<PAGE> 1
EXHIBIT 4.4
CERTIFICATE OF DESIGNATIONS
OF
6.75% REDEEMABLE CUMULATIVE CONVERTIBLE PREFERRED STOCK
SETTING FORTH THE POWERS, PREFERENCES, RIGHTS, QUALIFICATIONS,
LIMITATIONS AND RESTRICTIONS OF SUCH PREFERRED STOCK
Pursuant to Section 151 of the Delaware General Corporation Law,
Williams Communications Group, Inc., a Delaware corporation (the "Company"),
does hereby certify that the Board of Directors of the Company (the "Board of
Directors") and the Special Committee of the Board of Directors (the "Special
Committee"), pursuant to and in accordance with authority validly delegated to
the Special Committee by resolutions duly adopted by the Board of Directors,
duly adopted the following resolution and that such resolution has not been
modified and is in full force and effect:
RESOLVED that, pursuant to the authority vested in the Board of
Directors (including as delegated to the Special Committee) in accordance with
the provisions of the Restated Certificate of Incorporation of the Company (the
"Certificate of Incorporation"), a series of preferred stock of the Company is
hereby created and the designation and number of shares thereof and the voting
powers, preferences and relative, participating, optional and other special
rights of the shares of such series, and the qualifications, limitations and
restrictions thereof, are as set forth below in this Certificate of Designations
(this "Certificate"):
SECTION 1. NUMBER; DESIGNATION; REGISTERED FORM. (a) The shares of such
series shall be designated as "6.75% Redeemable Cumulative Convertible Preferred
Stock" (the "Preferred Stock") and shall have a par value of $.01 per share. The
number of shares constituting the Preferred Stock shall initially be 5,750,000.
Certificates for shares of Preferred Stock shall be issuable only in registered
form.
(b) All shares of Preferred Stock redeemed, purchased,
exchanged, converted or otherwise acquired by the Company shall be retired and
canceled and, upon the taking of any action required by applicable law, shall be
restored to the status of authorized but unissued shares of Preferred Stock of
the Company, without designation as to series, and may thereafter be reissued.
(c) Capitalized terms used herein and not otherwise defined
shall have the respective meanings set forth in Section 11 below.
SECTION 2. RANKING. The Preferred Stock shall, with respect to dividend
rights and rights upon liquidation, winding-up or dissolution, rank:
(a) senior to the Common Stock, the Class B Common Stock and
any other class or series of Capital Stock of the Company, the terms of which do
not expressly provide that such class or series ranks senior to or on a parity
with the Preferred Stock as to dividend rights and rights on liquidation,
winding-up and dissolution of the Company (collectively, the "Junior Stock");
(b) on a parity with any other class or series of Capital
Stock of the Company, the terms of which expressly provide that such class or
series ranks on a parity with the Preferred Stock as to dividend rights and
rights on liquidation, winding-up and dissolution of the Company (collectively,
the "Parity Stock"); and
(c) junior to each class or series of Capital Stock of the
Company, the terms of which expressly provide that such class or series ranks
senior to the Preferred Stock as to dividend rights and rights on liquidation,
winding-up and dissolution of the Company (collectively, the "Senior Stock").
<PAGE> 2
SECTION 3. DIVIDENDS. (a) The holders of shares of Preferred Stock
shall be entitled to receive, when, as and if declared by the Board of Directors
out of funds legally available therefor, dividends on the shares of Preferred
Stock, cumulative from the first date of issuance of any such shares (the
"Initial Issuance Date"), at a rate per annum equal to 6.75% of the Liquidation
Preference per share, payable in cash. Dividends on the shares of Preferred
Stock shall be payable quarterly in arrears on January 15, April 15, July 15 and
October 15 of each year, or if any such date is not a Business Day, on the next
succeeding Business Day (each such date, a "Dividend Payment Date", and each
such quarterly period, a "Dividend Period"), beginning on January 15, 2001, in
preference to and in priority over dividends on any Junior Stock but subject to
the rights of any holders of Senior Stock or Parity Stock. Such dividends shall
be paid to the holders of record of the shares of Preferred Stock as they appear
on the applicable Record Date. As used herein, the term "Record Date" means,
with respect to the dividends payable on January 15, April 15, July 15 and
October 15 of each year, January 1, April 1, July 1 and October 1 of each year,
respectively, or such other record date, not more than 60 days and not less than
10 days preceding the applicable Dividend Payment Date, as shall be fixed by the
Board of Directors. Dividends on the shares of Preferred Stock shall be fully
cumulative and shall accumulate (whether or not there are funds of the Company
legally available for the payment of dividends) from the Initial Issuance Date
(or the last Dividend Payment Date for which dividends were paid, whichever is
later) based on a 360-day year comprised of twelve 30-day months. Arrearages of
unpaid dividends for any past Dividend Period and dividends in connection with
any optional redemption may be declared and paid at any time, without reference
to any Dividend Payment Date, to holders of record on such date, not more than
45 days prior to the payment thereof, as may be fixed by the Board of Directors.
(b) No dividend whatsoever shall be declared or paid upon, or
any sum set apart for the payment of dividends upon, any outstanding share of
Preferred Stock with respect to any dividend period unless all dividends for all
preceding dividend periods have been declared and paid, or declared and a
sufficient sum set apart for the payment of such dividends, upon all outstanding
shares of Preferred Stock.
(c) No dividend shall be declared or paid or set apart for
payment or other distribution declared or made, whether in cash, obligations or
shares of Capital Stock of the Company or other property, directly or
indirectly, upon any shares of Junior Stock or Parity Stock, nor shall any
shares of Junior Stock or Parity Stock be redeemed, repurchased or otherwise
acquired for consideration by the Company through a sinking fund or otherwise,
unless all accumulated and unpaid dividends, including Special Dividends, if
any, through the most recent Dividend Payment Date (whether or not there are
funds of the Company legally available for the payment of dividends) on the
shares of Preferred Stock and any Parity Stock have been or contemporaneously
are declared and paid in full or set apart for payment; provided, however, that,
notwithstanding any provisions of this paragraph (c) to the contrary, the
Company shall be entitled to (i) declare and pay dividends on shares of Junior
Stock payable solely in shares of Junior Stock and on shares of Parity Stock
payable solely in shares of Parity Stock or Junior Stock, or in each case, by an
increase in the liquidation preference of the Junior Stock or Parity Stock, and
(ii) redeem, repurchase or otherwise acquire Junior Stock or Parity Stock in
exchange for consideration consisting of Junior Stock, in the case of Junior
Stock, or Parity Stock or Junior Stock, in the case of Parity Stock. When
dividends are not paid in full, as aforesaid, upon the shares of Preferred
Stock, all dividends declared on the Preferred Stock and any other Parity Stock
shall be declared and paid either (A) pro rata so that the amount of dividends
so declared on the shares of Preferred Stock and each such other class or series
of Parity Stock shall in all cases bear to each other the same ratio as
accumulated dividends on the shares of Preferred Stock and such class or series
of Parity Stock bear to each other or (B) on another basis that is at least as
favorable to the holders of the Preferred Stock entitled to receive such
dividends.
(d) All dividends paid with respect to shares of Preferred
Stock pursuant to this Section 3 shall be paid pro rata to the holders entitled
thereto. Holders of the Preferred Stock will not be entitled to any dividends,
whether payable in cash, property or stock, in excess of the full cumulative
dividends as herein described. In the event that the equivalent of six quarterly
dividends payable on the shares of Preferred Stock are accumulated and unpaid
(whether or not consecutive and whether or not declared), the holders will have
the rights and remedies set forth in Section 6(c).
2
<PAGE> 3
(e) The Company shall have the option to pay all or any part
of a dividend by delivering shares of Common Stock to the transfer agent for the
Preferred Stock (the "Transfer Agent") to be resold for cash. In such case, the
Company shall be obligated to deliver to the Transfer Agent a number of shares
of Common Stock which, when resold by the Transfer Agent, shall result in net
cash proceeds sufficient to pay the applicable dividend in cash to the holders
of shares of Preferred Stock. All shares of Common Stock that the Company may
deliver to the Transfer Agent as provided in this paragraph (e) shall be
registered under the Securities Act of 1933, as amended (the "Securities Act").
(f) (i) Upon the occurrence of a Registration Default,
additional dividends ("Special Dividends") will accumulate on the
Preferred Stock, from and including the date of such Registration
Default to but excluding the day on which such Registration Default has
been cured. In the event of each such Registration Default, the Company
shall pay Special Dividends to each holder of Preferred Stock at a rate
per annum equal to 0.50% of the Liquidation Preference of the Preferred
Stock, which shall accumulate from the date of the Registration Default
to and including the 90th day following such Registration Default, and
shall increase by 0.25% per annum of the Liquidation Preference for
each subsequent 90-day period; provided, however, that such Special
Dividends may not accumulate at any time at a rate greater than 1.00%
per annum of the Liquidation Preference of the Preferred Stock in the
aggregate regardless of the number of Registration Defaults then in
effect. Following the cure of all Registration Defaults, the
accumulation of Special Dividends with respect to such Preferred Stock
shall cease (without in any way limiting the effect of any subsequent
Registration Default).
(ii) If, after the cure of all Registration Defaults then in
effect, there is a subsequent Registration Default, the Special
Dividends for such subsequent Registration Default shall initially be
0.25% per annum of the Liquidation Preference of the Preferred Stock,
regardless of the Special Dividends in effect with respect to any prior
Registration Default at the time of the cure of such Registration
Default.
(iii) The Company shall notify the Transfer Agent within five
Business Days after each and every date on which a Registration Default
occurs. Special Dividends shall be paid by the Company to the record
Holders of shares of Preferred Stock on each Dividend Payment Date in
the manner provided for payment of regular dividends. Each obligation
to pay Special Dividends shall be deemed to commence accumulating on
the date of the applicable Registration Default and to cease
accumulating when all Registration Defaults have been cured.
SECTION 4. LIQUIDATION PREFERENCE. Each share of Preferred Stock will
have a preference on liquidation equal to $50.00 per share (the "Liquidation
Preference").
(a) Upon any voluntary or involuntary liquidation, dissolution
or winding-up of the Company, each holder of shares of Preferred Stock shall be
entitled to payment out of the assets of the Company available for distribution
of an amount equal to the then effective Liquidation Preference per share of
Preferred Stock held by such holder, plus all accumulated and unpaid dividends,
including Special Dividends, if any, thereon to the date of such liquidation,
dissolution or winding-up, before any distribution is made on any Junior Stock,
including, without limitation, the Common Stock, but after any distributions on
any Senior Stock. After payment in full of the then- effective Liquidation
Preference and all accumulated and unpaid dividends, including Special
Dividends, if any, to which holders of shares of Preferred Stock are entitled,
such holders shall not be entitled to any further participation in any
distribution of assets of the Company. If, upon any voluntary or involuntary
liquidation, dissolution or winding-up of the Company, the amounts payable with
respect to shares of Preferred Stock and all other Parity Stock are not paid in
full, the holders of shares of Preferred Stock and the holders of the Parity
Stock shall share equally and ratably in any distribution of assets of the
Company in proportion to the full Liquidation Preference and all accumulated and
unpaid dividends, including Special Dividends, if any, to which each such holder
is entitled.
3
<PAGE> 4
(b) Neither the voluntary sale, conveyance, exchange or
transfer (for cash, shares of stock, securities or other consideration) of all
or substantially all of the property or assets of the Company nor the
consolidation, merger or amalgamation of the Company with or into any
corporation or the consolidation, merger or amalgamation of any corporation with
or into the Company shall be deemed to be a voluntary or involuntary
liquidation, dissolution or winding-up of the Company.
(c) No funds are required to be set aside to protect the
Liquidation Preference of the shares of Preferred Stock, although such
Liquidation Preference will be substantially in excess of the par value of the
shares of the Preferred Stock.
SECTION 5. REDEMPTION. Shares of Preferred Stock shall be redeemable by
the Company as provided below.
(a) Optional Redemption. The shares of Preferred Stock shall
not be redeemable prior to October 15, 2005 (the "Initial Redemption Date").
After the Initial Redemption Date, the shares of Preferred Stock shall be
subject to redemption at any time or from time to time at the option of the
Company, in whole or in part, upon not less than 30 nor more than 60 days prior
notice sent by first class mail to each holder's registered address, at a price,
payable in cash, equal to the percentage set forth below of the Liquidation
Preference per share for redemption during the 12-month period beginning on the
dates indicated below, plus, in each case, an amount equal to accumulated and
unpaid dividends, including Special Dividends, if any, thereon (the "Optional
Redemption Price"), whether or not there are funds of the Company legally
available for the payment of dividends, to the Redemption Date (except to the
extent payable to a holder of Preferred Stock on a dividend payment Record Date
prior to the Redemption Date).
<TABLE>
<CAPTION>
Period Redemption Price
------ ----------------
<S> <C>
October 15, 2005......................................... 103.38%
October 15, 2006......................................... 102.70%
October 15, 2007......................................... 102.03%
October 15, 2008......................................... 101.35%
October 15, 2009......................................... 100.68%
October 15, 2010 and thereafter.......................... 100.00%
</TABLE>
(b) Mandatory Redemption. On October 15, 2012, the Company
shall be obligated to redeem all outstanding shares of Preferred Stock for cash,
upon not less than 30 nor more than 60 days notice sent by first class mail to
each holder's registered address, at a price (the "Mandatory Redemption Price"),
payable in cash, equal to 100.00% of the Liquidation Preference per share, plus
accumulated and unpaid dividends, including Special Dividends, if any, to the
Redemption Date (except to the extent payable to a holder of Preferred Stock on
a dividend payment Record Date prior to the Redemption Date).
(c) Redemption Procedures. (i) In the event that fewer than
all of the shares of Preferred Stock are to be redeemed pursuant to
this Section 5, the Company shall call for redemption shares of
Preferred Stock pro rata among the holders, based on the number of
shares of Preferred Stock held by each holder (with adjustments to
avoid fractional shares), except that the Company may redeem all of the
shares of Preferred Stock held by any holders of fewer than 100 shares
of Preferred Stock (or all the shares of Preferred Stock held by
holders who would hold less than 100 shares of Preferred Stock as a
result of such redemption). If fewer than all the shares of Preferred
Stock represented by any share certificate are to be so redeemed, (i)
the Company shall issue a new certificate for the shares not redeemed
and (ii) if any shares represented thereby are converted before
termination of the conversion right with respect to such shares, such
converted shares shall be deemed (so far as may be) to be the shares
represented by such share certificate that was selected for redemption.
4
<PAGE> 5
(ii) In the event the Company elects to effect an
optional redemption, the Company shall (i) make a public announcement
of the redemption and (ii) give a redemption notice (the "Redemption
Notice") to the holders not fewer than 30 days nor more than 60 days
before the Redemption Date. Whenever a Redemption Notice is required to
be delivered to the holders, such Redemption Notice shall provide the
information set forth below and be given by first class mail, postage
prepaid to each holder of shares of Preferred Stock to be redeemed, at
such holder's address appearing in the Preferred Stock register. All
Redemption Notices shall identify the Preferred Stock to be redeemed
(including CUSIP number) and shall state:
(A) the Redemption Date;
(B) the Redemption Price;
(C) if fewer than all outstanding shares of Preferred Stock
are to be redeemed, the identification (and, in the case of partial
redemption, the certificate number, the total number of shares
represented thereby and the number of such shares being redeemed on the
Redemption Date) of the particular shares of Preferred Stock to be
redeemed;
(D) that, on the Redemption Date, the Redemption Price to the
Redemption Date, will become due and payable upon each such share of
Preferred Stock to be redeemed and that dividends thereon will cease to
accumulate on and after said date;
(E) the Conversion Price, the date on which the right to
convert Preferred Stock to be redeemed will terminate and the place or
places where such Preferred Stock may be surrendered for conversion;
and
(F) the place of places where such Preferred Stock is to be
surrendered for payment of the Redemption Price.
The Redemption Notice shall be given by the Company or, at the
Company's request, by the Registrar in the name and at the expense of
the Company; provided, that if the Company so requests, it shall
provide the Registrar adequate time, as reasonably determined by the
Registrar, to deliver such notices in a timely fashion.
(iii) Prior to any Redemption Date, the Company shall
deposit with the Registrar or with a Paying Agent (or, if the Company
is acting as its own Paying Agent, segregate and hold in trust) an
amount of consideration sufficient to pay the Redemption Price of all
shares of Preferred Stock which are to be redeemed on that date other
than any Preferred Stock called for redemption on that date that have
been converted into shares of Common Stock prior to the date of such
deposit. If any shares of Preferred Stock called for redemption are
converted, any consideration deposited with the Registrar or with any
Paying Agent or so segregated and held in trust for the redemption of
such shares of Preferred Stock shall (subject to any right of the
holder of such Preferred Stock to receive accumulated but unpaid
dividends, including Special Dividends, if any, thereon as provided in
Section 7) be paid or delivered to the Company upon Company Order or,
if then held by the Company, shall be discharged from such trust.
(iv) Notice of redemption having been given as
aforesaid, the Redemption Price of the Preferred Stock so to be
redeemed shall, on the Redemption Date, become due and payable, and
from and after such date (unless the Company shall default in the
payment of the Redemption Price), such shares of Preferred Stock shall
no longer be outstanding, dividends on such Preferred Stock shall cease
to accumulate, such shares shall cease to be convertible into Common
Stock and all rights of the holders thereof as stockholders of the
Company (except the right to receive the Redemption Price) shall cease.
Upon surrender of any such share
5
<PAGE> 6
of Preferred Stock for redemption in accordance with said notice, such
share of Preferred Stock shall be redeemed by the Company at the
Redemption Price.
(v) Any certificate that represents more than one
share of Preferred Stock and is to be redeemed only in part shall be
surrendered at any office or agency of the Company designated for that
purpose (with, if the Company or the Registrar so requires, due
endorsement by, or a written instrument of transfer in form
satisfactory to the Company and the Registrar duly executed by, the
holder thereof or such holder's attorney duly authorized in writing),
and the Company shall execute, and the Registrar shall countersign and
deliver to the holder of such shares of Preferred Stock without service
charge, a new certificate or certificates, representing any number of
shares of Preferred Stock, as requested by such holder, in an aggregate
amount equal to and in exchange for the number of shares not redeemed
and represented by the certificate so surrendered.
(vi) In the event that the Redemption Date occurs
after a dividend payment Record Date and prior to the related Dividend
Payment Date, the holders of the shares of Preferred Stock at the close
of business on such dividend payment Record Date shall be entitled to
receive the dividend payable on such shares on the corresponding
Dividend Payment Date.
(vii) No optional redemption may be authorized or
made unless, prior to giving the applicable Redemption Notice, all
accumulated and unpaid dividends, including Special Dividends, if any,
for periods ended prior to the date of such Redemption Notice shall
have been paid in cash.
SECTION 6. VOTING RIGHTS. (a) The holders of shares of Preferred Stock
shall be entitled to vote with the holders of Common Stock on all matters
submitted for a vote of holders of Common Stock and, on such matters, each
holder of shares of Preferred Stock shall be entitled to a number of votes equal
to that number of shares of Common Stock into which such holder's shares of
Preferred Stock are then convertible.
(b) The affirmative vote of the holders of at least a majority
of the outstanding shares of Preferred Stock, voting as a single class with
holders of shares of all other classes and series of preferred stock affected in
the same way, in person or by proxy, at a special or annual meeting called for
that purpose, or by written consent in lieu of meeting, will be required to
amend, alter, repeal or change, whether by merger, consolidation, combination,
reclassification or otherwise, any provisions of the Certificate of
Incorporation, the bylaws of the Company or this Certificate in any manner which
would adversely affect, alter or change the powers, preferences or special
rights of the Preferred Stock and any of those securities affected in the same
way; provided that any such amendment or alteration that changes the dividend
payable on, or the Liquidation Preference of, the Preferred Stock shall require
the affirmative vote, at a meeting of holders of Preferred Stock duly called for
such purpose, or the written consent, of each holder of a share of Preferred
Stock.
(c) (i) If, at any time, the equivalent of six quarterly
dividends payable on the shares of Preferred Stock are accumulated and
unpaid (whether or not consecutive and whether or not declared), the
holders of all outstanding shares of Preferred Stock and any Parity
Stock or Senior Stock having similar voting rights then exercisable,
voting separately as a single class without regard to series, shall be
entitled to elect at the next annual meeting of the stockholders of the
Company two directors (each, a "Preferred Stock Director") to serve
until all dividends accumulated and unpaid on any such voting shares
have been paid, or declared and funds set aside to provide for payment
in full.
(ii) The voting rights set forth in the preceding
sentence will continue until such time as all dividends in arrears on
the Preferred Stock are paid in full, at which time the term of any
Preferred Stock Director shall terminate. At any time after voting
power to elect directors shall have become vested and be continuing in
the holders of the Preferred Stock pursuant to this Section 6(c), or if
a vacancy shall exist in the offices of Preferred Stock Directors, the
Board of Directors may, and upon written request of the holders
6
<PAGE> 7
of record of at least 25% of the Outstanding Preferred Stock addressed
to the Chairman of the Board of the Company shall, call a special
meeting of the holders of the Preferred Stock for the purpose of
electing the Preferred Stock Directors that such holders are entitled
to elect. At any meeting held for the purpose of electing Preferred
Stock Directors, the presence in person or by proxy of the holders of
at least a majority of the Outstanding Preferred Stock shall be
required to constitute a quorum of such Preferred Stock. Any vacancy
occurring in the office of a Preferred Stock Director may be filled by
the remaining Preferred Stock Director unless and until such vacancy
shall be filled by the holders of the Preferred Stock. The Preferred
Stock Directors shall agree, prior to their election to office, to
resign upon any termination of the right of the holders of Preferred
Stock to vote as a class for Preferred Stock Directors as herein
provided, and upon such termination, the Preferred Stock Directors then
in office shall forthwith resign.
(d) The creation, authorization or issuance of any other class
or series of the Company's Capital Stock, any increase or decrease in the amount
of authorized capital stock of any of those classes or series or of the
Preferred Stock (other than a decrease in the amount of authorized Preferred
Stock to an amount that is less than the Outstanding Preferred Stock at the time
of such decrease), or any increase, decrease or change in the par value of any
class or series of Capital Stock, including the Preferred Stock, will not
require the consent of the holders of the Preferred Stock and will not be deemed
to affect adversely, alter or change the powers, preferences and special rights
of the shares of Preferred Stock.
SECTION 7. CONVERSION. (a) Each share of Preferred Stock shall be
convertible at any time and from time to time at the option of the holder
thereof into fully paid and nonassessable shares of Common Stock. The number of
shares of Common Stock deliverable upon conversion of a share of Preferred
Stock, adjusted as hereinafter provided, is referred to herein as the
"Conversion Ratio". The Conversion Ratio as of the Initial Issuance Date shall
be 1.7610 and shall equal the ratio the numerator of which is the Liquidation
Preference and the denominator of which is the Conversion Price (rounded to the
nearest 1/1000 of a share). The "Conversion Price" shall be $28.39, subject to
adjustment from time to time as provided in Section 8.
(b) Conversion of shares of Preferred Stock may be effected by
any holder upon the surrender to the Company, at the principal office of the
Company or at the office of the Transfer Agent as may be designated by the Board
of Directors, of the certificate or certificates for such shares of Preferred
Stock to be converted accompanied by a written notice stating that such holder
elects to convert all or a specified whole number of such shares in accordance
with the provisions of this Section 7 and specifying the name or names in which
such holder wishes the certificate or certificates for shares of Common Stock to
be issued. In case such notice shall specify a name or names other than that of
such holder, such notice shall be accompanied by payment of all transfer taxes
payable upon the issuance of shares of Common Stock in such name or names. Other
than such taxes, the Company shall pay any documentary, stamp or similar issue
or transfer taxes that may be payable in respect of any issuance or delivery of
shares of Common Stock upon conversion of shares of Preferred Stock pursuant
hereto. As promptly as practicable after the surrender of such certificate or
certificates and the receipt of such notice relating to the conversion and
payment of all required transfer taxes, if any (or the demonstration to the
satisfaction of the Company that such taxes have been paid), the Company shall
deliver or cause to be delivered (i) certificates representing the number of
validly issued, fully paid and nonassessable full shares of Common Stock to
which the holder of shares of Preferred Stock being converted (or such holder's
transferee) shall be entitled, and (ii) if less than the full number of shares
of Preferred Stock evidenced by the surrendered certificate or certificates is
being converted, a new certificate or certificates, of like tenor, for the
number of shares evidenced by such surrendered certificate or certificates less
the number of shares being converted. Such conversion shall be deemed to have
been made at the close of business on the date of giving such notice and of such
surrender of the certificate or certificates representing the shares of
Preferred Stock to be converted so that the rights of the holder thereof as to
the shares being converted shall cease except for the right to receive shares of
Common Stock and, to the extent so provided in Section 7(c), accumulated and
unpaid dividends, including Special Dividends, if any, with respect to the
shares of Preferred Stock being converted, in each case, in accordance herewith,
and the person entitled to receive the shares of Common Stock shall be treated
for all purposes as having become the record holder of such shares of Common
Stock at such time.
7
<PAGE> 8
(c) Holders of shares of Preferred Stock at the close of
business on a dividend payment Record Date will be entitled to receive the
dividend payable on such shares on the corresponding Dividend Payment Date
notwithstanding the conversion of such shares following the dividend payment
Record Date and prior to such Dividend Payment Date. However, shares of
Preferred Stock surrendered for conversion during the period between the close
of business on any dividend payment Record Date and the opening of business on
the corresponding Dividend Payment Date must be accompanied by payment of an
amount equal to the dividend payable on such shares on such Dividend Payment
Date. Notwithstanding the foregoing, if shares of Preferred Stock are converted
during the period between the close of business on any dividend payment Record
Date and the opening of business on the corresponding Dividend Payment Date, and
we have called such shares of Preferred Stock for redemption or we have given a
notice to the holders of shares of Preferred Stock that we will cause the
conversion rights of such shares to terminate, the holder who tenders such
shares for conversion will receive the dividend payable on such Dividend Payment
Date and need not include payment of the amount of such dividend upon surrender
of shares of Preferred Stock for conversion. A holder of shares of Preferred
Stock on a dividend payment Record Date who converts such shares into shares of
Common Stock on the corresponding Dividend Payment Date will receive the
dividend payable on such shares of Preferred Stock on such Dividend Payment
Date, and the converting holder need not include payment of the amount of such
dividend upon surrender of shares of Preferred Stock for conversion. Except as
provided above, we will make no payment or allowance for unpaid dividends,
whether or not in arrears, on converted shares of Preferred Stock or the
dividends on the shares of Common Stock issued upon such conversion.
(d) In case any shares of Preferred Stock are to be redeemed
pursuant to Section 5, such right of conversion shall cease and terminate, as to
the shares of Preferred Stock to be redeemed, at the close of business on the
Business Day immediately preceding the date fixed for redemption, unless the
Company shall default in the payment of the Redemption Price therefor, as
provided herein.
(e) In connection with the conversion of any shares of
Preferred Stock, no fractions of shares of Common Stock shall be issued. In lieu
thereof, the Company shall round the applicable number of shares up or down to
the nearest whole number of shares. If more than one share of Preferred Stock
shall be surrendered for conversion by the same holder at the same time, the
number of full shares of Common Stock issuable on conversion thereof shall be
computed on the basis of the total number of shares of Preferred Stock so
surrendered.
(f) The Company shall at all times reserve and keep available,
free from preemptive rights, for issuance upon the conversion of shares of
Preferred Stock such number of its authorized but unissued shares of Common
Stock as will from time to time be sufficient if necessary to permit the
conversion of all outstanding shares of Preferred Stock. Prior to the delivery
of any securities which the Company shall be obligated to deliver upon
conversion of the Preferred Stock, the Company shall comply with all applicable
federal and state laws and regulations which require action to be taken by the
Company. All shares of Common Stock delivered upon conversion of the Preferred
Stock will upon delivery be duly and validly issued and fully paid and
nonassessable, free of all liens and charges and not subject to any preemptive
rights.
SECTION 8. CONVERSION PRICE ADJUSTMENTS. (a) The Conversion Price shall
be subject to adjustment from time to time as follows:
(i) STOCK SPLITS AND COMBINATIONS. In case the
Company shall at any time or from time to time after the Initial
Issuance Date (A) subdivide or split the outstanding shares of Common
Stock, (B) combine or reclassify the outstanding shares of Common Stock
into a smaller number of shares or (C) issue by reclassification of the
shares of Common Stock any shares of Capital Stock of the Company,
then, and in each such case, the Conversion Price in effect immediately
prior to such event or the record date therefor, whichever is earlier,
shall be adjusted so that the holder of any shares of Preferred Stock
thereafter surrendered for conversion shall be entitled to receive the
number of shares of Common Stock or other securities of the Company
which such holder would have owned or have been entitled to receive
after the
8
<PAGE> 9
occurrence of any of the events described above, had such shares of
Preferred Stock been surrendered for conversion immediately prior to
the occurrence of such event or the record date therefor, whichever is
earlier. An adjustment made pursuant to this subparagraph (i) shall
become effective at the close of business on the day upon which such
corporate action becomes effective. Such adjustment shall be made
successively whenever any event listed above shall occur.
(ii) STOCK DIVIDENDS IN COMMON STOCK. In case the
Company shall at any time or from time to time after the Initial
Issuance Date pay a dividend or make a distribution in shares of Common
Stock on any class of Capital Stock of the Company other than dividends
or distributions of shares of Common Stock or other securities with
respect to which adjustments are provided in Section 8(a)(i) above, and
the total number of shares constituting such dividend or distribution
shall exceed 25% of the total number of shares of Common Stock
outstanding at the close of business on the record date fixed for
determination of stockholders entitled to receive such dividend or
distribution, the Conversion Price shall be adjusted so that the holder
of each share of Preferred Stock shall be entitled to receive upon
conversion thereof, the number of shares of Common Stock determined by
multiplying (A) the applicable Conversion Price by (B) a fraction, the
numerator of which shall be the number of shares of Common Stock
theretofore outstanding and the denominator of which shall be the sum
of such number of shares and the total number of shares issued in such
dividend or distribution. In case the total number of shares
constituting such dividend or distribution shall not exceed 25% of the
total number of shares of Common Stock outstanding at the close of
business on the record date fixed for such dividend or distribution,
such shares of Common Stock shall be considered to be issued at the
time of any such next succeeding dividend or other distribution in
which the number of shares of Common Stock issued, together with the
number of shares issued in all previous such dividends and
distributions for which no adjustment to the Conversion Price has been
made, exceeds 25% of the total number of shares of Common Stock
outstanding at the close of business on the record date for such
dividend or distribution.
(iii) ISSUANCE OF RIGHTS OR WARRANTS. In case the
Company shall issue to all holders of Common Stock rights or warrants
expiring within 45 days entitling such holders to subscribe for or
purchase Common Stock at a price per share less than the Current Market
Price, the Conversion Price in effect immediately prior to the close of
business on the record date fixed for determination of stockholders
entitled to receive such rights or warrants shall be reduced by
multiplying such Conversion Price by a fraction, the numerator of which
is the sum of the number of shares of Common Stock outstanding at the
close of business on such record date and the number of shares of
Common Stock that the aggregate offering price of the total number of
shares of Common Stock so offered for subscription or purchase would
purchase at such Current Market Price and the denominator of which is
the sum of the number of shares of Common Stock outstanding at the
close of business on such record date and the number of additional
shares of Common Stock so offered for subscription or purchase. For
purposes of this subparagraph (iii), the issuance of rights or warrants
to subscribe for or purchase securities convertible into Common Stock
shall be deemed to be the issuance of rights or warrants to purchase
the Common Stock into which such securities are convertible at an
aggregate offering price equal to the sum of the aggregate offering
price of such securities and the minimum aggregate amount (if any)
payable upon conversion of such securities into Common Stock. Such
adjustment shall be made successively whenever any such event shall
occur.
(iv) DISTRIBUTION OF INDEBTEDNESS, SECURITIES OR
ASSETS. In case the Company shall distribute to all holders of Common
Stock (whether by dividend or in a merger, amalgamation or
consolidation or otherwise) evidences of indebtedness, shares of
Capital Stock of any class or series, other securities, cash or assets
(other than Common Stock, rights or warrants referred to in
subparagraph (iii) above or a dividend payable exclusively in cash and
other than as a result of a Fundamental Change (as defined below)), the
Conversion Price in effect immediately prior to the close of business
on the record date fixed for determination of stockholders entitled to
receive such distribution shall be reduced by multiplying such
Conversion Price by a fraction, the numerator of which is the Current
Market Price on such record date less
9
<PAGE> 10
the fair market value (as determined by the Board of Directors, except
in the case of a Spin-Off (as defined below), whose determination in
good faith shall be conclusive) of the portion of such evidences of
indebtedness, shares of capital stock, other securities, cash and
assets so distributed applicable to one share of Common Stock, and the
denominator of which is the Current Market Price. Such adjustment shall
be made successively whenever any such event shall occur.
In respect of a dividend or other distribution of
shares of Capital Stock of any class or series, or similar equity
interests, of or relating to a Subsidiary or other business unit of the
Company (a "Spin-Off"), the adjustment to the Conversion Price under
this subparagraph (iv) shall occur at the earlier of (A) 20 trading
days after the effective date of the Spin-Off and (B) the date of the
Initial Public Offering of the securities being distributed in the
Spin-Off, if that Initial Public Offering is effected simultaneously
with the Spin-Off.
(v) FUNDAMENTAL CHANGES. In case any transaction or
event (including, without limitation, any merger, consolidation,
combination, recapitalization, sale of assets, tender or exchange
offer, reclassification, compulsory share exchange or liquidation)
shall occur in which all or substantially all outstanding shares of
Common Stock are converted into or exchanged or acquired for or
constitute the right to receive stock, other securities, cash, property
or assets (each, a "Fundamental Change"), the holder of each share of
Preferred Stock outstanding immediately prior to the occurrence of such
Fundamental Change shall have the right upon any subsequent conversion
to receive (but only out of legally available funds, to the extent
required by applicable law) the kind and amount of stock, other
securities, cash, property or assets that such holder would have
received if such share had been converted immediately prior thereto.
(vi) SPECIAL ADJUSTMENT FOR SOME CHANGES OF CONTROL.
In the event of a Fundamental Change that constitutes a Change of
Control in which (A) the stockholders of the Company receive
consideration per share of Common Stock that is greater than the
Conversion Price at the effective time of the Change of Control,
without giving effect to the adjustment described below, and (B) at
least 10% of the total consideration paid to the stockholders of the
Company consists of cash, cash equivalents, securities or other assets
(other than publicly traded securities) (collectively, "Non-Public
Consideration"), then upon conversion of shares of Preferred Stock
after the Change of Control, in addition to the Common Stock or other
securities deliverable upon the conversion of the Preferred Stock as
described in Section 7 and subparagraphs (i) through (v) above, the
holder will receive a number of publicly traded securities of the
acquiror determined through the following calculation:
PV Cash Flows x (Non-Public Consideration/Total Consideration)
--------------------------------------------------------------
Acquiror Stock Price
where:
PV Cash Flows = the present value of the aggregate
dividend payments that would have
been payable on the Preferred Stock
from the date of conversion through
October 15, 2005. The present value
for this purpose will be calculated
using a discount rate equal to 3.25%
plus the yield to maturity of U.S.
Treasury securities having a
maturity closest to, but not later
than, October 15, 2005;
Total
Consideration = the total value of the consideration
payable to the Company's
stockholders at the effective time
of such Change of Control, with the
value of any assets or securities
other than cash or publicly traded
securities being determined in good
faith by the Board of Directors
based on an opinion as to such value
obtained from an accounting,
appraisal or investment banking firm
of international standing; and
10
<PAGE> 11
Acquiror
Stock Price = the price per security of the
acquiror's publicly traded
securities delivered in connection
with such Change of Control at the
effective time of such Change of
Control;
provided, however, that if the consideration received by the Company's
stockholders in respect of such Change of Control consists of at least 75%
Non-Public Consideration or if the acquiror's common stock is not publicly
traded, then upon conversion of shares of Preferred Stock after such Change of
Control, in lieu of issuing additional securities of the acquiror, as set forth
in this subparagraph (vi), each holder shall be entitled to receive an
additional amount in cash calculated as follows:
PV Cash Flows x (Non-Public Consideration/Total Consideration)
(b) Anything in paragraph (a) to the contrary notwithstanding,
the Company shall not be required to give effect to any adjustment in the
Conversion Price unless and until the net effect of one or more adjustments
(each of which shall be carried forward until counted toward adjustment),
determined as above provided, shall have resulted in a change of the Conversion
Price by at least 1%, and when the cumulative net effect of more than one
adjustment so determined shall be to change the Conversion Price by at least 1%,
such change in the Conversion Price shall thereupon be given effect. In the
event that, at any time as a result of the provisions of this paragraph (b), the
holder of shares of Preferred Stock upon subsequent conversion shall become
entitled to receive any shares of Capital Stock of the Company other than Common
Stock, the number of such other shares so receivable upon conversion of shares
of 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.
(c) There shall be no adjustment of the Conversion Price in
case of the issuance of any Capital Stock of the Company in a merger,
reorganization, acquisition, reclassification, recapitalization or other similar
transaction except as provided in this Section.
(d) In any case in which paragraph (a) requires that an
adjustment as a result of any event is to become effective from and after a
record date, the Company may elect to defer until after the occurrence of such
event (i) issuing to the holder of any shares of Preferred Stock converted after
such record date and before the occurrence of such event the additional shares
of Common Stock issuable upon such conversion over and above the shares issuable
on the basis of the Conversion Price in effect immediately prior to adjustment
and (ii) paying to such holder any amount in cash in lieu of a fractional share
of Common Stock.
(e) If the Company shall take a record of the holders of its
Common Stock for the purpose of entitling them to receive a dividend or other
distribution, and shall thereafter and before the distribution to stockholders
thereof legally abandon its plan to pay or deliver such dividend or
distribution, then thereafter no adjustment in the number of shares of Common
Stock issuable upon exercise of the right of conversion or in the Conversion
Price then in effect shall be required by reason of the taking of such record.
(f) The Board of Directors shall have the power to resolve any
ambiguity or correct any error in this Section 8, and its action in so doing
shall be final and conclusive.
SECTION 9. TERMINATION OF CONVERSION RIGHTS. On or after October 15,
2005, the Company may, at its option, upon not less than 30 nor more than 60
days prior notice sent by first class mail to each holder's registered address,
cause the conversion rights of the shares of Preferred Stock set forth in
Section 7 to terminate. The Company may exercise such option only if, for at
least 20 trading days within any period of 30 consecutive trading days,
including the last trading day of such period, the daily closing price of the
Company's Common Stock exceeds 140% of the Conversion Price, subject to
adjustment as provided in Section 8.
11
<PAGE> 12
SECTION 10. CHANGE IN CONTROL. (a) If a Change of Control occurs with
respect to the Company, each holder of shares of Preferred Stock shall have the
right to require the Company to purchase all or any part of such holder's shares
of Preferred Stock at a purchase price equal to 100% of the Liquidation
Preference of such shares, plus all accumulated and unpaid dividends, including
Special Dividends, if any, on such shares to the date of purchase. Within 30
days following such Change of Control, the Company shall mail a notice to each
holder of shares of Preferred Stock describing the transaction or transactions
that constitute such Change of Control and offering to purchase such holder's
shares of Preferred Stock on the date specified in such notice, which date shall
be no earlier than 30 days and no later than 60 days from the date such notice
is mailed. The Company shall have the option to pay for such shares either
solely in cash or solely in shares of Common Stock valued at 95% of the average
closing sale price of the Common Stock for the five trading days before and
including the third trading day before the repurchase date.
(b) Holders of the Preferred Stock shall not have the right
set forth in paragraph (a) above if:
(i) the daily closing price per share of the Common
Stock for any five trading days within the period of 10 consecutive
trading days ending immediately after the later of the Change of
Control or the public announcement thereof (in the case of a Change of
Control under paragraph (a) of the definition of "Change of Control")
or the period of 10 consecutive trading days ending immediately before
the Change of Control (in the case of a Change of Control under
paragraph (b), (c) or (d) of the definition of "Change of Control")
shall equal or exceed 105% of the Conversion Price of the Preferred
Stock in effect on the date of the Change of Control or the public
announcement thereof, as applicable; or
(ii) at least 90% of the consideration in the Change
of Control transaction consists of Capital Stock traded on a U.S.
national securities exchange or quoted on the NASDAQ National Market,
and as a result of the transaction, the Preferred Stock becomes
convertible solely into such Capital Stock.
(c) The Company shall comply with the requirements of Rule
14e-1 under the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), and any other securities laws and regulations to the extent such laws and
regulations are applicable in connection with the purchase of Preferred Stock as
a result of a Change of Control with respect to the Company. To the extent that
the provisions of any securities laws or regulations conflict with any of the
provisions of this Section 10, the Company shall comply with the applicable
securities laws and regulations and shall be deemed not to have breached its
obligations under this Section 10.
(d) On the date scheduled for payment of shares of Preferred
Stock tendered to the Company for repurchase as provided in this Section 10, the
Company shall, to the extent lawful, (i) accept for payment all shares of
Preferred Stock properly tendered, (ii) deposit with the Transfer Agent an
amount equal to the purchase price of the shares of Preferred Stock so tendered
and (iii) deliver or cause to be delivered to the Transfer Agent shares of
Preferred Stock so accepted together with an officers' certificate stating the
aggregate Liquidation Preference of the shares of Preferred Stock being
purchased by the Company. The Transfer Agent shall promptly mail or deliver to
each holder of shares of Preferred Stock so tendered the applicable payment for
such shares of Preferred Stock, and the Transfer Agent shall promptly
countersign and mail or deliver, or cause to be transferred by book-entry, to
each holder new shares of Preferred Stock equal in Liquidation Preference to any
unpurchased portion of the shares of Preferred Stock surrendered, if any. The
Company shall publicly announce the results of its offer on or as soon as
practicable after the payment date for the purchase of shares of Preferred Stock
in connection with a Change of Control of the Company.
(e) The Company shall not be required to make an offer to
purchase any shares of Preferred Stock upon the occurrence of a Change of
Control of the Company if a third party makes an offer in the manner, at the
times and otherwise in compliance with the requirements described in this
Section 10 and purchases all shares of Preferred Stock validly tendered and not
withdrawn.
(f) The right of the holders of shares of Preferred Stock
described in this Section 10 will be subject to the Company's obligation to:
12
<PAGE> 13
(i) repay all obligations in full under the Company's
credit facility; and
(ii) offer to purchase and purchase all of the
Company's senior redeemable notes that have been tendered for purchase
in connection with a Change of Control that constitutes a "change of
control" under the terms of such senior redeemable notes or the
indenture relating thereto.
(g) In addition, the right of the holders of shares of
Preferred Stock described in this Section 10 shall be subject to the repurchase
or repayment of any future indebtedness of the Company that the Company is
required to repurchase or repay in connection with a transaction or event that
constitutes a Change of Control.
When the Company shall have satisfied the obligations, or repurchased
or repaid the indebtedness, described above in paragraphs (f) and (g) of this
Section 10, and, subject to the legal availability of funds for such purpose,
the Company shall purchase all shares of Preferred Stock tendered for purchase
by the Company upon a Change of Control pursuant to this Section 10.
SECTION 11. CERTAIN DEFINITIONS. As used in this Certificate, the
following terms shall have the following meanings, unless the context otherwise
requires:
"Business Day" means any day other than a Saturday, Sunday or a U.S.
federal holiday.
"Capital Stock" of any person means any and all shares, interests,
participations or other equivalents however designated of corporate stock or
other equity participations, including partnership interests, whether general or
limited, of such person and any rights (other than debt securities convertible
or exchangeable into an equity interest), warrants or options to acquire an
equity interest in such person.
"Change of Control" means, with respect to the Company, the occurrence
of any of the following:
(a) if any "person" or "group" (as such terms are used in
Section 13(d) and Section 14(d) of the Exchange Act
or any successor provisions to either of the
foregoing), including any group acting for the
purpose of acquiring, holding, voting or disposing of
securities within the meaning of Rule 13d-5(b)(1)
under the Exchange Act, other than any one or more of
the Permitted Holders, becomes the "beneficial owner"
(as defined in Rule 13d-3 under the Exchange Act,
except that a person will be deemed to have
"beneficial ownership" of all shares that any such
person has the right to acquire, whether such right
is exercisable immediately or only after the passage
of time), directly or indirectly, of 35% or more of
the total voting power of the Voting Stock of the
Company at a time when the Permitted Holders are the
"beneficial owners" (as defined in Rule 13d-3 under
the Exchange Act, except that a person will be deemed
to have "beneficial ownership" of all shares that any
such person has the right to acquire, whether such
right is exercisable immediately or only after the
passage of time), directly or indirectly, in the
aggregate of a lesser percentage of the total voting
power of the Voting Stock of the Company than such
other person or group (for purposes of this
paragraph, such person or group shall be deemed to
beneficially own any Voting Stock of a corporation
held by any other corporation so long as such person
or group beneficially owns, directly or indirectly,
in the aggregate a majority of the total voting power
of the Voting Stock of such other corporation), or
any Permitted Holder files a Schedule 13D or TO (or
any successor schedule, form or report under the
Exchange Act) in connection with a transaction or
event as a result of which (a) such person becomes
the "beneficial owner" of additional shares of Common
Stock and (b) the Common Stock ceases, or immediately
upon consummation of or immediately following such
transaction or event, will cease, to be listed on a
U.S. national securities exchange or approved for
12
<PAGE> 14
quotation on the Nasdaq National Market or any
similar U.S. system for automated dissemination of
quotations of securities prices; or
(b) if the Company consolidates or merges with or into
any other person, other than a consolidation or
merger (a) of the Company with or into Williams or a
Subsidiary of the Company or Williams or (b) under a
transaction in which the outstanding Voting Stock of
the Company is changed into or exchanged for cash,
securities or other property with the effect that the
beneficial owners of the Company's outstanding Voting
Stock immediately before that transaction,
beneficially own, directly or indirectly, more than
35% of the voting stock, measured by voting power
rather than number of shares, of the surviving
corporation immediately following that transaction;
or
(c) upon the sale, transfer, assignment, lease,
conveyance or other disposition, directly or
indirectly, of all or substantially all the assets of
the Company and its subsidiaries considered as a
whole (other than a merger or consolidation of the
Company or a disposition of such assets as an
entirety or virtually as an entirety to one or more
Permitted Holders); or
(d) if 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 or appointment by the
Board of Directors or whose nomination for election
by the Company's stockholders was approved by a vote
of a majority of the directors then still in office
who were either directors at the beginning of such
period or whose election or nomination for election
was previously so approved) cease for any reason to
constitute a majority of the Company's Board of
Directors then in office.
Notwithstanding anything herein to the contrary, any transaction
completed to effectuate the separation of the Company's business from Williams'
energy business shall not constitute a "Change of Control."
"Common Stock" means the Class A common stock, par value $.01 per
share, of the Company.
"Company Order" means a written request or order signed in the name of
the Company by its Chairman of the Board, its President or a Vice President and
by its Treasurer, an Assistant Treasurer, its Secretary or an Assistant
Secretary.
"Current Market Price" of the Common Stock means the average of the
daily closing prices of the Common Stock for the five consecutive trading days
selected by the Board of Directors commencing not more than 20 trading days
before, and ending not later than the date immediately preceding the record date
fixed in connection with such event; provided, that the Current Market Price of
the Common Stock in connection with a Spin-Off shall mean the average of the
daily closing prices of the Common Stock for the same five consecutive trading
days used to determine the Fair Market Value of the securities being distributed
in such Spin-Off; provided further, that if an Initial Public Offering of the
securities being distributed in any Spin-Off is to be effected simultaneously
with such Spin-Off, the Current Market Price of the Common Stock shall mean the
closing price of the Common Stock on the trading day on which the Initial Public
Offering price of such securities is determined.
"Fair Market Value" of the securities to be distributed to the holders
of the Common Stock in connection with a Spin-Off that is not effected
simultaneously with an Initial Public Offering of the securities being
distributed in the Spin-Off, shall mean the average of the daily closing prices
of such securities for the five consecutive trading days selected by the Board
of Directors beginning on the first day of trading of such securities after the
effectiveness of such Spin-Off and ending not later than 20 days after the
effectiveness of the "Spin-Off"; provided, however, that if an Initial
14
<PAGE> 15
Public Offering of the securities being distributed in any Spin-Off is to be
effected simultaneously with such Spin-Off, the Fair Market Value of such
securities shall mean the initial public offering price.
"Initial Public Offering" means, in the event of a Spin-Off, the first
time securities of the same class or type as the securities being distributed in
the Spin-Off are bona fide offered to the public for cash.
"Initial Purchasers" means the purchasers set forth on Schedule A to
the Purchase Agreement.
"Officer" means the Chairman of the Board of Directors, the President,
any Vice President, a Treasurer, an Assistant Treasurer, the Secretary, or any
Assistant Secretary.
"Outstanding" means, when used with respect to Preferred Stock, as of
the date of determination, all shares of Preferred Stock outstanding as of such
date, provided, however, that, if such Preferred Stock is to be redeemed, notice
of such redemption has been duly given pursuant to this Certificate or provision
therefor satisfactory to the Registrar has been made; and (c) shares of
Preferred Stock (i) that are mutilated, destroyed, lost or stolen which the
Company has decided to pay or (ii) in exchange for or in lieu of which other
shares of Preferred Stock have been authenticated and delivered pursuant to this
Certificate; provided, however, that, in determining whether the holders of
Preferred Stock have given any request, demand, authorization, direction,
notice, consent or waiver or taken any other action hereunder, Preferred Stock
owned by the Company shall be deemed not to be Outstanding, except that, in
determining whether the Registrar shall be protected in relying upon any such
request, demand, authorization, direction, notice, consent, waiver or other
action, only Preferred Stock which the Registrar has actual knowledge of being
so owned shall be deemed not to be Outstanding.
"Permitted Holder" means:
o Williams and any of its subsidiaries,
o any corporation, the outstanding voting power of the Capital
Stock of which is beneficially owned, directly or indirectly,
by the Company's stockholders in substantially the same
proportions as their ownership of the voting power of the
Company's Capital Stock,
o any underwriter during the period engaged in a firm commitment
underwriting on behalf of the Company with respect to the
shares of Capital Stock being underwritten, or
o the Company or any Subsidiary of the Company.
"Purchase Agreement" means that certain Purchase Agreement, dated
September 14, 2000, by and among the Company and the Initial Purchasers.
"Redemption Date" shall mean (a) in the case of a redemption pursuant
to Section 5(a), the date fixed for redemption, and (b) in the case of a
redemption pursuant to Section 5(b), October 15, 2012.
"Redemption Price" shall mean (a) in the case of a redemption pursuant
to Section 5(a), the Optional Redemption Price, and (b) in the case of a
redemption pursuant to Section 5(b), the Mandatory Redemption Price.
"Registrar" means The Bank of New York as the Company's initial
registrar and transfer agent, and thereafter, any successor registrar and
transfer agent duly appointed by the Company.
"Registration Default" has the meaning ascribed to it in the
Registration Rights Agreement.
15
<PAGE> 16
"Registration Rights Agreement" means that certain Registration Rights
Agreement to be executed by the Company and the Initial Purchasers in connection
with the sale of the Preferred Stock pursuant to the Purchase Agreement.
"Shelf Registration Statement" means the shelf registration statement
required to be filed with the Securities and Exchange Commission pursuant to the
Registration Rights Agreement.
"Subsidiary" means, with respect to any person, (a) any corporation,
association or other business entity of which more than 50% of the total voting
power of shares of capital stock entitled (without regard to the occurrence of
any contingency) to vote in the election of directors, managers or trustees
thereof is at the time owned or controlled, directly or indirectly, by such
person or one or more of the other Subsidiaries of that person (or a combination
thereof) and (b) any partnership (i) the sole general partner or the managing
general partner of which is such person or a Subsidiary of such person or (ii)
the only general partners of which are such person or of one or more
Subsidiaries of such person (or any combination thereof).
"Voting Stock" of any person means Capital Stock of such person which
ordinarily has voting power for the election of directors, or persons performing
similar functions, of such person, whether at all times or only for so long as
no senior class of securities has such voting power by reason of any
contingency.
"Williams" means The Williams Companies, Inc.
SECTION 12. CURRENCY. All shares of Preferred Stock shall be
denominated in U.S. currency, and all payments and distributions thereon or with
respect thereto shall be made in U.S. currency. All references herein to "$" or
"dollars" refer to U.S. currency.
SECTION 13. FORM. (a) Preferred Stock shall be issued in the form of
one or more permanent global shares of Preferred Stock in definitive, fully
registered form with the global legend (the "Global Shares Legend") and, until
such time as determined by the Company and the Registrar, the global restricted
shares legend (the "Global Restricted Shares Legend"), in each case, as set
forth on the form of Preferred Stock certificate attached hereto as Exhibit A
(each, a "Global Preferred Share"), which is hereby incorporated in and
expressly made a part of this Certificate. The Global Preferred Share may have
notations, legends or endorsements required by law, stock exchange rules,
agreements to which the Company is subject, if any, or usage (provided that any
such notation, legend or endorsement is in a form acceptable to the Company).
The Global Preferred Share shall be deposited on behalf of the holders of the
Preferred Stock represented thereby with the Registrar, at its New York office,
as custodian for The Depository Trust Company, New York, New York ("DTC") or its
nominee and their respective successors (the "Depositary"), and registered in
the name of the Depositary or a nominee of the Depositary, duly executed by the
Company and countersigned and registered by the Registrar as hereinafter
provided. The aggregate number of shares represented by each Global Preferred
Share may from time to time be increased or decreased by adjustments made on the
records of the Registrar and the Depositary or its nominee as hereinafter
provided. Global Preferred Shares initially will bear CUSIP number 969455 20 3.
(b) This paragraph shall apply only to a Global Preferred
Share deposited with or on behalf of the Depositary. The Company shall execute
and the Registrar shall, in accordance with this Section, countersign and
deliver initially one or more Global Preferred Shares that (i) shall be
registered in the name of Cede & Co. or other nominee of the Depositary and (ii)
shall be delivered by the Registrar to Cede & Co. or pursuant to instructions
received from Cede & Co. or held by the Registrar as custodian for the
Depositary pursuant to an agreement between the Depositary and the Registrar.
Members of, or participants in, the Depositary ("Agent Members") shall have no
rights under this Certificate with respect to any Global Preferred Share held on
their behalf by the Depositary or by the Registrar as the custodian of the
Depositary or under such Global Preferred Share, and the Depositary may be
treated by the Company, the Registrar and any agent of the Company or the
Registrar as the absolute owner of such Global Preferred Share for all purposes
whatsoever. Notwithstanding the foregoing, nothing herein shall prevent the
16
<PAGE> 17
Company, the Registrar or any agent of the Company or the Registrar from giving
effect to any written certification, proxy or other authorization furnished by
the Depositary or impair, as between the Depositary and its Agent Members, the
operation of customary practices of the Depositary governing the exercise of the
rights of a holder of a beneficial interest in any Global Preferred Share.
Owners of beneficial interests in Global Preferred Shares will not be entitled
to receive physical delivery of certificated shares of Preferred Stock, unless
(x) DTC is unwilling or unable to continue as Depositary for
the Global Preferred Share and we do not appoint a qualified replacement for DTC
within 90 days or (y) DTC ceases to be a "Clearing Agency" registered under the
Exchange Act. In either such case, the Global Preferred Share will be exchanged
in whole for definitive shares of Preferred Stock in registered form, with the
same terms and of an equal aggregate Liquidation Preference. Definitive shares
of preferred stock will be registered in the name or names of the person or
person specified by DTC in a written instrument to the Registrar.
(c) (i) Two Officers shall sign the Global Preferred Share for
the Company, in accordance with the Company's bylaws and applicable law, by
manual or facsimile signature. The Company's seal shall be impressed, affixed,
imprinted or reproduced on the Global Preferred Share and may be in facsimile
form.
(ii) If an Officer whose signature is on a Global
Preferred Share no longer holds that office at the time the Transfer
Agent authenticates the Global Preferred Share, the Global Preferred
Share shall be valid nevertheless.
(iii) A Global Preferred Share shall not be valid
until an authorized signatory of the Transfer Agent manually
countersigns Global Preferred Share. The signature shall be conclusive
evidence that the Global Preferred Share has been authenticated under
this. Each Global Preferred Share shall be dated the date of its
authentication.
SECTION 14. REGISTRATION; TRANSFER. (a) The Preferred Stock has not
been registered under the Securities Act and may not be resold, pledged or
otherwise transferred prior to the date when they no longer constitute
"restricted securities" for purposes of Rule 144(k) under the Securities Act
other than (i) to the Company, (ii) to "qualified institutional buyers" ("QIBs")
pursuant to and in compliance with Rule 144A under the Securities Act ("Rule
144A"), (iii) pursuant to an exemption from the registration requirements of the
Securities Act provided by Rule 144 under the Securities Act or (iv) pursuant to
an effective registration statement under the Securities Act, in each case, in
accordance with any applicable securities laws of any state of the United
States.
(b) Notwithstanding any provision to the contrary herein, so
long as a Global Preferred Share remains outstanding and is held by or on behalf
of the Depositary, transfers of a Global Preferred Share, in whole or in part,
or of any beneficial interest therein, shall only be made in accordance with
this Section 14; provided, however, that beneficial interests in a Global
Preferred Share may be transferred to persons who take delivery thereof in the
form of a beneficial interest in the same or a different Global Preferred Share
in accordance with the transfer restrictions set forth in the Global Restricted
Shares Legend.
(i) Except for transfers or exchanges made in
accordance with subparagraph (ii) of this Section 14(b), transfers of a
Global Preferred Share shall be limited to transfers of such Global
Preferred Share in whole, but not in part, to nominees of the
Depositary or to a successor of the Depositary or such successor's
nominee.
(ii) If an owner of a beneficial interest in a Global
Preferred Share deposited with the Depositary or with the Registrar as
custodian for the Depositary wishes at any time to transfer its
interest in such Global Preferred Share to a person who is eligible to
take delivery thereof in the form of a beneficial interest in a Global
Preferred Share, such owner may, subject to the rules and procedures of
the Depositary, cause the exchange of such interest for a new
beneficial interest in the applicable Global Preferred Share. Upon
receipt by the Registrar at its office in The City of New York of (A)
instructions from the holder directing the Registrar to transfer its
interest in the applicable Global Preferred Share, such instructions to
17
<PAGE> 18
contain the name of the transferee and appropriate account information,
(B) unless the Shelf Registration Statement has become effective and
such shares are being transferred pursuant to the Shelf Registration
Statement, a certificate in the form of Exhibit B given by the
transferor, to the effect set forth therein, and (C) such other
certifications, legal opinions and other information as the Company or
the Registrar may reasonably require to confirm that such transfer is
being made pursuant to an exemption from, or in a transaction not
subject to, the registration requirements of the Securities Act, then
the Registrar shall instruct the Depositary to reduce or cause to be
reduced such Global Preferred Share by the number of shares of the
beneficial interest therein to be exchanged and to debit or cause to be
debited from the account of the person making such transfer the
beneficial interest in the Global Preferred Share that is being
transferred, and concurrently with such reduction and debit, the
Registrar will instruct the Depositary to increase or cause to be
increased the applicable Global Preferred Share by the aggregate number
of shares being exchanged and to credit or cause to be credited to the
account of the transferee the beneficial interest in the Global
Preferred Share that is being transferred.
(c) Except in connection with a Shelf Registration Statement
contemplated by and in accordance with the terms of the Registration Rights
Agreement relating to the Preferred Stock and shares of Common Stock issuable on
conversion of the Preferred Stock (collectively, the "Registerable Securities,")
if Preferred Stock is issued upon the transfer, exchange or replacement of
Preferred Stock bearing the Global Restricted Shares Legend, or if a request is
made to remove such Global Restricted Shares Legend on Preferred Stock, the
Preferred Stock so issued shall bear the Global Restricted Shares Legend and the
Global Restricted Shares Legend shall not be removed unless there is delivered
to the Company and the Registrar such satisfactory evidence, which may include
an opinion of counsel licensed to practice law in the State of New York, as may
be reasonably required by the Company or the Registrar, that neither the legend
nor the restrictions on transfer set forth therein are required to ensure that
transfers thereof comply with the provisions of Rule 144A or Rule 144 or that
such shares of Preferred Stock are not "restricted securities" within the
meaning of Rule 144 under the Securities Act. Upon provision of such
satisfactory evidence, the Registrar, at the direction of the Company, shall
countersign and deliver shares of Preferred Stock that do not bear the Global
Restricted Shares Legend.
(d) The Registrar shall have no responsibility for any actions
taken or not taken by the Depositary.
(e) The Company agrees that it will refuse to register any
transfer of Preferred Stock or any Common Stock issuable upon conversion thereof
that is not made in accordance with the provisions of Rule 144A, pursuant to a
registration statement that has been declared effective under the Securities Act
or pursuant to an available exemption from the registration requirements of the
Securities Act; provided that the provisions of this paragraph (e) shall not be
applicable to any Preferred Stock that does not bear any Global Restricted
Shares Legend or to any Common Stock that does not bear the Common Share Legend
(as defined below).
(f) Common Stock issued upon a conversion of the Preferred
Stock prior to the effectiveness of a Shelf Registration Statement shall be
delivered in certificated form and shall bear the common share legend (the
"Common Share Legend") set forth in Exhibit C hereto. If (i) shares of Common
Stock issued prior to the effectiveness of a Shelf Registration Statement are to
be registered in a name other than that of the holder of Preferred Stock or (ii)
shares of Common Stock represented by a certificate bearing the Common Share
Legend are transferred subsequently by such holder, then, unless the Shelf
Registration Statement has become effective and such shares are being
transferred pursuant to the Shelf Registration Statement, the holder must
deliver to the Registrar a certificate in substantially the form of Exhibit D as
to compliance with the restrictions on transfer applicable to such Common Stock
and the Registrar shall not be required to register any transfer of such Common
Stock not so accompanied by a properly completed certificate. Such Common Share
Legend may be removed, and new certificates representing the Common Stock may be
issued, upon the presentation of satisfactory evidence that such Common Share
Legend is no longer required as described above in paragraph (c) of this Section
14 with respect to the Preferred Stock.
18
<PAGE> 19
SECTION 15. PAYING AGENT AND CONVERSION AGENT. (a) The Company shall
maintain in the Borough of Manhattan, City of New York, State of New York (i) an
office or agency where Preferred Stock may be presented for payment (the "Paying
Agent") and (ii) an office or agency where Preferred Stock may be presented for
conversion (the "Conversion Agent"). The Company may appoint the Registrar, the
Paying Agent and the Conversion Agent and may appoint one or more additional
paying agents and one or more additional conversion agents in such other
locations as it shall determine. The term "Paying Agent" includes any additional
paying agent and the term "Conversion Agent" includes any additional conversion
agent. The Company may change any Paying Agent or Conversion Agent without prior
notice to any holder. The Company shall notify the Registrar of the name and
address of any Paying Agent or Conversion Agent appointed by the Company. If the
Company fails to appoint or maintain another entity as Paying Agent or
Conversion Agent, the Registrar shall act as such. The Company or any of its
affiliates may act as Paying Agent, Registrar, coregistrar or Conversion Agent.
(b) Neither the Company nor the Registrar shall be required
(i) to issue, countersign or register the transfer of or exchange any Preferred
Stock during a period beginning at the opening of business 15 days before the
day of the mailing of a notice of redemption of Preferred Stock under Section 5
and ending at the close of business on the day of such mailing or (ii) to
register the transfer of or exchange any Preferred Stock so selected for
redemption in whole or in part, except the unredeemed portion of any Preferred
Stock being redeemed in part.
(c) Payments due on the Preferred Stock shall be payable at
the office or agency of the Company maintained for such purpose in The City of
New York and at any other office or agency maintained by the Company for such
purpose. Payments shall be payable by United States dollar check drawn on, or
wire transfer (provided, that appropriate wire instructions have been received
by the Registrar at least 15 days prior to the applicable date of payment) to a
U.S. dollar account maintained by the holder with, a bank located in New York
City; provided that at the option of the Company, payment of dividends may be
made by check mailed to the address of the person entitled thereto as such
address shall appear in the Preferred Stock register.
SECTION 16. HEADINGS. The headings of the Sections of this Certificate
are for convenience of reference only and shall not define, limit or affect any
of the provisions hereof.
19
<PAGE> 20
IN WITNESS WHEREOF, the Company has caused this Certificate of
Designations to be duly executed by Howard S. Kalika, Vice President and
Treasurer of the Company, and attested by Loretta K. Roberts, Secretary of the
Company, this 18th day of September, 2000.
WILLIAMS COMMUNICATIONS GROUP, INC.
By: /s/ Howard S. Kalika
-----------------------------------
Name: Howard S. Kalika
Title: Vice President and Treasurer
ATTEST:
By: /s/ Loretta K. Roberts
------------------------
Name: Loretta K. Roberts
Title: Secretary
20
<PAGE> 21
EXHIBIT A
FACE OF SECURITY
[GLOBAL SHARES LEGEND (include if Security is issued as a global certificate):
UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE
DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), NEW YORK, NEW YORK, TO
THE COMPANY OR ITS AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE OR PAYMENT, AND
ANY CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR SUCH OTHER
NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS
MADE TO CEDE & CO., OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR
OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER
HEREOF, CEDE & CO. HAS AN INTEREST HEREIN.
TRANSFERS OF THIS GLOBAL SECURITY SHALL BE LIMITED TO TRANSFERS IN WHOLE, BUT
NOT IN PART, TO NOMINEES OF DTC OR TO A SUCCESSOR THEREOF OR SUCH SUCCESSOR'S
NOMINEE AND TRANSFERS OF PORTIONS OF THIS GLOBAL SECURITY SHALL BE LIMITED TO
TRANSFERS MADE IN ACCORDANCE WITH THE RESTRICTIONS SET FORTH IN THE PREFERRED
STOCK SCHEDULE REFERRED TO BELOW.
IN CONNECTION WITH ANY TRANSFER, THE HOLDER WILL DELIVER TO THE REGISTRAR AND
TRANSFER AGENT SUCH CERTIFICATES AND OTHER INFORMATION AS SUCH REGISTRAR AND
TRANSFER AGENT MAY REASONABLY REQUIRE TO CONFIRM THAT THE TRANSFER COMPLIES WITH
THE FOREGOING RESTRICTIONS.]
[GLOBAL RESTRICTED SHARES LEGEND (include if Security is not registered under
the Securities Act of 1933): THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"). THE HOLDER HEREOF, BY
PURCHASING THIS SECURITY, AGREES FOR THE BENEFIT OF THE COMPANY THAT THIS
SECURITY MAY NOT BE RESOLD, PLEDGED OR OTHERWISE TRANSFERRED (X) PRIOR TO THE
SECOND ANNIVERSARY OF THE ISSUANCE HEREOF (OR ANY PREDECESSOR SECURITY HERETO)
OR (Y) BY ANY HOLDER THAT WAS AN AFFILIATE OF THE COMPANY AT ANY TIME DURING THE
THREE MONTHS PRECEDING THE DATE OF SUCH TRANSFER, IN EITHER CASE, OTHER THAN (1)
TO THE COMPANY, (2) SO LONG AS THIS SECURITY IS ELIGIBLE FOR RESALE PURSUANT TO
RULE 144A UNDER THE SECURITIES ACT ("RULE 144A"), TO A PERSON WHOM THE SELLER
REASONABLY BELIEVES IS A QUALIFIED INSTITUTIONAL BUYER TO WHOM NOTICE IS GIVEN
THAT THE RESALE, PLEDGE OR OTHER TRANSFER IS BEING MADE IN RELIANCE ON RULE 144A
(AS INDICATED BY THE BOX CHECKED BY THE TRANSFEROR ON THE CERTIFICATE OF
TRANSFER ON THE REVERSE OF THIS SECURITY), (3) PURSUANT TO AN EXEMPTION FROM
REGISTRATION UNDER THE SECURITIES ACT PROVIDED BY RULE 144 (IF APPLICABLE) UNDER
THE SECURITIES ACT OR (4) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER
THE SECURITIES ACT, IN EACH CASE, IN ACCORDANCE WITH ANY APPLICABLE SECURITIES
LAWS OF ANY STATE OF THE UNITED STATES. THE HOLDER HEREOF, BY PURCHASING THIS
SECURITY, REPRESENTS AND AGREES FOR THE BENEFIT OF THE COMPANY THAT IT IS A
QUALIFIED INSTITUTIONAL BUYER WITHIN THE MEANING OF RULE 144A.
A-1
<PAGE> 22
Number: ____ ____ Shares
CUSIP NO.: 969455 20 3
6.75% REDEEMABLE CUMULATIVE CONVERTIBLE PREFERRED STOCK
OF
WILLIAMS COMMUNICATIONS GROUP, INC.
WILLIAMS COMMUNICATIONS GROUP, INC., a Delaware corporation
(the "Company"), hereby certifies that [HOLDER] (the "Holder") is the registered
owner of fully paid and non-assessable shares of preferred stock of the Company
designated as the 6.75% Redeemable Cumulative Convertible Preferred Stock, par
value $0.01 per share and liquidation preference $50.00 per share (the
"Preferred Stock"). The shares of Preferred Stock are transferable on the books
and records of the Registrar, in person or by a duly authorized attorney, upon
surrender of this certificate duly endorsed and in proper form for transfer. The
designation, rights, privileges, restrictions, preferences and other terms and
provisions of the Preferred Stock represented hereby are issued and shall in all
respects be subject to the provisions of the Certificate of Designations of the
Company dated September 18, 2000, as the same may be amended from time to time
in accordance with its terms (the "Certificate of Designations"). Capitalized
terms used herein but not defined shall have the respective meanings given them
in the Certificate of Designations. The Company will provide a copy of the
Certificate of Designations to a Holder without charge upon written request to
the Company at its principal place of business.
Reference is hereby made to select provisions of the Preferred
Stock set forth on the reverse hereof, and to the Certificate of Designations,
which select provisions and the Certificate of Designations shall for all
purposes have the same effect as if set forth at this place.
Upon receipt of this certificate, the Holder is bound by the
Certificate of Designations and is entitled to the benefits thereunder.
Unless the Transfer Agent's valid countersignature appears
hereon, the shares of Preferred Stock evidenced hereby shall not be entitled to
any benefit under the Certificate of Designations or be valid or obligatory for
any purpose.
A-2
<PAGE> 23
IN WITNESS WHEREOF, the Company has executed this Preferred
Stock certificate as of the date set forth below.
WILLIAMS COMMUNICATION GROUP, INC.
By:
------------------------------------
Name:
Title: [Vice President]
[Seal]
By:
------------------------------------
Name:
Title: [Secretary]
Dated:
------------------------------------
COUNTERSIGNED AND REGISTERED
THE BANK OF NEW YORK,
as Transfer Agent,
By:
-------------------------------
Authorized Signatory
Dated:
-------------------------------
A-3
<PAGE> 24
REVERSE OF SECURITY
WILLIAMS COMMUNICATIONS GROUP, INC.
6.75% Redeemable Cumulative Convertible Preferred Stock
Dividends on each share of Preferred Stock shall be payable in
cash at the rate per annum set forth on the face hereof or as provided in the
Certificate of Designations (including Special Dividends, if any).
The shares of Preferred Stock shall be redeemable as provided
in the Certificate of Designations. The shares of Preferred Stock shall be
convertible into the Company's Class A common stock in the manner and according
to the terms set forth in the Certificate of Designations.
The Company shall furnish to any holder upon request and
without charge, a full summary statement of the designations, voting rights,
preferences, limitations and special rights of the shares of each class or
series authorized to be issued by the Company so far as they have been fixed and
determined and the authority of the Board of Directors to fix and determine the
designations, voting rights, preferences, limitations and special rights of the
class and series of shares of the Company.
A-4
<PAGE> 25
ASSIGNMENT
FOR VALUE RECEIVED, the undersigned assigns and transfers the
shares of Preferred Stock evidenced hereby to:
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
(Insert assignee's social security or tax identification number)
--------------------------------------------------------------------------------
(Insert address and zip code of assignee)
--------------------------------------------------------------------------------
--------------------------------------------------------------------------------
and irrevocably appoints:
--------------------------------------------------------------------------------
agent to transfer the shares of Preferred Stock evidenced hereby on the books of
the Transfer Agent and Registrar. The agent may substitute another to act for
him or her.
Date:
---------------------------------------
Signature:
----------------------------------
(Sign exactly as your name appears on the other side of this Preferred Stock
Certificate)
Signature Guarantee: *
-------------------------------
----------
* Signature must be guaranteed by an "eligible guarantor institution"
(i.e., a bank, stockbroker, savings and loan association or credit
union) meeting the requirements of the Registrar, which requirements
include membership or participation in the Securities Transfer Agents
Medallion Program ("STAMP") or such other "signature guarantee program"
as may be determined by the Registrar in addition to, or in
substitution for, STAMP, all in accordance with the Securities Exchange
Act of 1934, as amended.
A-5
<PAGE> 26
NOTICE OF CONVERSION
(To be Executed by the Registered Holder
in order to Convert the Preferred Stock)
The undersigned hereby irrevocably elects to convert (the "Conversion")
_________ shares of 6.75% Redeemable Cumulative Convertible Preferred Stock (the
"Preferred Stock") into shares of Class A common stock, par value $0.01 per
share ("Common Stock"), of Williams Communications Group, Inc. (the "Company")
according to the conditions of the Certificate of Designations establishing the
terms of the Preferred Stock (the "Certificate of Designations"), as of the date
written below. If shares are to be issued in the name of a person other than the
undersigned, the undersigned will pay all transfer taxes payable with respect
thereto and is delivering herewith such certificates. No fee will be charged to
the holder for any conversion, except for transfer taxes, if any. A copy of each
stock certificate representing the shares to be converted is attached hereto (or
evidence of loss, theft or destruction thereof).*
The undersigned represents and warrants that all offers and sales by the
undersigned of the shares of Common Stock issuable to the undersigned upon
conversion of the Preferred Stock shall be made pursuant to registration of the
Common Stock under the Securities Act of 1933 (the "Act") or pursuant to any
exemption from registration under the Act.
Any holder, upon the exercise of its conversion rights in accordance with the
terms of the Certificate of Designations and the Preferred Stock, agrees to be
bound by the terms of the Registration Rights Agreement.
Capitalized terms used but not defined herein shall have the meanings ascribed
thereto in or pursuant to the Certificate of Designations.
Date of Conversion:
-------------------------------------------
Applicable Conversion Price:
----------------------------------
Number of shares of
Preferred Stock to be Converted:
------------------------------
Number of shares of
Common Stock to be Issued:
------------------------------------
Signature:
----------------------------------------------------
Name:
---------------------------------------------------------
Address:**
----------------------------------------------------
Fax No.:
------------------------------------------------------
* The Company is not required to issue shares of Common Stock to a person
holding Preferred Stock until the original stock certificates
representing such Preferred Stock (or evidence of loss, theft or
destruction thereof) to be converted are received by the Company or its
Transfer Agent. The Company shall issue and deliver shares of Common
Stock to an overnight courier not later than three Business Days
following receipt of the original stock certificates representing such
Preferred Stock to be converted.
** Address where shares of Common Stock and any other payments or
certificates shall be sent by the Company.
A-6
<PAGE> 27
[Global Share Schedule: (include if Security is issued as a global certificate)]
SCHEDULE A
SCHEDULE OF EXCHANGES FOR GLOBAL SECURITY
The initial number of shares of Preferred Stock represented by
this Global Preferred Share shall be [_______]. The following exchanges of a
part of this Global Preferred Share have been made:
<TABLE>
<CAPTION>
------------------------------------------------------------------------------------------------------------------------
Amount of decrease in Amount of increase in Number of shares repre
Date number of shares repre number of shares sented by this Global Signature of
of sented by this represented by this Preferred Share following authorized officer
Exchange Global Preferred Share Global Preferred Share such decrease or increase of Registrar
-------- ---------------------- ---------------------- ------------------------- ------------
------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
------------------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------------------
------------------------------------------------------------------------------------------------------------------------
</TABLE>
A-7
<PAGE> 28
EXHIBIT B
FORM OF CERTIFICATE OF TRANSFER
(Transfers pursuant to Section 14(b)(ii)
of the Certificate of Designations)
Bank of New York, as Transfer Agent
101 Barclay
New York, NY 10286
Attn:
Re: Williams Communications Group, Inc.
6.75% Redeemable Cumulative Convertible Preferred Stock
(the "Preferred Stock")
Reference is hereby made to the Certificate of Designations
relating to the Preferred Stock dated September 18, 2000 (the "Certificate of
Designations"). Capitalized terms used but not defined herein shall have the
respective meanings given them in the Certificate of Designations.
This Letter relates to _____________ shares of Preferred Stock
(the "Securities") which are held in the form of a Global Preferred Share (CUSIP
NO. 969455 20 3) with the Depositary in the name of [name of transferor] (the
"Transferor") to effect the transfer of the Securities.
In connection with such request, and in respect of the
Preferred Stock, the Transferor does hereby certify that shares of the Preferred
Stock are being transferred (i) in accordance with applicable securities laws of
any state of the United States or any other jurisdiction and (ii) in accordance
with their terms:
CHECK ONE BOX BELOW:
(1) [ ] to a transferee that the Transferor reasonably believes is
a qualified institutional buyer within the meaning of Rule
144A under the Securities Act purchasing for its own
account or for the account of a qualified institutional
buyer in a transaction meeting the requirements of Rule
144A;
(2) [ ] pursuant to an exemption from registration under the
Securities Act provided by Rule 144 thereunder (if
available); or
(3) [ ] in accordance with another exemption from the registration
requirements of the Securities Act (based upon an opinion
of counsel if the Company so requests).
[Name of Transferor]
By:
-------------------------
Name:
Title:
Dated:
cc: Williams Communications Group, Inc.
One Williams Center
Tulsa, OK 74172
Attn: Secretary
B-1
<PAGE> 29
EXHIBIT C
Form of Common Share Legend
"THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED (THE "SECURITIES ACT"). THE HOLDER HEREOF, BY PURCHASING THIS
SECURITY, AGREES FOR THE BENEFIT OF THE COMPANY THAT THIS SECURITY MAY NOT BE
RESOLD, PLEDGED OR OTHERWISE TRANSFERRED (X) PRIOR TO THE SECOND ANNIVERSARY OF
THE ISSUANCE HEREOF (OR ANY PREDECESSOR SECURITY HERETO) OR (Y) BY ANY HOLDER
THAT WAS AN AFFILIATE OF THE COMPANY AT ANY TIME DURING THE THREE MONTHS
PRECEDING THE DATE OF SUCH TRANSFER, IN EITHER CASE, OTHER THAN (1) TO THE
COMPANY, (2) TO AN INSTITUTION THAT IS AN "ACCREDITED INVESTOR" AS DEFINED IN
RULE 501 (a) (1), (2), (3) OR (7) UNDER THE SECURITIES ACT ("INSTITUTIONAL
ACCREDITED INVESTOR") (AS INDICATED BY THE BOX CHECKED BY THE TRANSFEROR ON THE
CERTIFICATE OF TRANSFER ON THE REVERSE OF THIS SECURITY) THAT IS ACQUIRING THE
SECURITY FOR INVESTMENT PURPOSES AND NOT FOR DISTRIBUTION, AND THAT, PRIOR TO
SUCH TRANSFER, DELIVERS TO THE COMPANY AND THE TRANSFER AGENT A SIGNED LETTER
CONTAINING CERTAIN REPRESENTATIONS AND AGREEMENTS RELATING TO THE RESTRICTIONS
ON TRANSFER OF THE SECURITY EVIDENCED HEREBY (THE FORM OF WHICH LETTER MAY BE
OBTAINED FROM THE TRANSFER AGENT), (3) PURSUANT TO AN EXEMPTION FROM
REGISTRATION UNDER THE SECURITIES ACT PROVIDED BY RULE 144 (IF APPLICABLE) UNDER
THE SECURITIES ACT OR (4) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER
THE SECURITIES ACT, IN EACH CASE IN ACCORDANCE WITH ANY APPLICABLE LAWS OF ANY
STATE OF THE UNITED STATES. PRIOR TO A TRANSFER OF THIS SECURITY (OTHER THAN A
TRANSFER PURSUANT TO CLAUSE (4) ABOVE), THE HOLDER OF THIS SECURITY MUST, PRIOR
TO SUCH TRANSFER, FURNISH TO THE COMPANY AND THE TRANSFER AGENT SUCH
CERTIFICATES AND OTHER INFORMATION AS THEY MAY REASONABLY REQUIRE TO CONFIRM
THAT ANY TRANSFER BY IT OF THIS SECURITY COMPLIES WITH THE FOREGOING
RESTRICTIONS. THE HOLDER HEREOF, BY PURCHASING THIS SECURITY, REPRESENTS AND
AGREES FOR THE BENEFIT OF THE COMPANY THAT IT IS (1) A QUALIFIED INSTITUTIONAL
BUYER WITHIN THE MEANING OF RULE 144A OR (2) AN INSTITUTION THAT IS AN
"ACCREDITED INVESTOR" AS DEFINED IN RULE 501(a) (1), (2), (3) OR (7) UNDER THE
SECURITIES ACT AND THAT IT IS HOLDING THIS SECURITY FOR INVESTMENT PURPOSES AND
NOT FOR DISTRIBUTION. IN ANY CASE, THE HOLDER HEREOF WILL NOT, DIRECTLY OR
INDIRECTLY, ENGAGE IN ANY HEDGING TRANSACTION WITH REGARD TO THIS SECURITY
EXCEPT AS PERMITTED BY THE SECURITIES ACT."
C-1
<PAGE> 30
EXHIBIT D
FORM OF CERTIFICATE OF TRANSFER
FOR COMMON SHARES
(Transfers pursuant to Section 14(c) of the
Certificate of Designations)
Bank of New York, as Transfer Agent
101 Barclay
New York, NY 10286
Attn:
Re: Williams Communications Group, Inc.
6.75% Redeemable Cumulative Convertible Preferred Stock
(the "Preferred Stock")
Reference is hereby made to the Certificate of Designations relating to
the Preferred Stock dated September 18, 2000 (the "Certificate of
Designations"). Capitalized terms used but not defined herein shall have the
respective meanings given them in the Certificate of Designations.
This letter relates to ____________shares of Common Stock represented
by the accompanying certificate(s) that were issued upon conversion of the
Preferred Stock and which are held in the name of [name of transferor] (the
"Transferor") to effect the transfer of such Common Stock.
In connection with such request and in respect of the shares of Common
Stock, the Transferor does hereby certify that the shares of Common Stock are
being transferred (i) in accordance with applicable securities laws of any state
of the United States or any other jurisdiction and (ii) in accordance with their
terms:
CHECK ONE BOX BELOW
(1) [ ] to a transferee that the Transferor reasonably believes
is an institutional "accredited investor" as defined in
Rule 501 (a) (1), (2), (3) or (7) under the Securities
Act that is acquiring such Common Stock for investment
purposes and not for distribution and is acquiring the
Common Stock for its own account or for one or more
accounts as to which the transferee exercises sole
investment discretion:
(2) [ ] pursuant to an exemption from registration under the
Securities Act provided by Rule 144 thereunder (if
available); or
(3) [ ] in accordance with another exemption from the
registration requirements of the Securities Act (based
upon an opinion of counsel if the Company so requests).
[Name of Transferor]
By:
-------------------------
Name:
Title:
Dated:
cc: Williams Communications Group, Inc.
One Williams Center
Tulsa, OK 74172
Attn: Secretary
D-1
