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Exhibit 3.2
ARTICLES OF AMENDMENT
TO
THE ARTICLES OF INCORPORATION
OF
CFW COMMUNICATIONS COMPANY
The name of the corporation is CFW Communications Company.
Pursuant to Section 13.1-639 of the Virginia Stock Corporation Act and
the authority conferred upon the Board of Directors by the Articles of
Incorporation of the Corporation, the Articles of Incorporation are hereby
amended to create a new series of Preferred Stock to consist of 137,500 shares
of Senior Cumulative Convertible Preferred Stock, Series C, by adding to Article
II of such Articles of Incorporation, a new section entitled, "Senior Cumulative
Convertible Preferred Stock, Series C," attached hereto as Appendix I. The
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Articles of Incorporation are further amended to create a new series of
Preferred Stock to consist of 77,200 shares of Senior Cumulative Convertible
Preferred Stock, Series D, by adding to Article II of such Articles of
Incorporation, a new section entitled, "Senior Cumulative Convertible Preferred
Stock, Series D," attached hereto as Appendix II.
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The amendments to the Articles of Incorporation of the Corporation
were duly adopted by the Board of Directors of the Corporation on May 17, 2000
and July 21, 2000. Shareholder action was not required.
These Articles of Amendment shall become effective on July 25, 2000 at
10:00 a.m.
Dated: July 24, 2000 CFW COMMUNICATIONS COMPANY
By: _______________________________
Name:
Title:
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APPENDIX I
TERMS OF THE SENIOR CUMULATIVE
CONVERTIBLE PREFERRED STOCK, SERIES C
OF
CFW COMMUNICATIONS COMPANY
1. Number; Rank. The number of authorized shares of Senior Cumulative
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Convertible Preferred Stock, Series C (the "Series C Preferred Stock") shall be
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137,500. The Series C Preferred Stock shall, with respect to dividend rights
and rights on liquidation, dissolution and winding up, rank (i) pari passu with
the Company's Senior Cumulative Convertible Preferred Stock, Series B (the
"Series B Preferred Stock") and with the Company's Senior Cumulative Convertible
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Preferred Stock, Series D (the "Series D Preferred Stock") and (ii) senior to
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all classes of the Company's common stock, no par value per share ("Common
------
Stock"), and to each other class of capital stock of the Company now or
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hereafter established (collectively, the "Junior Securities"). The definition
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of Junior Securities shall also include any rights or options exercisable for or
convertible into any of the Junior Securities.
2. Dividends.
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(a) Each holder of Series C Preferred Stock shall be entitled to receive, in
respect of each Dividend Period, when, as and if declared by the Board of
Directors of the Company, out of funds legally available for the payment of
dividends, cumulative dividends in an amount per share equal to the excess ( if
any) of (i) the Applicable Percentage of the Accreted Value as of the
immediately preceding Dividend Payment Date (or, for the initial Dividend
Period, as of the date of issuance) over (ii) the amount of any regular cash
dividends per share of Series C Preferred Stock that have been paid during such
Dividend Period pursuant to paragraph 2(d). Subject to the provisions of
paragraph 2(b), dividends paid pursuant to this paragraph 2(a) shall be payable
in cash in arrears semi-annually on June 30 and December 31 of each year (each
of such dates being a "Dividend Payment Date" and each such semi-annual period
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being a "Dividend Period"). Such dividends shall accrue from the date of issue
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(except that dividends on any amounts added to the Accreted Value pursuant to
paragraph 2(b) shall accrue from the date such amounts are added to the Accreted
Value), whether or not in any Dividend Period or Periods there shall be funds of
the Company legally available for the payment of such dividends. Each such
dividend shall be payable to the holders of record of shares of the Series C
Preferred Stock on June 1 and December 1, as they appear on the stock records of
the Company at the close of business on such record dates. The date on which the
Company initially issues any share of Series C Preferred Stock shall be deemed
to be its "date of issue" regardless of the number of times transfer of such
share is made on the stock records maintained by or for the Company and
regardless of the number of certificates which may be issued to evidence such
share.
(b) If dividends are not paid in cash on any Dividend Payment Date for the
immediately preceding Dividend Period (or portion thereof if less than a full
Dividend Period), the unpaid amount shall be added to the Accreted Value for
purposes of calculating succeeding periods' dividends. Notwithstanding the
addition to Accreted Value, the Company may pay, when, as and if declared by the
Board of Directors of the Company, the amount of dividends previously added to
the Accreted Value pursuant to the preceding sentence, and, if and when so paid,
the Accreted Value shall be reduced by the amount of such payments; provided
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that if on the date on which
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any such dividend is declared the Daily Price of a share of Common Stock is
equal to or exceeds the then applicable Conversion Price, then the Company shall
declare and pay such dividend in the number of shares of Common Stock determined
by dividing the cash amount of such dividend that the Company otherwise would
pay by the then applicable Conversion Price, and the Accreted Value shall be
reduced by the amount of cash the Company otherwise would have paid.
(c) The Applicable Percentage for each full Dividend Period for the Series C
Preferred Stock shall be 4.25%. The Applicable Percentage for the initial
Dividend Period, or any other period shorter or longer than a full Dividend
Period, on the Series C Preferred Stock shall be computed on the basis of a per
annum rate of 8.50% and the actual number of days elapsed over twelve 30-day
months and a 360-day year. No interest, or sum of money in lieu of interest,
shall be payable in respect of any dividend payment or payments on the Series C
Preferred Stock that may be in arrears. Notwithstanding the foregoing, if
Shareholder Approval is obtained, this subparagraph 2(c) shall automatically be
amended by substituting (i) "2.75%" for "4.25%" in the first sentence hereof and
(ii) "5.50%" for "8.50%" in the second sentence hereof; such amendment to take
effect (x) as of the original date of issuance of the Series C Preferred Stock,
if Shareholder Approval is obtained on or before the date which is six months
from the original date of issuance, or (y) as of the date Shareholder Approval
is obtained, if Shareholder Approval is obtained following the date which is six
months from the original date of issuance.
(d) In case the Company shall fix a record date for the making of any dividend
or distribution to holders of Common Stock, whether payable in cash, securities
or other property (other than dividends or distributions payable solely in
Common Stock), the holder of each share of Series C Preferred Stock on such
record date shall be entitled to receive an equivalent dividend or distribution
based on the number of shares of Common Stock into which such share of Series C
Preferred Stock is convertible on such record date (disregarding any Conversion
Cap or Minimum Conversion Price then in effect).
(e) So long as any shares of the Series C Preferred Stock are outstanding, no
Junior Securities shall be redeemed, purchased or otherwise acquired for any
consideration (or any moneys be paid to or made available for a sinking fund for
the redemption of any shares of any such stock) by the Company, directly or
indirectly (except by conversion into or exchange for Junior Securities) or any
cash dividend made on any Junior Security other than the ordinary dividend on
the Company's Common Stock as determined and declared by the Board in which the
holders of the Series C Preferred Stock participate in accordance with
subparagraph (d) above, unless in each case (i) the full dividends on all
outstanding shares of the Series C Preferred Stock shall have been paid or set
apart for payment for all past Dividend Periods and (ii) sufficient funds shall
have been paid or set apart for the payment of the dividend for the current
Dividend Period with respect to the Series C Preferred Stock.
3. Liquidation Preference.
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(a) In the event of any liquidation, dissolution or winding up of the Company,
whether voluntary or involuntary, before any payment or distribution of the
assets of the Company (whether capital or surplus) shall be made to or set apart
for the holders of Junior Securities, the holder of each share of Series C
Preferred Stock shall be entitled to receive an amount per share equal to the
Liquidation Value of such share on the date of distribution, and such holders
shall not be entitled to any further payment. If, upon any liquidation,
dissolution or winding up of the Company, the assets of the Company, or proceeds
thereof, distributable among the holders of the
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shares of Series C Preferred Stock, Series B Preferred Stock and Series D
Preferred Stock (collectively, the "Preferred Stock") shall be insufficient to
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pay in full the preferential amount due on such shares, then such assets, or
the proceeds thereof, shall be distributed among the holders of shares of
Preferred Stock ratably in accordance with the respective amounts that would be
payable on such shares of Preferred Stock if all amounts payable thereon were
paid in full. Solely for the purposes of this paragraph 3, neither the sale,
conveyance, exchange or transfer (for cash, shares of stock, securities or other
consideration) of all or substantially all of the property or assets of the
Company nor the consolidation or merger of the Company with or into one or more
other entities shall be deemed to be a liquidation, dissolution or winding-up of
the Company.
(b) After payment shall have been made in full to the holders of the Preferred
Stock, as provided in this paragraph 3, any other series or class or classes of
Junior Securities shall, subject to the respective terms and provisions (if any)
applying thereto, be entitled to receive any and all assets remaining to be paid
or distributed to holders of capital stock of the Company, and the holders of
the Preferred Stock shall not be entitled to share therein.
4. Conversion.
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(a) Subject to the provisions of this paragraph 4, each holder of shares of
Series C Preferred Stock shall have the right, at any time and from time to
time, at such holder's option, to convert its outstanding shares of Series C
Preferred Stock, in whole or in part, into fully paid and non-assessable shares
of Common Stock. Subject to subparagraph 4(a)(ii) below, the number of shares of
Common Stock deliverable upon conversion of one share of Series C Preferred
Stock shall be equal to (i) the Accreted Value of such share on the date of
conversion, plus any dividends accrued to such date (whether or not earned or
declared) since the end of the previous Dividend Period, divided by (ii) the
Conversion Price on such date. No notice delivered by the Company pursuant to
paragraph 5 will limit in any way any holder's rights to convert pursuant to
this paragraph 4(a). In order to exercise the conversion privilege set forth in
paragraph 4(a), the holder of the shares of Series C Preferred Stock to be
converted shall surrender the certificate representing such shares at the office
of the Company, with a written notice of election to convert completed and
signed, specifying the number of shares to be converted. Each conversion
pursuant to paragraph 4(a) shall be deemed to have been effected immediately
prior to the close of business on the date on which the certificates for shares
of Series C Preferred Stock shall have been surrendered and such notice received
by the Company as aforesaid, and the person in whose name or names any
certificate or certificates for shares of Common Stock shall be issuable upon
such conversion shall be deemed to have become the holder of record of the
shares of Common Stock represented thereby at such time on such date. Effective
upon such conversion, the shares of Series C Preferred Stock so converted shall
no longer be deemed to be outstanding, and all rights of a holder with respect
to such shares surrendered for conversion shall immediately terminate except the
right to receive the Common Stock and other amounts payable pursuant to this
paragraph 4.
In connection with any conversion of shares of Series C
Preferred Stock into shares of Common Stock occurring within 30 days of the
Company's delivery of a Change of Control Notice pursuant to the provisions of
paragraph 4(m), the number of shares of Common Stock deliverable upon conversion
of one share of Series C Preferred Stock shall be equal to (x) the Change of
Control Amount, divided by (y) the Conversion Price on such date.
(iii) Unless Shareholder Approval is obtained, in no event shall
the
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conversion of the Series C Preferred Stock result in the issuance, in the
aggregate, of more than 1,796,000 shares of Common Stock (subject to
proportional adjustment for any stock split, stock dividend, recapitalization,
reverse stock split or other similar event with respect to the Common Stock)
(the resulting number, the "Conversion Cap"). Any portion of the Accreted Value
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that may not be converted into Common Stock as a result of the Conversion Cap
shall be paid in cash by the Company at the time the Conversion Cap is reached.
If Shareholder Approval is obtained, this subparagraph 4(a)(iii) shall be of no
further force or effect.
(b) Unless the shares issuable on conversion pursuant to this paragraph 4
are to be issued in the same name as the name in which such shares of Series C
Preferred Stock are registered, each share surrendered for conversion shall be
accompanied by instruments of transfer, in form reasonably satisfactory to the
Company, duly executed by the holder or the holder's duly authorized attorney
and an amount sufficient to pay any transfer or similar tax.
As promptly as possible, but in any event within 5 days, after
the surrender by the holder of the certificates for shares of Series C Preferred
Stock as aforesaid, the Company shall issue and shall deliver to such holder, or
on the holder's written order to the holder's transferee, a certificate or
certificates for the whole number of shares of Common Stock issuable upon the
conversion of such shares in accordance with the provisions of this paragraph 4.
All shares of Common Stock delivered upon conversion of the
Series C Preferred Stock will upon delivery be duly and validly issued and fully
paid and non-assessable, free of all liens and charges and not subject to any
preemptive rights.
(c) Upon delivery to the Company by a holder of shares of Series C
Preferred Stock of a notice of election to convert pursuant to paragraph 4(a)
above, the right of the Company to purchase such shares of Series C Preferred
Stock shall terminate, regardless of whether a notice has been mailed pursuant
to paragraph 5.
From the date of delivery by a holder of shares of Series C
Preferred Stock of such notice of election to convert, in lieu of dividends on
such Series C Preferred Stock pursuant to paragraph 2, such Series C Preferred
Stock shall participate equally and ratably with the holders of shares of Common
Stock in all dividends paid on the Common Stock.
Except as provided herein, the Company shall make no payment or
adjustment for accrued dividends on shares of Series C Preferred Stock, whether
or not in arrears, on conversion of such shares or for dividends in cash on the
shares of Common Stock issued upon such conversion.
(d) The Company shall at all times reserve and keep available, free from
preemptive rights, such number of its authorized but unissued shares of Common
Stock as shall be required for the purpose of effecting conversion of the Series
C Preferred Stock.
Prior to the delivery of any securities which the Company shall be
obligated to deliver upon conversion of the Series C Preferred Stock, the
Company shall comply with all applicable federal and state laws and regulations
which require action to be taken by the Company.
(e) The Company will pay any and all documentary stamp or similar issue or
transfer taxes payable in respect of the issue or delivery of shares of Common
Stock on conversion of the Series C Preferred Stock pursuant hereto; provided
that the Company shall not be required to pay any tax which may be payable in
respect of any transfer involved in the issue or delivery of
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shares of Common Stock in a name other than that of the holder of the Series C
Preferred Stock to be converted and no such issue or delivery shall be made
unless and until the person requesting such issue or delivery has paid to the
Company the amount of any such tax or has established, to the satisfaction of
the Company, that such tax has been paid.
(f) In connection with the conversion of any shares of Series C Preferred
Stock, no fractional shares of Common Stock shall be issued, but in lieu thereof
the Company shall pay to the holder thereof the value of such share in cash as
determined by reference to the Daily Price as of the date of conversion of such
fractional share.
(g) Conversion Price.
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(i) In order to prevent dilution of the conversion rights granted under this
paragraph 4, the Conversion Price shall be subject to adjustment from time to
time pursuant to this paragraph (g).
(ii) Subject to the Minimum Conversion Price, if any, if and whenever on or
after the original date of issuance of the Series C Preferred Stock the Company
issues or sells, or in accordance with paragraph (h) is deemed to have issued or
sold, any shares of its Common Stock without consideration or at a price per
share less than the Conversion Price in effect immediately prior to such
issuance or sale (or deemed issuance or sale), then in each such case, the
Conversion Price, upon each such issuance or sale, except as hereinafter
provided, shall be lowered so as to be equal to an amount determined by
multiplying the Conversion Price in effect immediately prior to such issuance or
sale by the following fraction:
P + N
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P + F
where
P = the number of shares of Common Stock outstanding immediately
prior to such issuance or sale, assuming the exercise or
conversion of all outstanding securities exercisable for or
convertible into Common Stock at any time on or after the date of
such calculation
N = the number of shares of Common Stock which the net aggregate
consideration, if any, received by the Company for the total
number of such additional shares of Common Stock so issued or
sold would purchase at the Conversion Price in effect immediately
prior to such issuance or sale
F = the number of additional shares of Common Stock so issued or sold
(iii) Notwithstanding the foregoing, there shall be no adjustment in the
Conversion Price as a result of (A) any issue or sale (or deemed issue or sale)
of Options to acquire shares of Common Stock to employees of the Company, or
shares of Common Stock issuable pursuant to the exercise of such Options,
pursuant to stock option plans approved by the Company's Board of Directors so
long as the exercise price of such Options is not less than the Current Market
Price Per Common Share on the date such Options are issued as determined by the
Company's Board of Directors in its good faith judgment, or any issuance of
shares of Common Stock pursuant to the exercise of Options outstanding as of
July 11, 2000; (B) the issuance of up to 3,716,400 shares of Common Stock to the
sellers in connection with the closing of the Company's acquisition of R&B
Communications, Inc. and the issuance to employees of R&B Communications, Inc.
of options to acquire shares of Common Stock (not exceeding 65,000
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shares in the aggregate) pursuant to the terms set forth in Exhibit G to the
Agreement and Plan of Merger, dated as of June 16, 2000, by and among R&B
Communications, Inc., R&B Combination Company and the Company; (C) Common Stock
issued pursuant to and in accordance with the terms of the Company's Dividend
Reinvestment Plan (so long as such shares are issued at a price which is no less
than the Daily Price on the date of issuance) or 1997 Employee Stock Purchase
Plan, each as in effect as of July 11, 2000; and (D) the issuance of up to
600,000 shares of Common Stock in connection with the purchase by the Company of
minority interests in the Virginia PCS Alliance, the West Virginia PCS Alliance
and/or the Virginia RSA 6 Cellular Limited Partnership (assuming that the
aggregate purchase price for all such minority interests does not exceed $21
million).
(iv) Unless Shareholder Approval has been obtained, in no event shall the
Conversion Price be adjusted below $35.50 (the "Minimum Conversion Price").
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If Shareholder Approval is obtained, this subparagraph 4(g)(iv) shall be of
no further force or effect.
(h) Effect on Conversion Price of Certain Events. For purposes of determining
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the adjusted Conversion Price under paragraph (g), the following shall be
applicable:
(i) Issuance of Rights or Options. Except for Options granted in accordance
-----------------------------
with the provisions of paragraph (g)(iii) above or in accordance with the
Company's Rights Agreement dated as of February 26, 2000, if the Company in any
manner grants or sells any Options and the price per share for which Common
Stock is issuable upon the exercise of such Options, or upon conversion or
exchange of any Convertible Securities issuable upon exercise of such Options,
is less than the Conversion Price in effect immediately prior to the time of the
granting or sale of such Options, then the total maximum number of shares of
Common Stock issuable upon the exercise of such Options or upon conversion or
exchange of the total maximum amount of such Convertible Securities issuable
upon the exercise of such Options shall be deemed to be outstanding and to have
been issued and sold by the Company at the time of the granting or sale of such
Options for such price per share. For purposes of this paragraph, the "price per
share for which Common Stock is issuable" shall be determined by dividing (A)
the total amount, if any, received or receivable by the Company as consideration
for the granting or sale of such Options, plus the minimum aggregate amount of
additional consideration payable to the Company upon exercise of all such
Options, plus in the case of such Options which relate to Convertible
Securities, the minimum aggregate amount of additional consideration, if any,
payable to the Company upon the issuance or sale of such Convertible Securities
and the conversion or exchange thereof, by (B) the total maximum number of
shares of Common Stock issuable upon the exercise of such Options or upon the
conversion or exchange of all such Convertible Securities issuable upon the
exercise of such Options. No further adjustment of the Conversion Price shall be
made when Convertible Securities are actually issued upon the exercise of such
Options or when Common Stock is actually issued upon the exercise of such
Options or the conversion or exchange of such Convertible Securities.
(ii) Issuance of Convertible Securities. If the Company in any manner issues or
----------------------------------
sells any Convertible Securities and the price per share for which Common Stock
is issuable upon conversion or exchange thereof is less than (a) the Conversion
Price in effect immediately prior to the time of such issue or sale, then the
maximum number of shares of Common Stock issuable upon conversion or exchange of
such Convertible Securities shall be deemed to be outstanding and to have been
issued and sold by the Company at the time of the issuance or sale of such
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Convertible Securities for such price per share. For the purposes of this
paragraph, the "price per share for which Common Stock is issuable" shall be
determined by dividing (A) the total amount received or receivable by the
Company as consideration for the issue or sale of such Convertible Securities,
plus the minimum aggregate amount of additional consideration, if any, payable
to the Company upon the conversion or exchange thereof, by (B) the total maximum
number of shares of Common Stock issuable upon the conversion or exchange of all
such Convertible Securities. No further adjustment of the Conversion Price shall
be made when Common Stock is actually issued upon the conversion or exchange of
such Convertible Securities, and if any such issue or sale of such Convertible
Securities is made upon exercise of any Options for which adjustments of the
Conversion Price had been or are to be made pursuant to other provisions of this
paragraph (h), no further adjustment of the Conversion Price shall be made by
reason of such issue or sale.
(iii) Change in Option Price or Conversion Rate. Except for Options granted in
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accordance with the provisions of paragraph (g)(iii) above or in accordance with
the Company's Rights Agreement dated as of February 26, 2000, if the purchase
price provided for in any Options, the additional consideration, if any, payable
upon the conversion or exchange of any Convertible Securities or the rate at
which any Convertible Securities are convertible into or exchangeable for Common
Stock changes at any time, the Conversion Price in effect at the time of such
change shall be immediately adjusted to the Conversion Price which would have
been in effect at such time had such Options or Convertible Securities still
outstanding provided for such changed purchase price, additional consideration
or conversion rate, as the case may be, at the time initially granted, issued or
sold; provided that if such adjustment would result in an increase of the
Conversion Price then in effect, such adjustment shall not be effective until 30
days after written notice thereof has been given by the Company to all holders
of the Series C Preferred Stock. For purposes of paragraph (h), if the terms of
any Option or Convertible Security which was outstanding as of the date of
issuance of the Series C Preferred Stock are changed in the manner described in
the immediately preceding sentence, then such Option or Convertible Security and
the Common Stock deemed issuable upon exercise, conversion or exchange thereof
shall be deemed to have been issued as of the date of such change; provided that
no such change shall at any time cause the Conversion Price hereunder to be
increased.
(iv) Treatment of Expired Options and Unexercised Convertible Securities.
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Upon the expiration of any Option or the termination of any right to convert or
exchange any Convertible Security without the exercise of any such Option or
right, the Conversion Price then in effect hereunder shall be adjusted
immediately to the Conversion Price which would have been in effect at the time
of such expiration or termination had such Option or Convertible Security, to
the extent outstanding immediately prior to such expiration or termination,
never been issued; provided that if such expiration or termination would result
in an increase in the Conversion Price then in effect, such increase shall not
be effective until 30 days after written notice thereof has been given to all
holders of the Series C Preferred Stock. For purposes of paragraph (h), the
expiration or termination of any Option or Convertible Security which was
outstanding as of the date of issuance of the Series C Preferred Stock shall not
cause the Conversion Price hereunder to be adjusted unless, and only to the
extent that, a change in the terms of such Option or Convertible Security caused
it to be deemed to have been issued after the date of issuance of the Series C
Preferred Stock.
(v) Calculation of Consideration Received. If any Common Stock, Option or
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Convertible Security is issued or sold or deemed to have been issued or sold for
cash, the consideration
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received therefor shall be deemed to be the amount received by the Company
therefor. If any Common Stock, Option or Convertible Security is issued or sold
for a consideration other than cash, the amount of the consideration other than
cash received by the Company shall be the fair value of such consideration,
except where such consideration consists of securities, in which case the amount
of consideration received by the Company shall be the Market Price thereof as of
the date of receipt. If any Common Stock, Option or Convertible Security is
issued to the owners of the non-surviving entity in connection with any merger
in which the Company is the surviving Company, the amount of consideration
therefor shall be deemed to be the fair value of such portion of the net assets
and business of the non-surviving entity as is attributable to such Common
Stock, Option or Convertible Security, as the case may be. The fair value of any
consideration other than cash and securities shall be determined jointly by the
Company and the holders of a majority of the outstanding Series C Preferred
Stock. If such parties are unable to reach agreement within a reasonable period
of time, the fair value of such consideration shall be determined by an
independent appraiser experienced in valuing such type of consideration jointly
selected by the Company and the holders of a majority of the outstanding Series
C Preferred Stock. The determination of such appraiser shall be final and
binding upon the parties, and the fees and expenses of such appraiser shall be
borne by the Company.
(vi) Integrated Transactions. In case any Option is issued in connection with
-----------------------
the issue or sale of other securities of the Company, together comprising one
integrated transaction in which no specific consideration is allocated to such
Option by the parties thereto, the Option shall be deemed to have been issued
for a consideration of $.01.
(vii) Record Date. If the Company takes a record of the holders of Common
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Stock for the purpose of entitling them (a) to receive a dividend or other
distribution payable in Common Stock, Options or in Convertible Securities or
(b) to subscribe for or purchase Common Stock, Options or Convertible
Securities, then such record date shall be deemed to be the date of the issue or
sale of the shares of Common Stock deemed to have been issued or sold upon the
declaration of such dividend or upon the making of such other distribution or
the date of the granting of such right of subscription or purchase, as the case
may be.
(i) Subdivision or Combination of Common Stock. If the Company at any time
------------------------------------------
subdivides (by any stock split, stock dividend, recapitalization or otherwise)
one or more classes of its outstanding shares of Common Stock into a greater
number of shares, the Conversion Price in effect immediately prior to such
subdivision shall be proportionately reduced, and if the Company at any time
combines (by reverse stock split or otherwise) one or more classes of its
outstanding shares of Common Stock into a smaller number of shares, the
Conversion Price in effect immediately prior to such combination shall be
proportionately increased.
(j) Reorganization, Reclassification, Consolidation, Merger or Sale. Any
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recapitalization, reorganization, reclassification, consolidation, merger, sale
of all or substantially all of the Company's assets or other transaction, in
each case which is effected in such a manner that the holders of Common Stock
are entitled to receive (either directly or upon subsequent liquidation) stock,
securities or assets with respect to or in exchange for Common Stock, is
referred to herein as an "Organic Change". Prior to the consummation of any
Organic Change, the Company shall make appropriate provisions (in form and
substance reasonably satisfactory to the holders of a majority of the Series C
Preferred Stock then outstanding) to insure that each of the holders of Series C
Preferred Stock shall thereafter have the right to acquire and receive, in lieu
of or in addition to (as the case may be) the shares of Conversion Stock
immediately theretofore
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acquirable and receivable upon the conversion of such holder's Series C
Preferred Stock, such shares of stock, securities or assets as such holder would
have received in connection with such Organic Change if such holder had
converted its Series C Preferred Stock immediately prior to such Organic Change.
In each such case, the Company shall also make appropriate provisions (in form
and substance reasonably satisfactory to the holders of a majority of the Series
C Preferred Stock then outstanding) to insure that the provisions of paragraph 4
hereof shall thereafter be applicable to the Series C Preferred Stock
(including, in the case of any such consolidation, merger or sale in which the
successor entity or purchasing entity is other than the Company, an immediate
adjustment of the Conversion Price pursuant to the provisions of this paragraph
4 to give effect to the value for the Common Stock reflected by the terms of
such consolidation, merger or sale, and a corresponding immediate adjustment in
the number of shares of Conversion Stock acquirable and receivable upon
conversion of Series C Preferred Stock, if the value so reflected is less than
the Conversion Price in effect immediately prior to such consolidation, merger
or sale). The Company shall not effect any such consolidation, merger or sale,
unless prior to the consummation thereof, the successor entity (if other than
the Company) resulting from consolidation or merger or the entity purchasing
such assets assumes by written instrument (in form and substance reasonably
satisfactory to the holders of a majority of the Series C Preferred Stock then
outstanding), the obligation to deliver to each such holder such shares of
stock, securities or assets as, in accordance with the foregoing provisions,
such holder may be entitled to acquire.
(k) Certain Events. If any event occurs of the type contemplated by the
--------------
provisions of paragraph 4 but not expressly provided for by such provisions
(including, without limitation, the granting of stock appreciation rights,
phantom stock rights or other rights with equity features), then the Company's
Board of Directors shall make an appropriate adjustment in the Conversion Price
so as to protect the rights of the holders of Series C Preferred Stock; provided
that no such adjustment shall increase the Conversion Price as otherwise
determined pursuant to paragraph 4 or decrease the number of shares of
Conversion Stock issuable upon conversion of each share of Series C Preferred
Stock.
(l) Notices.
-------
(i) Immediately upon any adjustment of the Conversion Price, the Company shall
give written notice thereof to all holders of Series C Preferred Stock, setting
forth in reasonable detail and certifying the calculation of such adjustment.
(ii) The Company shall give written notice to all holders of Series C Preferred
Stock at least 20 days prior to the date on which the Company closes its books
or takes a record (a) with respect to any dividend or distribution upon Common
Stock (other than the Company's ordinary Common Stock dividend), (b) with
respect to any pro rata subscription offer to holders of Common Stock or (c) for
determining rights to vote with respect to any Organic Change, dissolution or
liquidation.
(iii) The Company shall also give written notice to the holders of Series C
Preferred Stock at least 20 days prior to the date on which any Organic Change
shall take place.
(m) Change of Control Offer.
-----------------------
(i) Promptly after the occurrence of a Change of Control (the date of such
occurrence being the "Change of Control Date"), the Company shall commence
----------------------
(or cause to be commenced) an offer to purchase all outstanding shares of
Series C Preferred Stock pursuant to the terms described in paragraph (m)
(iv) (the "Change of Control Offer") at a purchase price equal to the
-----------------------
10
<PAGE>
Change of Control Amount on the Change of Control Payment Date, and shall
purchase (or cause the purchase of) any shares of Series C Preferred Stock
tendered in the Change of Control Offer pursuant to the terms hereof.
(ii) At the option of each holder of Series C Preferred Stock, the Change of
Control Amount payable to such holder shall be payable (i) in cash, (ii) in a
number of shares of Common Stock (or the securities of the entity into which the
Common Stock became converted or was exchanged in connection with the Change of
Control) determined by dividing the portion of the Change of Control Amount that
would otherwise be paid in cash (and which the holder has elected to receive in
shares) by the Conversion Price in effect as of the date on which the Change of
Control occurred (which will determine the number of shares of the Company that
the holder would receive, which shall then be used to determine the number of
shares of the successor entity, if applicable, that the holder is entitled to
receive), or (iii) in a combination of cash and such shares.
(iii) If a holder elects to receive the Change of Control Amount in cash, prior
to the mailing of the notice referred to in paragraph (m)(iv), but in any event
within 20 days following the date on which a Change of Control has occurred, the
Company shall (A) promptly determine if the purchase of the Series C Preferred
Stock for cash would violate or constitute a default under the indebtedness of
the Company and (B) either shall repay to the extent necessary all such
indebtedness or preferred stock of the Company that would prohibit the
repurchase of the Series C Preferred Stock pursuant to a Change of Control Offer
or obtain any requisite consents or approvals under instruments governing any
indebtedness or preferred stock of the Company to permit the repurchase of the
Series C Preferred Stock for cash. The Company shall first comply with this
paragraph (m)(iii) before it shall repurchase for cash any Series C Preferred
Stock pursuant to this paragraph (m).
(iv) Within 20 days following the date on which a Change of Control has
occurred, the Company shall send, by first-class mail, postage prepaid, a
notice (a "Change of Control Notice") to each holder of Series C Preferred
------------------------
Stock. If applicable, such notice shall contain all instructions and
materials necessary to enable such holders to tender Series C Preferred
Stock pursuant to the Change of Control Offer. Such notice shall state:
. (A) that a Change of Control has occurred, that a Change of Control Offer
is being made pursuant to this paragraph (m) and that all Series C
Preferred Stock validly tendered and not withdrawn will be accepted for
payment;
. (B) the purchase price (including the amount of accrued dividends, if any)
and the purchase date (which must be no earlier than 30 days nor later
than 60 days from the date such notice is mailed, other than as may be
required by law) (the "Change of Control Payment Date");
------------------------------
. (C) that any shares of Series C Preferred Stock not tendered will continue
to accrue dividends;
. (D) that, unless the Company defaults in making payment therefor, any
share of Series C Preferred Stock accepted for payment pursuant to the
Change of Control Offer shall cease to accrue dividends after the
Change of Control Payment Date;
11
<PAGE>
. (E) that holders electing to have any share of Series C Preferred Stock
purchased pursuant to a Change of Control Offer will be required to
surrender stock certificates representing such shares of Series C Preferred
Stock, properly endorsed for transfer, together with such other customary
documents as the Company and the Transfer Agent may reasonably request to
the Transfer Agent and registrar for the Series C Preferred Stock at the
address specified in the notice prior to the close of business on the
business day prior to the Change of Control Payment Date;
. (F) that holders will be entitled to withdraw their election if the
Company receives, not later than five business days prior to the Change of
Control Payment Date, a telegram, facsimile transmission or letter setting
forth the name of the holder, the number of shares of Series C Preferred
Stock the holder delivered for purchase and a statement that such holder is
withdrawing its election to have such shares of Series C Preferred Stock
purchased;
. (G) that holders who tender only a portion of the shares of Series C
Preferred Stock represented by a certificate delivered will, upon purchase
of the shares tendered, be issued a new certificate representing the
unpurchased shares of Series C Preferred Stock; and
. (H) the circumstances and relevant facts regarding such Change of Control
(including information with respect to pro forma historical income, cash
flow and capitalization after giving effect to such Change of Control).
(v) The Company will comply with any tender offer rules under the Exchange Act
which may then be applicable in connection with any offer made by the Company to
repurchase the shares of Series C Preferred Stock as a result of a Change of
Control. To the extent that the provisions of any securities laws or regulations
conflict with provisions hereof, the Company shall comply with the applicable
securities laws and regulations and shall not be deemed to have breached its
obligation hereunder by virtue thereof.
(vi) On the Change of Control Payment Date, the Company shall (A) accept for
payment the shares of Series C Preferred Stock validly tendered pursuant to the
Change of Control Offer, (B) pay to the holders of shares so accepted the
purchase price therefor, at the option of each such holder, in cash or Common
Stock (or the securities of the entity into which the Common Stock became
converted in connection with the Change of Control) as provided in paragraph
(ii) above and (C) cancel each surrendered certificate and retire the shares
represented thereby. Unless the Company defaults in the payment for the shares
of Series C Preferred Stock tendered pursuant to the Change of Control Offer,
dividends will cease to accrue with respect to the shares of Series C Preferred
Stock tendered and all rights of holders of such tendered shares will terminate,
except for the right to receive payment therefor on the Change of Control
Payment Date.
(vii) To accept the Change of Control Offer, the holder of a share of Series C
Preferred Stock shall deliver, prior to the close of business on the business
day prior to the Change of Control Payment Date, written notice to the Company
(or an agent designated by the Company for such purpose) of such holder's
acceptance, together with certificates evidencing the shares of Series C
Preferred Stock with respect to which the Change of Control Offer is being
accepted, duly
12
<PAGE>
endorsed for transfer.
(n) Certain Mergers. In connection with any consolidation with or merger with
---------------
or into, any person in a transaction where the Common Stock is converted into or
exchanged for securities of such person or an affiliate of such person, the
Company covenants that as a condition precedent to the consummation of any such
consolidation or merger it shall provide the holders of the Series C Preferred
Stock with a certificate, in form and substance satisfactory to the holders of a
majority of the Series C Senior Preferred Stock signed by a duly authorized
officer of the Company indicating that the person issuing such securities will
be organized and existing under the laws of a jurisdiction which allows for the
issuance of preference stock and that the Series C Preferred Stock shall be
converted into or exchanged for and shall become shares of such person having in
respect of such person substantially the same powers, preference and relative
participating, optional or other special rights and the qualifications,
limitations or restrictions thereon that the Series C Preferred Stock had
immediately prior to such transaction.
(o) Conversion at the Option of the Company. If on any date after the fifth
---------------------------------------
anniversary of the date of issuance of the Series C Preferred Stock, the Daily
Price has been at least $64.50 per share (as adjusted for any stock splits,
stock dividends, reverse stock splits, share consolidations or other similar
transactions) during any 30 trading days out of any consecutive 45 trading day
period, the Company may elect, by written notice delivered to the Transfer Agent
(with a copy to each holder of Series C Preferred Stock), no later than five
Market Days after such date, to cause all outstanding shares of Series C
Preferred Stock to be converted into fully paid and nonassessable shares of
Common Stock. Any such conversion shall be deemed to have been effected, without
further action by any party, immediately prior to the close of business on the
date such notice is received by the Transfer Agent. The number of shares of
Common Stock deliverable upon conversion of one share of Series C Preferred
Stock shall be equal to (i) the Accreted Value of such share on the date of
conversion, plus any dividends accrued to such date (whether or not earned or
declared) since the end of the previous Dividend Period, divided by (ii) the
Conversion Price on such date.
(p) Reacquired Shares. Any shares of Series C Preferred Stock purchased or
-----------------
otherwise acquired by the Company in any manner whatsoever shall be retired and
canceled promptly after the acquisition thereof. All such shares shall upon
their cancellation become authorized but unissued shares of preferred stock and
may be reissued as part of a new series of preferred stock to be created by an
amendment or amendments of the Company's articles of incorporation adopted by
the Board of Directors, subject to the conditions and restrictions on issuance
set forth herein.
5. Put/Conversion.
--------------
(a) At any time on or after October 26, 2010, the holders of a majority of the
shares of Series C Preferred Stock may, by written notice (the "Put Notice") to
----------
the Company, require the Company to purchase all of the outstanding shares of
Series C Preferred Stock at a price per share equal to the Accreted Value on the
date of purchase, plus all dividends accrued to such date (whether or not earned
or declared) since the most recent Dividend Payment Date (the "Put Right"). The
---------
Put Notice shall state the date of purchase, which shall be no earlier
than 30 days from the date of the Put Notice. The purchase price will be payable
in cash.
(b) Upon receipt of the Put Notice, the Company shall notify, by first class
mail, postage prepaid, each holder of record of the shares to be purchased at
such holder's address as the same appears on the stock register of the Company;
provided that neither the failure to give such notice
13
<PAGE>
nor any defect therein shall affect the validity of the giving of notice for the
purchase of any share of Series C Preferred Stock to be purchased except as to
the holder to whom the Company has failed to give said notice or except as to
the holder whose notice was defective. Each such notice shall state: (i) the
date of purchase; (ii) the purchase price; (iii) the place or places where
certificates for such shares are to be surrendered for payment of the purchase
price; and (iv) that dividends on the shares to be purchased will cease to
accrue on such date of purchase.
(c) Notice having been mailed as aforesaid, from and after the purchase date
(unless default shall be made by the Company in providing money for the payment
of the purchase price), dividends on the shares of Series C Preferred Stock
shall cease to accrue, and all rights of the holders thereof as stockholders of
the Company (except the right to receive from the Company the purchase price)
shall cease. Upon surrender in accordance with said notice of the certificates
for any shares so purchased (properly endorsed or assigned for transfer, if the
Board of Directors of the Company shall so require and the notice shall so
state), such share shall be purchased by the Company at the purchase price
aforesaid.
(d) For the avoidance of doubt, nothing in this paragraph 5 shall restrict the
right of the holders of Series C Preferred Stock to convert their shares of
Series C Preferred Stock into shares of Common Stock prior to such holders
acceptance of the purchase price.
(e) If a Put Notice has not been delivered to the Company on or before the date
which is one year from the applicable date set forth in paragraph 5(a) above,
then the Company shall have the right to convert all, but not less than all, of
the outstanding shares of Series C Preferred Stock into fully paid and non-
assessable shares of Common Stock pursuant to the provisions of paragraph 4.
Notwithstanding the foregoing, if the Conversion Cap prohibits the issuance of
the proper number of shares of Common Stock, then, in lieu of such shares of
Common Stock which may not be issued due to the Conversion Cap, the Company
shall pay to the holders of the Series C Preferred Stock cash in an amount equal
to the Current Market Price Per Common Share of such shares of Common Stock as
of the date of conversion. If, upon any such conversion, the holders of Series C
Preferred Stock will receive shares of Common Stock and cash, then each holder
shall receive shares and cash ratably in accordance with the number of shares of
Series C Preferred Stock held by such holder.
(f) The Company shall notify, by first class mail, postage prepaid, mailed not
less than 30 days nor more than 60 days prior to the date of conversion each
holder of record of the shares to converted at such holder's address as the same
appears on the stock register of the Company; provided that neither the failure
to give such notice nor any defect therein shall affect the validity of the
giving of notice for the conversion of any share of Series C Preferred Stock to
be converted except as to the holder to whom the Company has failed to give said
notice or except as to the holder whose notice was defective. Each such notice
shall state: (i) the conversion date; (ii) the number of shares of Common Stock
and the cash, if any, into which each share of Series C Preferred Stock will
convert; (iii) the place or places where certificates for shares of Series C
Preferred Stock are to be surrendered for conversion; and (iv) that dividends on
the shares to be converted will cease to accrue on such conversion date.
6. Voting Rights.
---------------
(a) Except as required by law, each holder of Series C Preferred Stock shall be
entitled to vote on all matters and shall be entitled to that number of votes
equal to the number of shares of Common Stock into which such holder's shares of
Series C Preferred Stock could be converted, pursuant to the provisions of
paragraph 4 hereof, on the record date for the determination of
14
<PAGE>
shareholders entitled to vote on such matter or, if no such record date is
established, on the date such vote is taken or any written consent of
shareholders is solicited. Except as otherwise expressly provided herein or as
required by law, the holders of shares of Series C Preferred Stock and Common
Stock shall vote together as a single class on all matters.
(b) In addition, so long as any of the Series C Preferred Stock is outstanding,
the affirmative vote of the holders of (x) all of the outstanding shares of
Series C Preferred Stock shall be necessary to alter or change the preferences,
rights or powers of the Series C Preferred Stock, and (y) a majority of the
outstanding shares of Series C Preferred Stock, voting together as a single
class, shall be necessary to: (i) increase or decrease the authorized number of
shares of Series C Preferred Stock, (ii) amend, alter, repeal or waive any
provision of the Restated Articles of Incorporation (including any articles of
amendment and whether by amendment, merger or otherwise) or the By-laws so as to
adversely affect the preferences, rights or powers of the Series C Preferred
Stock, including, without limitation, the voting powers, dividend rights and
liquidation preference of the Series C Preferred Stock, or change the Series C
Preferred Stock into any other securities (other than as required by paragraph
4(j)), cash or other property, (iii) issue any additional Series C Preferred
Stock or create, authorize or issue any capital stock that ranks prior (whether
with respect to dividends or upon liquidation, dissolution, winding up or
otherwise) to or pari passu with the Series C Preferred Stock, (iv) redeem or
repurchase for cash any Junior Securities, or (v) authorize the issuance of any
Common Stock or Convertible Securities at a price that would cause the
Conversion Price to be adjusted below the Minimum Conversion Price, provided
that the approval required by this clause (v) shall no longer be required at any
time following Shareholder Approval removing the Minimum Conversion Price
limitation and authorizing the Series C Preferred Stock to be converted into
Common Stock at any Conversion Price determined by application of the anti-
dilution protection set forth in paragraph 4 above without regard to the Minimum
Conversion Price.
7. Miscellaneous. If any holder of Series C Preferred Stock elects to receive
-------------
the Change of Control Amount in shares of Common Stock in connection with a
Change of Control Offer pursuant to paragraph 4(m), the Company shall comply
with all statutes, rules and regulations applicable thereto at that time,
including any and all regulations of the principal trading market on which the
Common Stock is then trading, including, if necessary, any shareholder approval
requirement under NASD Rule 4460(i), as it may be amended from time to time.
8. Definitions. The following terms, as used herein, shall have the following
-----------
meanings:
"Accreted Value" equals, with respect to one share of Series C Preferred
--------------
Stock, $1,000, adjusted for the amount of any dividends added to (or subtracted
from) the Accreted Value in accordance with paragraph 2(b) (which aggregate
amount shall be subject to adjustment whenever there shall occur a stock split,
combination, re-classification or other similar event involving the Series C
Preferred Stock).
"Applicable Percentage" is defined in paragraph 2(c) hereof.
---------------------
"Change of Control" means: (i) the sale, lease, transfer, conveyance or
-----------------
other disposition (other than by way of merger or consolidation), in one or a
series of related transactions, of all or substantially all the assets of the
Company and its subsidiaries taken as a whole to any "person" (as such term is
used in Section 13(d)(3) of the Exchange Act), (ii) the consummation of any
transaction (including any merger or consolidation) the result of which is that
any "person" (as defined above), becomes the beneficial owner (as determined in
accordance with Rules 13d-3 and 13d-5 under the Exchange Act except that a
person will be deemed to have beneficial
15
<PAGE>
ownership of all shares that such person has the right to acquire, whether such
right is exercisable immediately or only after the passage of time), directly or
indirectly, of more than 40% of the Voting Securities of the Company, or (iii)
the first day on which a majority of the members of the board of directors are
not Continuing Directors.
"Change of Control Amount" means, with respect to one share of Series C
------------------------
Preferred Stock, 101% of the Accreted Value per share plus any dividends accrued
to such date (whether or not earned or declared) since the end of the previous
Dividend Period; provided, however, that if the Change of Control occurs prior
-------- -------
to the fifth anniversary of the date of issue of any share of Series C Preferred
Stock, the Accreted Value shall be calculated assuming the Change of Control had
occurred on the fifth anniversary of the date of issue of such share of Series C
Preferred Stock (and assuming that no cash dividends had been paid on such share
from the actual date of the Change of Control through the fifth anniversary of
the date of issue).
"Continuing Directors" means individuals who constituted the Board of
--------------------
Directors of the Company on July 11, 2000 (the "Incumbent Directors"); provided
-------------------
that any individual becoming a director during any year shall be considered to
be an Incumbent Director if such individual's election, appointment or
nomination was recommended or approved by at least two-thirds of the other
Incumbent Directors continuing in office following such election, appointment or
nomination present, in person or by telephone, at any meeting of the Board of
Directors of the Company, after the giving of a sufficient notice to each
Incumbent Director so as to provide a reasonable opportunity for such Incumbent
Directors to be present at such meeting.
"Conversion Price" means $43.00, subject to adjustment from time to time as
----------------
provided in paragraph 4; provided, however, that if Shareholder Approval is
obtained, this definition will automatically be amended by substituting "$45.00"
for "$43.00"
"Conversion Stock" means shares of the Company's Common Stock, no par value
----------------
per share; provided that if there is a change such that the securities issuable
upon conversion of the Series C Preferred Stock are issued by an entity other
than the Company or there is a change in the type or class of securities so
issuable, then the term "Conversion Stock" shall mean one share of the security
issuable upon conversion of the Series C Preferred Stock if such security is
issuable in shares, or shall mean the smallest unit in which such security is
issuable if such security is not issuable in shares.
"Convertible Securities" means any stock or securities directly or
----------------------
indirectly convertible into or exchangeable for Common Stock.
"Current Market Price Per Common Share" means, as of any date, the average
-------------------------------------
(weighted by daily trading volume) of the Daily Prices per share of Common Stock
for the 30 consecutive trading days immediately prior to such date.
"Daily Price" means, as of any date, (i) if the shares of such class of
-----------
Common Stock then are listed and traded on the New York Stock Exchange, Inc.
("NYSE"), the closing price on such date as reported on the NYSE Composite
----
Transactions Tape; (ii) if the shares of such class of Common Stock then are not
listed and traded on the NYSE, the closing price on such date as reported by the
principal national securities exchange on which the shares are listed and
traded; (iii) if the shares of such class of Common Stock then are not listed
and traded on any such securities exchange, the last reported sale price on such
date on the National Market of the National Association of Securities Dealers,
Inc. Automated Quotation System ("NASDAQ"); or (iv) if the shares of such class
------
of Common Stock then are not traded on the NASDAQ National Market, the average
of the highest reported bid and lowest reported asked price on such date as
16
<PAGE>
reported by NASDAQ.
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
------------
"Liquidation Value" on any date means, with respect to one share of Series
-----------------
C Preferred Stock, the greater of (i) the Accreted Value on such date, plus all
dividends (whether or not earned or declared) accrued since the end of the
previous Dividend Period and (ii) the amount that would have been payable on a
number of shares of Common Stock equal to the number of shares of Common Stock
into which a share of Series C Preferred Stock was convertible immediately prior
to such date (disregarding any Conversion Cap or Minimum Conversion Price then
in effect).
"Market Day" means a day on which the principal national securities market
----------
or exchange on which the Common Stock is listed or admitted for trading is open
for the transaction of business.
"Market Price" of any security means the average of the closing prices of
------------
such security's sales on all securities exchanges on which such security may at
the time be listed, or, if there has been no sales on any such exchange on any
day, the average of the highest bid and lowest asked prices on all such
exchanges at the end of such day, or, if on any day such security is not so
listed, the average of the representative bid and asked prices quoted in the
NASDAQ System as of 4:00 P.M., New York time, or, if on any day such security is
not quoted in the NASDAQ System, the average of the highest bid and lowest asked
prices on such day in the domestic over-the-counter market as reported by the
National Quotation Bureau, Incorporated, or any similar successor organization,
in each such case averaged over a period of 21 days consisting of the day as of
which "Market Price" is being determined and the 20 consecutive business days
prior to such day. If at any time such security is not listed on any securities
exchange or quoted in the NASDAQ System or the over-the-counter market, the
"Market Price" shall be the fair value thereof determined jointly by the Company
and the holders of a majority of the Series C Preferred Stock. If such parties
are unable to reach agreement within a reasonable period of time, such fair
value shall be determined by an independent appraiser experienced in valuing
securities jointly selected by the Company and the holders of a majority of the
Series C Preferred Stock. The determination of such appraiser shall be final
and binding upon the parties, and the Company shall pay the fees and expenses of
such appraiser.
"Options" means any rights, warrants or options to subscribe for or
-------
purchase Common Stock or Convertible Securities.
"Person" as used herein means any corporation, limited liability company,
------
partnership, trust, organization, association, other entity or individual.
"Securities Act" means the Securities Act of 1933, as amended.
--------------
"Shareholder Approval" means the approval of requisite holders of the
--------------------
Common Stock with respect to each of the following: (i) the removal of the
Conversion Cap contemplated in subparagraph 4(a)(iii), (ii) the removal of the
Minimum Conversion Price contemplated in subparagraph 4(g)(iv), (iii) the
removal of any limitation on the conversion of the Series D Preferred Stock into
Series C Preferred Stock and on the conversion of the Series C Preferred Stock
into Common Stock and (iv) the removal of any limitation on the right of Welsh,
Carson, Anderson & Stowe VIII, L.P., Welsh, Carson, Anderson & Stowe IX, L.P. or
any of their Affiliates to vote any Voting Securities contained in Section 4.02
of that certain Amended and Restated Shareholders Agreement dated as of July 26,
2000.
"Transfer Agent" means the transfer agent for the Series C Preferred Stock
--------------
appointed by
17
<PAGE>
the Company.
"Voting Securities" means securities of the Company ordinarily having the
-----------------
power to vote for the election of directors of the Company; provided that when
the term "Voting Securities" is used with respect to any other Person it means
the capital stock or other equity interests of any class or kind ordinarily
having the power to vote for the election of directors or other members of the
governing body of such Person.
APPENDIX II
TERMS OF THE SENIOR CUMULATIVE
CONVERTIBLE PREFERRED STOCK, SERIES D
OF
CFW COMMUNICATIONS COMPANY
1. Number; Rank. The number of authorized shares of Senior Cumulative
------------
Convertible Preferred Stock, Series D (the "Series D Preferred Stock") shall be
------------------------
77,200. The Series D Preferred Stock shall, with respect to dividend rights and
rights on liquidation, dissolution and winding up, (i) rank pari passu with the
Company's Senior Cumulative Convertible Preferred Stock, Series B (the "Series B
--------
Preferred Stock") and with the Company's Senior Cumulative Convertible Preferred
---------------
Stock, Series C (the "Series C Preferred Stock") and (ii) senior to all classes
------------------------
of the Company's common stock, no par value per share ("Common Stock"), and to
------------
each other class of capital stock of the Company now or hereafter established
(collectively, the "Junior Securities"). The definition of Junior Securities
-----------------
shall also include any rights or options exercisable for or convertible into any
of the Junior Securities.
2. Dividends.
---------
(a) Each holder of Series D Preferred Stock shall be entitled to
receive, in respect of each Dividend Period, when, as and if declared by the
Board of Directors of the Company, out of funds legally available for the
payment of dividends, cumulative dividends in an amount per share equal to the
excess (if any) of (i) the Applicable Percentage of the Accreted Value as of the
immediately preceding Dividend Payment Date (or, for the initial Dividend
Period, as of the date of issuance) over (ii) the amount of any regular cash
dividends per share of Series D Preferred Stock that have been paid during such
Dividend Period pursuant to paragraph 2(d). Subject to the provisions of
paragraph 2(b), dividends paid pursuant to this paragraph 2(a) shall be payable
in cash in arrears semi-annually on June 30 and December 31 of each year (each
of such dates being a "Dividend Payment Date" and each such semi-annual period
---------------------
being a "Dividend Period"). Such dividends shall accrue from the date of
---------------
issue (except that dividends on any amounts added to the Accreted Value pursuant
to paragraph 2(b) shall accrue from the date such amounts are added to the
Accreted Value), whether or not in any Dividend Period or Periods there shall be
funds of the Company legally available for the payment of such dividends. Each
such dividend shall be payable to the holders of record of shares of the Series
D Preferred Stock on June 1 and December 1, as they appear on the stock records
of the Company at the close of business on such record dates. The date on which
the Company initially issues any share of Series D Preferred
18
<PAGE>
Stock shall be deemed to be its "date of issue" regardless of the number of
times transfer of such share is made on the stock records maintained by or for
the Company and regardless of the number of certificates which may be issued to
evidence such share.
(b) If dividends are not paid in cash on any Dividend Payment Date for the
immediately preceding Dividend Period (or portion thereof if less than a full
Dividend Period), the unpaid amount shall be added to the Accreted Value for
purposes of calculating succeeding periods' dividends.
(c) The Applicable Percentage for each full Dividend Period for the Series
D Preferred Stock shall be 9.00%. The Applicable Percentage for the initial
Dividend Period, or any other period shorter or longer than a full Dividend
Period, on the Series D Preferred Stock shall be computed on the basis of a per
annum rate of 18.00% and the actual number of days elapsed over twelve 30-day
months and a 360-day year. No interest, or sum of money in lieu of interest,
shall be payable in respect of any dividend payment or payments on the Series D
Preferred Stock that may be in arrears.
(d) In case the Company shall fix a record date for the making of any
dividend or distribution to holders of Series C Preferred Stock, whether payable
in cash, securities or other property, the holder of each share of Series D
Preferred Stock on such record date shall be entitled to receive an equivalent
dividend or distribution based on the number of shares of Series C Preferred
Stock into which such share of Series D Preferred Stock would be convertible on
such record date (as if the Approval Date had occurred on such record date).
(e) So long as any shares of the Series D Preferred Stock are outstanding,
no Junior Securities shall be redeemed, purchased or otherwise acquired for any
consideration (or any moneys be paid to or made available for a sinking fund for
the redemption of any shares of any such stock) by the Company, directly or
indirectly (except by conversion into or exchange for Junior Securities) or any
cash dividend made on any Junior Security other than the ordinary dividend on
the Company's Common Stock as determined and declared by the Board in which the
holders of the Series D Preferred Stock participate in accordance with
subparagraph (d) above, unless in each case (i) the full dividends on all
outstanding shares of the Series D Preferred Stock shall have been paid or set
apart for payment for all past Dividend Periods and (ii) sufficient funds shall
have been paid or set apart for the payment of the dividend for the current
Dividend Period with respect to the Series D Preferred Stock.
3. Liquidation Preference.
----------------------
(a) In the event of any liquidation, dissolution or winding up of the
Company, whether voluntary or involuntary, before any payment or distribution of
the assets of the Company (whether capital or surplus) shall be made to or set
apart for the holders of Junior Securities, the holder of each share of Series D
Preferred Stock shall be entitled to receive an amount per share equal to the
Liquidation Value of such share on the date of distribution, and such holders
shall not be entitled to any further payment. If, upon any liquidation,
dissolution or winding up of the Company, the assets of the Company, or proceeds
thereof, distributable among the holders of the shares of Series D Preferred
Stock, Series B Preferred Stock and Series C
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Preferred Stock (collectively, the "Preferred Stock") shall be insufficient to
---------------
pay in full the preferential amount due on such shares, then such assets, or the
proceeds thereof, shall be distributed among the holders of shares of Preferred
Stock ratably in accordance with the respective amounts that would be payable on
such shares of Preferred Stock if all amounts payable thereon were paid in full.
Solely for the purposes of this paragraph 3, neither the sale, conveyance,
exchange or transfer (for cash, shares of stock, securities or other
consideration) of all or substantially all of the property or assets of the
Company nor the consolidation or merger of the Company with or into one or more
other entities shall be deemed to be a liquidation, dissolution or winding-up of
the Company.
(b) After payment shall have been made in full to the holders of the
Preferred Stock, as provided in this paragraph 3, any other series or class or
classes of Junior Securities shall, subject to the respective terms and
provisions (if any) applying thereto, be entitled to receive any and all assets
remaining to be paid or distributed to holders of capital stock of the Company,
and the holders of the Preferred Stock shall not be entitled to share therein.
4. Conversion.
----------
(a) Subject to the provisions of this paragraph 4, each share of Series
D Preferred Stock shall be automatically converted into one share of Series C
Preferred Stock on the Approval Date without any further action required by the
Company or the holder of such share. The accreted value of such share of Series
C Preferred Stock into which such share of Series D Preferred Stock shall
convert on the Approval Date shall be: (i) if the Approval Date occurs prior to
the date which is six months from the original date of issue of the Series D
Preferred, then equal to the accreted value which such share of Series C
Preferred Stock would have had on the Approval Date if such share had been
issued on the date of original issue of the share of Series D Preferred Stock
which is thereby converted, or (ii) if the Approval Date occurs on or after the
date which is six months from the original date of issue of the Series D
Preferred, then equal to the Accreted Value.
(b) Unless the shares issuable on conversion pursuant to this paragraph 4
are to be issued in the same name as the name in which such shares of Series D
Preferred Stock are registered, each share surrendered for conversion shall be
accompanied by instruments of transfer, in form reasonably satisfactory to the
Company, duly executed by the holder or the holder's duly authorized attorney
and an amount sufficient to pay any transfer or similar tax.
(i) As promptly as possible, but in any event within 5 days, after the
Approval Date, the Company shall issue and shall deliver to such holder, or on
the holder's written order to the holder's transferee, a certificate or
certificates for the whole number of shares of Series C Preferred Stock issuable
upon the conversion of such shares in accordance with the provisions of this
paragraph 4.
(ii) All shares of Series C Preferred Stock delivered upon conversion
of the Series D Preferred Stock will upon delivery be duly and validly issued
and fully paid and non-assessable, free of all liens and charges and not subject
to any preemptive rights.
20
<PAGE>
(c) The Company shall at all times reserve and keep available, free from
preemptive rights, such number of its authorized but unissued shares of Series C
Preferred Stock (and shares of Common Stock into which such shares of Series C
Preferred Stock may be converted) as shall be required for the purpose of
effecting conversion of the Series D Preferred Stock.
(d) Prior to the delivery of any securities which the Company shall be
obligated to deliver upon conversion of the Series D Preferred Stock, the
Company shall comply with all applicable federal and state laws and regulations
which require action to be taken by the Company.
(e) The Company will pay any and all documentary stamp or similar issue or
transfer taxes payable in respect of the issue or delivery of shares of Series C
Preferred Stock on conversion of the Series D Preferred Stock pursuant hereto;
provided that the Company shall not be required to pay any tax which may be
payable in respect of any transfer involved in the issue or delivery of shares
of Series C Preferred Stock in a name other than that of the holder of the
Series D Preferred Stock to be converted and no such issue or delivery shall be
made unless and until the person requesting such issue or delivery has paid to
the Company the amount of any such tax or has established, to the satisfaction
of the Company, that such tax has been paid.
(f) In connection with the conversion of any shares of Series D Preferred
Stock, no fractional shares of Series C Preferred Stock shall be issued, but in
lieu thereof the Company shall pay to the holder thereof the value of such share
in cash as determined by the Accreted Value of such share, plus all dividends
(whether or not earned or declared) accrued since the end of the previous
Dividend Period.
(g) Subdivision or Combination of Common Stock. If the Company at any time
------------------------------------------
subdivides (by any stock split, stock dividend, recapitalization or otherwise)
its outstanding shares of Series C Preferred Stock into a greater number of
shares, or combines (by reverse stock split or otherwise) its outstanding shares
of Series C Preferred Stock into a smaller number of shares, then the number of
shares of Series C Preferred Stock into which the Series D Preferred Stock shall
be convertible shall be adjusted proportionately.
(h) Reorganization, Reclassification, Consolidation, Merger or Sale. Any
---------------------------------------------------------------
recapitalization, reorganization, reclassification, consolidation, merger, sale
of all or substantially all of the Company's assets or other transaction, in
each case which is effected in such a manner that the holders of Series C
Preferred Stock or Common Stock are entitled to receive (either directly or upon
subsequent liquidation) stock, securities or assets with respect to or in
exchange for Series C Preferred Stock or Common Stock, is referred to herein as
an "Organic Change". Prior to the consummation of any Organic Change, the
Company shall make appropriate provisions (in form and substance reasonably
satisfactory to the holders of a majority of the Series D Preferred Stock then
outstanding) to insure that each of the holders of Series D Preferred Stock
shall thereafter have the right to acquire and receive, upon the obtaining of
Shareholder Approval, in lieu of or in addition to (as the case may be) the
shares of Conversion Stock immediately theretofore acquirable and receivable
upon the conversion of such holder's
21
<PAGE>
Series D Preferred Stock, such shares of stock, securities or assets as such
holder would have received in connection with such Organic Change if such
holder's shares of Series D Preferred Stock had been converted immediately
prior to such Organic Change. In each such case, the Company shall also make
appropriate provisions (in form and substance reasonably satisfactory to the
holders of a majority of the Series D Preferred Stock then outstanding) to
insure that the provisions of paragraph 4 hereof shall thereafter be applicable
to the Series D Preferred Stock. The Company shall not effect any such
consolidation, merger or sale, unless prior to the consummation thereof, the
successor entity (if other than the Company) resulting from consolidation or
merger or the entity purchasing such assets assumes by written instrument (in
form and substance reasonably satisfactory to the holders of a majority of the
Series D Preferred Stock then outstanding), the obligation to deliver to each
such holder such shares of stock, securities or assets as, in accordance with
the foregoing provisions, such holder may be entitled to acquire.
(i) Notices.
-------
(i) The Company shall give written notice to all holders of Series D
Preferred Stock at least 20 days prior to the date on which the Company closes
its books or takes a record (a) with respect to any dividend or distribution
upon Common Stock (other than the Company's ordinary Common Stock dividend), (b)
with respect to any pro rata subscription offer to holders of Common Stock or
(c) for determining rights to vote with respect to any Organic Change,
dissolution or liquidation.
(ii) The Company shall also give written notice to the holders of
Series D Preferred Stock at least 20 days prior to the date on which any Organic
Change shall take place.
(j) Change of Control Offer.
-----------------------
(i) Promptly after the occurrence of a Change of Control (the date of
such occurrence being the "Change of Control Date"), the Company shall commence
----------------------
(or cause to be commenced) an offer to purchase all outstanding shares of Series
D Preferred Stock pursuant to the terms described in paragraph (j)(iv) (the
"Change of Control Offer") at a purchase price equal to the Change of Control
------------------------
Amount on the Change of Control Payment Date, and shall purchase (or cause the
purchase of) any shares of Series D Preferred Stock tendered in the Change of
Control Offer pursuant to the terms hereof.
(ii) The Change of Control Amount payable to each holder of
Series D Preferred Stock shall be payable in cash.
(iii) Prior to the mailing of the notice referred to in
paragraph (j)(iv), but in any event within 20 days following the date on which a
Change of Control has occurred, the Company shall (A) promptly determine if the
purchase of the Series D Preferred Stock for cash would violate or constitute a
default under the indebtedness of the Company and (B) either shall repay to the
extent necessary all such indebtedness or preferred stock of the Company that
would prohibit the repurchase of the Series D Preferred Stock pursuant to a
Change of Control
22
<PAGE>
Offer or obtain any requisite consents or approvals under instruments
governing any indebtedness or preferred stock of the Company to permit the
repurchase of the Series D Preferred Stock for cash. The Company shall first
comply with this paragraph (j)(iii) before it shall repurchase for cash any
Series D Preferred Stock pursuant to this paragraph (j).
(iv) Within 20 days following the date on which a Change of Control
has occurred, the Company shall send, by first-class mail, postage prepaid, a
notice (a "Change of Control Notice") to each holder of Series D Preferred
------------------------
Stock. If applicable, such notice shall contain all instructions and materials
necessary to enable such holders to tender Series D Preferred Stock pursuant to
the Change of Control Offer. Such notice shall state:
(A) that a Change of Control has occurred, that a Change of Control
Offer is being made pursuant to this paragraph (j) and that all Series D
Preferred Stock validly tendered and not withdrawn will be accepted for
payment;
(B) the purchase price (including the amount of accrued dividends,
if any) and the purchase date (which must be no earlier than 30 days nor
later than 60 days from the date such notice is mailed, other than as may
be required by law) (the "Change of Control Payment Date");
------------------------------
(C) that any shares of Series D Preferred Stock not tendered will
continue to accrue dividends;
(D) that, unless the Company defaults in making payment therefor,
any share of Series D Preferred Stock accepted for payment pursuant to the
Change of Control Offer shall cease to accrue dividends after the Change of
Control Payment Date;
(E) that holders electing to have any share of Series D Preferred
Stock purchased pursuant to a Change of Control Offer will be required to
surrender stock certificates representing such shares of Series D Preferred
Stock, properly endorsed for transfer, together with such other customary
documents as the Company and the Transfer Agent may reasonably request to
the Transfer Agent and registrar for the Series D Preferred Stock at the
address specified in the notice prior to the close of business on the
business day prior to the Change of Control Payment Date;
(F) that holders will be entitled to withdraw their election if the
Company receives, not later than five business days prior to the Change of
Control Payment Date, a telegram, facsimile transmission or letter setting
forth the name of the holder, the number of shares of Series D Preferred
Stock the holder delivered for purchase and a statement that such holder is
withdrawing its election to have such shares of Series D Preferred Stock
purchased;
(G) that holders who tender only a portion of the shares of Series
D Preferred Stock represented by a certificate delivered will, upon
purchase of the shares tendered, be issued a new certificate representing
the unpurchased shares of Series D Preferred Stock; and
23
<PAGE>
(H) the circumstances and relevant facts regarding such
Change of Control (including information with respect to pro forma
historical income, cash flow and capitalization after giving effect to such
Change of Control).
(v) The Company will comply with any tender offer rules under the
Exchange Act which may then be applicable in connection with any offer made by
the Company to repurchase the shares of Series D Preferred Stock as a result of
a Change of Control. To the extent that the provisions of any securities laws or
regulations conflict with provisions hereof, the Company shall comply with the
applicable securities laws and regulations and shall not be deemed to have
breached its obligation hereunder by virtue thereof.
(vi) On the Change of Control Payment Date, the Company shall (A)
accept for payment the shares of Series D Preferred Stock validly tendered
pursuant to the Change of Control Offer, (B) pay to the holders of shares so
accepted the purchase price therefor in cash and (C) cancel each surrendered
certificate and retire the shares represented thereby. Unless the Company
defaults in the payment for the shares of Series D Preferred Stock tendered
pursuant to the Change of Control Offer, dividends will cease to accrue with
respect to the shares of Series D Preferred Stock tendered and all rights of
holders of such tendered shares will terminate, except for the right to receive
payment therefor on the Change of Control Payment Date.
(vii) To accept the Change of Control Offer, the holder of a share
of Series D Preferred Stock shall deliver, prior to the close of business on the
business day prior to the Change of Control Payment Date, written notice to the
Company (or an agent designated by the Company for such purpose) of such
holder's acceptance, together with certificates evidencing the shares of Series
D Preferred Stock with respect to which the Change of Control Offer is being
accepted, duly endorsed for transfer.
(k) Certain Mergers. In connection with any consolidation with or merger
---------------
with or into, any person in a transaction where the Common Stock is converted
into or exchanged for securities of such person or an affiliate of such person,
the Company covenants that as a condition precedent to the consummation of any
such consolidation or merger it shall provide the holders of the Series D
Preferred Stock with a certificate, in form and substance satisfactory to the
holders of a majority of the Series D Senior Preferred Stock signed by a duly
authorized officer of the Company indicating that the person issuing such
securities will be organized and existing under the laws of a jurisdiction which
allows for the issuance of preference stock and that the Series D Preferred
Stock shall be converted into or exchanged for and shall become shares of such
person having in respect of such person substantially the same powers,
preference and relative participating, optional or other special rights and the
qualifications, limitations or restrictions thereon that the Series D Preferred
Stock had immediately prior to such transaction.
(l) Reacquired Shares. Any shares of Series D Preferred Stock purchased or
-----------------
otherwise acquired by the Company in any manner whatsoever shall be retired and
canceled promptly after the acquisition thereof. All such shares shall upon
their cancellation become authorized but unissued shares of preferred stock and
may be reissued as part of a new series of
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<PAGE>
preferred stock to be created by an amendment or amendments of the Company's
articles of incorporation adopted by the Board of Directors, subject to the
conditions and restrictions on issuance set forth herein.
5. Redemption.
----------
(a) If the Approval Date has not occurred prior to the third
anniversary of the date of issue of the Series D Preferred Stock
(the "Third Anniversary") the holders of a majority of the shares of Series
-----------------
D Preferred Stock (the "Requesting Stockholders") may require the Company to
-----------------------
redeem all of the outstanding shares of Series D Preferred
Stock at a redemption price equal to the Liquidation Value. The Requesting
Stockholders shall deliver a notice of redemption (the "Redemption Notice") to
-----------------
the Company no later than 30 days following the Third Anniversary. The
redemption price shall be payable in two equal installments,the first
installment being payable on or before the third business day following delivery
of the Redemption Notice and the second installment being payable on or before
the date which is one year following delivery of the Redemption Notice, subject,
in each case, to any limitations on such redemption that may be contained in the
terms of the senior credit arrangements of the company in effect on the original
date of issue of Series D Preferred Stock (the"Senior Credit Arrangements").
--------------------------
If the company is of the opinion redemption will be in violation of the terms of
the Senior Credit Arrangements, the Requesting Stockholders may require the
Company to use its best efforts to consummate the sale and issuance of high-
yield debt or other subordinated debt securities as soon as practicable after
the Third Anniversary and to use the proceeds from such sale and issuance to
redeem all of the outstanding shares of Series D Preferred Stock.
(i) If, at any time following the issue of the Series D Preferred
Stock, the Company consummates a sale and issuance of any debt or equity
securities, the holders of a majority of the shares of Series D Preferred Stock
may require the Company to use the proceeds of such sale and issuance to redeem
the Series D Preferred Stock at a redemption price equal to the Liquidation
Value. The Company will use its best efforts to obtain exceptions from its debt
financings to permit such refinancing of the Series D Preferred Stock.
(ii) At any time (a) following the Third Anniversary, the Company
may, at its option, redeem all, but not less than all, of the outstanding shares
of Series D Preferred Stock at a redemption price equal to 105% of the
Liquidation Value thereof, and (b) following the fifth anniversary of the date
of issue of the Series D Preferred Stock, the Company may, at its option, redeem
all, but not less than all, of the outstanding shares of Series D Preferred
Stock at a redemption price equal to the Liquidation Value thereof.
(iii) On October 26, 2010, the Company will be required to redeem
all of the outstanding shares of Series D Preferred Stock at a redemption price
per share equal to the Liquidation Value on such date. The redemption price will
be payable in cash.
(b) In the case of (iii) and (iv) above, notice of any redemption
shall be given by the Company by first class mail, postage prepaid, mailed not
less than 30 days nor more than 60 days prior to the redemption date, to each
holder of record of the shares to be redeemed at such
25
<PAGE>
holder's address as the same appears on the stock register of the Company;
provided that neither the failure to give such notice nor any defect therein
shall affect the validity of the giving of notice for the redemption of any
share of Series D Preferred Stock to be redeemed except as to the holder to whom
the Company has failed to give said notice or except as to the holder whose
notice was defective. Each such notice shall state: (i) the redemption date;
(ii) the redemption price; (iii) the place or places where certificates for such
shares are to be surrendered for payment of the redemption price; and (iv) that
dividends on the shares to be redeemed will cease to accrue on such redemption
date.
(c) Notice having been mailed as aforesaid, from and after the
redemption date (unless default shall be made by the Company in providing money
for the payment of the redemption price of the shares called for redemption),
dividends on the shares of Series D Preferred Stock so called for redemption
shall cease to accrue, and all rights of the holders thereof as stockholders of
the Company (except the right to receive from the Company the redemption price)
shall cease. Upon surrender in accordance with said notice of the certificates
for any shares so redeemed (properly endorsed or assigned for transfer, if the
Board of Directors of the Company shall so require and the notice shall so
state), such share shall be redeemed by the Company at the redemption price
aforesaid.
6. Voting Rights.
--------------
(a) Except as required by law, each holder of Series D Preferred Stock
shall not be entitled to vote on any matter subject to the vote of the holders
of the Company's Voting Securities.
(b) So long as any of the Series D Preferred Stock is outstanding, the
affirmative vote of the holders of (x) all of the outstanding shares of Series D
Preferred Stock shall be necessary to alter or change the preferences, rights or
powers of the Series D Preferred Stock, and (y) a majority of the outstanding
shares of Series D Preferred Stock, voting together as a single class, shall be
necessary to: (i) increase or decrease the authorized number of shares of Series
B Preferred Stock, Series C Preferred Stock or Series D Preferred Stock, (ii)
amend, alter, repeal or waive any provision of the Restated Articles of
Incorporation (including any articles of amendment and whether by amendment,
merger or otherwise) or the By-laws with respect to the preferences, rights or
powers of the Series B Preferred Stock, Series C Preferred Stock or Series D
Preferred Stock, including, without limitation, the voting powers, dividend
rights and liquidation preference of the Series B Preferred Stock, Series C
Preferred Stock or Series D Preferred Stock, or change the Series D Preferred
Stock into any other securities, cash or other property, (iii) issue any
additional Series B Preferred Stock, Series C Preferred Stock or Series D
Preferred Stock or create, authorize or issue any capital stock that ranks prior
(whether with respect to dividends or upon liquidation, dissolution, winding up
or otherwise) to or pari passu with the Series D Preferred Stock, or (iv) redeem
or repurchase for cash any Junior Securities.
(c) So long as any of the Series D Preferred Stock is outstanding,
without the affirmative vote of the holders of a majority of the outstanding
shares of Series D Preferred Stock, voting together as a single class, the
Company will not:
26
<PAGE>
(i) and will not permit any of its subsidiaries to, Incur any
Indebtedness (other than Indebtedness existing on the Closing Date); provided
that the Company may Incur Indebtedness if, after giving pro forma effect to the
Incurrence of such Indebtedness and the receipt and application of the proceeds
therefrom, the Indebtedness to EBITDA Ratio would be positive but (1) less than
7.0:1.0, if prior to August 15, 2004 and (2) less than 6.0:1.0, if on or after
August 15, 2004; and provided further that the Company and its subsidiaries may
Incur each and all of the following:
(A) Indebtedness of the Company outstanding at any time in
an aggregate principal amount (together with refinancings thereof) not to
exceed $325.0 million, less any amount of such Indebtedness permanently
repaid as provided in paragraph 6(c)(ix);
(B) Indebtedness owed (A) to the Company or (B) to any
subsidiary of the Company; provided that any event which results in any
such subsidiary ceasing to be a subsidiary or any subsequent transfer of
such Indebtedness (other than to the Company or another subsidiary) shall
be deemed, in each case, to constitute an Incurrence of such Indebtedness
not permitted by this clause (B);
(C) Indebtedness issued in exchange for, or the net proceeds
of which are used to refinance or refund, then outstanding Indebtedness and
any refinancings thereof in an amount not to exceed the amount so
refinanced or refunded (plus premiums, accrued interest, fees and
expenses); provided that in no event may Indebtedness of the Company be
refinanced by means of any Indebtedness of any subsidiary of the Company
pursuant to this clause (C);
(D) Indebtedness
(1) in respect of performance, surety or appeal bonds
provided in the ordinary course of business;
(2) under Currency Agreements and Interest Rate Agreements;
provided that such agreements (a) are designed solely to protect the
Company or its subsidiaries against fluctuations in foreign currency
exchange rates or interest rates and (b) do not increase the
Indebtedness of the obligor outstanding at any time other than as a
result of fluctuations in foreign currency exchange rates or interest
rates or by reason of fees, indemnities and compensation payable
thereunder; and
(3) arising from agreements providing for indemnification,
adjustment of purchase price or similar obligations, or from
Guarantees or letters of credit, surety bonds or performance bonds
securing any obligations of the Company or any of its subsidiaries
pursuant to such agreements, in any case Incurred in connection with
the disposition of any business, assets or subsidiary (other than
Guarantees of Indebtedness Incurred by any Person acquiring all or any
portion of such business, assets or subsidiary for the purpose of
financing
27
<PAGE>
such acquisition), in a principal amount not to exceed the gross
proceeds actually received by the Company or any subsidiary of the
Company in connection with such disposition;
(E) Indebtedness of the Company, to the extent the net
proceeds thereof are promptly (A) used to purchase Notes tendered as an
Offer to Purchase made as a result of a Charge in Control or (B) deposited
to defease the Notes as described in Section 8.02 and Section 8.03 of the
Indenture;
(F) Guarantees of the Notes and Subordinated Notes and
Guarantees of Indebtedness of the Company or any of its subsidiaries
provided that the Guarantee of such Indebtedness is permitted by and made
in accordance with paragraph 6(c)(v);
(G) Acquired Indebtedness; provided that the Indebtedness to
EBITDA Ratio, after giving effect to such Incurrence on a pro forma basis,
is no greater than such ratio prior to giving pro forma effect to such
Incurrence;
(H) The Incurrence by the Company or any of its subsidiaries
of Indebtedness to finance the cost (including the cost of design,
development, improvement, acquisition, construction, installation,
transportation or integration) to acquire equipment, inventory or network
assets, in an aggregate principal amount not to exceed $10.0 million in any
fiscal year; provided that amounts not so Incurred in any fiscal year may
be accumulated and Incurred by the Company or any of its subsidiaries in
any subsequent fiscal year; and provided further that the aggregate amount
of Indebtedness that may be outstanding under this clause (G) at any one
time shall not exceed $75.0 million;
(I) Indebtedness of the Company not to exceed, at any one
time outstanding, two times the sum of:
(1) the Net Cash Proceeds received by the Company, other
than from MSDW and WCAS up to an aggregate amount of $112.5 million,
from the issuance and sale of its Capital Stock or options, warrants
or other rights to acquire such Capital Stock to a Person that is not
a subsidiary of the Company, to the extent such Net Cash Proceeds have
not been used pursuant to clause (B)(2) of the first paragraph or
clause (3) or (4) of the second paragraph of paragraph 6(c)(ii) to
make a Restricted Payment, and
(2) 80% of the fair market value of property (other than
cash or Cash Equivalents) received by the Company after the Closing
Date from the sale of its Capital Stock or options, warrants or other
rights to acquire such Capital Stock to a person that is not a
subsidiary of the Company, to the extent such sale of Capital Stock
has not been used pursuant to clause (3) or (4) of the second
paragraph of paragraph 6(c)(ii) to make a Restricted Payment;
28
<PAGE>
(J) Indebtedness of the Company (in addition to Indebtedness
permitted under clauses (A) through (G) above) in an aggregate
principal amount outstanding at any time (together with refinancings
thereof) not to exceed $15.0 million at any time prior to closing of
the R&B Acquisition and $25.0 million thereafter, less any amount of
such Indebtedness permanently repaid as provided under paragraph
6(c)(ix).
Notwithstanding any other provision of this paragraph 6(c)(i), the maximum
amount of Indebtedness that the Company or a subsidiary may Incur pursuant to
this paragraph 6(c)(i) shall not be deemed to be exceeded, with respect to any
outstanding Indebtedness due solely to the result of fluctuations in the
exchange rates of currencies.
For purposes of determining any particular amount of Indebtedness under this
paragraph 6(c)(i), (1) Indebtedness Incurred under the Credit Facility on or
prior to the Closing Date shall be treated as Incurred pursuant to clause (A) of
this paragraph 6(c)(i), (2) Guarantees, Liens or obligations with respect to
letters of credit supporting Indebtedness otherwise included in the
determination of such particular amount shall not be included and (3) any Liens
granted pursuant to the equal and ratable provisions referred to in paragraph
6(c)(vii) shall not be treated as Indebtedness. For purposes of determining
compliance with this paragraph 6(c)(i), in the event that an item of
Indebtedness meets the criteria of more than one of the types of Indebtedness
described in the above clauses (other than Indebtedness referred to in clause
(1) of the preceding sentence), the Company, in its sole discretion, shall
classify, and from time to time may reclassify, such item of Indebtedness and
only be required to include the amount and type of such Indebtedness in one of
such clauses.
Notwithstanding anything herein to the contrary, if the Company or any of its
subsidiaries issues any security convertible into Indebtedness, the documents
governing such security shall provide that unless the Incurrence of such
Indebtedness would be permitted under this paragraph 6(c)(i), such security may
not be converted into Indebtedness.
(ii) and will not permit any of its material subsidiaries
to, directly or indirectly, (1) declare or pay any dividend or make any
distribution on or with respect to its Capital Stock (other than (x) dividends
or distributions payable solely in shares of its Capital Stock or in options,
warrants or other rights to acquire shares of such Capital Stock and (y) pro
rata dividends or distributions on Common Stock of any material subsidiaries
held by minority stockholders) held by Persons other than the Company or any of
its subsidiaries, (2) purchase, redeem, retire or otherwise acquire for value
any shares of Capital Stock of (A) the Company (including options, warrants or
other rights to acquire such shares of Capital Stock) held by any Person or (B)
a material subsidiary of the Company (including options, warrants or other
rights to acquire such shares of Capital Stock) held by any Affiliate of the
Company (other than a Wholly Owned subsidiary) or any holder (or any Affiliate
of such holder) of 5% or more of the Capital Stock of the Company, (3) make any
voluntary or optional principal payment, or voluntary or optional redemption,
repurchase, defeasance, or other acquisition or retirement for value, of
Indebtedness of the Company that is subordinated in right of payment to the
Series D Preferred Stock or (4) make any Investment, other than a Permitted
Investment, in any Person (such payments or any other actions described in
clauses (1) through (4) above being collectively
29
<PAGE>
"Restricted Payments") if, at the time of, and after giving effect to, the
proposed Restricted Payment:
(A) the Company could not Incur at least $1.00 of
Indebtedness under paragraph 6(c)(i) or
(B) the aggregate amount of all Restricted Payments (the
amount, if other than in cash, to be determined in good faith by the Board
of Directors, whose determination shall be conclusive and evidenced by a
Board Resolution) made after the Closing Date shall exceed the sum of
(1) the amount of (x) Consolidated EBITDA of the Company
after June 30, 2003 through the end of the latest full fiscal quarter
for which consolidated financial statements of the Company are
available preceding the date of such Restricted Payment, treated as a
single accounting period, less (y) 2.0 times the aggregate
Consolidated Interest Expense of the Company after June 30, 2003
through the end of the latest full fiscal quarter for which
consolidated financial statements of the Company are available
preceding the date of such Restricted Payment treated as a single
accounting period, plus
(2) the aggregate Net Cash Proceeds and fair market value of
property other than cash (to the extent not used to make a Permitted
Investment), received by the Company after the Closing Date from the
issuance and sale permitted by these Terms of its Capital Stock to a
Person who is not a subsidiary of the Company, or from the issuance to
a Person who is not a subsidiary of the Company of any options,
warrants or other rights to acquire Capital Stock of the Company plus
(3) an amount equal to the net reduction in Investments
(other than reductions in Permitted Investments) in any Person
resulting from payments of interest on Indebtedness, dividends,
repayments of loans or advances, or other transfers of assets, in each
case to the Company or any subsidiary or from the Net Cash Proceeds
from the sale of any such Investment (except, in each case, to the
extent any such payment or proceeds are included in the calculation of
Adjusted Consolidated Net Income), not to exceed, in each case, the
amount of Investments previously made by the Company or any subsidiary
of the Company in such Person.
The foregoing provision shall not be violated by reason of:
(4) the payment of any dividend within 60 days after the
date of declaration thereof if, at said date of declaration, such
payment would comply with the foregoing paragraph;
(5) the redemption, repurchase, defeasance or other
acquisition or retirement for value of Indebtedness that is
subordinated in right of payment to the
30
<PAGE>
Series D Preferred Stock including premium, if any, and accrued and
unpaid interest, with the proceeds of, or in exchange for,
Indebtedness Incurred under clause (C) of paragraph 6(c)(i);
(6) the repurchase, redemption or other acquisition of
Capital Stock of the Company (or options, warrants or other rights to
acquire such Capital Stock) in exchange for, or out of the proceeds of
a substantially concurrent offering of, shares of Capital Stock of the
Company (or options, warrants or other rights to acquire such Capital
Stock);
(7) the making of any principal payment or the repurchase,
redemption, retirement, defeasance or other acquisition for value of
Indebtedness of the Company which is subordinated in right of payment
to the Series D Preferred Stock in exchange for, or out of the
proceeds of, a substantially concurrent offering of, shares of the
Capital Stock of the Company (or options, warrants or other rights to
acquire such Capital Stock);
(8) payments or distributions, to dissenting stockholders
pursuant to applicable law, pursuant to or in connection with a
consolidation, merger or transfer of assets that complies with the
provisions of these Terms applicable to mergers, consolidations and
transfers of all or substantially all of the property and assets of
the Company;
(9) Investments acquired in exchange for, or out of the
proceeds of a substantially concurrent offering of, Capital Stock of
the Company;
(10) upon the occurrence of a Change of Control and within
60 days after the completion of the offer to repurchase the Series D
Preferred Stock pursuant to the provisions of paragraph 4(j)
(including the purchase of any Series D Preferred Stock tendered), any
purchase or redemption of subordinated obligations required pursuant
to the terms thereof as a result of such Change of Control at a
purchase or redemption price not to exceed the outstanding principal
amount thereof, plus any accrued or unpaid interest;
(11) repurchases of Capital Stock deemed to occur upon the
exercise of stock options if such options or Capital Stock represents
a portion of the exercise price thereof; and
(12) payments not to exceed $250,000 in the aggregate
solely to enable the Company to make payments to holders of its
Capital Stock in lieu of the issuance of fractional shares of its
Capital Stock; and
(13) the repurchase of the Subordinated Notes with the
proceeds of the issuance of additional senior Indebtedness; provided
that pro forma such transaction, the Company could Incur $1.00 of
Indebtedness under the first paragraph of paragraph 6(c)(i).
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<PAGE>
Each Restricted Payment permitted pursuant to the preceding paragraph (other
than the Restricted Payment referred to in clause (2) thereof, an exchange of
Capital Stock for Capital Stock or Indebtedness referred to in clause (3) or (4)
thereof and an Investment acquired as a capital contribution or in exchange for
Capital Stock referred to in clause (4) thereof), and the Net Cash Proceeds from
any issuance of Capital Stock referred to in clauses (3) and (4), shall be
included in calculating whether the conditions of clause (B) of the first
paragraph of this paragraph 6(c)(ii) have been met with respect to any
subsequent Restricted Payments. In the event the proceeds of an issuance of
Capital Stock of the Company are used for the redemption, repurchase or other
acquisition of the Series D Preferred Stock, or Indebtedness that is pari passu
with the Series D Preferred Stock, then the Net Cash Proceeds of such issuance
shall be included in clause (B) of the first paragraph of this paragraph
6(c)(ii) only to the extent such proceeds are not used for such redemption,
repurchase or other acquisition of Indebtedness.
Any Restricted Payments made other than in cash shall be valued at fair market
value. The amount of any Investment "outstanding" at any time shall be deemed to
be equal to the amount of such Investment on the date made, less the return of
capital to the Company and its subsidiaries with respect to such Investment (up
to the amount of the Investment on the date made).
(iii) and will not permit any material subsidiary of the
Company to, create or otherwise cause or suffer to exist or become effective any
consensual encumbrance or restriction of any kind on the ability of any material
subsidiary of the Company to (1) pay dividends or make any other distributions
permitted by applicable law on any Capital Stock of such material subsidiary
owned by the Company or any other subsidiary of the Company, (2) pay any
Indebtedness owed to the Company or any other material subsidiary, (3) make
loans or advances to the Company or any other material subsidiary of the Company
or (4) transfer any of its property or assets to the Company or any other
material subsidiary of the Company.
The foregoing provisions shall not restrict any encumbrances or restrictions:
(A) existing on the Closing Date in the Credit
Facility, these Terms or any other agreements in effect on the Closing
Date, and any extensions, refinancings, renewals or replacements of such
agreements; provided that the encumbrances and restrictions in any such
extensions, refinancings, renewals or replacements are no less favorable in
any material respect to the holders of the Series D Preferred Stock than
those encumbrances or restrictions that are then in effect and that are
being extended, refinanced, renewed or replaced;
(B) existing under or by reason of applicable law;
(C) existing with respect to any Person or the property
or assets of such Person acquired by the Company or any subsidiary of the
Company, existing at the time of such acquisition and not incurred in
contemplation thereof, which encumbrances or restrictions are not
applicable to any Person or the property or assets of any Person other than
such Person or the property or assets of such Person so acquired;
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<PAGE>
(D) in the case of clause (4) of the first paragraph of this
paragraph 6(c)(ii), (A) that restrict in a customary manner the subletting,
assignment or transfer of any property or asset that is a lease, license,
conveyance or contract or similar property or asset, (B) existing by virtue
of any transfer of, agreement to transfer, option or right with respect to,
or Lien on, any property or assets of the Company or any subsidiary of the
Company not otherwise prohibited by these Terms or (C) arising or agreed to
in the ordinary course of business, not relating to any Indebtedness, and
that do not, individually or in the aggregate, detract from the value of
property or assets of the Company or any material subsidiary of the Company
in any manner material to the Company and its material subsidiaries, taken
as a whole; or
(E) with respect to a subsidiary of the Company and imposed
pursuant to an agreement that has been entered into for the sale or
disposition of all or substantially all of the Capital Stock of, or
property and assets of, such subsidiary.
Nothing contained in this paragraph 6(c)(iii) shall prevent the Company or any
subsidiary from (1) creating, incurring, assuming or suffering to exist any
Liens otherwise permitted in paragraph 6(c)(vii) or (2) restricting the sale or
other disposition of property or assets of the Company or any of its
subsidiaries that secure Indebtedness of the Company or any of its subsidiaries.
(iv) and will not permit any material subsidiary, directly or
indirectly, to issue or sell, any shares of Capital Stock of a material
subsidiary (including options, warrants or other rights to purchase shares of
such Capital Stock) except:
(A) to the Company or a Wholly Owned subsidiary;
(B) issuances of director's qualifying shares or sales to
foreign nationals of shares of Capital Stock of foreign subsidiaries of the
Company, to the extent required by applicable law;
(C) if, immediately after giving effect to such issuance or
sale, such subsidiary would no longer constitute a subsidiary and any
Investment in such Person remaining after giving effect to such issuance or
sale would have been permitted to be made under paragraph 6(c)(ii) if made
on the date of such issuance or sale; or
(D) the sale of Common Stock of subsidiaries, if the proceeds
of such issuance and sale are applied in accordance with clauses 1(A) and
1(B) of paragraph 6(c)(ix).
(v) will not permit any subsidiary of the Company, directly or
indirectly, to Guarantee any Indebtedness of the Company which is pari passu
with or subordinate in right of payment to the Series D Preferred Stock
("Guaranteed Indebtedness"), provided that this paragraph shall not be
applicable to any Guarantee of any subsidiary of the Company (x) that existed at
the time such Person became a subsidiary and was not Incurred in connection
with, or in contemplation of, such Person becoming a subsidiary of the Company
or (y) of the Indebtedness Incurred under the Credit Facility.
33
<PAGE>
(vi) and will not permit any subsidiary of the Company to,
directly or indirectly, enter into, renew or extend any transaction (including,
without limitation, the purchase, sale, lease or exchange of property or assets,
or the rendering of any service) with any holder (or any Affiliate of such
holder) of 5% or more of any class of Capital Stock of the Company or with any
Affiliate of the Company or any subsidiary of the Company, except upon fair and
reasonable terms no less favorable to the Company or such subsidiary than could
be obtained, at the time of such transaction or, if such transaction is pursuant
to a written agreement, at the time of the execution of the agreement providing
therefor, in a comparable arm's-length transaction with a Person that is not
such a holder or Affiliate.
The foregoing limitation does not limit, and shall not apply to:
(1) transactions (i) approved by a majority of the
disinterested members of the Board of Directors or (ii) for which the
Company or a subsidiary of the Company delivers to the holders of the
Series D Preferred Stock a written opinion of a nationally recognized
investment banking firm or a nationally recognized firm having
expertise in the specific area which is the subject of such
determination stating that the transaction is fair to the Company or
such subsidiary from a financial point of view;
(2) any transaction solely between the Company and any of
its Wholly Owned subsidiaries or solely between Wholly Owned
subsidiaries;
(3) the payment of reasonable and customary regular fees
to directors of the Company who are not employees of the Company;
(4) any payments or other transactions pursuant to any
tax-sharing agreement between the Company and any other Person with
which the Company files a consolidated tax return or with which the
Company is part of a consolidated group for tax purposes;
(5) any sale of shares of Capital Stock of the Company (or
options, warrants or other rights to acquire such Capital Stock);
(6) any Restricted Payments not prohibited by paragraph
6(c)(ii);
(7) any purchase of Capital Stock of subsidiaries of the
Company approved by a majority of the disinterested members of the
Board of Directors; provided, however, that such purchases shall not
be made from (i) WCAS, (ii) management of the Company or (iii) family
members of management of the Company; or
(8) payments by the Company or any of its subsidiaries to
WCAS pursuant to the terms of the Preferred Share Documents, as they
exist on the Closing Date, between the Company and WCAS relating to
the issuance, sale and purchase of the Preferred Shares.
34
<PAGE>
Notwithstanding the foregoing, any transaction or series of related transactions
covered by the first paragraph of this paragraph 6(c)(vi) and not covered by
clauses (2) through (8) of this paragraph, (a) the aggregate amount of which
exceeds $1.0 million in value, must be approved or determined to be fair in the
manner provided for in clause (1)(A) or (B) above and (b) the aggregate amount
of which exceeds $10.0 million in value, must be determined to be fair in the
manner provided for in clause (1)(B) above.
(vii) and will not permit any material subsidiary of the Company
to, create, incur, assume or suffer to exist any Lien on any of its assets or
properties of any character, or any shares of Capital Stock or Indebtedness of
any material subsidiary of the Company, without making effective provision for
all of the Series D Preferred Stock to be directly secured equally and ratably
with (or, if the obligation or liability to be secured by such Lien is
subordinated in right of payment to the Series D Preferred Stock, prior to) the
obligation or liability secured by such Lien.
The foregoing limitation does not apply to:
(A) Liens existing on the Closing Date;
(B) Liens granted after the Closing Date on any assets or
Capital Stock of the Company or its subsidiaries created in favor of the
holders of Series D Preferred Stock;
(C) Liens with respect to the assets of a subsidiary of the
Company granted by such subsidiary to the Company or a Wholly Owned
subsidiary to secure Indebtedness owing to the Company or such other
subsidiary;
(D) Liens securing Indebtedness which is Incurred to
refinance secured Indebtedness which is permitted to be Incurred under
clause (C) of paragraph 6(c)(i); provided that such Liens do not extend to
or cover any property or assets of the Company or any subsidiary of the
Company other than the property or assets securing the Indebtedness being
refinanced;
(E) Liens on any property or assets of a subsidiary
securing Indebtedness of such subsidiary permitted under paragraph 6(c)(i);
(F) Permitted Liens; or
(G) Liens securing obligations under the Credit Facility.
(viii) and will not permit any of its subsidiaries to, enter into
any sale-leaseback transaction involving any of its assets or properties whether
now owned or hereafter acquired, whereby the Company or a subsidiary of the
Company sells or transfers such assets or properties and then or thereafter
leases such assets or properties or any part thereof or any other assets or
properties which the Company or such subsidiary, as the case may be, intends to
use for substantially the same purpose or purposes as the assets or properties
sold or transferred.
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<PAGE>
The foregoing restriction does not apply to any sale-leaseback transaction if
(1) the lease is for a period, including renewal rights, of not in excess of
three years; (2) the lease secures or relates to industrial revenue or pollution
control bonds; (3) the transaction is solely between the Company and any Wholly
Owned subsidiary or solely between Wholly Owned subsidiaries; or (4) the Company
or such subsidiary, within 12 months after the sale or transfer of any assets or
properties is completed, applies an amount not less than the net proceeds
received from such sale in accordance with clauses (1)(A) or (1)(B) of paragraph
6(c)(ix).
(ix) and will not permit any of its subsidiaries to, consummate
any Asset Sale, unless (1) the consideration received by the Company or such
subsidiary is at least equal to the fair market value of the assets sold or
disposed of and (2) at least 75.0% of the consideration received consists of
cash or Temporary Cash Investments or the assumption of Indebtedness of the
Company or any subsidiary (other than Indebtedness to the Company or any
subsidiary), provided that the Company or such subsidiary is irrevocably and
unconditionally released from all liability under such Indebtedness.
In the event and to the extent that the Net Cash Proceeds received by the
Company or any of its subsidiaries from one or more Asset Sales occurring on or
after the Closing Date in any period of 12 consecutive months exceed 10% of
Adjusted Consolidated Net Tangible Assets (determined as of the date closest to
the commencement of such 12-month period for which a consolidated balance sheet
of the Company and its Subsidiaries has been filed with the Commission or
provided to the Trustee), then the Company shall or shall cause the relevant
subsidiary to:
(1) within twelve months after the date Net Cash Proceeds so
received exceed 10% of Adjusted Consolidated Net Tangible Assets
(A) apply an amount equal to such excess Net Cash Proceeds
to permanently repay unsubordinated Indebtedness of the Company or
Indebtedness of any subsidiary of the Company, in each case owing to a
Person other than the Company or any of its subsidiaries or
(B) invest an equal amount, or the amount not so applied
pursuant to clause (A) (or enter into a definitive agreement committing so
to invest within 12 months after the date of such agreement), in property
or assets (other than current assets) of a nature or type or that are used
in a business (or in a company having property and assets of a nature or
type, or engaged in a business) similar or related to the nature or type of
the property and assets of, or the business of, the Company and its
subsidiaries existing on the date of such investment and
(C) apply (no later than the end of the 12-month period
referred to in clause (1)) such excess Net Cash Proceeds (to the extent not
applied pursuant to clause (1)) as provided in the following paragraph of
this paragraph 6(c)(ix).
(d) So long as any of the Series D Preferred Stock is outstanding, the
Company will:
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<PAGE>
(i) and shall cause each of its subsidiaries to, at all times
preserve and maintain in full force and effect its corporate existence and good
standing under the laws of its state or jurisdiction of incorporation;
(ii) and shall cause each of its subsidiaries to, at all times
preserve and maintain all assets and properties material to its business;
(iii) pay, and shall cause each of its subsidiaries to pay, prior
to delinquency, all material Taxes and levies except such as are contested in
good faith and by appropriate proceedings or where the failure to effect such
payment is not adverse in any material respect to the holders of the Series D
Preferred Stock;
(iv) comply with, and shall cause each of its subsidiaries to
comply with, in all material respects, all requirements of any law (statutory or
common), rule or regulation or determination of any Governmental Authority
having jurisdiction over it or its business, except as may be contested in good
faith or as to which a bona fide dispute may exist; and
(v) maintain, and will cause each of its subsidiaries to
maintain, proper books of records and accounts, in which full, true and correct
entries in conformity with U.S. generally accepted accounting principles
consistently applied shall be made of all financial transactions and matters
involving the assets and business of the Company and its subsidiaries.
(e) If the Company shall fail to comply with any one or more of the
provisions in paragraph 6(b), (c) or (d), then in any such event the Applicable
Percentage for each full Dividend Period shall be increased to 11.50%.
7. Definitions. The following terms, as used herein, shall have the
-----------
following meanings:
"Accreted Value" equals, with respect to one share of Series D Preferred
--------------
Stock, $1,000, adjusted for the amount of any dividends added to (or subtracted
from) the Accreted Value in accordance with paragraph 2(b) (which aggregate
amount shall be subject to adjustment whenever there shall occur a stock split,
combination, re-classification or other similar event involving the Series D
Preferred Stock).
"Acquired Indebtedness" means Indebtedness of a Person (1) existing at the
---------------------
time such Person becomes a subsidiary of the Company or (2) assumed in
connection with an Asset Acquisition by a subsidiary of the Company; provided
that Indebtedness of such Person which is redeemed, defeased, retired or
otherwise repaid at the time of or immediately upon consummation of the
transactions by which such Person becomes a subsidiary of the Company or such
Asset Acquisition shall not be Acquired Indebtedness.
"Adjusted Consolidated Net Income" means, for any period, the aggregate net
--------------------------------
income (or loss) of the Company and its subsidiaries for such period determined
in conformity with GAAP; provided that the following items shall be excluded in
computing Adjusted Consolidated Net Income (without duplication):
37
<PAGE>
(1) the net income of any Person that is not a subsidiary, except to
the extent of the amount of dividends or other distributions actually paid
to the Company or any of its subsidiaries by such Person during such
period;
(2) the net income (or loss) of any Person accrued prior to the date
it becomes a subsidiary or is merged into or consolidated with the Company
or any of its subsidiaries or all or substantially all of the property and
assets of such Person are acquired by the Company or any of its
subsidiaries;
(3) the net income of any subsidiary to the extent that the
declaration or payment of dividends or similar distributions by such
subsidiary of such net income is not at the time permitted by the operation
of the terms of its charter or any agreement, instrument, judgment, decree,
order, statute, rule or governmental regulation applicable to such
subsidiary;
(4) any gains or losses (on an after-tax basis) attributable to Asset
Sales;
(5) solely for purposes of calculating the amount of Restricted
Payments that may be made pursuant to clause (C) of paragraph 6(c)(ii), any
amount paid or accrued as dividends on Preferred Stock of the Company owned
by Persons other than the Company and any of its subsidiaries; and
(6) all extraordinary gains and extraordinary losses.
"Adjusted Consolidated Net Tangible Assets" means the total amount of
-----------------------------------------
assets of the Company and its subsidiaries (less applicable depreciation,
amortization and other valuation reserves), except to the extent resulting from
write-ups of capital assets (excluding write-ups in connection with accounting
for acquisitions in conformity with GAAP), after deducting therefrom (1) all
current liabilities of the Company and its subsidiaries (excluding intercompany
payables and receivables) and (2) all goodwill, trade names, trademarks,
patents, unamortized debt discount and expense and other like intangibles, other
than licenses, all as set forth on the most recent quarterly or annual
consolidated balance sheet of the Company and its subsidiaries, prepared in
conformity with GAAP and filed with the Commission or provided to the holders of
the Series D Preferred Stock.
"Affiliate" of any specified Person means any other Person directly or
---------
indirectly controlling or controlled by or under direct or indirect common
control with such specified Person. For purposes of this definition, "control"
(including, with correlative meanings, the terms "controlling," "controlled by"
and "under common control with"), as used with respect to any Person, shall mean
the possession, directly or indirectly, of the power to direct or cause the
direction of the management or policies of such Person, whether through the
ownership of voting securities, by agreement or otherwise; provided, that
beneficial ownership of 10% or more of the voting securities of a Person shall
be deemed to be control and in no event shall a holder of Series D Preferred
Stock be deemed an Affiliate of the Company or its subsidiaries.
"Applicable Percentage" is defined in paragraph 2(c) hereof.
---------------------
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<PAGE>
"Approval Date" means the date on which Shareholder Approval is obtained.
-------------
"Asset Acquisition" means (1) an Investment by the Company or any of its
-----------------
material subsidiaries in any other Person pursuant to which such Person shall
become a material subsidiary or shall be merged into or consolidated with the
Company or any of its material subsidiaries; provided that such Person's primary
business is related, ancillary or complementary to the businesses of the Company
and its material subsidiaries on the date of such Investment or (2) an
acquisition by the Company or any of its material subsidiaries of the property
and assets of any Person other than the Company or any of its material
subsidiaries that constitute material substantially all of a division or line of
business of such Person; provided that the property and assets acquired are
related, ancillary or complementary to the businesses of the Company and its
material subsidiaries on the date of such acquisition.
"Asset Disposition" means the sale or other disposition by the Company or
-----------------
any of its material subsidiaries (other than to the Company or another
subsidiary) of (1) all or substantially all of the Capital Stock of any material
subsidiary or (2) all or substantially all of the assets that constitute a
division or line of business of the Company or any of its material subsidiaries.
"Asset Sale" means any sale, transfer or other disposition (including by
----------
way of merger, consolidation or sale-leaseback transaction) after the Closing
Date in one transaction or a series of related transactions by the Company or
any of its material subsidiaries to any Person other than the Company or any of
its subsidiaries of (1) all or any of the Capital Stock of any material
subsidiary, (2) all or substantially all of the property and assets of an
operating unit or business of the Company or any of its material subsidiaries or
(3) any other property and assets of the Company or any of its material
subsidiaries outside the ordinary course of business of the Company or such
subsidiary; provided that "Asset Sale" shall not include (a) sales or other
dispositions of inventory, receivables and other current assets, (b) sales,
transfers or other dispositions of assets constituting a Restricted Payment
permitted to be made pursuant to paragraph 6(c)(ix), (c) sales or other
dispositions of assets for consideration at least equal to the fair market value
of the assets sold or disposed of, to the extent that the consideration received
would satisfy clause (B) of paragraph 6(c)(ix) or (d) sales or other
dispositions of obsolete or worn out equipment or equipment that is no longer
useful in the conduct of the business of the Company and its subsidiaries and
that is disposed of in each case in the ordinary course of business.
"Board of Directors" means the Board of Directors of the Company or any
------------------
committee of such Board of Directors duly authorized to act under this
Indenture.
"Board Resolution" means a copy of a resolution certified by the Secretary
----------------
or an Assistant Secretary of the Company to have been duly adopted by the Board
of Directors and to be in full force and effect on the date of such
certification, and delivered to the holders of the Series D Preferred Stock.
"Business Day" means any day except a Saturday, Sunday or other day on
------------
which commercial banks in The City of New York are authorized by law to close.
39
<PAGE>
"Capital Stock" means, with respect to any Person, any and all shares,
-------------
interests, participations or other equivalents (however designated, whether
voting or non-voting) in equity of such Person, whether outstanding on the
Closing Date or issued thereafter.
"Capitalized Lease" means, as applied to any Person, any lease of any
-----------------
property (whether real, personal or mixed) of which the discounted present value
of the rental obligations of such Person as lessee, in conformity with GAAP, is
required to be capitalized on the balance sheet of such Person.
"Capitalized Lease Obligations" means the discounted present value of the
-----------------------------
rental obligations under a Capitalized Lease.
"Cash Equivalents" means (1) securities issued or directly and fully
----------------
guaranteed or insured by the United States of America or any agency or
instrumentality thereof (provided that the full faith and credit of the United
States of America is pledged in support thereof) in each case maturing within
one year after the date of acquisition, (2) time deposits and certificates of
deposit and commercial paper issued by the parent corporation of any domestic
commercial bank of recognized standing having capital and surplus in excess of
$500.0 million and commercial paper issued by others rated at least A-2 or the
equivalent thereof by S&P or at least P-2 or the equivalent thereof by Moody's
and in each case maturing within one year after the date of acquisition and (3)
investments in money market funds substantially all of whose assets comprise
securities of the types described in clauses (1) and (2) above.
"Change in Control" has the meaning assigned thereto in the Indenture.
-----------------
"Change of Control" means: (i) the sale, lease, transfer, conveyance or
-----------------
other disposition (other than by way of merger or consolidation), in one or a
series of related transactions, of all or substantially all the assets of the
Company and its subsidiaries taken as a whole to any "person" (as such term is
used in Section 13(d)(3) of the Exchange Act), (ii) the consummation of any
transaction (including any merger or consolidation) the result of which is that
any "person" (as defined above), becomes the beneficial owner (as determined in
accordance with Rules 13d-3 and 13d-5 under the Exchange Act except that a
person will be deemed to have beneficial ownership of all shares that such
person has the right to acquire, whether such right is exercisable immediately
or only after the passage of time), directly or indirectly, of more than 40% of
the Voting Securities of the Company, or (iii) the first day on which a majority
of the members of the board of directors are not Continuing Directors.
"Change of Control Amount" means, with respect to one share of Series D
------------------------
Preferred Stock, 105% of the Accreted Value per share plus any dividends accrued
to such date (whether or not earned or declared) since the end of the previous
Dividend Period; provided, however, that if the Change of Control occurs prior
-------- -------
to the fifth anniversary of the date of issue of any share of Series D Preferred
Stock, the Accreted Value shall be calculated assuming the Change of Control had
occurred on the fifth anniversary of the date of issue of such share of Series D
Preferred Stock (and assuming that no cash dividends had been paid on such share
from the actual date of the Change of Control through the fifth anniversary of
the date of issue).
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<PAGE>
"Closing Date" means the date of issue of the Series D Preferred Stock.
------------
"Commission" means the Securities and Exchange Commission, as from time to
----------
time constituted, created under the Exchange Act or, if at any time after the
execution of this instrument such Commission is not existing and performing the
duties now assigned to it under the TIA, then the body performing such duties at
such time.
"Consolidated EBITDA" means, for any period, Adjusted Consolidated Net
-------------------
Income for such period plus, to the extent such amount was deducted in
calculating such Adjusted Consolidated Net Income: (1) Consolidated Interest
Expense, (2) income taxes (other than income taxes (either positive or negative)
attributable to extraordinary and non-recurring gains or losses or sales of
assets), (3) depreciation expense, (4) amortization expense, (5) for purposes of
determining the Company's ability to Incur Indebtedness, non-recurring severance
and transaction costs incurred in connection with any acquisition (including any
Transaction) by the Company or its subsidiaries and (6) all other non-cash items
reducing Adjusted Consolidated Net Income (other than items that will require
cash payments and for which an accrual or reserve is, or is required by GAAP to
be, made), less all non-cash items increasing Adjusted Consolidated Net Income,
all as determined on a consolidated basis for the Company and its subsidiaries
in conformity with GAAP; provided that, if any subsidiary is not a Wholly Owned
subsidiary, Consolidated EBITDA shall be reduced (to the extent not otherwise
reduced in accordance with GAAP) or increased (to the extent not otherwise
increased in accordance with GAAP) by an amount equal to (A) the amount of the
Adjusted Consolidated Net Income (whether positive or negative) attributable to
such subsidiary multiplied by (B) the percentage ownership interest in the
income of such subsidiary not owned on the last day of such period by the
Company or any of its subsidiaries.
"Consolidated Interest Expense" means, for any period, the aggregate amount
-----------------------------
of interest in respect of Indebtedness (including, without limitation,
Indebtedness that is Guaranteed or secured by the Company or any of its
subsidiaries, including, without limitation, amortization of original issue
discount on any Indebtedness and the interest portion of any deferred payment
obligation, calculated in accordance with the effective interest method of
accounting; all commissions, discounts and other fees and charges owed with
respect to letters of credit and bankers' acceptance financing; and the net
costs associated with Interest Rate Agreements) and all but the principal
component of rentals in respect of Capitalized Lease Obligations paid, accrued
or scheduled to be paid or to be accrued by the Company and its subsidiaries
during such period; excluding, however, (1) any amount of such interest of any
subsidiary if the net income of such subsidiary is excluded in the calculation
of Adjusted Consolidated Net Income pursuant to clause (3) of the definition
thereof (but only in the same proportion as the net income of such subsidiary is
excluded from the calculation of Adjusted Consolidated Net Income pursuant to
clause (3) of the definition thereof) and (2) any premiums, fees and expenses
(and any amortization thereof) payable in connection with the offering of the
Notes, all as determined on a consolidated basis in conformity with GAAP.
"Continuing Directors" means individuals who constituted the Board of
--------------------
Directors of the Company on July 11, 2000 (the "Incumbent Directors"); provided
-------------------
that any individual becoming a
41
<PAGE>
director during any year shall be considered to be an Incumbent Director if such
individual's election, appointment or nomination was recommended or approved by
at least two-thirds of the other Incumbent Directors continuing in office
following such election, appointment or nomination present, in person or by
telephone, at any meeting of the Board of Directors of the Company, after the
giving of a sufficient notice to each Incumbent Director so as to provide a
reasonable opportunity for such Incumbent Directors to be present at such
meeting.
"Conversion Stock" means shares of the Company's Series C Preferred Stock;
----------------
provided that if there is a change such that the securities issuable upon
conversion of the Series D Preferred Stock are issued by an entity other than
the Company or there is a change in the type or class of securities so issuable,
then the term "Conversion Stock" shall mean one share of the security issuable
upon conversion of the Series D Preferred Stock if such security is issuable in
shares, or shall mean the smallest unit in which such security is issuable if
such security is not issuable in shares.
"Credit Facility" means the Credit Agreement dated as of July 26, 2000
---------------
among the Company, Morgan Stanley Senior Funding, Inc. and certain other
financial institutions party thereto, as such agreement, may be, in one or more
agreements with one or more lending groups, amended, renewed, extended,
substituted, refinanced, restructured, replaced, supplemented or otherwise
modified, in whole or in part, from time to time (including, without limitation,
any successive renewals, extensions, substitutions, refinancings,
restructurings, replacements, supplements or other modifications of the
foregoing, including those that increase the amount available thereunder in
accordance with the terms of this Indenture).
"Currency Agreement" means any foreign exchange contract, currency swap
------------------
agreement or other similar agreement or arrangement.
"Event of Default" has the meaning assigned thereto in the Indenture.
----------------
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
------------
"GAAP" means generally accepted accounting principles in the United States
----
of America as in effect as of the Closing Date, including, without limitation,
those set forth in the opinions and pronouncements of the Accounting Principles
Board of the American Institute of Certified Public Accountants and statements
and pronouncements of the Financial Accounting Standards Board or in such other
statements by such other entity as approved by a significant segment of the
accounting profession. All ratios and computations contained or referred to in
the Terms shall be computed in conformity with GAAP applied on a consistent
basis, except that calculations made for purposes of determining compliance with
the terms of the covenants and with other provisions of these Terms shall be
made without giving effect to (1) the amortization of any expenses incurred in
connection with the Transactions and (2) except as otherwise provided, the
amortization of any amounts required or permitted by Accounting Principles Board
Opinion Nos. 16 and 17.
"Governmental Authority" means any nation or government, any state or other
----------------------
political subdivision thereof, any central bank (or similar monetary or
regulatory authority) thereof, any
42
<PAGE>
entity exercising executive, legislative, judicial, regulatory or administrative
functions of or pertaining to government, and any corporation or other entity
owned or controlled, through stock or capital ownership or otherwise, by any of
the foregoing.
"Guarantee" means any obligation, contingent or otherwise, of any Person
---------
directly or indirectly guaranteeing any Indebtedness of any other Person and,
without limiting the generality of the foregoing, any obligation, direct or
indirect, contingent or otherwise, of such Person (1) to purchase or pay (or
advance or supply funds for the purchase or payment of) such Indebtedness of
such other Person (whether arising by virtue of partnership arrangements, or by
agreements to keep-well, to purchase assets, goods, securities or services
(unless such purchase arrangements are on arm's-length terms and are entered
into in the ordinary course of business), to take-or-pay, or to maintain
financial statement conditions or otherwise) or (2) entered into for purposes of
assuring in any other manner the obligee of such Indebtedness of the payment
thereof or to protect such obligee against loss in respect thereof (in whole or
in part); provided that the term "Guarantee" shall not include endorsements for
collection or deposit in the ordinary course of business. The term "Guarantee"
used as a verb has a corresponding meaning.
"Guaranteed Indebtedness" has the meaning set forth in paragraph 6(c)(v).
-----------------------
"Incur" means, with respect to any Indebtedness, to incur, create, issue,
-----
assume, Guarantee or otherwise become liable for or with respect to, or become
responsible for, the payment of, contingently or otherwise, such Indebtedness,
including an "Incurrence" of Acquired Indebtedness; provided that neither the
accrual of interest nor the accretion of original issue discount shall be
considered an Incurrence of Indebtedness.
"Indebtedness" means, with respect to any Person at any date of
------------
determination (without duplication):
(1) all indebtedness of such Person for borrowed money;
(2) all obligations of such Person evidenced by bonds, debentures,
notes or other similar instruments;
(3) all obligations of such Person in respect of letters of credit or
other similar instruments (including reimbursement obligations with respect
thereto, but excluding obligations with respect to letters of credit
(including trade letters of credit) securing obligations (other than
obligations described in (1) or (2) above or (5), (6) or (7) below) entered
into in the ordinary course of business of such Person to the extent such
letters of credit are not drawn upon or, if drawn upon, to the extent such
drawing is reimbursed no later than the third Business Day following
receipt by such Person of a demand for reimbursement);
(4) all obligations of such Person to pay the deferred and unpaid
purchase price of property or services, which purchase price is due more
than six months (or one year in the case of earnouts for which the maximum
non-contingent obligation does not
43
<PAGE>
exceed $25.0 million) after the date of placing such property in service or
taking delivery and title thereto or the completion of such services,
except Trade Payables;
(5) all Capitalized Lease Obligations;
(6) all Indebtedness of other Persons secured by a Lien on any asset
of such Person, whether or not such Indebtedness is assumed by such Person;
provided that the amount of such Indebtedness shall be the lesser of (A)
the fair market value of such asset at such date of determination and (B)
the amount of such Indebtedness;
(7) all Indebtedness of other Persons Guaranteed by such Person to the
extent such Indebtedness is Guaranteed by such Person; and
(8) to the extent not otherwise included in this definition,
obligations under Currency Agreements and Interest Rate Agreements.
The amount of Indebtedness of any Person at any date shall be the
outstanding balance at such date of all unconditional obligations as described
above and, with respect to contingent obligations, the maximum net liability
upon the occurrence of the contingency giving rise to the obligation, provided
(A) that the amount outstanding at any time of any Indebtedness issued with
original issue discount is the face amount of such Indebtedness less the
remaining unamortized portion of the original issue discount of such
Indebtedness at such time as determined in conformity with GAAP, (B) that money
borrowed and set aside at the time of the Incurrence of any Indebtedness in
order to prefund the payment of the interest on such Indebtedness shall not be
deemed to be "Indebtedness" so long as such money is held to secure the payment
of such interest and (C) that Indebtedness shall not include any liability for
federal, state, local or other taxes.
"Indebtedness to EBITDA Ratio" means, on any Transaction Date, the ratio of
----------------------------
(1) the aggregate amount of Indebtedness of the Company and its
subsidiaries on a consolidated basis outstanding on such Transaction Date
to
(2) the aggregate amount of Consolidated EBITDA for the then most
recent four fiscal quarters for which financial statements of the Company
have been filed with the Commission (such four fiscal quarter period being
the "Four Quarter Period"); provided that, in making the foregoing
-------------------
calculation, (A) pro forma effect shall be given to any Indebtedness to be
Incurred or repaid on the Transaction Date; (B) pro forma effect shall be
given to Asset Dispositions and Asset Acquisitions (including giving pro
forma effect to the application of proceeds of any Asset Disposition) that
occur from the beginning of the Four Quarter Period through the Transaction
Date (the "Reference Period"), as if they had occurred and such proceeds
had been applied on the first day of such Reference Period; and (C) pro
forma effect shall be given to Asset Dispositions and Asset Acquisitions
(including giving pro forma effect to the application of proceeds of any
Asset Disposition) that have been made by any Person that has become a
material subsidiary or has been merged with or into the Company or any
material subsidiary
44
<PAGE>
during such Reference Period and that would have constituted Asset
Dispositions or Asset Acquisitions had such transactions occurred when such
Person was a material subsidiary as if such asset dispositions or asset
acquisitions were Asset Dispositions or Asset Acquisitions that occurred on
the first day of such Reference Period; provided that to the extent that
clause (B) or (C) of this sentence requires that pro forma effect be given
to an Asset Acquisition or Asset Disposition, such pro forma calculation
shall be based upon the four full fiscal quarters immediately preceding the
Transaction Date of the Person, or division or line of business of the
Person, that is acquired or disposed of for which financial information is
available.
"Indenture" means the Indenture dated July 26, 2000 by and between the
---------
Company and the Bank of New York, as Trustee, in respect of the Notes.
"Interest Rate Agreement" means any interest rate protection agreement,
-----------------------
interest rate future agreement, interest rate option agreement, interest rate
swap agreement, interest rate cap agreement, interest rate collar agreement,
interest rate hedge agreement, option or future contract or other similar
agreement or arrangement.
"Investment" by the Company or any subsidiary in any Person means any
----------
direct or indirect advance, loan or other extension of credit (including,
without limitation, by way of Guarantee or similar arrangement; but excluding
Permitted Advances and advances to customers in the ordinary course of business
that are, in conformity with GAAP, recorded as accounts receivable on the
balance sheet of the Company or its material subsidiaries) or capital
contribution to (by means of any transfer of cash or other property to others or
any payment for property or services for the account or use of others), or any
purchase or acquisition of Capital Stock, bonds, notes, debentures or other
similar instruments issued by, such Person and shall include the retention of
the Capital Stock (or any other Investment) by the Company or any of its
subsidiaries, of (or in) any Person that has ceased to be a subsidiary,
including without limitation, by reason of any transaction permitted by clause
(iii) of paragraph 6(c)(iv). For purpose of paragraph 6(c)(ii), the amount of
or a reduction in an Investment shall be equal to the fair market value thereof
at the time such Investment is made or reduced.
"Lien" means any mortgage, pledge, security interest, encumbrance, lien or
----
charge of any kind (including, without limitation, any conditional sale or other
title retention agreement or lease in the nature thereof or any agreement to
give any security interest).
"Liquidation Value" on any date means, with respect to one share of Series
-----------------
D Preferred Stock, the Accreted Value on such date, plus all dividends (whether
or not earned or declared) accrued since the end of the previous Dividend
Period.
"MSDW" means Morgan Stanley Dean Witter & Co. and its affiliates.
----
"Net Cash Proceeds" means, (a) with respect to any Asset Sale, the proceeds
-----------------
of such Asset Sale in the form of cash or Cash Equivalents, including payments
in respect of deferred payment obligations (to the extent corresponding to the
principal, but not interest, component thereof) when received in the form of
cash or Cash Equivalents and proceeds from the
45
<PAGE>
conversion of other property received when converted to cash or Cash
Equivalents, net of (i) brokerage commissions and other fees and expenses
(including fees and expenses of counsel and investment bankers) related to such
Asset Sale, (ii) provisions for all taxes (whether or not such taxes will
actually be paid or are payable) as a result of such Asset Sale without regard
to the consolidated results of operations of the Company and its subsidiaries,
taken as a whole, (iii) payments made to repay Indebtedness or any other
obligation outstanding at the time of such Asset Sale that either (A) is secured
by a Lien on the property or assets sold or (B) is required to be paid as a
result of such sale and (iv) appropriate amounts to be provided by the Company
or any of its subsidiaries as a reserve against any liabilities associated with
such Asset Sale, including, without limitation, pension and other post-
employment benefit liabilities, liabilities related to environmental matters and
liabilities under any indemnification obligations associated with such Asset
Sale, all as determined in conformity with GAAP and (b) with respect to any
issuance or sale of Capital Stock, the proceeds of such issuance or sale in the
form of cash or Cash Equivalents, including payments in respect of deferred
payment obligations (to the extent corresponding to the principal, but not
interest, component thereof) when received in the form of cash or Cash
Equivalents and proceeds from the conversion of other property received when
converted to cash or Cash Equivalents, net of attorney's fees, accountants'
fees, underwriters' or placement agents' fees, discounts or commissions and
brokerage, consultant and other fees incurred in connection with such issuance
or sale and net of taxes paid or payable as a result thereof.
"Notes" means the 13.5% Senior Notes of the Company due 2010.
-----
"Offer to Purchase" has the meaning assigned thereto in the Indenture.
-----------------
"Permitted Advances" means advances by the Company to the West Virginia PCS
------------------
Alliance on and after the Closing Date in an aggregate amount not to exceed
$104.0 million at any one time outstanding.
"Permitted Holders" means WCAS and MSDW.
-----------------
"Permitted Investment" means:
--------------------
(1) an Investment in the Company or a subsidiary of the Company
or a Person which will, upon the making of such Investment, become a
subsidiary of the Company or be merged or consolidated with or into or
transfer or convey all or substantially all its assets to, the Company
or a subsidiary of the Company; provided that such person's primary
business is related, ancillary or complementary to the businesses of
the Company and its subsidiaries on the date of such Investment;
(2) Temporary Cash Investments;
(3) payroll, travel and similar advances to cover matters that
are expected at the time of such advances ultimately to be treated as
expenses in accordance with GAAP;
46
<PAGE>
(4) stock, obligations or securities received in
satisfaction of judgments;
(5) Interest Rate Agreements and Currency Agreements
designed solely to protect the Company or its subsidiaries against
fluctuations in interest rates or foreign currency exchange rates;
(6) loans or advances to or guarantees of third-party loans
or advances to employees of the Company or any subsidiary in the
normal course of business in an aggregate amount not to exceed $5.0
million in the aggregate at any one time outstanding;
(7) Strategic Telecommunications Investments made after the
Closing Date in an aggregate amount not to exceed $11.25 million in
the aggregate at any one time outstanding prior to the closing of the
Company's acquisition of R&B Communications, Inc. (the "R&B
---
Acquisition") and $15.0 million thereafter in the aggregate at any one
-----------
time outstanding;
(8) Notwithstanding 7 above, Strategic Telecommunications
Investments, to the extent that the payment for such Strategic
Telecommunications Investments consists of (i) Common Stock of the
Company or (ii) proceeds of a sale of Common Stock of the Company
received by the Company within 60 days of the making of such
Investment;
(9) Investments, the payment for which consists of (i)
Capital Stock of the Company or (ii) the proceeds of a sale of Capital
Stock of the Company received by the Company within 60 days of the
making of such Investment, in an aggregate amount not to exceed $37.5
million at any one time outstanding prior to the closing of the R&B
Acquisition and thereafter $50.0 million in the aggregate at any one
time outstanding; and
(10) Investments outstanding on the Closing Date or to be
made as part of the Transactions, including, without limitation, $7.5
million of investments in the RTFC to facilitate borrowings under the
Credit Facility.
"Permitted Liens" means:
---------------
(11) Liens for taxes, assessments, governmental charges or
claims that are being contested in good faith by appropriate legal
proceedings promptly instituted and diligently conducted and for which
a reserve or other appropriate provision, if any, as shall be required
in conformity with GAAP shall have been made;
(12) statutory and common law Liens of landlords and
carriers, warehousemen, mechanics, suppliers, materialmen, repairmen
or other similar Liens arising in the ordinary course of business and
with respect to amounts not
47
<PAGE>
yet delinquent or being contested in good faith by appropriate legal
proceedings promptly instituted and diligently conducted and for which
a reserve or other appropriate provision, if any, as shall be required
in conformity with GAAP shall have been made;
(13) Liens incurred or deposits made in the ordinary course of
business in connection with workers' compensation, unemployment
insurance and other types of social security;
(14) Liens incurred or deposits made to secure the performance
of tenders, bids, leases, statutory or regulatory obligations,
bankers' acceptances, surety and appeal bonds, government contracts,
performance and return-of-money bonds and other obligations of a
similar nature incurred in the ordinary course of business (exclusive
of obligations for the payment of borrowed money);
(15) easements, rights-of-way, municipal and zoning ordinances
and similar charges, encumbrances, title defects or other
irregularities that do not materially interfere with the ordinary
course of business of the Company and its subsidiaries, taken as a
whole;
(16) Liens (including extensions and renewals thereof) upon real
or personal property acquired after the Closing Date; provided that
(a) such Lien is created solely for the purpose of securing
Indebtedness Incurred, in accordance with paragraph 6(c)(i), to
finance the cost (including the cost of improvement or construction)
of the item of property or assets subject thereto and such Lien is
created prior to, at the time of or within six months after the later
of the acquisition, the completion of construction or the commencement
of full operation of such property (b) the principal amount of the
Indebtedness secured by such Lien does not exceed 100% of such cost
and (c) any such Lien shall not extend to or cover any property or
assets other than such item of property or assets and any improvements
on such item;
(17) leases or subleases granted to others that do not
materially interfere with the ordinary course of business of the
Company and its subsidiaries, taken as a whole;
(18) Liens encumbering property or assets under construction
arising from progress or partial payments by a customer of the Company
or its subsidiaries relating to such property or assets;
(19) any interest or title of a lessor in the property subject
to any Capitalized Lease or operating lease;
(20) Liens arising from filing Uniform Commercial Code financing
statements regarding leases;
48
<PAGE>
(21) Liens on property of, or on shares of Capital Stock or
Indebtedness of, any Person existing at the time such Person becomes,
or becomes a part of, any subsidiary of the Company; provided that
such Liens do not extend to or cover any property or assets of the
Company or any subsidiary of the Company other than the property or
assets acquired;
(22) Liens in favor of the Company or any subsidiary of the
Company;
(23) Liens arising from the rendering of a final judgment or
order against the Company or any of its subsidiaries that do not give
rise to an Event of Default;
(24) Liens securing reimbursement obligations with respect to
letters of credit that encumber documents and other property relating
to such letters of credit and the products and proceeds thereof;
(25) Liens in favor of customs and revenue authorities arising
as a matter of law to secure payment of customs duties in connection
with the importation of goods;
(26) Liens encumbering customary initial deposits and margin
deposits, and other Liens that are within the general parameters
customary in the industry and incurred in the ordinary course of
business, in each case, securing Indebtedness under Interest Rate
Agreements and Currency Agreements and forward contracts, options,
future contracts, futures options or similar agreements or
arrangements designed solely to protect the Company or any of its
subsidiaries from fluctuations in interest rates, currencies or the
price of commodities;
(27) Liens arising out of conditional sale, title retention,
consignment or similar arrangements for the sale of goods entered into
by the Company or any of its subsidiaries in the ordinary course of
business in accordance with the past practices of the Company and its
subsidiaries prior to the Closing Date;
(28) Liens on receivables.
"Person" as used herein means any corporation, limited liability company,
------
partnership, trust, organization, association, other entity or individual.
"Preferred Share Documents" means (1) the Securities Purchase Agreement
-------------------------
dated as of July 11, 2000 among the Company, WCAS, and the other purchasers
listed on the signature pages thereof (the "Purchasers"), with respect to the
----------
Series B Preferred Stock, (2) the Securities Purchase Agreement dated as of July
26, 2000 among the Company and the Purchasers, with respect to the Series C and
Series D Preferred Stock, (3) the Shareholders Agreement among the Company and
the Purchasers entered into at the closing of the sale of the Series B Preferred
49
<PAGE>
Stock as amended and restated on July 26, 2000, and (4) the Warrant Agreement
among the Company and the Purchasers entered into at the closing of the sale of
the Series B Preferred Stock.
"R&B Acquisition" has the meaning set forth in the definition of "Permitted
---------------
Investments" in this paragraph 7.
"Related Business" means any business related to, ancillary to, or
----------------
complementary to, the ownership, development, operation or acquisition of
communications systems or the provision of communications services, in each case
as determined in good faith by the board of directors of the Company.
"Restricted Payments" has the meaning provided in paragraph 6(c)(ii).
-------------------
"Securities Act" means the Securities Act of 1933, as amended.
--------------
"Shareholder Approval" means the approval of requisite holders of the
--------------------
Common Stock with respect to each of the following: (i) the removal of any
limitation on the conversion of the Series D Preferred Stock into Series C
Preferred Stock pursuant to and in accordance with the terms hereof and on the
conversion of the Series C Preferred Stock into Common Stock, (ii) the removal
of the Conversion Cap to which the Series C Preferred Stock is subject, (iii)
the removal of the Minimum Conversion Price to which the Series C Preferred
Stock is subject and (iv) the removal of any limitation on the right of Welsh,
Carson, Anderson & Stowe VIII, L.P., Welsh, Carson, Anderson & Stowe IX, L.P. or
any of their Affiliates to vote any Voting Securities contained in paragraph
4.02 of that certain Amended and Restated Shareholders Agreement dated as of
July 26, 2000.
"Strategic Telecommunications Investment" means the acquisition by the
---------------------------------------
Company or any of its subsidiaries of 50.0% or less of the Common Stock in a
Related Business (1) over which the Company or its subsidiaries exerts
operational or managerial influence or (2) which provides service directly to
the Company or its subsidiaries; in each case, as determined in good faith by
the Board of Directors (when such Investment is or exceeds $1.0 million) or as
certified by an officer of the Company (when such Investment is below $1.0
million).
"Subordinated Notes" means the 13.5% Subordinated Notes due 2011 of the
------------------
Company.
"Taxes" means all taxes, assessments, fees, levies, imposts, duties,
-----
penalties, deductions, withholdings, or other charges of any nature whatsoever
from time to time or at any time imposed by any law or any Governmental
Authority.
"Temporary Cash Investment" means any of the following:
-------------------------
(29) direct obligations of the United States of America
or any agency thereof or obligations fully and unconditionally
guaranteed by the United States of America or any agency thereof;
50
<PAGE>
(30) time deposit accounts, certificates of deposit and
money market deposits maturing within 180 days of the date of
acquisition thereof issued by a bank or trust company which is
organized under the laws of the United States of America, any state
thereof or any foreign country recognized by the United States of
America, and which bank or trust company has capital, surplus and
undivided profits aggregating in excess of $100 million (or the
foreign currency equivalent thereof) and has outstanding debt which is
rated "A" (or similar equivalent rating) or higher by at least one
nationally recognized statistical rating organization (as defined in
Rule 436 under the Securities Act) or any money-market fund sponsored
by a registered broker dealer or mutual fund distributor;
(31) repurchase obligations with a term of not more than 30
days for underlying securities of the types described in clause (1)
above entered into with a bank or trust company meeting the
qualifications described in clause (2) above;
(32) commercial paper, maturing not more than 90 days after
the date of acquisition, issued by a corporation (other than an
Affiliate of the Company) organized and in existence under the laws of
the United States of America, any state thereof or any foreign country
recognized by the United States of America with a rating at the time
as of which any investment therein is made of "P-1" (or higher)
according to Moody's or "A-1" (or higher) according to S&P; and
(33) securities with maturities of six months or less from
the date of acquisition issued or fully and unconditionally guaranteed
by any state, commonwealth or territory of the United States of
America, or by any political subdivision or taxing authority thereof,
and rated at least "A" by S&P or Moody's.
"Trade Payables" means, with respect to any Person, any accounts payable or
--------------
any other indebtedness or monetary obligation to trade creditors created,
assumed or Guaranteed by such Person or any of its Subsidiaries arising in the
ordinary course of business in connection with the acquisition of goods or
services.
"Transaction Date" means, with respect to the Incurrence of any
----------------
Indebtedness by the Company or any of its subsidiaries, the date such
Indebtedness is to be Incurred and, with respect to any Restricted Payment, the
date such Restricted Payment is to be made.
"Transactions" means:
------------
(34) the issuance of the Notes and the Subordinated Notes by
the Company;
(35) the repayment of Indebtedness by the Company of the
Alliances to the RTFC;
51
<PAGE>
(36) the sale and issuance by the Company to the Permitted
Holders of an aggregate amount of $250.0 million of its Preferred
Shares;
(37) the acquisition by the Company of certain licenses and
assets held by Richmond-Norfolk (the "Richmond-Norfolk Acquisition");
----------------------------
(38) the borrowings by the Company under the Credit
Facility; and
(39) the dispositions of assets of Virginia RSA6 and RSA5 in
connection with the Richmond-Norfolk Acquisition.
"Transfer Agent" means the transfer agent for the Series D Preferred Stock
--------------
appointed by the Company.
"Voting Securities" means securities of the Company ordinarily having the
-----------------
power to vote for the election of directors of the Company; provided that when
the term "Voting Securities" is used with respect to any other Person it means
the capital stock or other equity interests of any class or kind ordinarily
having the power to vote for the election of directors or other members of the
governing body of such Person.
"WCAS" means Welsh, Carson, Anderson & Stowe VIII, L.P. and Welsh, Carson,
----
Anderson & Stowe IX, L.P. and their respective affiliates.
"Wholly Owned" means with respect to any subsidiary of any Person, the
------------
ownership of all of the outstanding Capital Stock of such subsidiary (other than
any director's qualifying shares or Investments by foreign nationals mandated by
applicable law) by such Person or one or more Wholly Owned subsidiaries of such
Person.
52
