------------------------------------------
NEXTLINK Communications, Inc. (the "Corporation"), a corporation
organized and existing under the General Corporation Law of the State of
Delaware, does hereby certify that, pursuant to authority conferred upon
the board of directors of the Corporation (the "Board of Directors") by the
Corporation's Certificate of Incorporation, as amended (the "Certificate of
Incorporation"), and pursuant to the provisions of Section 151 of the
General Corporation Law of the State of Delaware, said Board of Directors
is authorized to issue Preferred Stock of the Corporation in one or more
series and the Special Committee of the Board of Directors, as authorized
by the Board of Directors, has duly approved and adopted the following
resolution on December 7, 1999 (the "Resolution"):
RESOLVED that, pursuant to the authority vested in the Board
of Directors by its Certificate of Incorporation, the Special
Committee, as authorized by the Board of Directors, hereby creates,
authorizes and provides for the issuance of a series of the preferred
stock of the Corporation, par value $.01 per share (such preferred
stock designated as the "Series C Cumulative Convertible Participating
Preferred Stock"), consisting of 584,375 shares and having the powers,
designation, preferences, relative, participating, optional and other
special rights and the qualifications, limitations and restrictions
thereof that are set forth in the Certificate of Incorporation and in
this Resolution as follows:
1. Number and Designation. 584,375 shares of the Preferred Stock
of the Corporation shall constitute a series designated as "Series C
Cumulative Convertible Participating Preferred Stock" (the "Series C
Preferred Stock").
2. Definitions. Unless the context otherwise requires, when used
herein the following terms shall have the meaning indicated.
"Board of Directors" means the Board of Directors of the
Corporation.
"Business Day" means any day except Saturday, Sunday and any day
which shall be a legal holiday or a day on which banking institutions in
New York City, New York generally are authorized or required by law or
other governmental actions to close.
"Capital Stock" means, with respect to any person, any and all
shares, interests, participations, rights in, or other equivalents (however
designated and whether voting and/or non-voting) of such person's capital
stock, whether outstanding on the Issue Date or issued after the Issue
Date, and any and all rights (other than any evidence of indebtedness),
warrants or options exchangeable for or convertible into such capital
stock.
"Change of Control" will be deemed to have occurred at such time
as any of the following occur: (i) any person or any persons acting
together that would constitute a "group" for purposes of Section 13(d) of
the Exchange Act, or any successor provision thereto (other than Eagle
River, Craig O. McCaw, Wendy P. McCaw and their respective affiliates or an
underwriter engaged in a firm commitment underwriting on behalf of the
Corporation), shall beneficially own (within the meaning of Rule 13d-3
under the Exchange Act, or any successor provision thereto) more than 50%
of the aggregate voting power of all classes of Voting Stock of the
Corporation, (ii) neither Mr. Craig O. McCaw nor any person designated by
him to the Corporation as acting on his behalf shall be a director of the
Corporation, or (iii) from and after the date on which the Corporation has
redeemed indefeasibly or defeased in full its obligations in respect of its
12-1/2% Senior Notes due April 15, 2006 or defeased the covenants
applicable thereto in accordance with their terms, during any period of two
consecutive years, individuals who at the beginning of such period
constituted the Board of Directors (together with any new directors whose
election by the Board of Directors or whose nomination for election by the
shareholders of the Corporation was proposed by a vote of a majority of the
directors of the Corporation then still in office who were either directors
at the beginning of such period or whose election or nomination for
election was previously so approved) cease for any reason to constitute a
majority of the Board of Directors then in office.
"Class A Common Stock" means any shares of the Corporation's
Class A Common Stock, par value $.02 per share, now or hereafter authorized
to be issued, and any and all securities of any kind whatsoever of the
Corporation which may be exchanged for or converted into Class A Common
Stock, any and all securities of any kind whatsoever of the Corporation
which may be issued on or after the date hereof in respect of, in exchange
for, or upon conversion of shares of Class A Common Stock pursuant to a
merger, consolidation, stock split, stock dividend, recapitalization of the
Corporation or otherwise.
"Common Stock" means the Corporation's Class A Common Stock, the
Corporation's Class B Common Stock, par value $.02 per share, and any other
common stock of the Corporation.
"Current Market Price" means the average of the daily Market
Prices of the Common Stock for ten consecutive trading days immediately
preceding the date for which such value is to be computed.
"Eagle River" means Eagle River Investments, L.L.C., a limited
liability company formed under the laws of the State of Washington.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended, or any successor statute, and the rules and regulations
promulgated thereunder.
"Issue Date" means the original date of issuance of shares of
Series C Preferred Stock.
"Liquidation Preference" with respect to a share of Series C
Preferred Stock means, as at any date, the sum of (i) $1,000.00 plus (ii)
any Special Amount with respect to such share plus (iii) an amount equal to
any accrued and unpaid Preferred Dividends (as defined in paragraph 4(a)
below) with respect to such share from the last Dividend Payment Date
through such date.
"Market Price" means, with respect to the Common Stock, on any
given day, (i) the price of the last trade, as reported on the Nasdaq
National Market, not identified as having been reported late to such
system, or (ii) if the Common Stock is so traded, but not so quoted, the
average of the last bid and ask prices, as those prices are reported on the
Nasdaq National Market, or (iii) if the Common Stock is not listed or
authorized for trading on the Nasdaq National Market or any comparable
system, the average of the closing bid and asked prices as furnished by two
members of the National Association of Securities Dealers, Inc. selected
from time to time by the Corporation for that purpose. If the Common Stock
is not listed and traded in a manner that the quotations referred to above
are available for the period required hereunder, the Market Price per share
of Common Stock shall be deemed to be the fair value per share of such
security as determined in good faith by the Board of Directors of the
Corporation.
"Net Realizable FMV" means, with respect to a share of Common
Stock, if calculable, the amount of gross proceeds net of underwriters'
discounts, commissions or other selling expenses received by or to be
received by the holder in connection with the sale of such share of Common
Stock on a when issued basis or immediately after the conversion or, in all
other cases, an amount equal to 97% of the Current Market Price of the
Common Stock.
"Preference Amount" with respect to a share of Series C Preferred
Stock means, as at any date, the sum of (i) $727.273 plus (ii) any Special
Amount, whether or not declared, with respect to such share plus (iii) an
amount equal to any accrued and unpaid Preferred Dividends with respect to
such share from the last Dividend Payment Date through such date.
"Series D Designation" means the Certificate of Designation for
the Series D Preferred Stock.
"Series D Preferred Stock" means the Series D Convertible
Participating Preferred Stock, par value $.01 per share, of the
Corporation.
"Special Amount" with respect to a share of Series C Preferred
Stock shall mean all dividends and other amounts which have become payable
in respect of such share under paragraph 4(a) but which have not been paid.
The Special Amount with respect to any such share shall be reduced by the
amount of any such dividends and other amounts actually paid in respect of
such share under paragraph 4(c).
"Voting Stock" means, with respect to any person, the Capital
Stock of any class or kind ordinarily having the power to vote for the
election of directors or other members of the governing body of such
person.
3. Rank. (a) The Series C Preferred Stock and Series D Preferred
Stock each will, with respect to dividend rights and rights on liquidation,
winding-up and dissolution, rank (i) senior to the Corporation's 6-1/2%
Cumulative Convertible Preferred Stock, par value $.01 per share, all
classes of Common Stock and to each other class of Capital Stock of the
Corporation or series of Preferred Stock of the Corporation established
hereafter by the Board of Directors of the Corporation the terms of which
do not expressly provide that such class or series ranks senior to, or on a
parity with, the Series C Preferred Stock and Series D Preferred Stock as
to dividend rights and rights on liquidation, winding-up and dissolution of
the Corporation (collectively referred to, together with all classes of
Common Stock of the Corporation, as "Junior Securities"); (ii) on a parity
with each class of Capital Stock of the Corporation or series of Preferred
Stock of the Corporation established hereafter by the Board of Directors of
the Corporation, the terms of which expressly provide that such class or
series will rank on a parity with the Series C Preferred Stock and Series D
Preferred Stock as to dividend rights and rights on liquidation, winding-up
and dissolution (collectively referred to as "Parity Securities"); and
(iii) junior to the Corporation's 14% Senior Exchangeable Redeemable
Preferred Shares, par value $.01 per share (the "Senior Exchangeable
Redeemable Preferred Shares"), and to each class of Capital Stock of the
Corporation or series of Preferred Stock of the Corporation established
hereafter by the Board of Directors of the Corporation in accordance with
Section 9(d) hereof, the terms of which expressly provide that such class
or series will rank senior to the Series C Preferred Stock and Series D
Preferred Stock as to dividend rights and rights on liquidation, winding-up
and dissolution of the Corporation (collectively referred to as "Senior
Securities"); provided that the relative powers, rights and preferences of
the Series C Preferred Stock and Series D Preferred Stock vis-a-vis the
other shall be as set forth herein and in the Series D Designation.
(b) The respective definitions of Junior Securities, Parity
Securities and Senior Securities shall also include any warrants, rights or
options or other securities exercisable or exchangeable for or convertible
into any of the Junior Securities, Parity Securities and Senior Securities,
as the case may be.
(c) The Series C Preferred Stock shall be subject to the creation
of Junior Securities and Parity Securities and, to the extent permitted by
Section 9(d), Senior Securities.
4. Dividends. (a) The holders of shares of Series C Preferred
Stock shall be entitled to receive with respect to each share of Series C
Preferred Stock, when, as and if declared by the Board of Directors, out of
funds legally available for the payment of dividends, dividends per annum
equal to $54.5455 per share in cash (the "Preferred Dividend"). Preferred
Dividends shall accrue and shall be cumulative whether or not declared from
the Issue Date and shall be payable quarterly in arrears on March 31, June
30, September 30 and December 31 of each year (unless such day is not a
Business Day, in which event such dividends shall be payable on the next
succeeding Business Day) (each such date being a "Dividend Payment Date"
and each such quarterly period being a "Dividend Period"), commencing on
March 31, 2000. Each such dividend shall be payable to the holders of
record of shares of the Series C Preferred Stock as they appear on the
stock register of the Corporation at the close of business on the
corresponding Record Date. As used herein, the term "Record Date" means,
with respect to the dividend payable on March 31, June 30, September 30 and
December 31, respectively, of each year, the preceding March 15, June 15,
September 15 and December 15, or such other date, not more than 60 days or
less than 10 days preceding the payment dates thereof, as shall be fixed as
the record date by the Board of Directors.
(b) The amount of Preferred Dividends payable for each full
Dividend Period for each outstanding share of Series C Preferred Stock
shall be computed by dividing $54.5455 by four. The amount of Preferred
Dividends payable on the initial Dividend Payment Date, or in respect of
any period shorter or longer than a full Dividend Period, on the Series C
Preferred Stock shall be computed on the basis of twelve 30-day months and
a 360-day year. No interest, or sum or money in lieu of interest, shall be
payable in respect of any dividend payment or payments on the Series C
Preferred Stock that may be in arrears.
(c) Accrued and unpaid Special Amounts for any past Dividend
Periods may be declared and paid on any subsequent Dividend Payment Date,
to holders of record on the corresponding Record Date.
(d) So long as any shares of the Series C Preferred Stock are
outstanding, no dividend, except as described in the last sentence of
Section 4(e) below and except as described in the next succeeding sentence,
shall be declared or paid or set apart for payment on any Parity
Securities, nor shall any Parity Securities be redeemed, purchased or
otherwise acquired for any consideration (or any moneys be paid to or made
available for a sinking fund for the redemption of any shares of any such
stock) by the Corporation, directly or indirectly (except by conversion
into or exchange for Parity Securities or Junior Securities), unless in
each case all Special Amounts have been or contemporaneously are declared
and paid or declared and a sum sufficient for the payment thereof is set
apart for such payment on the Series C Preferred Stock for all Dividend
Periods terminating on or prior to the date of payment of the dividend on,
or the date of redemption, purchase, or acquisition for consideration of,
such Parity Securities. When Special Amounts are not paid in full or a sum
sufficient for such payment is not set apart, as aforesaid, all Special
Amounts and additional amounts declared upon shares of the Series C
Preferred Stock and all dividends and additional amounts declared upon any
other Parity Securities shall be declared ratably in proportion to the
respective amounts of Special Amounts and additional amounts accumulated
and unpaid on the Series C Preferred Stock and dividends and additional
amounts accumulated and unpaid on such Parity Securities.
(e) So long as any shares of the Series C Preferred Stock are
outstanding, no dividends shall be declared or paid or set apart for
payment and no other distribution shall be declared or made upon Junior
Securities, nor shall any Junior Securities be redeemed, purchased or
otherwise acquired (any such dividend, distribution, redemption, purchase
or acquisition being hereinafter referred to as a "Junior Securities
Distribution") for any consideration (or any moneys be paid to or made
available for a sinking fund for the redemption of any shares of any such
stock) by the Corporation, directly or indirectly (except by conversion
into or exchange for Junior Securities), unless in each case (i) all
Special Amounts and additional amounts on all outstanding shares of the
Series C Preferred Stock and accrued and unpaid dividends and additional
amounts on any other Parity Securities shall have been paid or set apart
for payment for all past Dividend Periods with respect to the Series C
Preferred Stock and all past dividend periods with respect to such Parity
Securities and (ii) sufficient funds shall have been paid or set apart for
the payment of the dividend for the current Dividend Period with respect to
the Series C Preferred Stock and the current dividend period with respect
to such Parity Securities. Notwithstanding anything in this Certificate of
Designation to the contrary, the Corporation may declare and pay dividends
on Parity Stock which are payable solely in additional shares of, or by the
increase in the liquidation value of, Parity Stock or on Junior Stock which
are payable in additional shares of, or by the increase in the liquidation
value of, Junior Stock, as applicable, or repurchase, redeem or otherwise
acquire Junior Stock in exchange for Junior Stock, and Parity Stock in
exchange for Parity Stock or Junior Stock.
(f) So long as any shares of Series C Preferred Stock are
outstanding, if the Corporation pays a dividend in cash, securities or
other property on the Common Stock then at the same time the Corporation
shall declare and pay a dividend on each share of Series C Preferred Stock
in an amount equal to the Series C Per Share Participation Amount. The
"Series C Per Share Participation Amount" means, as at any date, 37.5% of
the amount of dividends that would be paid with respect to the Series C
Preferred Stock and Series D Preferred Stock taken together if converted
into Common Stock on the date established as the record date with respect
to such dividend on the Common Stock divided by the number of shares of
Series C Preferred Stock then outstanding.
5. Liquidation Preference. (a) In the event of any liquidation,
dissolution or winding-up of the Corporation, whether voluntary or
involuntary, after payment or distribution of the assets of the Corporation
(whether capital or surplus) shall be made to or set apart for the holders
of Senior Securities, and before any payment or distribution of the assets
of the Corporation (whether capital or surplus) shall be made to or set
apart for the holders of Junior Securities, the holders of the shares of
Series C Preferred Stock and Series D Preferred Stock taken together shall
be entitled to receive an amount in cash equal to the greater of (x) the
aggregate Liquidation Preferences (as set forth herein and in the Series D
Designation) of the shares of Series C Preferred Stock and Series D
Preferred Stock as of the date of liquidation, or (y) the aggregate amount
that would have been received with respect to the shares of Series C
Preferred Stock and Series D Preferred Stock if such stock had been
converted to Common Stock immediately prior to such liquidation,
dissolution or winding-up. If, upon any liquidation, dissolution or
winding-up of the Corporation, the assets of the Corporation, or proceeds
thereof, shall be insufficient to pay in full the aforesaid amounts under
clause (x) of the preceding sentence and liquidating payments on all Parity
Securities, then such assets, or proceeds thereof, shall (i) be distributed
among the shares of Series C Preferred Stock and the Series D Preferred
Stock taken together and all such other Parity Securities ratably in
accordance with the respective amounts that would be payable on such shares
of Preferred Stock and any such other Parity Securities if all amounts
payable thereon were paid in full and (ii) the amount distributable under
clause (i) to the Series C Preferred Stock and Series D Preferred Stock
taken together, shall first be distributed to the Series C Preferred Stock
until it has received an amount equal to the aggregate Preference Amounts
of all Series C Preferred Stock outstanding as of the date of liquidation
and thereafter 37.5% to the Series C Preferred Stock and 62.5% to the
Series D Preferred Stock. If, upon any liquidation, dissolution or
winding-up of the Corporation, the assets of the Corporation, or proceeds
thereof, distributable to the Series C Preferred Stock and Series D
Preferred Stock taken together shall be sufficient to pay in full the
aforesaid amounts under clause (x) of the first sentence of this subsection
5(a) then such amount shall first be distributed to the Series C Preferred
Stock until it has received an amount equal to the aggregate Preference
Amounts of all Series C Preferred Stock outstanding as of the date of
liquidation and thereafter 37.5% to the Series C Preferred Stock and 62.5%
to the Series D Preferred Stock. Any amounts distributed with respect to
the Series C Preferred Stock pursuant to this paragraph 5(a) shall be
allocated pro rata among the shares of Series C Preferred Stock. For the
purposes of this paragraph 5, neither the sale, conveyance, exchange or
transfer (for cash, shares of stock, securities or other consideration) of
all or substantially all of the property or assets of the Corporation nor
the consolidation or merger of the Corporation with or into one or more
other entities shall be deemed to be a liquidation, dissolution or
winding-up of the Corporation.
(b) Subject to the rights of the holders of any Parity
Securities, after payment shall have been made in full to the holders of
the Series C Preferred Stock and the Series D Preferred Stock taken
together, as provided in this paragraph 5, any other series or class or
classes of Junior Securities shall, subject to the respective terms and
provisions (if any) applying thereto, be entitled to receive any and all
assets remaining to be paid or distributed, and the holders of the Series C
Preferred Stock, Series D Preferred Stock and any Parity Securities shall
not be entitled to share therein.
6. Redemption. (a) The Series C Preferred Stock shall not be
redeemable by the Corporation prior to the later of (i) the fifth
anniversary of the Issue Date and (ii) the date on which the Corporation
has redeemed indefeasibly or defeased in full its obligations in respect of
its 12-1/2% Senior Notes due April 15, 2006 or defeased the covenants
applicable thereto in accordance with their terms (the "Redemption Trigger
Date"). On and after the Redemption Trigger Date, to the extent the
Corporation shall have funds legally available for such payment, and
subject to the rights of the holders pursuant to Section 8 hereof, the
Corporation may redeem at its option shares of Series C Preferred Stock, at
any time in whole or from time to time in part, at a redemption price per
share equal to the Liquidation Preference as of the date fixed for
redemption, without interest; provided that the Corporation shall only be
entitled to redeem shares of the Series C Preferred Stock if shares of the
Series D Preferred Stock are also redeemed on a proportional basis based on
the percentage of each series of shares outstanding at such time.
(b) To the extent the Corporation shall have funds legally
available therefor, during the 180-day period commencing on the tenth
anniversary of the Issue Date, the holders of the Series C Preferred Stock
shall have the right to cause the Corporation to redeem at any time in
whole or from time to time in part outstanding shares of Series C Preferred
Stock, if any, at a redemption price per share in cash equal to the
Liquidation Preference, without interest; provided that upon any such
election the Corporation shall be required to redeem a proportional amount
of the Series D Preferred Stock.
(c) Shares of Series C Preferred Stock which have been issued and
reacquired by the Corporation in any manner, including shares purchased or
redeemed, shall (upon compliance with any applicable provisions of the laws
of the State of Delaware) be retired and have the status of authorized and
unissued shares of the class of Preferred Stock undesignated as to series
and may be redesignated and reissued as part of any series of the Preferred
Stock; provided that no such issued and reacquired shares of Series C
Preferred Stock shall be reissued or sold as Series C Preferred Stock.
(d) If the Corporation is unable or shall fail to discharge its
obligation to redeem outstanding shares of Series C Preferred Stock
pursuant to paragraph 6(b) (the "Mandatory Redemption Obligation"), the
Mandatory Redemption Obligation shall be discharged as soon as the
Corporation is able to discharge such Mandatory Redemption Obligation. If
and so long as any Mandatory Redemption Obligation with respect to the
Series C Preferred Stock shall not be fully discharged, the Corporation
shall not (i) directly or indirectly, redeem, purchase, or otherwise
acquire any Parity Security or discharge any mandatory or optional
redemption, sinking fund or other similar obligation in respect of any
Parity Securities or (ii) declare or make any Junior Securities
Distribution, or, directly or indirectly, discharge any mandatory or
optional redemption, sinking fund or other similar obligation in respect of
any Junior Securities.
7. Procedure for Redemption. (a) In the event that fewer than all
the outstanding shares of Series C Preferred Stock are to be redeemed, in
the case of Section 6(a), the number of shares to be redeemed shall be
determined by the Board of Directors and the shares to be redeemed shall be
selected pro rata (with any fractional shares being rounded to the nearest
whole shares). Notwithstanding anything in Section 6 to the contrary, the
Corporation shall only redeem shares of Series C Preferred Stock pursuant
to Section 6(a) or 6(b) on a proportional basis based on the percentage of
each series of shares outstanding at such time.
(b) In the event the Corporation shall redeem shares of Series C
Preferred Stock pursuant to Section 6(a), notice of such redemption shall
be given by first class mail, postage prepaid, mailed not less than 30 days
nor more than 60 days prior to the redemption date, to each holder of
record of the shares to be redeemed at such holder's address as the same
appears on the stock register of the Corporation; provided that neither the
failure to give such notice nor any defect therein shall affect the
validity of the giving of notice for the redemption of any share of Series
C Preferred Stock to be redeemed except as to the holder to whom the
Corporation has failed to give said notice or except as to the holder whose
notice was defective. Each such notice shall state: (i) the redemption
date; (ii) the number of shares of Series C Preferred Stock to be redeemed
and, if fewer than all the shares held by such holder are to be redeemed,
the number of shares to be redeemed from such holder; (iii) the redemption
price; (iv) the place or places where certificates for such shares are to
be surrendered for payment of the redemption price; and (v) that dividends
on the shares to be redeemed will cease to accrue on such redemption date.
(c) Notice having been mailed as aforesaid, if applicable, from
and after the redemption date, dividends on the shares of Series C
Preferred Stock so called for redemption shall cease to accrue, and all
rights of the holders thereof as stockholders of the Corporation (except
the right to receive from the Corporation the redemption price and except
the right to convert shares so called for redemption prior to the close of
business on the date immediately preceding the date fixed for such
redemption) shall cease. Upon surrender in accordance with said notice, if
applicable, of the certificates for any shares so redeemed (properly
endorsed or assigned for transfer, if the Board of Directors shall so
require and the notice shall so state), such shares shall be redeemed by
the Corporation at the redemption price aforesaid. In case fewer than all
the shares represented by any such certificate are redeemed, a new
certificate shall be issued representing the unredeemed shares without cost
to the holder thereof.
8. Conversion. (a) (i) Subject to the provisions of this Section
8, the holders of shares of Series C Preferred Stock shall have the right,
at any time in whole and from time to time in part, at such holders'
option, to convert any or all outstanding shares (and fractional shares) of
Series C Preferred Stock held by such holders into fully paid and
non-assessable shares of Class A Common Stock; provided that upon the
exercise by any holder of Series C Preferred Stock of this conversion
option, a proportional amount, based on the percentage of each series of
shares outstanding, of the Series D Preferred Stock shall automatically
convert in accordance with the terms of the Series D Designation. At any
time and from time to time the outstanding shares of Series C Preferred
Stock and Series D Preferred Stock taken together shall be convertible into
a number of shares of Class A Common Stock (the "Aggregate Conversion
Shares") equal to the aggregate Liquidation Preferences of the shares of
the Series C Preferred Stock and the Series D Preferred Stock as set forth
herein and in the Series D Designation as of the date of conversion divided
by $63.25, subject to adjustment from time to time pursuant to paragraph
8(g) hereof (the "Conversion Price"). The Series C Preferred Stock
outstanding as at any date shall be convertible into a number of shares of
Class A Common Stock (the "Aggregate Series C Conversion Shares") equal to
the sum of (A) the aggregate Preference Amounts with respect to all
outstanding shares of Series C Preferred Stock divided by the Net
Realizable FMV of a share of Class A Common Stock at the time of conversion
plus (B) .375 times the excess, if any, of the Aggregate Conversion Shares
over the number determined pursuant to clause (A). Each share of Series C
Preferred Stock being converted shall convert into a number of shares of
Class A Common Stock equal to the Aggregate Series C Conversion Shares
divided by the number of shares of Series C Preferred Stock then
outstanding. Notwithstanding any call for redemption pursuant to Section
6(a), the right to convert shares so called for redemption shall terminate
at the close of business on the date immediately preceding the date fixed
for such redemption unless the Corporation shall default in making payment
of the amount payable upon such redemption.
(ii) In the case of any partial conversion of Series C
Preferred Stock by the holders thereof, selection of the Series D Preferred
Stock for automatic conversion will be made by the Corporation in
compliance with the requirements of the principal national securities
exchange, if any, on which the Series D Preferred Stock is listed, or if
the Series D Preferred Stock is not listed on a national securities
exchange, on a pro rata basis, by lot or such other method as the
Corporation, in its sole discretion, shall deem fair and appropriate;
provided, however, that the Corporation may redeem all the shares held by
holders of fewer than 5 shares of Series D Preferred Stock (or all of the
shares held by the holders who would hold less than 5 shares of Series D
Preferred Stock as a result of such redemption) as may be determined by the
Corporation.
(b) (i) In order to exercise the conversion privilege, the holder
of the shares of Series C Preferred Stock to be converted shall surrender
the certificate representing such shares at the principal executive offices
of the Corporation, with a written notice of election to convert completed
and signed, specifying the number of shares to be converted. Unless the
shares issuable on conversion are to be issued in the same name as the name
in which such shares of Series C Preferred Stock are registered, each share
surrendered for conversion shall be accompanied by instruments of transfer,
in form satisfactory to the Corporation, duly executed by the holder or the
holder's duly authorized attorney, and an amount sufficient to pay any
transfer or similar tax.
(ii) As promptly as practicable after the surrender by the
holder of the certificates for shares of Series C Preferred Stock as
aforesaid, the Corporation shall issue and shall deliver to such holder, or
on the holder's written order to the holder's transferee, (x) a certificate
or certificates for the whole number of shares of Class A Common Stock
issuable upon the conversion of such shares in accordance with the
provisions of this paragraph 8, (y) any cash adjustment required pursuant
to Section 8(f), and (z) in the event of a conversion in part, a
certificate or certificates for the whole number of shares of Series C
Preferred Stock not being so converted.
(iii) Each conversion of shares of Series C Preferred Stock
pursuant to paragraph 8(a) shall be deemed to have been effected
immediately prior to the close of business on the date on which the
certificates for shares of Series C Preferred Stock shall have been
surrendered and such notice received by the Corporation as aforesaid, and
the person in whose name or names any certificate or certificates for
shares of Class A Common Stock shall be issuable upon such conversion shall
be deemed to have become the holder of record of the shares of Class A
Common Stock represented thereby at such time on such date and such
conversion shall be into a number of whole shares of Class A Common Stock
in respect of the shares of Series C Preferred Stock being converted as
determined in accordance with this Section 8 at such time on such date. All
shares of Class A Common Stock delivered upon conversion of the Series C
Preferred Stock will upon delivery be duly and validly issued and fully
paid and non-assessable, free of all liens and charges and not subject to
any preemptive rights. Upon the surrender of certificates representing the
shares of Series C Preferred Stock to be converted, the shares to be so
converted shall no longer be deemed to be outstanding and all rights of a
holder with respect to such shares surrendered for conversion shall
immediately terminate except the right to receive the Class A Common Stock
and other amounts payable pursuant to this paragraph 8 and a certificate or
certificates representing the shares of Series C Preferred Stock not
converted.
(c) (i) Upon delivery to the Corporation by a holder of shares of
Series C Preferred Stock of a notice of election to convert, the right of
the Corporation to redeem such shares of Series C Preferred Stock shall
terminate, regardless of whether a notice of redemption has been mailed as
aforesaid.
(ii) If a holder of Series C Preferred Stock delivers to the
Corporation a certificate therefor and a notice of election to convert, the
Series C Preferred Stock to be converted shall cease to accrue dividends
pursuant to paragraph 4 but shall continue to be entitled to receive pro
rata dividends for the period from the last Dividend Payment Date to the
date of delivery of the notice of election to convert in preference to and
in priority over any dividends on any Junior Securities.
(iii) Except as provided above and in paragraph 8(g), the
Corporation shall make no payment or adjustment for accrued and unpaid
dividends on shares of Series C Preferred Stock, whether or not in arrears,
on conversion of such shares or for dividends theretofore paid on the
shares of Class A Common Stock.
(d) (i) The Corporation covenants that it will at all times
reserve and keep available, free from preemptive rights, such number of its
authorized but unissued shares of Class A Common Stock as shall be required
for the purpose of effecting conversions of the Series C Preferred Stock.
(ii) Prior to the delivery of any securities which the
Corporation shall be obligated to deliver upon conversion of the Series C
Preferred Stock, the Corporation shall comply with all applicable federal
and state laws and regulations which require action to be taken by the
Corporation.
(e) The Corporation will pay any and all documentary stamp or
similar issue or transfer taxes payable in respect of the issue or delivery
of shares of Class A Common Stock on conversion of the Series C Preferred
Stock pursuant hereto; provided that the Corporation shall not be required
to pay any tax which may be payable in respect of any transfer involved in
the issue or delivery of shares of Class A Common Stock in a name other
than that of the holder of the Series C Preferred Stock to be converted and
no such issue or delivery shall be made unless and until the person
requesting such issue or delivery has paid to the Corporation the amount of
any such tax or has established, to the satisfaction of the Corporation,
that such tax has been paid.
(f) In connection with the conversion of any shares of Series C
Preferred Stock, no fractions of shares of Class A Common Stock shall be
required to be issued to the holder of such shares of Series C Preferred
Stock, but in lieu thereof the Corporation shall pay a cash adjustment in
respect of such fractional interest in an amount equal to such fractional
interest multiplied by the Market Price per share of Class A Common Stock
on the business day next preceding the business day on which such shares of
Series C Preferred Stock are deemed to have been converted.
(g) (i) In case the Corporation shall at any time after the Issue
Date (A) declare a dividend or make a distribution on Common Stock payable
in Common Stock (other than dividends or distributions payable to holders
of the Series C Preferred Stock including dividends paid as contemplated by
Section 4(f)), (B) subdivide or split the outstanding Common Stock, (C)
combine or reclassify the outstanding Common Stock into a smaller number of
shares, (D) issue any shares of its Capital Stock in a reclassification of
Common Stock (including any such reclassification in connection with a
consolidation or merger in which the Corporation is the continuing
corporation), or (E) consolidate with, or merge with or into, any other
person, the Conversion Price in effect at the time of the record date for
such dividend or distribution or on the effective date of such subdivision,
split, combination, consolidation, merger or reclassification shall be
adjusted so that the conversion of the Series C Preferred Stock after such
time shall entitle the holder to receive the aggregate number of shares of
Common Stock or other securities of the Corporation (or other securities
into which such shares of Common Stock have been converted, exchanged,
combined, consolidated, merged or reclassified pursuant to clause
8(g)(i)(C), 8(g)(i)(D) or 8(g)(i)(E) above) which, if the Series C
Preferred Stock had been converted immediately prior to such time, such
holder would have owned upon such conversion and been entitled to receive
by virtue of such dividend, distribution, subdivision, split, combination,
consolidation, merger or reclassification. Such adjustment shall be made
successively whenever an event listed above shall occur.
(ii) In case the Corporation shall issue or sell any Common
Stock (or rights, options, warrants or other securities convertible into or
exercisable or exchangeable for shares of Common Stock) without
consideration or for a consideration per share (or having a conversion,
exchange or exercise price per share) less than the Current Market Price on
the date of such issuance (or, in the case of convertible or exchangeable
or exercisable securities, less than the Current Market Price as of the
date of issuance of the rights, options, warrants or other securities in
respect of which shares of Common Stock were issued) then, and in each such
case, the Conversion Price shall be reduced to an amount determined by
multiplying (A) the Conversion Price in effect on the day immediately prior
to such date by (B) a fraction, the numerator of which shall be the sum of
(1) the number of shares of Common Stock outstanding immediately prior to
such sale or issuance multiplied by the then applicable Current Market
Price (such Current Market Price, the "Adjustment Price") and (2) the
aggregate consideration receivable by the Corporation for the total number
of shares of Common Stock so issued (or into or for which the rights,
options, warrants or other securities are convertible, exercisable or
exchangeable), and the denominator of which shall be the sum of (x) the
total number of shares of Common Stock outstanding immediately prior to
such sale or issue and (y) the number of additional shares of Common Stock
issued (or into or for which the rights, options, warrants or other
securities may be converted, exercised or exchanged), multiplied by the
Adjustment Price. In case any portion of the consideration to be received
by the Corporation shall be in a form other than cash, the fair market
value of such noncash consideration shall be utilized in the foregoing
computation. Such fair market value shall be determined in good faith by
the Board of Directors.
(iii) In case the Corporation shall fix a record date for
the issuance on a pro rata basis of rights, options or warrants to the
holders of its Common Stock or other securities entitling such holders to
subscribe for or purchase shares of Common Stock (or securities convertible
into or exercisable or exchangeable for shares of Common Stock) at a price
per share of Common Stock (or having a conversion, exercise or exchange
price per share of Common Stock, in the case of a security convertible
into, or exerciseable or exchangeable for, shares of Common Stock) less
than the Current Market Price on such record date, the maximum number of
shares of Common Stock issuable upon exercise of such rights, options or
warrants (or conversion of such convertible securities) shall be deemed to
have been issued and outstanding as of such record date and the Conversion
Price shall be adjusted pursuant to paragraph 8(g)(ii) hereof, as though
such maximum number of shares of Common Stock had been so issued for an
aggregate consideration payable by the holders of such rights, options,
warrants or other securities prior to their receipt of such shares of
Common Stock. In case any portion of such consideration shall be in a form
other than cash, the fair market value of such noncash consideration shall
be determined as set forth in paragraph 8(g)(ii) hereof. Such adjustment
shall be made successively whenever such record date is fixed; and in the
event that such rights, options or warrants are not so issued or expire in
whole or in part unexercised, or in the event of a change in the number of
shares of Common Stock to which the holders of such rights, options or
warrants are entitled (other than pursuant to adjustment provisions therein
comparable to those contained in this paragraph 8(g)), the Conversion Price
shall again be adjusted as follows: (A) in the event that all of such
rights, options or warrants expire unexercised, the Conversion Price shall
be the Conversion Price that would then be in effect if such record date
had not been fixed; (B) in the event that less than all of such rights,
options or warrants expire unexercised, the Conversion Price shall be
adjusted pursuant to paragraph 8(g)(ii) to reflect the maximum number of
shares of Common Stock issuable upon exercise of such rights, options or
warrants that remain outstanding (without taking into effect shares of
Common Stock issuable upon exercise of rights, options or warrants that
have lapsed or expired); and (C) in the event of a change in the number of
shares of Common Stock to which the holders of such rights, options or
warrants are entitled, the Conversion Price shall be adjusted to reflect
the Conversion Price which would then be in effect if such holder had
initially been entitled to such changed number of shares of Common Stock.
Notwithstanding anything herein to the contrary, no further adjustment to
the Conversion Price shall be made upon the issuance or sale of Common
Stock upon the exercise of any rights, options or warrants to subscribe for
or purchase Common Stock, if any adjustment in the Conversion Price was
made or required to be made upon the record date for the issuance or sale
of such rights, options or warrants under this clause 8(g)(iii).
Notwithstanding anything herein to the contrary, no adjustment in the
Conversion Price shall be made under this clause 8(g)(iii) to the extent
the holders of Series C Preferred Stock participate in any such
distribution in accordance with Section 4(f) hereof.
(iv) In case the Corporation shall fix a record date for the
making of a distribution to all holders of any class of Common Stock
(including any such distribution made in connection with a consolidation or
merger in which the Corporation is the continuing corporation) of evidences
of indebtedness, assets or other property, the Conversion Price to be in
effect after such record date shall be determined by multiplying the
Conversion Price in effect immediately prior to such record date by a
fraction, (A) the numerator of which shall be the Conversion Price
immediately prior to such distributions less the fair market value
(determined as set forth in paragraph 8(g)(ii) hereof) of the portion of
the assets, other property or evidence of indebtedness so to be distributed
which is applicable to one share of Common Stock and (B) the denominator of
which shall be the Conversion Price immediately prior to such
distributions. Such adjustments shall be made successively whenever such a
record date is fixed; and in the event that such distribution is not so
made, the Conversion Price shall again be adjusted to be the Conversion
Price which would then be in effect if such record date had not been fixed.
An adjustment to the Conversion Price also shall be made in respect of
dividends and distributions paid exclusively in cash to all holders of any
class of Common Stock (excluding any dividend or distribution in connection
with the liquidation, dissolution or winding-up of the Corporation, whether
voluntary or involuntary, and any cash that is distributed upon a merger,
consolidation or other transaction for which an adjustment pursuant to
paragraph 8(g)(i) is made) where the sum of (1) all such cash dividends and
distributions made within the preceding 12 months in respect of which no
adjustment has been made and (2) any cash and the fair market value
(determined as set forth in paragraph 8(g)(ii) hereof) of other
consideration paid in respect of any repurchases of Common Stock by the
Corporation or any of its subsidiaries within the preceding 12 months in
respect of which no adjustment has been made, exceeds 2% of the
Corporation's market capitalization (being the product of the then Current
Market Price of the Common Stock times the aggregate number of shares of
Common Stock then outstanding on the record date for such distribution).
The Conversion Price to be in effect after such adjustment shall be
determined by subtracting from the Conversion Price in effect prior to such
adjustment an amount equal to the quotient of (A) the sum of clause (1) and
clause (2) above and (B) the number of shares of Common Stock outstanding
on the date such adjustment is to be determined. Notwithstanding anything
herein to the contrary, no adjustment in the Conversion Price shall be made
under this clause 8(g)(iv) to the extent the holders of Series C Preferred
Stock participate in any such distribution in accordance with Section 4(f)
hereof.
(v) No adjustment to the Conversion Price pursuant to (a)
paragraphs 8(g)(ii), 8(g)(iii) or 8(g)(iv) above shall be required unless
such adjustment would require an increase or decrease of at least $.50 in
the Conversion Price or (b) paragraph 8(g)(ii) above shall be required with
respect to rights, options, warrants or other securities outstanding on the
Issue Date or issued pursuant to the Company's employee benefit plans in
effect on the Issue Date or reserved for issuance thereunder as of the
Issue Date or stock options granted after the Issue Date pursuant to any
stock option plans adopted by the Board of Directors so long as such
options have an exercise price not less than the Market Price on the day
preceding such grant; provided, however, that any adjustments which by
reason of paragraph 8(g)(v)(a) are not required to be made shall be carried
forward and taken into account in any subsequent adjustment. All
calculations under this paragraph 8(g) shall be made to the nearest four
decimal points.
(vi) In the event that, at any time as a result of the
provisions of this paragraph 8(g), a holder of Series C Preferred Stock
upon subsequent conversion shall become entitled to receive any shares of
Capital Stock of the Corporation other than Common Stock, the number of
such other shares so receivable upon conversion of Series C Preferred Stock
shall thereafter be subject to adjustment from time to time in a manner and
on terms as nearly equivalent as practicable to the provisions contained
herein.
(vii) If, as a result of the operation of paragraphs
8(g)(ii), 8(g)(iii) or 8(g)(iv) above and corresponding provisions in the
Series D Designation, the cumulative number of shares of Class A Common
Stock issued or issuable upon conversion of the Series C Preferred Stock
and Series D Preferred Stock, after giving effect to (x) the adjustments
described in such paragraphs and corresponding provisions in the Series D
Designation and (y) all prior conversions of the Series C Preferred Stock
and Series D Preferred Stock, would equal or exceed a number (the
"Threshold Number") equal to 20% of the outstanding shares of Class A
Common Stock as of the Issue Date and if the Company receives a written
opinion of its outside counsel that the issuance of such shares in excess
of the Threshold Number would violate the rules of the Nasdaq National
Market or any other exchange on which the Class A Common Stock is then
quoted or traded, then until and unless the Corporation obtains the
approval of its common stockholders for the issuance of any such shares of
Class A Common Stock in excess of the Threshold Number, the holders shall
only be entitled to exercise their conversion rights with respect to a
maximum number of Series C and Series D Preferred Stock that would not
result in an amount of shares of Class A Common Stock being issued in
excess of the Threshold Number, but in any case, the Conversion Price shall
be adjusted as provided in such paragraphs. If, as a result of the
operation of the preceding sentence, the conversion rights of the holders
of Series C Preferred Stock are limited by operation thereof because
appropriate stockholder approval has not been obtained, the Corporation
agrees for the benefit of the holders of Series C Preferred Stock and
Series D Preferred Stock to use its reasonable best efforts to seek, as
promptly as reasonably practicable, the requisite approval of its common
stockholders (and shall seek such approval as often as necessary to obtain
such approval), and will recommend to its stockholders that they vote in
favor of a resolution providing for such approval, for the amount of shares
of Class A Common Stock that would be issued or issuable upon conversion in
full of all outstanding Series C and Series D Preferred Stock.
Notwithstanding anything to the contrary set forth above, the holders of
Series C Preferred Stock and Series D Preferred Stock shall be entitled to
exercise such holders' conversion rights in full (after giving effect to
any and all anti-dilution adjustments resulting from operation of
paragraphs 8(g)(ii), 8(g)(iii) or 8(g)(iv)) in connection with any merger,
consolidation or other transaction in which such Series C Preferred Stock,
Series D Preferred Stock or Class A Common Stock is being converted into or
exchanged for cash, securities or other property in connection with such
merger, consolidation or other transaction. In the event that the
Corporation elects to redeem the shares of Series C Preferred Stock and
Series D Preferred Stock at a time when the holders' right to convert such
shares into Class A Common Stock is limited as provided in this paragraph
(g), and such holders seek to exercise such conversion rights prior to the
date fixed for redemption in accordance with this Section 8 (the
"Redemption Date"), then if the total number of shares of Class A Common
Stock issued or issuable upon conversion of such shares, after giving
effect to any adjustments provided under the first sentence of this section
(the "Cumulative Number"), would exceed the Threshold Number, the holders
shall be entitled to convert such number of shares of Series C Preferred
Stock and Series D Preferred Stock into a number of shares of Class A
Common Stock up to the Threshold Number, and with respect to the balance of
such shares, the Corporation shall cancel such shares and shall pay the
holders in lieu thereof an amount in cash equal to (a)(i) the Cumulative
Number minus (ii) the Threshold Number multiplied by (b) the Market Price
per share of Class A Common Stock on the business day next preceding the
business day which is deemed the Redemption Date.
(h) All adjustments pursuant to this paragraph 8 shall be
notified to the holders of the Series C Preferred Stock and such notice
shall be accompanied by a schedule of computations of the adjustments.
9. Voting Rights. (a) The holders of record of shares of Series C
Preferred Stock shall be entitled to vote on an as-converted basis
(calculated in accordance with Section 8(a) as of the close of trading on
the last trading day of the most recently ended fiscal quarter of the
Corporation) with the Common Stock as a single class on all matters
presented to the holders of the Common Stock for vote, except as
hereinafter provided in this Section 9 or as otherwise provided by law. So
long as the provisions of Section 9(b)(i) entitle the holders of Series C
Preferred Stock to designate the Series C Designee (as defined below), the
holders of Series C Preferred Stock shall not be entitled to vote as to the
election of other directors of the Corporation.
(b) (i) On the Issue Date, the Board of Directors shall cause the
total number of directors then constituting the whole Board of Directors to
be increased by two and the holders of the outstanding shares of Series C
Preferred Stock shall be entitled to designate one director (the "Series C
Designee") for election to the Board of Directors of the Corporation and,
voting separately as a series, shall have the exclusive right to vote for
the election of such designee to the Board of Directors; and the holders of
the outstanding shares of Series D Preferred Stock shall be entitled to
designate one director (the "Series D Designee") for election to the Board
of Directors of the Corporation and, voting separately as a series, shall
have the exclusive right to vote for the election of such designee to the
Board of Directors; provided that, notwithstanding the foregoing, after the
Issue Date, (i) the holders of the outstanding shares of the Series C
Preferred Stock shall continue to be entitled to designate the Series C
Designee for election to the Board of Directors and, voting separately as a
series, shall continue to have the exclusive right to vote for the election
of the Series C Designee to the Board of Directors, and the holders of the
outstanding shares of the Series D Preferred Stock shall continue to be
entitled to designate the Series D Designee for election to the Board of
Directors and, voting separately as a series, shall continue to have the
exclusive right to vote for the election of the Series D Designee to the
Board of Directors, in each case, for as long as, and only for as long as,
at least 40% of the aggregate number of shares of Series C Preferred Stock
issued on the Issue Date and of shares of Series D Preferred Stock issued
on the original date of issuance of the Series D Preferred Stock (such
aggregate number of shares of Series C Preferred Stock and Series D
Preferred Stock being referred to herein as the "Total C and D Shares")
remains outstanding; (ii) the entitlement of the holders of outstanding
shares of Series C Preferred Stock to designate one director for election
to the Board of Directors, and the exclusive right of the holders of
outstanding shares of Series C Preferred Stock to vote, separately as a
series, for the election of the Series C Designee to the Board of
Directors, shall cease immediately upon less than 40% of the Total C and D
Shares being outstanding, and the holders of the outstanding shares of the
Series C Preferred Stock shall be entitled to designate one board observer
(the "Series C Board Observer"), for as long as, and only for as long as
any shares of Series C Preferred Stock issued on the Issue Date are
outstanding; (iii) immediately upon no shares of Series C Preferred Stock
issued on the Issue Date being outstanding, the entitlement of the holders
of outstanding shares of Series C Preferred Stock to designate the Series C
Board Observer, and the rights of the Series C Observer, shall cease; and
(iv) immediately upon less than 40% but more than 20% of the Total C and D
Shares being outstanding, the Board of Directors shall cause the total
number of directors then constituting the whole Board of Directors to be
decreased by one, and the term of office of the Series C Designee shall
terminate. The Series C Designee may be removed with or without cause by
the holders of the shares of Series C Preferred Stock. The "Series C Board
Observer" means a person who shall not be a member of the Board of
Directors and who shall have the rights as agreed to with the Corporation,
provided that such rights shall satisfy the requirement of contractual
management rights for purposes of the Department of Labor's "plan assets"
regulation.
(ii) If and whenever six quarterly dividends payable on the
Series C Preferred Stock have not been paid in full or if the Corporation
shall have failed to discharge its Mandatory Redemption Obligation or the
Corporation shall have failed to comply with Section 9(d) hereof, the total
number of directors then constituting the whole Board of Directors
automatically shall be increased by one and the holders of outstanding
shares of Series C Preferred Stock, voting separately as a single series,
shall be entitled to elect one additional director to serve on the Board of
Directors at any annual meeting of stockholders or special meeting held in
place thereof, or at a special meeting of the holders of the Series C
Preferred Stock called as hereinafter provided. Whenever all arrears in
dividends and Special Amounts on the Series C Preferred Stock then
outstanding shall have been paid and dividends thereon for the current
quarterly dividend period shall have been paid or declared and set apart
for payment, or the Company shall have fulfilled its Mandatory Redemption
Obligation, as the case may be, then the right of the holders of
outstanding shares of Series C Preferred Stock to elect such additional
director shall cease (but subject always to the same provisions for the
vesting of such voting rights in the case of any similar future arrearage
in six quarterly dividends or failure to fulfill any Mandatory Redemption
Obligation), and the term of office of any person elected as director by
the holders of outstanding shares of Series C Preferred Stock pursuant to
this subparagraph (b)(ii) shall forthwith terminate and the total number of
directors then constituting the whole Board of Directors automatically
shall be reduced by one. At any time after voting power to elect one
additional director shall have become vested and be continuing in the
holders of outstanding shares of Series C Preferred Stock pursuant to this
subparagraph (b)(ii), or if a vacancy shall exist in the office of a
director elected by the holders of outstanding shares of Series C Preferred
Stock pursuant to this subparagraph (b)(ii), a proper officer of the
Corporation may, and upon the written request of the holders of record of
at least twenty-five percent (25%) of the shares of Series C Preferred
Stock then outstanding addressed to the Secretary of the Corporation shall,
call a special meeting of the holders of Series C Preferred Stock, for the
purpose of electing the one additional director which such holders are
entitled to elect pursuant to this subparagraph (b)(ii). If such meeting
shall not be called by a proper officer of the Corporation within twenty
(20) days after personal service of said written request upon the Secretary
of the Corporation, or within twenty (20) days after mailing the same
within the United States by certified mail, addressed to the Secretary of
the Corporation at its principal executive offices, then the holders of
record of at least twenty-five percent (25%) of the outstanding shares of
Series C Preferred Stock may designate in writing one of their number to
call such meeting at the expense of the Corporation, and such meeting may
be called by the person so designated upon the notice required for the
annual meeting of stockholders of the Corporation and shall be held at the
place for holding the annual meetings of stockholders. Any holder of Series
C Preferred Stock so designated shall have, and the Corporation shall
provide, access to the lists of stockholders to be called pursuant to the
provisions hereof.
(c) Without the written consent of holders of a majority of the
outstanding shares of Series C Preferred Stock or the affirmative vote of
holders of a majority of the outstanding shares of Series C Preferred Stock
at a meeting of the holders of Series C Preferred Stock called for such
purpose, the Corporation will not amend, alter or repeal any provision of
the Restated Certificate of Incorporation or this Certificate of
Designation so as to adversely affect the preferences, rights or powers of
the Series C Preferred Stock or to authorize the issuance of, or to issue
any, additional shares of Series C Preferred Stock; provided that any such
amendment that changes any dividend or other amount payable on or the
liquidation preference of the Series C Preferred Stock shall require the
written consent of holders of two-thirds of the outstanding shares of
Series C Preferred Stock or the affirmative vote of holders of two-thirds
of the outstanding shares of Series C Preferred Stock at a meeting of the
holders of Series C Preferred Stock called for such purpose.
(d) Without the written consent of holders of a majority of the
outstanding shares of Series C Preferred Stock or the affirmative vote of
holders of a majority of the outstanding shares of Series C Preferred Stock
at a meeting of such holders called for such purpose, the Corporation will
not create, authorize or issue any (i) Parity Securities or (ii) Senior
Securities except Senior Securities issued in accordance with paragraph
(f)(ii) of the Certificate of Designation for the Senior Exchangeable
Redeemable Preferred Shares as in effect on December 3, 1999.
(e) Subject to the provisions of Sections 8 and 10 hereof, the
Corporation may, without the consent of any holder of Series C Preferred
Stock, consolidate with or merge with or into, or convey, transfer or lease
all or substantially all its assets as an entirety to, any Person, provided
that: (1) the successor, transferee or lessee (if not the Corporation) is
organized and existing under the laws of the United States of America or
any State thereof or the District of Columbia and the Series C Preferred
Stock shall be converted into or exchanged for and shall become shares of,
or interests in, such successor, transferee or lessee, having in respect of
such successor, transferee, or lessee substantially the same powers,
preferences and relative, participating, optional or other special rights
and the qualifications, limitations or restrictions thereof, that the
Series C Preferred Stock has immediately prior to such transaction; and (2)
the Corporation delivers to the transfer agent an officers' certificate and
an opinion of counsel stating that such consolidation, merger, conveyance,
transfer or lease complies with this Certificate of Designation. In the
event of any consolidation or merger or conveyance, transfer or lease of
all or substantially all of the assets of the Corporation that is permitted
pursuant to this paragraph (e), the successor resulting from such
consolidation or into which the Corporation is merged or the transferee or
lessee to which such conveyance, transfer or lease is made, will succeed
to, and be substituted for, and may exercise every right and power of, the
Corporation with respect to the Series C Preferred Stock (or the shares or
interests into, or for which, the Series C Preferred Stock is converted or
exchanged), and thereafter, except in the case of a lease, the predecessor
(if still in existence) shall be released from its obligations and
covenants with respect to the Series C Preferred Stock.
(f) In exercising the voting rights set forth in this paragraph
9, each share of Series C Preferred Stock shall have one vote per share.
Except as otherwise required by applicable law or as set forth herein, the
shares of Series C Preferred Stock shall not have any relative,
participating, optional or other special voting rights and powers and the
consent of the holders thereof shall not be required for the taking of any
corporate action.
10. Change of Control. (a) Within thirty days of a Change of
Control (the date of such occurrence being the "Change of Control Date"),
the Corporation shall notify the holders of the Series C Preferred Stock of
such occurrence and shall be required to make an offer (the "Offer to
Purchase") to each holder of shares of Series C Preferred Stock (subject to
the rights of the holders pursuant to Section 8 hereof) to repurchase such
holder's shares of Series C Preferred Stock, or such portion thereof as may
be determined by such holder, at a price per share in cash equal to 101% of
the Liquidation Preference plus, without duplication, an amount in cash
equal to all accumulated and unpaid dividends per share (including an
amount in cash equal to a prorated dividend for the period from the last
Dividend Payment Date through such date); provided that if any holders of
Series C Preferred Stock tender their shares pursuant to the Offer to
Purchase, the Corporation shall be required to purchase a proportional
amount of the Series D Preferred Stock.
(b) The Offer to Purchase must take place on a Business Day (the
"Change of Control Payment Date") not later than 30 days following the
Change of Control Date. On the Change of Control Payment Date, the
Corporation shall (A) accept for payment the Series C Preferred Stock
validly tendered pursuant to the Offer to Purchase, (B) pay to the holders
of shares so accepted the purchase price therefor in cash and (C) cancel
and retire each surrendered certificate. Unless the Corporation defaults in
the payment for the Series C Preferred Stock tendered pursuant to the Offer
to Purchase, dividends will cease to accrue with respect to the Series C
Preferred Stock tendered and all rights of holders of such tendered shares
will terminate, except for the right to receive payment therefor.
(c) The Corporation will comply with any securities laws and
regulations, to the extent such laws and regulations are applicable to the
repurchase of the Series C Preferred Stock in connection with an Offer to
Purchase.
(d) Notwithstanding anything to the contrary contained in this
Section 10, the Company will not repurchase or redeem any such stock
pursuant to this Section 10 until it has repurchased or repaid all
outstanding debt obligations pursuant to rights triggered pursuant to the
terms thereof resulting from the Change of Control in question.
11. Reports. So long as any of the Series C Preferred Stock is
outstanding, in the event the Corporation is not required to file quarterly
and annual financial reports with the Securities and Exchange Commission
pursuant to Section 13 or Section 15(d) of the Exchange Act, the
Corporation will furnish the holders of the Series C Preferred Stock with
reports containing the same information as would be required in such
reports.
12. General Provisions. (a) The term "person" as used herein
means any corporation, limited liability company, partnership, trust,
organization, association, other entity or individual.
(b) The term "outstanding", when used with reference to shares of
stock, shall mean issued shares, excluding shares held by the Corporation
or a subsidiary of the Corporation.
(c) The headings of the sections, paragraphs, subparagraphs,
clauses and subclauses of this Certificate of Designation are for
convenience of reference only and shall not define, limit or affect any of
the provisions hereof.
<PAGE>
IN WITNESS WHEREOF, said NEXTLINK Communications, Inc. has caused
this Certificate of Designation to be signed by Gary D. Begeman, its Vice
President and Secretary this 19th day of January, 2000.
NEXTLINK COMMUNICATIONS, INC.
By: /s/ Gary D. Begeman
------------------------------
Name: Gary D. Begeman
Title: Vice President and
Secretary
EXHIBIT 4
NEXTLINK COMMUNICATIONS, INC.
CERTIFICATE OF DESIGNATION OF THE POWERS, PREFERENCES AND RELATIVE,
PARTICIPATING, OPTIONAL AND OTHER SPECIAL RIGHTS OF SERIES D CONVERTIBLE
PARTICIPATING PREFERRED STOCK AND QUALIFICATIONS, LIMITATIONS AND
RESTRICTIONS THEREOF
- ---------------------------------------------------------------------------
Pursuant to Section 151 of the
General Corporation Law of the State of Delaware
- ---------------------------------------------------------------------------
NEXTLINK Communications, Inc. (the "Corporation"), a corporation
organized and existing under the General Corporation Law of the State of
Delaware, does hereby certify that, pursuant to authority conferred upon
the board of directors of the Corporation (the "Board of Directors") by the
Corporation's Certificate of Incorporation, as amended (the "Certificate of
Incorporation"), and pursuant to the provisions of Section 151 of the
General Corporation Law of the State of Delaware, said Board of Directors
is authorized to issue Preferred Stock of the Corporation in one or more
series and the Special Committee of the Board of Directors, as authorized
by the Board of Directors, has duly approved and adopted the following
resolution on December 7, 1999 (the "Resolution"):
RESOLVED that, pursuant to the authority vested in the Board
of Directors by its Certificate of Incorporation, the Special
Committee, as authorized by the Board of Directors, hereby creates,
authorizes and provides for the issuance of a series of preferred
stock of the Corporation, par value $.01 per share (such preferred
stock designated as the "Series D Convertible Participating Preferred
Stock"), consisting of 265,625 shares and having the powers,
designation, preferences, relative, participating, optional and other
special rights and the qualifications, limitations and restrictions
thereof that are set forth in the Restated Certificate of
Incorporation and in this Resolution as follows:
1. Number and Designation. 265,625 shares of the Preferred Stock
of the Corporation shall constitute a series designated as "Series D
Convertible Participating Preferred Stock" (the "Series D Preferred
Stock").
2. Definitions. Unless the context otherwise requires, when used
herein the following terms shall have the meaning indicated.
"Board of Directors" means the Board of Directors of the
Corporation.
"Business Day" means any day except Saturday, Sunday and any day
which shall be a legal holiday or a day on which banking institutions in
New York City, New York generally are authorized or required by law or
other governmental actions to close.
"Capital Stock" means, with respect to any person, any and all
shares, interests, participations, rights in, or other equivalents (however
designated and whether voting and/or non-voting) of such person's capital
stock, whether outstanding on the Issue Date or issued after the Issue
Date, and any and all rights (other than any evidence of indebtedness),
warrants or options exchangeable for or convertible into such capital
stock.
"Change of Control" will be deemed to have occurred at such time
as any of the following occur: (i) any person or any persons acting
together that would constitute a "group" for purposes of Section 13(d) of
the Exchange Act, or any successor provision thereto (other than Eagle
River, Craig O. McCaw, Wendy P. McCaw and their respective affiliates or an
underwriter engaged in a firm commitment underwriting on behalf of the
Corporation), shall beneficially own (within the meaning of Rule 13d-3
under the Exchange Act, or any successor provision thereto) more than 50%
of the aggregate voting power of all classes of Voting Stock of the
Corporation, (ii) neither Mr. Craig O. McCaw nor any person designated by
him to the Corporation as acting on his behalf shall be a director of the
Corporation or (iii) from and after the date on which the Corporation has
redeemed indefeasibly or defeased in full its obligations in respect of its
12-1/2% Senior Notes due April 15, 2006 or defeased the covenants
applicable thereto in accordance with their terms, during any period of two
consecutive years, individuals who at the beginning of such period
constituted the Board of Directors (together with any new directors whose
election by the Board of Directors or whose nomination for election by the
shareholders of the Corporation was proposed by a vote of a majority of the
directors of the Corporation then still in office who were either directors
at the beginning of such period or whose election or nomination for
election was previously so approved) cease for any reason to constitute a
majority of the Board of Directors then in office.
"Class A Common Stock" means the Corporation's Class A Common
Stock, par value $.02 per share, now or hereafter authorized to be issued,
and any and all securities of any kind whatsoever of the Corporation which
may be exchanged for or converted into Class A Common Stock, any and all
securities of any kind whatsoever of the Corporation which may be issued on
or after the date hereof in respect of, in exchange for, or upon conversion
of shares of Class A Common Stock pursuant to a merger, consolidation,
stock split, stock dividend, recapitalization of the Corporation or
otherwise.
"Common Stock" means the Corporation's Class A Common Stock, the
Corporation's Class B Common Stock, par value $.02 per share, and any other
common stock of the Corporation.
"Current Market Price" means the average of the daily Market
Prices of the Common Stock for ten consecutive trading days immediately
preceding the date for which such value is to be computed.
"Eagle River" means Eagle River Investments, L.L.C., a limited
liability company formed under the laws of the State of Washington.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended, or any successor statute, and the rules and regulations
promulgated thereunder.
"Issue Date" means the original date of issuance of shares of
Series D Preferred Stock.
"Liquidation Preference" with respect to a share of Series D
Preferred Stock means, as at any date, $1,000.00 plus an amount equal to
any accrued and unpaid dividends with respect to such share through such
date.
"Market Price" means, with respect to the Common Stock, on any
given day, (i) the price of the last trade, as reported on the Nasdaq
National Market, not identified as having been reported late to such
system, or (ii) if the Common Stock is so traded, but not so quoted, the
average of the last bid and ask prices, as those prices are reported on the
Nasdaq National Market, or (iii) if the Common Stock is not listed or
authorized for trading on the Nasdaq National Market or any comparable
system, the average of the closing bid and asked prices as furnished by two
members of the National Association of Securities Dealers, Inc. selected
from time to time by the Corporation for that purpose. If the Common Stock
is not listed and traded in a manner that the quotations referred to above
are available for the period required hereunder, the Market Price per share
of Common Stock shall be deemed to be the fair value per share of such
security as determined in good faith by the Board of Directors of the
Corporation.
"Net Realizable FMV" means, with respect to a share of Common
Stock, if calculable, the amount of gross proceeds net of underwriters'
discounts, commissions or other selling expenses received by or to be
received by the holder in connection with the sale of such share of Common
Stock on a when issued basis or immediately after the conversion or, in all
other cases, an amount equal to 97% of the Current Market Price of the
Common Stock.
"Series C Designation" means the Certificate of Designation for
the Series C Preferred Stock.
"Series C Preferred Stock" means the Series C Cumulative
Convertible Participating Preferred Stock, par value $.01 per share, of the
Corporation.
"Voting Stock" means, with respect to any person, the Capital
Stock of any class or kind ordinarily having the power to vote for the
election of directors or other members of the governing body of such
person.
3. Rank. (a) The Series C Preferred Stock and Series D Preferred
Stock each will, with respect to dividend rights and rights on liquidation,
winding-up and dissolution, rank (i) senior to the Corporation's 6-1/2%
Cumulative Convertible Preferred Stock, par value $.01 per share, all
classes of Common Stock and to each other class of Capital Stock of the
Corporation or series of Preferred Stock of the Corporation established
hereafter by the Board of Directors of the Corporation the terms of which
do not expressly provide that such class or series ranks senior to, or on a
parity with, the Series C Preferred Stock and Series D Preferred Stock as
to dividend rights and rights on liquidation, winding-up and dissolution of
the Corporation (collectively referred to, together with all classes of
Common Stock of the Corporation, as "Junior Securities"); (ii) on a parity
with each class of Capital Stock of the Corporation or series of Preferred
Stock of the Corporation established hereafter by the Board of Directors of
the Corporation, the terms of which expressly provide that such class or
series will rank on a parity with the Series C Preferred Stock and Series D
Preferred Stock as to dividend rights and rights on liquidation, winding-up
and dissolution (collectively referred to as "Parity Securities"); and
(iii) junior to the Corporation's 14% Senior Exchangeable Redeemable
Preferred Shares, par value $.01 per share (the "Senior Exchangeable
Redeemable Preferred Shares"), and to each class of Capital Stock of the
Corporation or series of Preferred Stock of the Corporation established
hereafter by the Board of Directors of the Corporation in accordance with
Section 9(d) hereof, the terms of which expressly provide that such class
or series will rank senior to the Series C Preferred Stock and Series D
Preferred Stock as to dividend rights and rights on liquidation, winding-up
and dissolution of the Corporation (collectively referred to as "Senior
Securities"); provided that the relative powers, rights and preferences of
the Series C Preferred Stock and Series D Preferred Stock vis-a-vis the
other shall be as set forth herein and in the Series C Designation.
(b) The respective definitions of Junior Securities, Parity
Securities and Senior Securities shall also include any warrants, rights,
options or other securities exercisable or exchangeable for or convertible
into any of the Junior Securities, Parity Securities and Senior Securities,
as the case may be.
(c) The Series D Preferred Stock shall be subject to the creation
of Junior Securities and Parity Securities and, to the extent permitted by
Section 9(d), Senior Securities.
4. Dividends. So long as any shares of Series D Preferred Stock
are outstanding, if the Corporation pays a dividend in cash, securities or
other property on the Common Stock then at the same time the Corporation
shall declare and pay a dividend on each share of Series D Preferred Stock
in an amount equal to the Series D Per Share Participation Amount. The
"Series D Per Share Participation Amount" means, as at any date, 62.5% of
the amount of dividends that would be paid with respect to the Series C
Preferred Stock and Series D Preferred Stock taken together if converted
into Common Stock on the date established as the record date with respect
to such dividend on the Common Stock divided by the number of shares of
Series D Preferred Stock then outstanding.
5. Liquidation Preference. (a) In the event of any liquidation,
dissolution or winding-up of the Corporation, whether voluntary or
involuntary, after any payment or distribution of the assets of the
Corporation (whether capital or surplus) shall be made to or set apart for
the holders of Senior Securities, and before any payment or distribution of
the assets of the Corporation (whether capital or surplus) shall be made to
or set apart for the holders of Junior Securities, the holders of the
shares of Series C Preferred Stock and Series D Preferred Stock taken
together shall be entitled to receive an amount in cash equal to the
greater of (x) the aggregate Liquidation Preferences (as set forth herein
and in the Series C Designation) of the shares of Series C Preferred Stock
and Series D Preferred Stock as of the date of liquidation, or (y) the
aggregate amount that would have been received with respect to the shares
of Series C Preferred Stock and Series D Preferred Stock if such stock had
been converted to Common Stock immediately prior to such liquidation,
dissolution or winding-up. If, upon any liquidation, dissolution or
winding-up of the Corporation, the assets of the Corporation, or proceeds
thereof, shall be insufficient to pay in full the aforesaid amounts under
clause (x) of the preceding sentence and liquidating payments on all Parity
Securities, then such assets, or proceeds thereof, shall (i) be distributed
among the shares of Series C Preferred Stock and the Series D Preferred
Stock taken together and all such other Parity Securities ratably in
accordance with the respective amounts that would be payable on such shares
of Preferred Stock and any such other Parity Securities if all amounts
payable thereon were paid in full and (ii) the amount distributable under
clause (i) to the Series C Preferred Stock and Series D Preferred Stock
taken together, shall first be distributed to the Series C Preferred Stock
until it has received an amount equal to the aggregate Preference Amounts
(as defined in the Series C Designation) of all Series C Preferred Stock
outstanding as of the date of liquidation and thereafter 37.5% to the
Series C Preferred Stock and 62.5% to the Series D Preferred Stock. If,
upon any liquidation, dissolution or winding-up of the Corporation, the
assets of the Corporation, or proceeds thereof, distributable to the Series
C Preferred Stock and Series D Preferred Stock taken together shall be
sufficient to pay in full the aforesaid amounts under clause (x) of the
first sentence of this subsection 5(a) then such amount shall first be
distributed to the Series C Preferred Stock until it has received an amount
equal to the aggregate Preference Amounts (as defined in the Series C
Designation) of all Series C Preferred Stock outstanding as of the date of
liquidation and thereafter 37.5% to the Series C Preferred Stock and 62.5%
to the Series D Preferred Stock. Any amounts distributed with respect to
the Series D Preferred Stock pursuant to this paragraph 5(a) shall be
allocated pro rata among the shares of Series D Preferred Stock. For the
purposes of this paragraph 5, neither the sale, conveyance, exchange or
transfer (for cash, shares of stock, securities or other consideration) of
all or substantially all of the property or assets of the Corporation nor
the consolidation or merger of the Corporation with or into one or more
other entities shall be deemed to be a liquidation, dissolution or
winding-up of the Corporation.
(b) Subject to the rights of the holders of any Parity
Securities, after payment shall have been made in full to the holders of
the Series C Preferred Stock and the Series D Preferred Stock taken
together, as provided in this paragraph 5, any other series or class or
classes of Junior Securities shall, subject to the respective terms and
provisions (if any) applying thereto, be entitled to receive any and all
assets remaining to be paid or distributed, and the holders of the Series D
Preferred Stock, Series C Preferred Stock and any Parity Securities shall
not be entitled to share therein.
6. Redemption. (a) The Series D Preferred Stock shall not be
redeemable by the Corporation prior to the later of (i) the fifth
anniversary of the Issue Date and (ii) the date on which the Corporation
has redeemed indefeasibly or defeased in full its obligations in respect of
its 12-1/2% Senior Notes due April 15, 2006 or defeased the covenants
applicable thereto in accordance with their terms (the "Redemption Trigger
Date"). On and after the Redemption Trigger Date, to the extent the
Corporation shall have funds legally available for such payment, and
subject to the rights of the holders pursuant to Section 8 hereof, the
Corporation may redeem at its option shares of Series D Preferred Stock, at
any time in whole or from time to time in part, at a redemption price per
share equal to the Liquidation Preference as of the date fixed for
redemption, without interest; provided that the Corporation shall only be
entitled to redeem shares of the Series D Preferred Stock if shares of the
Series C Preferred Stock are also redeemed on a proportional basis based on
the percentage of each series of shares outstanding at such time.
(b) Pursuant to the Series C Designation, to the extent the
Corporation shall have funds legally available therefor, during the 180-day
period commencing on the tenth anniversary of the Issue Date, the holders
of the Series C Preferred Stock shall have the right to cause the
Corporation to redeem at any time in whole or from time to time in part
outstanding shares of Series C Preferred Stock, if any, at a redemption
price per share in cash equal to the Liquidation Preference (as set forth
in the Series C Designation), without interest; provided that upon any such
election the Corporation shall be required to redeem a proportional amount
of the Series D Preferred Stock.
(c) Shares of Series D Preferred Stock which have been issued and
reacquired by the Corporation in any manner, including shares purchased or
redeemed, shall (upon compliance with any applicable provisions of the laws
of the State of Delaware) be retired and have the status of authorized and
unissued shares of the class of Preferred Stock undesignated as to series
and may be redesignated and reissued as part of any series of the Preferred
Stock; provided that no such issued and reacquired shares of Series D
Preferred Stock shall be reissued or sold as Series D Preferred Stock.
(d) If the Corporation is unable or shall fail to discharge its
obligation to redeem outstanding shares of Series C Preferred Stock and
Series D Preferred Stock pursuant to paragraph 6(b) (the "Mandatory
Redemption Obligation"), the Mandatory Redemption Obligation shall be
discharged as soon as the Corporation is able to discharge such Mandatory
Redemption Obligation. If and so long as any Mandatory Redemption
Obligation with respect to the Series C Preferred Stock and Series D
Preferred Stock shall not be fully discharged, the Corporation shall not
(i) directly or indirectly, redeem, purchase, or otherwise acquire any
Parity Security or discharge any mandatory or optional redemption, sinking
fund or other similar obligation in respect of any Parity Securities or
(ii) declare or make any Junior Securities Distribution (as defined in the
Series C Designation), or, directly or indirectly, discharge any mandatory
or optional redemption, sinking fund or other similar obligation in respect
of any Junior Securities.
7. Procedure for Redemption. (a) In the event that fewer than all
the outstanding shares of Series D Preferred Stock are to be redeemed, in
the case of Section 6(a), the number of shares to be redeemed shall be
determined by the Board of Directors and the shares to be redeemed shall be
selected pro rata (with any fractional shares being rounded to the nearest
whole shares). Notwithstanding anything in Section 6 to the contrary, the
Corporation shall only redeem shares of Series D Preferred Stock pursuant
to Section 6(a) or 6(b) on a proportional basis based on the percentage of
each series of shares outstanding at such time.
(b) In the event the Corporation shall redeem shares of Series D
Preferred Stock pursuant to Section 6(a), notice of such redemption shall
be given by first class mail, postage prepaid, mailed not less than 30 days
nor more than 60 days prior to the redemption date, to each holder of
record of the shares to be redeemed at such holder's address as the same
appears on the stock register of the Corporation; provided that neither the
failure to give such notice nor any defect therein shall affect the
validity of the giving of notice for the redemption of any share of Series
D Preferred Stock to be redeemed except as to the holder to whom the
Corporation has failed to give said notice or except as to the holder whose
notice was defective. Each such notice shall state: (i) the redemption
date; (ii) the number of shares of Series D Preferred Stock to be redeemed
and, if fewer than all the shares held by such holder are to be redeemed,
the number of shares to be redeemed from such holder; (iii) the redemption
price; (iv) the place or places where certificates for such shares are to
be surrendered for payment of the redemption price; and (v) that dividends
on the shares to be redeemed will cease to accrue on such redemption date.
(c) Notice having been mailed as aforesaid, if applicable, from
and after the redemption date, dividends on the shares of Series D
Preferred Stock so called for redemption shall cease to accrue, and all
rights of the holders thereof as stockholders of the Corporation (except
the right to receive from the Corporation the redemption price and except
the right to convert shares so called for redemption prior to the close of
business on the date immediately preceding the date fixed for such
redemption) shall cease. Upon surrender in accordance with said notice, if
applicable, of the certificates for any shares so redeemed (properly
endorsed or assigned for transfer, if the Board of Directors shall so
require and the notice shall so state), such shares shall be redeemed by
the Corporation at the redemption price aforesaid. In case fewer than all
the shares represented by any such certificate are redeemed, a new
certificate shall be issued representing the unredeemed shares without cost
to the holder thereof.
8. Conversion. (a) (i) Pursuant to the provisions of the Series C
Designation, the holders of shares of Series C Preferred Stock have the
right, at any time in whole and from time to time in part, at such holders'
option, to convert any or all outstanding shares (and fractional shares) of
Series C Preferred Stock held by such holders into fully paid and
non-assessable shares of Class A Common Stock. Upon the exercise by any
holder of Series C Preferred Stock of its conversion option, a proportional
amount, based on the percentage of each series of shares outstanding, of
the Series D Preferred Stock shall automatically convert into fully paid
and non-assessable shares of Class A Common Stock, subject to the
provisions of this Section 8. At any time and from time to time the
outstanding shares of Series C Preferred Stock and Series D Preferred Stock
taken together shall be convertible into a number of shares of Class A
Common Stock (the "Aggregate Conversion Shares") equal to the aggregate
Liquidation Preferences of the shares of the Series C Preferred Stock and
the Series D Preferred Stock as set forth herein and in the Series C
Designation as of the date of conversion divided by $63.25, subject to
adjustment from time to time pursuant to paragraph 8(g) hereof (the
"Conversion Price"). The Series D Preferred Stock outstanding as at any
date shall be convertible into a number of shares of Class A Common Stock
(the "Aggregate Series D Conversion Shares") equal to .625 times the
excess, if any, of (A) the Aggregate Conversion Shares over (B) the
aggregate Preference Amounts (as defined in the Series C Designation) with
respect to all outstanding shares of Series C Preferred Stock divided by
the Net Realizable FMV of a share of Class A Common Stock at the time of
conversion. Each share of Series D Preferred Stock being converted shall
convert into a number of shares of Class A Common Stock equal to the
Aggregate Series D Conversion Shares divided by the number of shares of
Series D Preferred Stock then outstanding. Notwithstanding any call for
redemption pursuant to Section 6(a), the holders' right to convert shares
so called for redemption shall terminate at the close of business on the
date immediately preceding the date fixed for such redemption unless the
Corporation shall default in making payment of the amount payable upon such
redemption.
(ii) In the case of any partial conversion of Series C
Preferred Stock by the holders thereof, selection of the Series D Preferred
Stock for automatic conversion will be made by the Corporation in
compliance with the requirements of the principal national securities
exchange, if any, on which the Series D Preferred Stock is listed, or if
the Series D Preferred Stock is not listed on a national securities
exchange, on a pro rata basis, by lot or such other method as the
Corporation, in its sole discretion, shall deem fair and appropriate;
provided, however, that the Corporation may redeem all the shares held by
holders of fewer than 5 shares of Series D Preferred Stock (or all of the
shares held by the holders who would hold less than 5 shares of Series D
Preferred Stock as a result of such redemption) as may be determined by the
Corporation. The Corporation shall provide prompt written notice (including
the number of shares so converted) of the automatic conversion of shares of
Series D Preferred Stock pursuant to this paragraph 8 to the holders of
record of the shares so converted.
(b) (i) Promptly upon receipt of notice of automatic conversion
of shares of Series D Preferred Stock pursuant to paragraph 8(a) (including
the number of shares to be so converted), the holder of the shares of
Series D Preferred Stock so converted shall surrender the certificate
representing such shares at the principal executive offices of the
Corporation. Unless the shares issuable on conversion are to be issued in
the same name as the name in which such shares of Series D Preferred Stock
are registered, each certificate so surrendered shall be accompanied by
instruments of transfer, in form satisfactory to the Corporation, duly
executed by the holder or the holder's duly authorized attorney, and an
amount sufficient to pay any transfer or similar tax.
(ii) As promptly as practicable after the surrender by the
holder of the certificates for shares of Series D Preferred Stock as
aforesaid, the Corporation shall issue and shall deliver to such holder, or
on the holder's written order to the holder's transferee, (x) a certificate
or certificates for the whole number of shares of Class A Common Stock
issuable upon the conversion of such shares in accordance with the
provisions of this paragraph 8, (y) any cash adjustment required pursuant
to Section 8(f), and (z) in the event of a conversion in part, a
certificate or certificates for the whole number of shares of Series D
Preferred Stock not being so converted.
(iii) Each conversion of shares of Series D Preferred Stock
pursuant to paragraph 8(a) shall be deemed to have been effected
immediately prior to the close of business on the date on which the
certificates for shares of Series C Preferred Stock shall have been
surrendered and the notice of election to convert received by the
Corporation in accordance with the procedures set forth in Section 8 of the
Series C Designation, and the person in whose name or names any certificate
or certificates for shares of Class A Common Stock shall be issuable upon
such conversion shall be deemed to have become the holder of record of the
shares of Class A Common Stock represented thereby at such time on such
date and such conversion shall be into a number of whole shares of Class A
Common Stock in respect of the shares of Series D Preferred Stock being
converted as determined in accordance with this Section 8 at such time on
such date. All shares of Class A Common Stock delivered upon conversion of
the Series D Preferred Stock will upon delivery be duly and validly issued
and fully paid and non-assessable, free of all liens and charges and not
subject to any preemptive rights. Upon automatic conversion of shares of
Series D Preferred Stock, the shares so converted shall no longer be deemed
to be outstanding and all rights of a holder with respect to such converted
shares shall immediately terminate except the right to receive the Class A
Common Stock and other amounts payable pursuant to this paragraph 8 and a
certificate or certificates representing the shares of Series D Preferred
Stock not converted.
(c) (i) Upon delivery to the Corporation by a holder of shares of
Series C Preferred Stock of a notice of election to convert, the right of
the Corporation to redeem the applicable shares of Series D Preferred Stock
shall terminate, regardless of whether a notice of redemption has been
mailed as aforesaid.
(ii) If a holder of Series C Preferred Stock delivers to the
Corporation a certificate therefor and a notice of election to convert, the
Series D Preferred Stock to be converted shall cease to accrue dividends
pursuant to paragraph 4.
(iii) Except as provided above and in paragraph 8(g), the
Corporation shall make no payment or adjustment for accrued and unpaid
dividends on shares of Series D Preferred Stock, whether or not in arrears,
on conversion of such shares or for dividends theretofore paid on the
shares of Class A Common Stock.
(d) (i) The Corporation covenants that it will at all times
reserve and keep available, free from preemptive rights, such number of its
authorized but unissued shares of Class A Common Stock as shall be required
for the purpose of effecting conversions of the Series D Preferred Stock.
(ii) Prior to the delivery of any securities which the
Corporation shall be obligated to deliver upon conversion of the Series D
Preferred Stock, the Corporation shall comply with all applicable federal
and state laws and regulations which require action to be taken by the
Corporation.
(e) The Corporation will pay any and all documentary stamp or
similar issue or transfer taxes payable in respect of the issue or delivery
of shares of Class A Common Stock on conversion of the Series D Preferred
Stock pursuant hereto; provided that the Corporation shall not be required
to pay any tax which may be payable in respect of any transfer involved in
the issue or delivery of shares of Class A Common Stock in a name other
than that of the holder of the Series D Preferred Stock to be converted and
no such issue or delivery shall be made unless and until the person
requesting such issue or delivery has paid to the Corporation the amount of
any such tax or has established, to the satisfaction of the Corporation,
that such tax has been paid.
(f) In connection with the conversion of any shares of Series D
Preferred Stock, no fractions of shares of Class A Common Stock shall be
required to be issued to the holder of such shares of Series D Preferred
Stock, but in lieu thereof the Corporation shall pay a cash adjustment in
respect of such fractional interest in an amount equal to such fractional
interest multiplied by the Market Price per share of Class A Common Stock
on the business day next preceding the business day on which such shares of
Series D Preferred Stock are deemed to have been converted.
(g) (i) In case the Corporation shall at any time after the Issue
Date (A) declare a dividend or make a distribution on Common Stock payable
in Common Stock (other than dividends or distributions payable to holders
of the Series D Preferred Stock including dividends paid as contemplated by
Section 4(f)), (B) subdivide or split the outstanding Common Stock, (C)
combine or reclassify the outstanding Common Stock into a smaller number of
shares, (D) issue any shares of its Capital Stock in a reclassification of
Common Stock (including any such reclassification in connection with a
consolidation or merger in which the Corporation is the continuing
corporation), or (E) consolidate with, or merge with or into, any other
person, the Conversion Price in effect at the time of the record date for
such dividend or distribution or on the effective date of such subdivision,
split, combination, consolidation, merger or reclassification shall be
adjusted so that the conversion of the Series D Preferred Stock after such
time shall entitle the holder to receive the aggregate number of shares of
Common Stock or other securities of the Corporation (or other securities
into which such shares of Common Stock have been converted, exchanged,
combined, consolidated, merged or reclassified pursuant to clause
8(g)(i)(C), 8(g)(i)(D) or 8(g)(i)(E) above) which, if the Series D
Preferred Stock had been converted immediately prior to such time, such
holder would have owned upon such conversion and been entitled to receive
by virtue of such dividend, distribution, subdivision, split, combination,
consolidation, merger or reclassification. Such adjustment shall be made
successively whenever an event listed above shall occur.
(ii) In case the Corporation shall issue or sell any Common
Stock (or rights, options, warrants or other securities convertible into or
exercisable or exchangeable for shares of Common Stock) without
consideration or for a consideration per share (or having a conversion,
exchange or exercise price per share) less than the Current Market Price on
the date of such issuance (or, in the case of convertible or exchangeable
or exercisable securities, less than the Current Market Price as of the
date of issuance of the rights, options, warrants or other securities in
respect of which shares of Common Stock were issued) then, and in each such
case, the Conversion Price shall be reduced to an amount determined by
multiplying (A) the Conversion Price in effect on the day immediately prior
to such date by (B) a fraction, the numerator of which shall be the sum of
(1) the number of shares of Common Stock outstanding immediately prior to
such sale or issuance multiplied by the then applicable Current Market
Price (such Current Market Price, the "Adjustment Price") and (2) the
aggregate consideration receivable by the Corporation for the total number
of shares of Common Stock so issued (or into or for which the rights,
options, warrants or other securities are convertible, exercisable or
exchangeable), and the denominator of which shall be the sum of (x) the
total number of shares of Common Stock outstanding immediately prior to
such sale or issue and (y) the number of additional shares of Common Stock
issued (or into or for which the rights, options, warrants or other
securities may be converted, exercised or exchanged), multiplied by the
Adjustment Price. In case any portion of the consideration to be received
by the Corporation shall be in a form other than cash, the fair market
value of such noncash consideration shall be utilized in the foregoing
computation. Such fair market value shall be determined in good faith by
the Board of Directors.
(iii) In case the Corporation shall fix a record date for
the issuance on a pro rata basis of rights, options or warrants to the
holders of its Common Stock or other securities entitling such holders to
subscribe for or purchase shares of Common Stock (or securities convertible
into or exercisable or exchangeable for shares of Common Stock) at a price
per share of Common Stock (or having a conversion, exercise or exchange
price per share of Common Stock, in the case of a security convertible
into, or exerciseable or exchangeable for, shares of Common Stock) less
than the Current Market Price on such record date, the maximum number of
shares of Common Stock issuable upon exercise of such rights, options or
warrants (or conversion of such convertible securities) shall be deemed to
have been issued and outstanding as of such record date and the Conversion
Price shall be adjusted pursuant to paragraph 8(g)(ii) hereof, as though
such maximum number of shares of Common Stock had been so issued for an
aggregate consideration payable by the holders of such rights, options,
warrants or other securities prior to their receipt of such shares of
Common Stock. In case any portion of such consideration shall be in a form
other than cash, the fair market value of such noncash consideration shall
be determined as set forth in paragraph 8(g)(ii) hereof. Such adjustment
shall be made successively whenever such record date is fixed; and in the
event that such rights, options or warrants are not so issued or expire in
whole or in part unexercised, or in the event of a change in the number of
shares of Common Stock to which the holders of such rights, options or
warrants are entitled (other than pursuant to adjustment provisions therein
comparable to those contained in this paragraph 8(g)), the Conversion Price
shall again be adjusted as follows: (A) in the event that all of such
rights, options or warrants expire unexercised, the Conversion Price shall
be the Conversion Price that would then be in effect if such record date
had not been fixed; (B) in the event that less than all of such rights,
options or warrants expire unexercised, the Conversion Price shall be
adjusted pursuant to paragraph 8(g)(ii) to reflect the maximum number of
shares of Common Stock issuable upon exercise of such rights, options or
warrants that remain outstanding (without taking into effect shares of
Common Stock issuable upon exercise of rights, options or warrants that
have lapsed or expired); and (C) in the event of a change in the number of
shares of Common Stock to which the holders of such rights, options or
warrants are entitled, the Conversion Price shall be adjusted to reflect
the Conversion Price which would then be in effect if such holder had
initially been entitled to such changed number of shares of Common Stock.
Notwithstanding anything herein to the contrary, no further adjustment to
the Conversion Price shall be made upon the issuance or sale of Common
Stock upon the exercise of any rights, options or warrants to subscribe for
or purchase Common Stock, if any adjustment in the Conversion Price was
made or required to be made upon the record date for the issuance or sale
of such rights, options or warrants under this clause 8(g)(iii).
Notwithstanding anything herein to the contrary, no adjustment in the
Conversion Price shall be made under this clause 8(g)(iii) to the extent
the holders of Series D Preferred Stock participate in any such
distribution in accordance with Section 4 hereof.
(iv) In case the Corporation shall fix a record date for the
making of a distribution to all holders of any class of Common Stock
(including any such distribution made in connection with a consolidation or
merger in which the Corporation is the continuing corporation) of evidences
of indebtedness, assets or other property, the Conversion Price to be in
effect after such record date shall be determined by multiplying the
Conversion Price in effect immediately prior to such record date by a
fraction, (A) the numerator of which shall be the Conversion Price
immediately prior to such distribution less the fair market value
(determined as set forth in paragraph 8(g)(ii) hereof) of the portion of
the assets, other property or evidence of indebtedness so to be distributed
which is applicable to one share of Common Stock, and (B) the denominator
of which shall be the Conversion Price immediately prior to such
distribution. Such adjustments shall be made successively whenever such a
record date is fixed; and in the event that such distribution is not so
made, the Conversion Price shall again be adjusted to be the Conversion
Price which would then be in effect if such record date had not been fixed.
An adjustment to the Conversion Price also shall be made in respect of
dividends and distributions paid exclusively in cash to all holders of
Common Stock (excluding any dividend or distribution in connection with the
liquidation, dissolution or winding-up of the Corporation, whether
voluntary or involuntary, and any cash that is distributed upon a merger,
consolidation or other transaction for which an adjustment pursuant to
paragraph 8(g)(i) is made) where the sum of (1) all such cash dividends and
distributions made within the preceding 12 months in respect of which no
adjustment has been made and (2) any cash and the fair market value
(determined as set forth in paragraph 8(g)(ii) hereof)of other
consideration paid in respect of any repurchases of Common Stock by the
Corporation or any of its subsidiaries within the preceding 12 months in
respect of which no adjustment has been made, exceeds 2% of the
Corporation's market capitalization (being the product of the then Current
Market Price of the Common Stock times the aggregate number of shares of
Common Stock then outstanding on the record date for such distribution).
The Conversion Price to be in effect after such adjustment shall be
determined by subtracting from the Conversion Price in effect prior to such
adjustment an amount equal to the quotient of (A) the sum of clause (1) and
clause (2) above and (B) the number of shares of Common Stock outstanding
on the date such adjustment is to be determined. Notwithstanding anything
herein to the contrary, no adjustment in the Conversion Price shall be made
under this clause 8(g)(iv) to the extent the holders of Series D Preferred
Stock participate in any such distribution in accordance with Section 4
hereof.
(v) No adjustment to the Conversion Price pursuant to (a)
paragraphs 8(g)(ii), 8(g)(iii) or 8(g)(iv) above shall be required unless
such adjustment would require an increase or decrease of at least $.50 in
the Conversion Price or (b) paragraph 8(g)(ii) above shall be required with
respect to rights, options, warrants or other securities outstanding on the
Issue Date or issued pursuant to the Company's employee benefit plans in
effect on the Issue Date or reserved for issuance thereunder as of the
Issue Date or stock options granted after the Issue Date pursuant to any
stock option plans adopted by the Board of Directors so long as such
options have an exercise price not less than the Market Price on the day
preceding such grant; provided, however, that any adjustments which by
reason of this paragraph 8(g)(v)(a) are not required to be made shall be
carried forward and taken into account in any subsequent adjustment. All
calculations under this paragraph 8(g) shall be made to the nearest four
decimal points.
(vi) In the event that, at any time as a result of the
provisions of this paragraph 8(g), a holder of Series D Preferred Stock
upon subsequent conversion shall become entitled to receive any shares of
Capital Stock of the Corporation other than Common Stock, the number of
such other shares so receivable upon conversion of Series D Preferred Stock
shall thereafter be subject to adjustment from time to time in a manner and
on terms as nearly equivalent as practicable to the provisions contained
herein.
(vii) If, as a result of the operation of paragraphs
8(g)(ii), 8(g)(iii) or 8(g)(iv) above and corresponding provisions in the
Series C Designation, the cumulative number of shares of Class A Common
Stock issued or issuable upon conversion of the Series C Preferred Stock
and Series D Preferred Stock, after giving effect to (x) the adjustments
described in such paragraphs and corresponding provisions in the Series C
Designation and (y) all prior conversions of Series C Preferred Stock and
Series D Preferred Stock, would equal or exceed a number (the "Threshold
Number") equal to 20% of the outstanding shares of Class A Common Stock as
of the Issue Date and if the Company receives a written opinion of its
outside counsel that the issuance of such shares in excess of the Threshold
Number would violate the rules of the Nasdaq National Market or any other
exchange on which the Class A Common Stock is then quoted or traded, then
until and unless the Corporation obtains the approval of its common
stockholders for the issuance of any such shares of Class A Common Stock in
excess of the Threshold Number, the holders shall only be entitled to
exercise their conversion rights with respect to a maximum number of Series
C and Series D Preferred Stock that would not result in an amount of shares
of Class A Common Stock being issued in excess of the Threshold Number, but
in any case, the Conversion Price shall be adjusted as provided in such
paragraphs. If, as a result of the operation of the preceding sentence, the
conversion rights of the holders of Series D Preferred Stock are limited by
operation thereof because appropriate stockholder approval has not been
obtained, the Corporation agrees for the benefit of the holders of Series C
Preferred Stock and Series D Preferred Stock to use its reasonable best
efforts to seek, as promptly as reasonably practicable, the requisite
approval of its common stockholders (and shall seek such approval as often
as necessary to obtain such approval), and will recommend to its
stockholders that they vote in favor of a resolution providing for such
approval, for the amount of shares of Class A Common Stock that would be
issued or issuable upon conversion in full of all outstanding Series C and
Series D Preferred Stock. Notwithstanding anything to the contrary set
forth above, the holders of Series C Preferred Stock and Series D Preferred
Stock shall be entitled to exercise such holders' conversion rights in full
(after giving effect to any and all anti-dilution adjustments resulting
from operation of paragraphs 8(g)(ii), 8(g)(iii) or 8(g)(iv)) in connection
with any merger, consolidation or other transaction in which such Series C
Preferred Stock, Series D Preferred Stock or Class A Common Stock is being
converted into or exchanged for cash, securities or other property in
connection with such merger, consolidation or other transaction. In the
event that the Corporation elects to redeem the shares of Series C
Preferred Stock and Series D Preferred Stock at a time when the holders'
right to convert such shares into Class A Common Stock is limited as
provided in this paragraph (g), and such holders seek to exercise such
conversion rights prior to the date fixed for redemption in accordance with
this Section 8 (the "Redemption Date"), then if the total number of shares
of Class A Common Stock issued or issuable upon conversion of such shares,
after giving effect to any adjustments provided under the first sentence of
this section (the "Cumulative Number"), would exceed the Threshold Number,
the holders shall be entitled to convert such number of shares of Series C
Preferred Stock and Series D Preferred Stock into a number of shares of
Class A Common Stock up to the Threshold Number, and with respect to the
balance of such shares, the Corporation shall cancel such shares and shall
pay the holders in lieu thereof an amount in cash equal to (a)(i) the
Cumulative Number minus (ii) the Threshold Number multiplied by (b) the
Market Price per share of Class A Common Stock on the business day next
preceding the business day which is deemed the Redemption Date.
(h) All adjustments pursuant to this paragraph 8 shall be
notified to the holders of the Series D Preferred Stock and such notice
shall be accompanied by a schedule of computations of the adjustments.
9. Voting Rights. (a) The holders of record of shares of Series D
Preferred shall be entitled to vote on an as-converted basis (calculated in
accordance with Section 8(a) as of the close of trading on the last trading
day of the most recently ended fiscal quarter of the Corporation) with the
Common Stock as a single class on all matters presented to the holders of
the Common Stock for vote, except as hereinafter provided in this Section 9
or as otherwise provided by law. So long as the provisions of Section
9(b)(i) entitle the holders of Series D Preferred Stock to designate the
Series D Designee (as defined below), the holders of Series D Preferred
Stock shall not be entitled to vote as to the election of other directors
of the Corporation.
(b) (i) On the Issue Date, the Board of Directors shall cause the
total number of directors then constituting the whole Board of Directors to
be increased by two and the holders of the outstanding shares of Series C
Preferred Stock shall be entitled to designate one director (the "Series C
Designee") for election to the Board of Directors of the Corporation and,
voting separately as a series, shall have the exclusive right to vote for
the election of such designee to the Board of Directors, and the holders of
the outstanding shares of Series D Preferred Stock shall be entitled to
designate one director (the "Series D Designee") for election to the Board
of Directors of the Corporation and, voting separately as a series, shall
have the exclusive right to vote for the election of such designee to the
Board of Directors; provided that, notwithstanding the foregoing, after the
Issue Date, (i) the holders of the outstanding shares of Series C Preferred
Stock shall continue to be entitled to designate the Series C Designee for
election to the Board of Directors and, voting separately as a series,
shall continue to have the exclusive right to vote for the election of the
Series C Designee to the Board of Directors, and the holders of the
outstanding shares of the Series D Preferred Stock shall continue to be
entitled to designate the Series D Designee for election to the Board of
Directors and, voting separately as a series, shall continue to have the
exclusive right to vote for the election of the Series D Designee to the
Board of Directors, in each case, for as long as, and only for as long as,
at least 40% of the aggregate number of shares of Series C Preferred Stock
issued on the original date of issuance of the Series C Preferred Stock and
of shares of Series D Preferred Stock issued on the Issue Date (such
aggregate number of shares of Series C Preferred Stock and Series D
Preferred Stock being referred to herein as the "Total C and D Shares")
remains outstanding; (ii) the entitlement of the holders of outstanding
shares of Series D Preferred Stock to designate one director for election
to the Board of Directors, and the exclusive right of the holders of
outstanding shares of Series D Preferred Stock to vote, separately as a
series, for the election of such designee to the Board of Directors, shall
cease immediately upon 20% or less of the Total C and D Shares being
outstanding, and the holders of the outstanding shares of Series D
Preferred Stock shall be entitled to designate one board observer (the
"Series D Board Observer"), for as long as, and only for as long as, 20% or
less (but at least one share of Series D Preferred Stock) of the Total C
and D Shares remains outstanding; (iii) immediately upon no shares of
Series D Preferred Stock issued on the Series D Issue Date being
outstanding, the entitlement of the holders of outstanding shares of Series
D Preferred Stock to designate the Series D Board Observer, and the rights
of such Board Observer, shall cease; and (iv) immediately upon 20% or less
of the Total C and D Shares being outstanding, the Board of Directors shall
cause the total number of directors then constituting the whole Board of
Directors to be decreased by one, and the term of office of the Series D
Designee shall terminate. The Series D Designee may be removed with or
without cause by the holders of the shares of Series D Preferred Stock. The
"Series D Board Observer" means a person who shall not be a member of the
Board of Directors and who shall have the rights as agreed to with the
Corporation, provided that such rights shall satisfy the requirement of
contractual management rights for purposes of the Department of Labor's
"plan assets" regulation.
(ii) If and whenever the Corporation shall have failed to
discharge its Mandatory Redemption Obligation or the Corporation shall have
failed to comply with Section 9(d) hereof, the total number of directors
then constituting the whole Board of Directors automatically shall be
increased by one and the holders of outstanding shares of Series D
Preferred Stock, voting separately as a single series, shall be entitled to
elect one additional director to serve on the Board of Directors at any
annual meeting of stockholders or special meeting held in place thereof, or
at a special meeting of the holders of the Series D Preferred Stock called
as hereinafter provided. Whenever the Corporation shall have fulfilled its
Mandatory Redemption Obligation, then the right of the holders of the
outstanding shares of the Series D Preferred Stock to elect such additional
director shall cease (but subject always to the same provisions for the
vesting of such voting rights in the case of any future failure to fulfill
any Mandatory Redemption Obligation), and the term of office of any person
elected as director by the holders of outstanding shares of Series D
Preferred Stock pursuant to this subparagraph (b)(ii) shall forthwith
terminate and the total number of directors then constituting the whole
Board of Directors automatically shall be reduced by one. At any time after
voting power to elect one additional director shall have become vested and
be continuing in the holders of outstanding shares of Series D Preferred
Stock pursuant to this subparagraph (b)(ii), or if a vacancy shall exist in
the office of a director elected by the holders of outstanding shares of
Series D Preferred Stock pursuant to this subparagraph (b)(ii), a proper
officer of the Corporation may, and upon the written request of the holders
of record of at least twenty-five percent (25%) of the shares of Series D
Preferred Stock then outstanding addressed to the Secretary of the
Corporation shall, call a special meeting of the holders of Series D
Preferred Stock, for the purpose of electing the one additional director
which such holders are entitled to elect pursuant to this subparagraph
(b)(ii). If such meeting shall not be called by a proper officer of the
Corporation within twenty (20) days after personal service of said written
request upon the Secretary of the Corporation, or within twenty (20) days
after mailing the same within the United States by certified mail,
addressed to the Secretary of the Corporation at its principal executive
offices, then the holders of record of at least twenty-five percent (25%)
of the outstanding shares of Series D Preferred Stock may designate in
writing one of their number to call such meeting at the expense of the
Corporation, and such meeting may be called by the person so designated
upon the notice required for the annual meeting of stockholders of the
Corporation and shall be held at the place for holding the annual meetings
of stockholders. Any holder of Series D Preferred Stock so designated shall
have, and the Corporation shall provide, access to the lists of
stockholders to be called pursuant to the provisions hereof.
(c) Without the written consent of holders of a majority of the
outstanding shares of Series D Preferred Stock or the affirmative vote of
holders of a majority of the outstanding shares of Series D Preferred Stock
at a meeting of the holders of Series D Preferred Stock called for such
purpose, the Corporation will not amend, alter or repeal any provision of
the Restated Certificate of Incorporation or this Certificate of
Designation so as to adversely affect the preferences, rights or powers of
the Series D Preferred Stock or to authorize the issuance of, or to issue
any, additional shares of Series D Preferred Stock; provided that any such
amendment that changes any dividend or other amount payable on or the
liquidation preference of the Series D Preferred Stock shall require the
written consent of holders of two-thirds of the outstanding shares of
Series D Preferred Stock or the affirmative vote of holders of two-thirds
of the outstanding shares of Series D Preferred Stock at a meeting of the
holders of Series D Preferred Stock called for such purpose.
(d) Without the written consent of holders of a majority of the
outstanding shares of Series D Preferred Stock or the affirmative vote of
holders of a majority of the outstanding shares of Series D Preferred Stock
at a meeting of such holders called for such purpose, the Corporation will
not create, authorize or issue any (i) Parity Securities or (ii) Senior
Securities except Senior Securities issued in accordance with paragraph
(f)(ii) of the Certificate of Designation for the Senior Exchangeable
Redeemable Preferred Shares as in effect on December 3, 1999.
(e) Subject to the provisions of Sections 8 and 10 hereof, the
Corporation may, without the consent of any holder of Series D Preferred
Stock, consolidate with or merge with or into, or convey, transfer or lease
all or substantially all its assets as an entirety to, any Person, provided
that: (1) the successor, transferee or lessee (if not the Corporation) is
organized and existing under the laws of the United States of America or
any State thereof or the District of Columbia and the Series D Preferred
Stock shall be converted into or exchanged for and shall become shares of,
or interests in, such successor, transferee or lessee, having in respect of
such successor, transferee, or lessee substantially the same powers,
preferences and relative, participating, optional or other special rights
and the qualifications, limitations or restrictions thereof, that the
Series D Preferred Stock has immediately prior to such transaction; and (2)
the Corporation delivers to the transfer agent an officers' certificate and
an opinion of counsel stating that such consolidation, merger, conveyance,
transfer or lease complies with this Certificate of Designation. In the
event of any consolidation or merger or conveyance, transfer or lease of
all or substantially all of the assets of the Corporation that is permitted
pursuant to this paragraph (e), the successor resulting from such
consolidation or into which the Corporation is merged or the transferee or
lessee to which such conveyance, transfer or lease is made, will succeed
to, and be substituted for, and may exercise every right and power of, the
Corporation with respect to the Series D Preferred Stock (or shares or
interests into, or for which, the Series D Preferred Stock is converted or
exchanged), and thereafter, except in the case of a lease, the predecessor
(if still in existence) shall be released from its obligations and
covenants with respect to the Series D Preferred Stock.
(f) In exercising the voting rights set forth in this paragraph
9, each share of Series D Preferred Stock shall have one vote per share.
Except as otherwise required by applicable law or as set forth herein, the
shares of Series D Preferred Stock shall not have any relative,
participating, optional or other special voting rights and powers and the
consent of the holders thereof shall not be required for the taking of any
corporate action.
10. Change of Control. (a) Pursuant to the Series C Designation,
within thirty days of a Change of Control (the date of such occurrence
being the "Change of Control Date"), the Corporation shall notify the
holders of the Series C Preferred Stock of such occurrence and shall be
required to make an offer (the "Offer to Purchase") to each holder of
shares of Series C Preferred Stock (subject to the rights of the holders
pursuant to Section 8 hereof) to repurchase such holder's shares of Series
C Preferred Stock, or such portion thereof as may be determined by such
holder, at a price per share in cash equal to 101% of the Liquidation
Preference plus, without duplication, an amount in cash equal to all
accumulated and unpaid dividends per share (including an amount in cash
equal to a prorated dividend for the period from the last Dividend Payment
Date through such date); provided that if any holders of Series C Preferred
Stock tender their shares pursuant to the Offer to Purchase, the
Corporation shall be required to purchase a proportional amount of the
Series D Preferred Stock.
(b) The Offer to Purchase must take place on a Business Day (the
"Change of Control Payment Date") not later than 30 days following the
Change of Control Date. On the Change of Control Payment Date, the
Corporation shall (A) accept for payment any Series D Preferred Stock
required to be purchased, (B) pay to the holders of shares so accepted the
purchase price therefor in cash and (C) cancel and retire each surrendered
certificate. Unless the Corporation defaults in the payment for the Series
D Preferred Stock required to be purchased pursuant to Section 10(a)
hereof, dividends will cease to accrue with respect to the Series D
Preferred Stock purchased and all rights of holders of such tendered shares
will terminate, except for the right to receive payment therefor.
(c) The Corporation will comply with any securities laws and
regulations, to the extent such laws and regulations are applicable to the
repurchase of the Series D Preferred Stock in connection with an Offer to
Purchase.
(d) Notwithstanding anything to the contrary contained in this
Section 10, the Company will not repurchase or redeem any such stock
pursuant to this Section 10 until it has repurchased or repaid all
outstanding debt obligations pursuant to rights triggered pursuant to the
terms thereof resulting from the Change of Control in question.
11. Reports. So long as any of the Series D Preferred Stock is
outstanding, in the event the Corporation is not required to file quarterly
and annual financial reports with the Securities and Exchange Commission
pursuant to Section 13 or Section 15(d) of the Exchange Act, the
Corporation will furnish the holders of the Series D Preferred Stock with
reports containing the same information as would be required in such
reports.
12. General Provisions. (a) The term "person" as used herein
means any corporation, limited liability company, partnership, trust,
organization, association, other entity or individual.
(b) The term "outstanding", when used with reference to shares of
stock, shall mean issued shares, excluding shares held by the Corporation
or a subsidiary of the Corporation.
(c) The headings of the sections, paragraphs, subparagraphs,
clauses and subclauses of this Certificate of Designation are for
convenience of reference only and shall not define, limit or affect any of
the provisions hereof.
<PAGE>
IN WITNESS WHEREOF, said NEXTLINK Communications, Inc. has caused
this Certificate of Designation to be signed by Gary D. Begeman, its Vice
President and Secretary this 19th day of January, 2000.
NEXTLINK COMMUNICATIONS, INC.
By: /s/ Gary D. Begeman
------------------------------
Name: Gary D. Begeman
Title: Vice President and
Secretary
EXHIBIT 5
ASSIGNMENT AND ASSUMPTION AGREEMENT
-----------------------------------
Assignment and Assumption Agreement, dated as of January 19, 2000
(this "Agreement"), by and between Forstmann Little & Co. Equity
Partnership-VI, L.P., a Delaware limited partnership (the "Assignor"), and
FL Fund, L.P., a Delaware limited partnership (the "Assignee").
WHEREAS, pursuant to the Stock Purchase Agreement, dated as of
December 7, 1999 (the "Stock Purchase Agreement"), among the Assignor,
Forstmann Little & Co. Subordinated Debt and Equity Management Buyout
Partnership-VII, L.P., a Delaware limited partnership ("MBO-VII"), and
NEXTLINK Communications, Inc., a Delaware corporation ("NEXTLINK"), the
Assignor and MBO-VII have collectively agreed to purchase 265,625 shares of
Series D Convertible Participating Preferred Stock of NEXTLINK (the "Series
D Preferred") for an aggregate purchase price of $265,625,000 and to
purchase 584,375 shares of Series C Cumulative Convertible Participating
Preferred Stock of NEXTLINK for an aggregate purchase price of
$584,375,000;
WHEREAS, pursuant to section 8.6 of the Stock Purchase Agreement,
the Assignor is permitted to assign its rights and obligations under the
Stock Purchase Agreement to an Affiliate (as defined in the Stock Purchase
Agreement) of the Assignor;
WHEREAS, the Assignee is an Affiliate of the Assignor;
WHEREAS, the Assignor wishes to assign, and the Assignee wishes
to assume, the Assignor's rights and obligations under the Stock Purchase
Agreement relating to the purchase of 550 shares of Series D Preferred in
accordance with the terms of the Stock Purchase Agreement.
NOW, THEREFORE, for good and valuable consideration, the receipt
of which is hereby acknowledged, the parties hereby agree as follows (all
terms used herein and not otherwise defined herein shall have the meanings
given to them in the Stock Purchase Agreement):
1. Assignment. The Assignor hereby expressly assigns to the
Assignee the Assignor's right under the Stock Purchase Agreement relating
to the purchase of 550 shares of Series D Preferred in accordance with the
terms of the Stock Purchase Agreement; provided that in no event shall such
assignment release the Assignor from its obligations and liabilities under
the Stock Purchase Agreement.
2. Assumption. The Assignee hereby expressly assumes all of the
Assignor's rights under the Stock Purchase Agreement relating to the
purchase of 550 shares of Series D Preferred in accordance with the terms
of the Stock Purchase Agreement; provided that in no event shall such
assumption release the Assignor from its obligations and liabilities under
the Stock Purchase Agreement. The Assignee hereby represents and warrants
to NEXTLINK, as of the date hereof and as of the date of the Closing, the
representations and warranties made by the Assignor and MBO-VII to NEXTLINK
pursuant to Article III of the Stock Purchase Agreement, which
representations and warranties are incorporated herein by reference.
3. Binding Effect. This Agreement shall be binding upon and inure
to the benefit of the parties hereto and their respective successors and
assigns.
4. Parties in Interest. This Agreement shall be binding upon and
inure solely to the benefit of each party hereto, and nothing in this
Agreement, express or implied, is intended to or shall confer upon any
other person any right, benefit or remedy of any nature whatsoever under or
by reason of this Agreement. Notwithstanding the above, NEXTLINK shall be a
third party beneficiary of this Agreement.
5. Amendment and Modifications. This Agreement may be amended,
modified or supplemented only by the written agreement of the party against
whom enforcement of such amendment, modification or supplement is sought.
6. Governing Law. This Agreement and the rights and obligations
of the parties hereto shall be governed by, and construed in accordance
with, the laws of the State of New York, without giving effect to the
principles of conflicts of law thereof.
7. Headings; Counterparts. The headings and captions contained
herein are for convenience only and shall not control or affect the meaning
or construction of any provision hereof. This Agreement may be executed in
any number of counterparts, each of which shall be deemed to be an original
and which together shall constitute one and the same instrument.
<PAGE>
IN WITNESS WHEREOF, the parties have executed this Assignment and
Assumption Agreement as of the date first above written.
FORSTMANN LITTLE & CO. EQUITY
PARTNERSHIP-VI, L.P.
By: FLC XXXII Partnership, L.P.
its general partner
By: /s/ Winston W. Hutchins
---------------------------------
Winston W. Hutchins,
a general partner
FL FUND, L.P.
By: FLC XXXI Partnership, L.P.
its general partner
By: FLC XXIX Partnership, L.P.
a general partner
By: /s/ Winston W. Hutchins
-----------------------------
Winston W. Hutchins,
a general partner
EXHIBIT 6
JOINT FILING AGREEMENT
The undersigned acknowledge and agree that the foregoing
statement on Schedule 13D is filed on behalf of each of the undersigned and
that all subsequent amendments to this statement shall be filed on behalf
of each of the undersigned without the necessity of filing additional joint
filing agreements. The undersigned acknowledge that each shall be
responsible for the timely filing of such amendments, and for the
completeness and accuracy of the information concerning it contained
therein, but shall not be responsible for the completeness and accuracy of
the information concerning the others, except to the extent that it knows
or has reason to believe that such information is inaccurate.
This Agreement may be executed in counterparts and each of such
counterparts taken together shall constitute one and the same instrument.
Dated: January 25, 2000
FORSTMANN LITTLE & CO.
SUBORDINATED DEBT AND EQUITY
MANAGEMENT BUYOUT
PARTNERSHIP-VII, L.P.
By: FLC XXXIII Partnership
its general partner
By: /s/ Winston W. Hutchins
----------------------------
Winston W. Hutchins,
a general partner
FORSTMANN LITTLE & CO. EQUITY
PARTNERSHIP-VI, L.P.
By: FLC XXXII Partnership, L.P.
its general partner
By: /s/ Winston W. Hutchins
----------------------------
Winston W. Hutchins,
a general partner
FL FUND, L.P.
By: FLC XXXI Partnership, L.P.
its general partner
By: FLC XXIX Partnership, L.P.
a general partner
By: /s/ Winston W. Hutchins
------------------------
Winston W. Hutchins,
a general partner
