SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported) December 17, 1997
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WINSTAR COMMUNICATIONS, INC.
(Exact Name of Registrant as Specified in Charter)
Delaware 1-10726 13-3585278
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(State or Other Jurisdiction (Commission (IRS Employer
of Incorporation) File Number) Identification No.)
230 Park Avenue, New York, New York 10169
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(Address of Principal Executive Offices) (Zip Code)
Registrant's telephone number, including area code (212) 584-4000
Not Applicable
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(Former Name or Former Address, if Changed Since Last Report)
Exhibit Index -- Page 6
Page 1 of 6 Pages
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Item 5. Other Events.
On December 17, 1997, WinStar Communications, Inc. (the "Company") and
its wholly owned subsidiary WinStar Credit Corp. ("WCC" and, together with
WinStar Communications, Inc., the "Sellers") entered into a Purchase Agreement
("Purchase Agreement") with Salomon Brothers Inc and Credit Suisse First Boston
Corporation ("Initial Purchasers"), pursuant to which the Company and WCC agreed
to sell to the Initial Purchasers an aggregate of 165,000 shares and 10,000
shares, respectively of the Company's Series C 14 1/4% Senior Cumulative
Exchangeable Preferred Stock ("Exchangeable Preferred Stock") for an aggregate
purchase price of $175 million. The sale of the Securities was consummated on
December 22, 1997 ("Closing Date"). The Initial Purchasers resold the
Exchangeable Preferred Stock in a Rule 144A institutional private placement
("Preferred Stock Placement").
A portion of the net proceeds of the Preferred Stock Placement was used
to prepay $62.25 million of indebtedness (plus interest thereon) incurred by the
Company in connection with its recent acquisition of assets from US ONE
Communications Corp. in October 1997. The balance of the proceeds is intended to
be used to acquire substantially all of the assets and business of MIDCOM
Communications Inc. and certain of its subsidiaries for a purchase price of
approximately $92 million, assuming such acquisition is consummated, of which
there is no assurance, and for working capital and general corporate purposes.
Dividends on the Exchangeable Preferred Stock will accrue from the date
of issuance at the rate of 14 1/4% of the Accumulated Amount (as defined in the
Certificate of Designation authorizing the Exchangeable Preferred Stock) per
annum, compounded semiannually on each June 15 and December 15, but will not be
payable in cash, except as set forth in the next sentence. Commencing on the
first June 15 or December 15 (each a "Dividend Payment Date") which is at least
six months after the later of December 15, 2002, and the date all obligations
under each of the Company's outstanding indentures shall have been satisfied in
full (the "Specified Debt Satisfaction Date") (the "Cash Payment Date"),
dividends on the Exchangeable Preferred Stock will be payable in cash at a rate
per annum equal to 14 1/4% of the Accumulated Amount as of the Dividend Payment
Date preceding such date. In the event that the Specified Debt Satisfaction Date
shall not have occurred before December 15, 2002, the rate otherwise applicable
to the Exchangeable Preferred Stock shall be increased by 150 basis points from
December 15, 2002, until the Dividend Payment Date falling on or after the
Specified Debt Satisfaction Date.
The Exchangeable Preferred Stock will not be redeemable prior to
December 15, 2002. On or after December 15, 2002, the Exchangeable Preferred
Stock is redeemable at the option of the Company, at the following redemption
prices (expressed as percentages of the Accumulated Amount thereof), plus
accumulated and unpaid dividends, if any (including an amount in cash equal to a
prorated dividend for any partial dividend period), on such Accumulated Amount
if redeemed during the 12-month period commencing on December 15 of the years
set forth below:
Period Redemption
Price
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2002..........................................................107.125%
2003..........................................................105.344%
2004..........................................................103.563%
2005..........................................................101.781%
2006 and thereafter...........................................100.000%
The Company is required to redeem the Exchangeable Preferred Stock on
December 15, 2007, at a redemption price equal to 100% of the Accumulated Amount
thereof plus accumulated and unpaid dividends, if any, to the date of
redemption.
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On any scheduled Dividend Payment Date following the Specified Debt
Satisfaction Date, the Company may, at its option, exchange all but not less
than all of the shares of Exchangeable Preferred Stock then outstanding for the
Company's 14 1/4% Senior Subordinated Deferred Interest Notes Due 2007 (the
"Exchange Debentures") in an Accumulated Amount equal to the aggregate
Accumulated Amount of the shares of Exchangeable Preferred Stock outstanding at
the time of such exchange, plus accumulated and unpaid dividends to the date of
exchange. Until the Cash Payment Date, interest on the Exchange Debentures will
accrue at a rate of 14 1/4% of the Accumulated Amount per annum and will be
compounded semiannually on each June 15 and December 15 (each an "Interest
Payment Date") but will not be payable in cash except as set forth in the next
sentence. Commencing on the first Interest Payment Date following the later of
the date the Company exchanges the Exchangeable Preferred Stock for Exchange
Debentures (the "Exchange Date") or the Cash Payment Date, interest will be
payable in cash at a rate per annum equal to 14 1/4% of the Accumulated Amount
as of the Exchange Date. Interest on the Accumulated Amount of each Exchange
Debenture as of the Exchange Date will be paid semiannually on each June 15 and
December 15 of each year, after the Exchange Date. The Exchange Debentures will,
if issued, be unsecured, senior subordinated obligations of the Company,
subordinated in right of payment to all Senior Indebtedness of the Company and
to all indebtedness and other liabilities (including trade payables) of the
Company's subsidiaries.
The Company and the Initial Purchasers also entered into a Registration
Rights Agreement, dated December 17, 1997, pursuant to which the Company is
obligated to file a registration statement under the Securities Act of 1933, as
amended (the "Act"), or, under certain circumstances, a shelf registration
statement, registering additional shares of Exchangeable Preferred Stock
("Exchange Securities") to be exchanged for the Exchangeable Preferred Stock
issued in the Preferred Stock Placement ("Registered Exchange Offer"), and to
use its best efforts to have such registration statement declared effective by
the Securities and Exchange Commission ("SEC") on or prior to June 20, 1998.
In the event that applicable interpretations of the staff of the
Securities and Exchange Commission (the "SEC") do not permit the Company to
effect the Registered Exchange Offer, or if for any other reason such Registered
Exchange Offer is not consummated within 180 days of the date of the
Registration Rights Agreement, or if the Initial Purchasers so request with
respect to Exchangeable Preferred Stock, not eligible to be exchanged for
Exchange Securities in such Registered Exchange Offer, or if any holder of
Exchangeable Preferred Stock is not eligible to participate in such Registered
Exchange Offer or does not receive freely tradeable Exchange Securities in such
Registered Exchange Offer, the Company will, at its cost, (a) as promptly as
practicable, file a shelf registration statement (a "Shelf Registration
Statement") covering resales of the Exchangeable Preferred Stock or Exchange
Securities, as the case may be, (b) use its best efforts to cause the Shelf
Registration Statement to be declared effective under the Securities Act and (c)
keep the Shelf Registration Statement effective until the time when the
Exchangeable Preferred Stock or Exchange Securities covered by the Shelf
Registration Statement can be sold pursuant to Rule 144A without any limitations
under clauses (c), (e), (f) and (h) of Rule 144.
If (i) by February 5, 1998, neither the Exchange Offer Registration
Statement nor the Shelf Registration Statement has been filed with the SEC; (ii)
by June 20, 1998, neither the Registered Exchange Offer is consummated nor the
Shelf Registration Statement is declared effective; or (iii) after either the
Exchange Offer Registration Statement or the Shelf Registration Statement is
declared effective, such Registration Statement thereafter ceases to be
effective or such Registration Statement or the related prospectus ceases to be
useable (subject to certain exceptions) in connection with resales of the
Exchangeable Preferred Stock or Exchange Securities, as the case may be, in
accordance with and during the periods specified in the Registration Rights
Agreement (each such event referred to in clauses (i) through (iii) a
"Registration Default"), additional dividends or interest, as the case may be,
will accrue on the Exchangeable Preferred Stock or the Exchange Securities from
and including the date on which any such Registration Default shall occur to but
excluding the date on which all Registration
3
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Defaults have been cured. Such additional dividends or interest will accrue at a
rate per annum equal to .50% of the Accumulated Amount of such Exchangeable
Preferred Stock or Exchange Securities.
On December 17, 1997, the Company issued a press release announcing the
execution of the Purchase Agreement and the transactions contemplated thereby.
On December 22, 1997, the Company issued a press release announcing the
consummation of the Preferred Stock Placement. Copies of such press releases are
annexed hereto as exhibits.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of
1934, the Registrant has duly caused this report to be signed on its behalf by
the undersigned hereunto duly authorized.
Dated: December 22, 1997 WINSTAR COMMUNICATIONS, INC.
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(Registrant)
/s/ Frederic E. Rubin
Frederic E. Rubin
Vice President and Treasurer
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EXHIBIT INDEX
Exhibit Number Description
10.1 Purchase Agreement
10.2 Amendment to the Purchase Agreement
10.3 Certificate of Designations, Rights and
Preferences of 14 1/4% Series C Senior
Cumulative Exchangeable Preferred Stock
Due 2007 with Form of Exchangeable Preferred
Stock Certificate annexed thereto
10.4 Registration Rights Agreement
99.1 Press Release, dated December 17, 1997
99.2 Press Release, dated December 22, 1997
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EXECUTION COPY
WINSTAR COMMUNICATIONS, INC.
Series C 14-1/4% Senior Cumulative Exchangeable Preferred Stock Due 2007
(Initial Liquidation Preference $1,000 Per Share)
PURCHASE AGREEMENT
December 17, 1997
Salomon Smith Barney
Salomon Brothers Inc
Credit Suisse First Boston Corporation
c/o Salomon Brothers Inc
Seven World Trade Center
New York, N.Y. 10048
Ladies and Gentlemen:
1. Introductory. WinStar Communications, Inc., a Delaware corporation
(the "Issuer"), and WinStar Credit Corp., a Delaware corporation and a wholly
owned subsidiary of the Issuer ("WCC" and together with the Issuer, the
"Sellers"), have agreed, subject to the terms and conditions stated herein, to
issue and sell to the several initial purchasers named in Schedule A hereto (the
"Purchasers") 157,500 shares and 17,500 shares, respectively, of the Issuer's
Series C 14-1/4% Senior Cumulative Exchangeable Preferred Stock Due 2007
(initial liquidation preference $1,000 per share) (the "Exchangeable Preferred
Stock"). The Company may, at its option, on any Scheduled Dividend Payment Date
following the Specified Debt Satisfaction Date (as such terms are defined in the
Offering Document described below), exchange all but not less than all of the
Exchangeable Preferred Stock then outstanding for Senior Subordinated Deferred
Interest Notes Due 2007 (the "Exchange Debentures"), and each holder of
outstanding shares of Exchangeable Preferred Stock will be entitled to receive
$1.00 Accumulated Amount (as defined in the Offering Document) of Exchange
Debentures for each $1.00 Liquidation Preference (as defined in the Offering
Document) of Exchangeable Preferred Stock held by such holder at the time of
such exchange. The Exchangeable Preferred Stock and the Exchange Debentures
issuable upon the exchange of the Exchangeable Preferred Stock are collectively
herein referred to as the "Offered Securities". Holders of shares of the
Exchangeable Preferred Stock or Exchange Debentures will have the registration
rights set forth in the Registration Rights Agreement dated the date hereof
among the Company and the Purchasers. The United States Securities Act of 1933
is herein referred to as the "Securities Act." For purposes of this Agreement,
"Salomon Smith Barney" shall mean Salomon Brothers Inc.
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The Sellers hereby agree with the several Purchasers as follows:
2. Representations and Warranties of the Issuer. The Sellers represent
and warrant to, and agree with, the several Purchasers that:
(a) A preliminary offering circular and an offering circular relating
to the Offered Securities being purchased by the Purchasers have been prepared
by the Issuer for use by the Purchasers in connection with the resale of the
Offered Securities. Such preliminary offering circular and offering circular, as
supplemented as of the date of this Agreement, together with any other document
approved by the Issuer for use in connection with the contemplated resale of the
Offered Securities are hereinafter collectively referred to as the "Offering
Document." On the date of this Agreement, the Offering Document does not, and at
the Closing Date (as defined below) the Offering Document will not, include any
untrue statement of a material fact or omit to state any material fact necessary
in order to make the statements therein, in the light of the circumstances under
which they were made, not misleading. The preceding sen tence does not apply to
statements in or omissions from the Offering Document based upon written
information furnished to the Issuer by any Purchaser through Salomon Smith
Barney specifically for use therein, it being understood and agreed that the
only such information is that described as such in Section 7(b). The Issuer's
Annual Report on Form 10-K most recently filed with the Securities and Exchange
Commission (the "Commission") and all subsequent reports (collectively, the
"Exchange Act Reports") which have been filed by the Issuer with the Commission
or sent to stockholders pursu ant to the Securities Exchange Act of 1934 (the
"Exchange Act"), when they were filed with the Commission, conformed in all
material respects to the requirements of the Exchange Act and the rules and
regulations of the Commission thereunder.
(b) The Issuer has been duly incorporated and is an existing
corporation in good standing under the laws of the State of Delaware, with
corporate power and authority to own its properties and conduct its business as
described in the Offering Document; and the Issuer is duly qualified to do
business as a foreign corporation in good standing in all other jurisdictions in
which its ownership or lease of property or the conduct of its business requires
such qualification, except to the extent that the failure to be so qualified or
be in good standing would not have a material adverse effect on the condition
(financial or other), business, properties or results of operations of the
Issuer and its subsidiaries, taken as a whole (a "Material Adverse Effect"). The
Issuer is qualified to do business as a foreign corporation in the State of New
York.
(c) Each subsidiary of the Issuer, including WCC, has been duly
incorporated and is an existing corporation in good standing under the laws of
the jurisdiction of its incorporation, with corporate power and authority to own
its properties and conduct its business as described in the Offering Document;
and each subsidiary of the Issuer is duly qualified to do business as a foreign
corporation in good standing in all other jurisdictions in which its ownership
or lease of property or the conduct of its business requires such qualification,
except to the extent that the failure to be so qualified or be in good standing
would not have a Material Adverse Effect; all of the issued and out standing
capital stock of each subsidiary of the Issuer has been duly authorized and
validly issued and is fully paid and nonassessable; and the capital stock of
each subsidi ary owned by the Issuer, directly or through subsidiaries, is owned
free from liens, encumbrances and defects.
(d) The Exchangeable Preferred Stock has been duly authorized by the
Issuer; and when the Exchangeable Preferred Stock has been delivered by the
Sellers and paid for pursuant to this Agreement on the Closing Date (as defined
below), such Exchangeable Preferred Stock will be validly issued, fully paid and
nonassessable and will conform, in all material respects, to the description
thereof contained in the Offering Document; and the issuance of the Offered
Securities is not subject to preemptive or other similar rights. Each of the
indenture between the Issuer and United States Trust Company of New York (in
such capacity, the "Trustee") that will
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govern the Exchange Debentures (the "Indenture") and the Exchange Debentures has
been duly authorized; and when the Indenture has been duly executed and
delivered and the Exchange Debentures have been executed and authenticated in
accordance with the Indenture and delivered in exchange for the Exchangeable
Preferred Stock, the Exchange Debentures will constitute, valid and legally
binding obligations of the Issuer, enforceable in accordance with their terms,
subject to bankruptcy, insolvency, fraudulent transfer, reorganization,
moratorium, and similar laws of general applicability relating to or affecting
creditors' rights and the general equity principles; and the Exchange Debentures
conform, in all material respects, to the description thereof contained in the
Offering Document.
(e) The Registration Rights Agreement (as defined herein) has been duly
authorized, executed and delivered; Registration Rights Agreement constitutes a
valid and legally binding obligation of the Issuer, enforceable in accordance
with its terms, subject to bankruptcy, insolvency, fraudulent transfer,
reorganization, moratorium and similar laws of general applicability relating to
or affecting creditors' rights and to general equity principles; except that
rights to indemnity and contribution may be limited by federal and state
securities laws and public policy considerations.
(f) Except as contemplated by this Agreement or as disclosed in the
Offering Document, there are no contracts, agreements or understandings between
the Sellers and any person that would give rise to a valid claim against the
Sellers or any Purchaser for a brokerage commission, finder's fee or other like
payment in connection with the transactions contemplated by this Agreement.
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(g) No consent, approval, authorization, or order of, or filing with,
any governmental agency or body or any court is required for the consummation of
the transactions contemplated by this Agreement in connection with the issuance
and sale of the Offered Securities by the Sellers, other than as may be required
under the Securities Act and the Rules and Regulations of the Commission
thereunder with respect to the Registration Rights Agreement among the Issuer
and the Purchasers dated the date hereof (the "Registration Rights Agreement")
and the transactions contemplated thereunder, and such as may be required by
securities or blue sky laws of any state of the United States or of any foreign
jurisdiction in connection with the offer and sale of the Offered Securities.
(h) The execution, delivery and performance of the Registration Rights
Agreement and this Agreement, and the issuance and sale of the Offered
Securities and compliance with the terms and provisions thereof will not result
in a breach or violation of any of the terms and provisions of, or constitute a
default under, (i) any statute, rule, regulation or order of any governmental
agency or body or any court, domestic or foreign, having jurisdiction over the
Sellers or any subsidiary of the Issuer or any of their properties, (ii) any
agreement or instrument to which the Sellers or any subsidiary of the Issuer is
a party or by which the Sellers or any subsidiary of the Issuer is bound or to
which any of the properties of the Sellers or any subsidiary of the Issuer is
subject, or (iii) the charters or by-laws of the Sellers or any subsidiary of
the Issuer, except, in the case of clause (i) or (ii), such breaches, violations
or defaults that individually or in the aggregate would not have a Material
Adverse Effect; and the Issuer has full corporate power and authority to
authorize, issue and sell the Offered Securities to be sold by the Issuer and
WCC as contemplated by this Agreement.
(i) This Agreement has been duly authorized, executed and delivered by
the Sellers.
(j) Except as disclosed in the Offering Document, the Issuer and its
subsidi aries have good and marketable title to all real properties and all
other properties and assets owned by them, in each case free from liens,
encumbrances and defects that would materially affect the value thereof or
materially interfere with the use made or to be made thereof by them; and,
except as disclosed in the Offering Document, the Issuer and its subsidiaries
hold any leased real or personal property under valid and enforce able leases
with no exceptions that would materially interfere with the use made or to be
made thereof by them.
(k) The Issuer and its subsidiaries possess adequate certificates,
authorities or permits issued by appropriate governmental agencies or bodies
necessary to conduct the business now operated by them and have not received any
notice of proceedings relat ing to the revocation or modification of any such
certificate, authority or permit that, individually or in the aggregate, could
reasonably be expected to have a Material Adverse Effect.
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(l) No labor dispute with the employees of the Issuer or any of its
subsidiaries exists or, to the knowledge of the Issuer, is imminent that could
reasonably be expected to have a Material Adverse Effect.
(m) The Issuer and its subsidiaries own, possess or can acquire on
reasonable terms, adequate trademarks, trade names and other rights to
inventions, know-how, patents, copyrights, confidential information and other
intellectual property (collec tively, "intellectual property rights") necessary
to conduct the business as now operated by them, or used in the conduct of the
business as now operated by them, except to the extent that the failure to own
or possess or the inability to acquire such intellectual property rights would
not individually or in the aggregate have a Material Adverse Effect; and the
Issuer has not received any notice of infringement of or conflict with asserted
rights of others with respect to any intellectual property rights that, if deter
mined adversely to the Issuer or any of its subsidiaries, would individually or
in the aggregate have a Material Adverse Effect.
(n) Except as disclosed in the Offering Document, neither the Issuer
nor any of its subsidiaries is in violation of any statute, rule, regulation,
decision or order of any governmental agency or body or any court, domestic or
foreign, relating to the use, disposal or release of hazardous or toxic
substances or relating to the protection or restoration of the environment or
human exposure to hazardous or toxic substances (collectively, "environmental
laws"), owns or operates any real property contaminated with any substance that
is subject to any environmental laws, is liable for any off-site disposal or
contamination pursuant to any environmental laws, or is subject to any claim
relating to any environmental laws, which violation, contamination, liability or
claim would individually or in the aggregate have a Material Adverse Effect; and
the Issuer is not aware of any pending investigation which might lead to such a
claim.
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(o) Except as disclosed in the Offering Document, there are no pending
actions, suits or proceedings against or affecting the Issuer, any of its
subsidiaries or any of their respective properties that, individually or in the
aggregate, could reason ably be expected to have a Material Adverse Effect, or
to materially and adversely affect the ability of the Issuer to perform its
obligations under the Registration Rights Agreement or this Agreement, or which
are otherwise material in the context of the sale of the Offered Securities;
and, to the Issuer's knowledge, no such actions, suits or proceedings are
threatened or contemplated.
(p) The financial statements included in the Offering Document present
fairly the financial position of the Issuer and its consolidated subsidiaries as
of the dates shown and their results of operations and cash flows for the
periods shown, and such financial statements have been prepared in conformity
with generally accepted account ing principles in the United States applied on a
consistent basis; and the assumptions used in preparing the pro forma financial
statements included in the Offering Document provide a reasonable basis for
presenting the significant effects directly attributable to the transactions or
events described therein, the related pro forma adjustments give appropriate
effect to those assumptions, and the pro forma columns therein reflect the
proper application of those adjustments to the corresponding historical
financial state ment amounts.
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(q) Except as disclosed in the Offering Document, since the date of the
latest audited financial statements included in the Offering Document, there has
been no material adverse change, nor any development or event involving a
prospective material adverse change, in the condition (financial or other),
business, properties or results of operations of either of the Issuer and its
subsidiaries taken as a whole (it being understood that the acquisition of
certain assets from US ONE Communications Corp., the acquisition from Telesoft
Corp. of its Internet services subsidiary and the execution of an agreement by
the Issuer to acquire substantially all the assets (the "MIDCOM Acquisition") of
MIDCOM Communications, Inc. ("MIDCOM") (or the termination of such agreement), a
change in the Issuer's stock price or the continuation of operating losses
consistent with the Issuer's historical results shall be deemed not to be, in
and of themselves, such a material adverse change), and, except as disclosed in
or contemplated by the Offering Document, there has been no dividend or
distribution of any kind declared, paid or made by the Issuer on any class of
its capital stock.
(r) The Issuer is not an open-end investment company, unit investment
trust or face-amount certificate company that is or is required to be registered
under Section 8 of the United States Investment Company Act of 1940 (the
"Investment Company Act"), nor is it a closed-end investment company required to
be registered, but not registered, thereunder; and the Issuer is not and, after
giving effect to the offering and sale of the Offered Securities and the
application of the proceeds thereof, will not be an "investment company" as
defined in the Investment Company Act.
(s) No securities of the same class (within the meaning of Rule
144A(d)(3) under the Securities Act) as the Offered Securities are listed on any
national securities exchange registered under Section 6 of the Exchange Act or
quoted in a U.S. auto mated inter-dealer quotation system.
(t) Assuming the accuracy of the representations and warranties of the
Purchasers contained herein, the offer and sale of the Offered Securities in the
manner contemplated by this Agreement will be exempt from the registration
requirements of the Securities Act; and it is not necessary to qualify an
indenture in respect of the Offered Securities under the United States Trust
Indenture Act of 1939, as amended (the "Trust Indenture Act"), other than in
connection with the Issuer's obligations under the Registration Rights
Agreement.
(u) Except for sales to or through the Purchasers, neither the Issuer
nor any of its affiliates, nor any person acting on its or their behalf (i) has,
within the six-month period prior to the date hereof, offered or sold in the
United States or to any U.S. person (as such terms are defined in Regulation S
under the Securities Act) the Offered Securities or any security of the same
class or series as the Offered Securities or (ii) has offered or will offer or
sell the Offered Securities (A) in the United States by means of any form of
general solicitation or general advertising within the meaning of Rule 502(c)
under the Securities Act or (B) with respect to any such securities sold in
reliance on Rule 903 of Regulation S ("Regulation S") under the Securities Act,
by means of any directed selling efforts within the meaning of Rule 902(b) of
Regulation S. The Issuer, its affiliates and any person acting on their behalf
have complied and will comply with the offering restrictions requirement of
Regulation S. The Issuer has not entered and will not enter into any contractual
arrangement with respect to the distribution of the Offered Securities except
for this Agreement and the Registration Rights Agreement.
(v) The Issuer is subject to Section 13 or 15(d) of the Exchange Act.
(w) The Issuer and its subsidiaries are in compliance in all material
respects with the Communications Act of 1934 (as amended by the
Telecommunications Act of 1996, the "Communications Act") and with all
applicable rules, regulations and poli cies of the Federal Communications
Commission (the "FCC").
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(x) The Issuer has provided to the Purchasers a complete and accurate
list of all licenses granted to the Issuer and its subsidiaries (other than
experimental licenses in the 31 GHz and 38 GHz portions of the radio spectrum
and licenses acquired from Local Area Telecommunications, Inc. that are not in
the 38 GHz portion of the radio spectrum) by the FCC (the "Licenses"). All of
the Licenses are currently valid and in full force and effect. Neither the
Issuer nor any of its subsidiaries have any knowledge of any investigation,
notice of apparent liability, violation, forfeiture or other order or complaint
issued by or before any court or regulatory body, including the FCC, or of any
other proceedings (other than proceedings relating to the wireless
communications industries generally) which could in any manner materially
threaten or adversely affect the validity or continued effectiveness of any of
the Licenses.
(y) No event has occurred which (i) results in, or after notice or
lapse of time or both would result in, revocation, suspension, adverse
modification, non-renewal, impairment, restriction or termination of, or order
of forfeiture with respect to, any License or (ii) materially and adversely
affects or could reasonably be expected in the
<PAGE>
future to materially adversely affect any of the rights of the Issuer or any of
its subsidiaries thereunder.
(z) The Issuer and its subsidiaries have duly filed in a timely manner
all mate rial filings, reports, applications, documents, instruments and
information required to be filed by them under the Communications Act, and all
such filings are true, correct and complete in all material respects.
(aa) Neither the Issuer nor any of its subsidiaries have any reason to
believe that any of the Licenses will not be renewed in the ordinary course.
3. Purchase, Sale and Delivery of Offered Securities; Payment of
Underwriting Discount. On the basis of the representations, warranties and
agreements herein con tained, but subject to the terms and conditions herein set
forth, the Sellers hereby agree to sell to the Purchasers, and the Purchasers
hereby agree, severally and not jointly, to purchase from the Sellers, the
number of shares of Exchangeable Preferred Stock set forth opposite the names of
the Purchasers in Schedule A hereto, at a purchase price of $962.50 per share
plus accrued dividends (if any) from December 22, 1997 to the Closing Date (as
hereinafter defined).
The Issuer hereby agrees to deliver against payment of the purchase
price the Offered Securities in the form of one or more permanent global
securities in definitive form (the "Global Securities") deposited with United
States Trust Company of New York (in such capacity, the "Transfer Agent") as
custodian for The Depository Trust Company ("DTC") and registered in the name of
Cede & Co., as nominee for DTC. Interests in any permanent Global Securities
will be held only in book-entry form through DTC, except in limited
circumstances (which are described in the Offering Document). Payment for the
Offered Securities shall be made by the Purchasers in Federal (same day) funds
by wire transfer to an account previously designated to Salomon Smith Barney by
the Issuer at a bank acceptable to Salomon Smith Barney, at the office of
Cravath, Swaine & Moore, Worldwide Plaza, 825 Eighth Avenue, New York, N.Y.
10019-7475 at 10:00 A.M. (New York time), on December 22, 1997 (the "Closing
Date"), against delivery to the Transfer Agent as custodian for DTC of the
Global Securities representing all of the Offered Securities.
4. Representations and Agreements by Purchasers; Resale by Purchasers.
(a) Each Purchaser severally represents and warrants to the Issuer that
it is an "accredited investor" within the meaning of Regulation D under the
Securities Act.
(b) Each Purchaser severally acknowledges that the Offered Securities
have not been registered under the Securities Act and may not be offered or sold
within the United States or to, or for the account or benefit of, U.S. persons
except in accordance with Regulation S or pursuant to an exemption from the
registration requirements of the Securities Act. Each Purchaser severally
represents and agrees that it has offered and sold the Offered Securities, and
will offer and sell the Offered Securities (i) as part of its distribution at
any time and (ii) otherwise until 40 days after the later of the com mencement
of the offering and the Closing Date, only in accordance with Rule 903 or Rule
144A under the Securities Act ("Rule 144A"). Accordingly, neither such Purchaser
nor its affiliates, nor any persons acting on its or their behalf, have engaged
or will engage in any directed selling efforts with respect to the Offered
Securities, and
<PAGE>
such Purchaser, its affiliates and all persons acting on its or their behalf
have complied and will comply with the offering restrictions requirement of
Regulation S. Each Purchaser severally agrees that, at or prior to confirmation
of sale of the Offered Securities, other than a sale pursuant to Rule 144A, such
Purchaser will have sent to each distributor, dealer or person receiving a
selling concession, fee or other remunera tion that purchases the Offered
Securities from it during the restricted period a confirmation or notice to
substantially the following effect:
"The Securities covered hereby have not been registered under the U.S.
Securities Act of 1933 (the "Securities Act") and may not be offered or
sold within the United States or to, or for the account or benefit of,
U.S. persons (i) as part of their distribution at any time or (ii)
otherwise until 40 days after the later of the date of the commencement
of the offering and the closing date, except in either case in
accordance with Regulation S (or Rule 144A if avail able) under the
Securities Act."
Unless otherwise defined herein, terms used in this subsection (b) have the
meanings given to them by Regulation S.
(c) Each Purchaser severally agrees that it and each of its affiliates
has not entered and will not enter into any contractual arrangement with respect
to the dis tribution of the Offered Securities except for any such arrangements
with the other Purchaser or affiliates of the other Purchaser or with the prior
written consent of the Issuer.
(d) Each Purchaser severally agrees that it and each of its affiliates
has not offered or sold, and will not offer or sell, the Offered Securities in
the United States by means of any form of general solicitation or general
advertising within the meaning of Rule 502(c) under the Securities Act,
including, but not limited to (i) any advertise ment, article, notice or other
communication published in any newspaper, magazine or similar media or broadcast
over television or radio, or (ii) any seminar or meeting whose attendees have
been invited by any general solicitation or general advertising. Each Purchaser
severally agrees, with respect to resales made in reliance on Rule 144A of any
of the Offered Securities, to deliver either with the confirmation of such
resale or otherwise prior to settlement of such resale a notice to the effect
that the resale of such Offered Securities has been made in reliance upon the
exemption from the registration requirements of the Securities Act provided by
Rule 144A.
(e) Each of the Purchasers severally represents and agrees that (i) it
has not offered or sold and prior to the date six months after the date of issue
of the Offered Securities will not offer or sell any Offered Securities to
persons in the United Kingdom except to persons whose ordinary activities
involve them in acquiring, hold ing, managing or disposing of investments (as
principal or agent) for the purposes of their businesses or otherwise in
circumstances which have not resulted and will not result in an offer to the
public in the United Kingdom within the meaning of the Public Offers of
Securities Regulations 1995; (ii) it has complied and will comply with all
applicable provisions of the Financial Services Act 1986 with respect to
anything done by it in relation to the Offered Securities in, from or otherwise
involving the United Kingdom; and (iii) it has only issued or passed on and will
only issue or pass on in the United Kingdom any document received by it in
connection with the issue of the Offered Securities to a person who is of a kind
described in Article 11(3) of the
<PAGE>
Financial Services Act 1986 (Investment Advertisements) (Exemptions) Order 1996
or is a person to whom such document may otherwise lawfully be issued or passed
on.
(f) Each Purchaser agrees that promptly following the completion of its
initial resale of all the Offered Securities purchased by such Purchaser
pursuant to this Agreement, it will notify the Issuer in writing thereof.
5. Certain Agreements of the Issuer. The Issuer agrees with the
several Purchasers that:
(a) The Issuer will advise Salomon Smith Barney promptly of any
proposal to amend or supplement the Offering Document and will not effect such
amendment or supplementation without Salomon Smith Barney's consent (which
consent shall not be unreasonably withheld). If, at any time prior to the
completion of the resale of the Offered Securities by the Purchasers, any event
occurs as a result of which the Offering Document as then amended or
supplemented would include an untrue statement of a material fact or omit to
state any material fact necessary in order to make the statements therein, in
the light of the circumstances under which they were made, not misleading, or if
it is necessary at any such time to amend or supplement the Offering Document to
comply with any applicable law, the Issuer promptly will notify Salomon Smith
Barney of such event and promptly will prepare, at its own expense, an amendment
or supplement which will correct such statement or omission or effect such
compliance. Neither Salomon Smith Barney's consent to, nor the Purchasers'
delivery to offerees or investors of, any such amendment or supplement shall
constitute a waiver of any of the conditions set forth in Section 6.
(b) The Issuer will furnish to Salomon Smith Barney copies of the
Offering Document and all amendments and supplements to such document, in each
case as soon as available and in such quantities as Salomon Smith Barney
reasonably requests, and the Issuer will furnish to Salomon Smith Barney as soon
as available three copies of the Offering Document signed by a duly authorized
officer of the Issuer, one of which will include the independent accountants'
reports therein manually signed by such indepen dent accountants. At any time
when the Issuer is not subject to Section 13 or 15(d) of the Exchange Act, such
Issuer will promptly furnish or cause to be furnished to Salomon Smith Barney
(and, upon request, to each of the other Purchasers) and, upon request of
holders and prospective purchasers of the Offered Securities, to such holders
and purchasers, copies of the information required to be delivered to holders
and pro spective purchasers of the Offered Securities pursuant to Rule
144A(d)(4) under the Securities Act (or any successor provision thereto) in
order to permit compliance with Rule 144A in connection with resales by such
holders of the Offered Securities. The Issuer will pay the expenses of printing
and distributing to the Purchasers all such docu ments.
(c) The Issuer will use its best efforts to arrange for the
qualification of the Offered Securities for sale and the determination of their
eligibility for investment under the laws of such jurisdictions in the United
States and Canada as Salomon Smith Barney reasonably designates and will
continue such qualifications in effect so long as required for the resale of the
Offered Securities by the Purchasers; provided, however, that the Issuer will
not be required to qualify as a foreign corporation or to file a general consent
to service of process in any such state.
<PAGE>
(d) During the period of five years after the Closing Date, the Issuer
will furnish to Salomon Smith Barney and, upon request, to each of the other
Purchasers, as soon as practicable after the end of each fiscal year, a copy of
the Issuer's annual report to stockholders for such year; and the Issuer will
furnish to Salomon Smith Barney and, upon request, to each of the other
Purchasers (i) as soon as available, a copy of each report and any definitive
proxy statement of the Issuer filed with the Commission under the Exchange Act
or mailed to stockholders and (ii) from time to time, such other publicly
available information concerning the Issuer as Salomon Smith Barney may
reasonably request.
(e) During the period of two years after the Closing Date, the Issuer
will, upon request, furnish to the Purchasers and any holder of Offered
Securities a copy of the restrictions on transfer applicable to the Offered
Securities.
(f) During the period of two years after the Closing Date, the Issuer
will not, and will not permit any of its affiliates (as defined in Rule 144
under the Securities Act) to, resell any of the Offered Securities that have
been reacquired by any of them.
(g) During the period of two years after the Closing Date, the Issuer
will not be or become, an open-end investment company, unit investment trust or
face-amount certificate company that is or is required to be registered under
Section 8 of the Investment Company Act, and the Issuer is not, or will not be
or become, a closed-end investment company required to be registered, but not
registered, under the Investment Company Act.
(h) The Issuer will pay all expenses incidental to the performance of
the Issuer's obligations under this Agreement and the Indenture, including (i)
the fees and expenses of the Transfer Agent and the Trustee, (ii) all expenses
in connection with the execution, issue, authentication, packaging and initial
delivery of the Offered Securities, the preparation and printing of this
Agreement, the Offered Securities, the Indenture, the Offering Document and
amendments and supplements thereto, and any other document relating to the
issuance, offer, sale and delivery of the Offered Securities; (ii) the cost of
qualifying the Offered Securities for trading in The Private Offerings, Resale
and Trading through Automated Linkages (PORTAL) market and any expenses
incidental thereto; (iii) the cost of any advertising approved by the Issuer in
connection with the issue of the Offered Securities; (iv) any expenses
(including fees and disbursements of counsel) incurred in connection with
qualification of the Offered Securities for sale under the laws of such
jurisdictions in the United States and Canada as Salomon Smith Barney designates
and the printing of memoranda relating thereto; (v) any fees charged by
investment rating agencies for the rating of the Offered Securities; and (vi)
all expenses incurred in distributing the Offering Document (includ ing any
amendments and supplements thereto) to the Purchasers.
(i) In connection with the offering, until Salomon Smith Barney shall
have notified the Issuer and the other Purchasers of the completion of the
resale of the Offered Securities, neither the Issuer nor any of its affiliates
has or will (unless required by the terms of the indenture governing such
Offered Securities), either alone or with one or more other persons, bid for or
purchase for any account in which it or any of its affiliates has a beneficial
interest any Offered Securities or attempt to induce any person to purchase any
Offered Securities; and neither they nor any of their
<PAGE>
affiliates will make bids or purchases for the purpose of creating actual, or
apparent, active trading in, or of raising the price of, the Offered Securities.
(j) The Issuer will not at any time offer, sell, contract to sell,
pledge or other wise dispose of, directly or indirectly, any securities under
circumstances where such offer, sale, pledge, contract or disposition would
cause the exemption afforded by Section 4(2) of the Securities Act or the safe
harbor of Regulation S thereunder to cease to be applicable to the offer and
sale of the Offered Securities.
(k) The Issuer will cause each Offered Security to bear the legend set
forth in the form of Exchangeable Preferred Stock attached as Exhibit A to the
Certificate of Designation relating to the Exchangeable Preferred Stock and as
Exhibit 1 to the Rule 144A/Regulation S Appendix to the Indenture until such
legend shall no longer be necessary or advisable because the Offered Securities
are no longer subject to the restrictions on transfer described therein.
6. Conditions of the Obligations of the Purchasers. The obligations of
the several Purchasers to purchase and pay for the Offered Securities will be
subject to performance by the Issuer of its obligations hereunder and to the
following additional conditions precedent:
(a) The Purchasers shall have received opinions, dated the Closing
Date, of (i) Graubard Mollen & Miller, counsel for the Issuer, and (ii) Willkie
Farr & Gallagher, counsel for the Issuer on FCC matters, in each case
substantially to the effect set forth in Annex I and Annex II, respectively.
(b) The Purchasers shall have received from Cravath, Swaine & Moore,
counsel for the Purchasers (or, if such counsel shall fail to deliver such
opinion, other counsel reasonably acceptable to the Purchasers), such opinion or
opinions, dated the Closing Date, with respect to the incorporation of the
Issuer, the validity of the Offered Securities, the exemption from registration
for the offer and sale of the Offered Securities by the Issuer to the several
Purchasers and the resales by the several Purchasers as contemplated hereby and
other related matters as Salomon Smith Barney may reasonably require, and the
Issuer shall have furnished to such counsel such docu ments as they reasonably
request for the purpose of enabling them to pass upon such matters.
(c) The Purchasers shall have received a certificate, dated the Closing
Date, of the Chief Executive Officer or any Vice President and the Treasurer or
a principal financial or accounting officer of the Issuer in which such
officers, to the best of their knowledge after reasonable investigation, shall
state that the Issuer has complied with all agreements and satisfied all
conditions on its part to be performed or satisfied here under at or prior to
the Closing Date.
(d) The Company shall have filed with the Secretary of State of the
State of Delaware the Certificate of Designation for the Exchangeable Preferred
Stock.
(e) The Purchasers shall have received upon the execution of this
Agreement and at the Closing Date, letters from Grant Thornton LLP, dated
respectively as of the date hereof and as of the Closing Date, in form and
substance satisfactory to the Purchasers, confirming that they are independent
accountants within the meaning of the
<PAGE>
Securities Act and the applicable published rules and regulations thereunder and
that they have performed a review of the unaudited condensed consolidated
balance sheet as of September 30, 1997, and unaudited condensed consolidated
statements of operations and cash flows of the Issuer for the nine-month periods
ended September 30, 1996 and 1997 in accordance with Statement on Auditing
Standards No. 71, and stating in effect that:
(i) in their opinion the audited financial statements included
in the Offering Document and reported on by them comply as to form in
all material respects with the applicable accounting requirements of
the Securities Act and the related published rules and regulations;
(ii) on the basis of a reading of the latest unaudited
financial statements made available by the Issuer and its subsidiaries;
their limited review, in accor dance with standards established under
Statement on Auditing Standards No. 71, of the unaudited condensed
consolidated balance sheet as of September 30, 1997, and unaudited
condensed consolidated statements of operations and cash flows of the
Issuer for the nine-month period ended September 30, 1996 and 1997;
carrying out certain specified procedures (but not an examination in
accordance with generally accepted auditing standards) which would not
neces sarily reveal matters of significance with respect to the
comments set forth in such letter; a reading of the minutes of the
meetings of the stockholders, directors and executive, finance and
audit committees of the Issuer and its sub sidiaries; and inquiries of
certain officials of the Issuer who have responsibility for financial
and accounting matters of the Issuer and its subsidiaries as to trans
actions and events subsequent to September 30, 1997, nothing came to
their attention which caused them to believe that:
(1) any unaudited financial statements included in
the Offering Document do not comply as to form in all material
respects with appli cable accounting requirements of the
Securities Act and with the pub lished rules and regulations
of the Commission with respect to financial statements
included or incorporated in quarterly reports on Form 10-Q
under the Securities Exchange Act of 1934; or that any
material modifi cations should be made to such unaudited
financial statements for them to be in conformity with
generally accepted accounting principles applied on a basis
substantially consistent with that of the audited financial
state ments included or incorporated in the Offering Document;
and
(2) with respect to the period subsequent to
September 30, 1997, there were any changes, at a specified
date not more than five days prior to the date of the letter,
in the capital stock or paid-in capital, increase in long-term
debt, less current portion or any decreases in the
consolidated net current assets or stockholders' equity of the
Issuer and its subsidi aries as compared with the amounts
shown on the September 30, 1997, consolidated balance sheet
included in the Offering Document, or for the period from
October 1, 1997, to such specified date there were any
decreases, as compared with the corresponding period in the
previous year in consolidated operating revenues or increases
in total or per share amounts of net loss of the Issuer and
its subsidiaries except in all instances for changes or
decreases set forth in such letter, in which case
<PAGE>
the letter shall be accompanied by an explanation by the
Issuer as to the significance thereof unless said explanation
is not deemed necessary by the Purchaser.
(iii) they have performed certain other specified procedures
as a result of which they determined that certain information of an
accounting, financial or statistical nature (which is limited to
accounting, financial or statistical informa tion derived from the
general accounting records of the Issuer and its subsidi aries) set
forth in the Offering Document, including the information set forth
under the captions "Offering Circular Summary", "Risk Factors", "Use of
Proceeds", "Capitalization", "Selected Historical Financial Data",
"Management's Discussion and Analysis of Financial Condition and
Results of Operations" and "Business" in the Offering Document agrees
with the account ing records of the Company and its subsidiaries,
excluding any questions of legal interpretation; and
(iv) they have performed certain agreed-upon procedures on the
unaudited pro forma financial statements included in the Offering
Document (the "pro forma financial statements"); inquired of certain
officials of the Issuer who have responsibility for financial and
accounting matters; proven the arithmetic accuracy of the application
of the pro forma adjustments to the historical amounts in the pro forma
financial statements; and stated their findings.
References to the Offering Document in this paragraph (e) include any
supplement thereto at the date of the letter.
(f) Subsequent to the date hereof or, if earlier, the dates as of which
information is given in the Offering Document (exclusive of any supplement
thereto), there shall not have been (i) any change or decrease specified in the
letter or letters referred to in paragraph (e) of this Section 6 or (ii) any
change, or any development involving a prospective change, in or affecting the
condition (financial or otherwise), earnings, business or properties of the
Issuer and its subsidiaries, taken as a whole, whether or not arising from
transactions in the ordinary course of business, except as set forth in or
contemplated in the Offering Document (exclusive of any supplement thereto) and
except for a termination of the asset purchase agreement relating to the MIDCOM
Acquisition, the effect of which, in any case referred to in clause (i) or (ii)
above, is, in the sole judgment of the Purchasers, so material and adverse as to
make it impractical or inadvisable to proceed with the offering or delivery of
the Offered Securities as contemplated by the Offering Document (exclusive of
any amendment thereof).
(g) The Issuer shall have issued a press release concerning the MIDCOM
Acquisition as soon as practicable on December 17, 1997, but in any case no
later than 5:00 p.m. EST on December 17, 1997; provided, however, that no such
press release need be issued if the Issuer determines by such time not to
proceed with the MIDCOM Acquisition.
(h) In the event the Issuer determines not to proceed with the MIDCOM
Acquisition, the Chief Executive Officer of the Issuer shall have conducted a
conference call no later than the Closing Date with the investors to whom the
Purchasers are initially reselling the Exchangeable Preferred Stock.
<PAGE>
The Issuer will furnish the Purchasers with such conformed copies of
such opinions, certificates, letters and documents as the Purchasers reasonably
request. Salomon Smith Barney may in its sole discretion waive on behalf of the
Purchasers compliance with any conditions to the obligations of the Purchasers
hereunder, whether in respect of the Closing Date or otherwise.
7. Indemnification and Contribution. (a) The Issuer will indemnify and
hold harmless each Purchaser against any losses, claims, damages or liabilities,
joint or several, to which such Purchaser may become subject, under the
Securities Act or the Exchange Act or otherwise, insofar as such losses, claims,
damages or liabilities (or actions in respect thereof) arise out of or are based
upon any breach of any of the representations and warranties of the Issuer
contained herein or any untrue statement or alleged untrue statement of any
material fact contained in the Offering Document, or any amendment or supplement
thereto, or arise out of or are based upon the omission or alleged omission to
state therein a material fact necessary in order to make the state ments
therein, in the light of the circumstances under which they were made, not mis
leading, and will reimburse each Purchaser for any legal or other expenses
reasonably incurred by such Purchaser in connection with investigating or
defending any such loss, claim, damage, liability or action as such expenses are
incurred; provided, however, that the Issuer will not be liable in any such case
to the extent that any such loss, claim, damage or liability arises out of or is
based upon an untrue statement or alleged untrue statement in or omission or
alleged omission from any of such documents in reliance upon and in conformity
with written information furnished to the Issuer by any Purchaser through
Salomon Smith Barney specifically for use therein, it being under stood and
agreed that the only such information consists of the information described as
such in subsection (b) below.
(b) Each Purchaser will severally and not jointly indemnify and hold
harmless the Issuer against any losses, claims, damages or liabilities to which
the Issuer may become subject, under the Securities Act or the Exchange Act or
otherwise, insofar as such losses, claims, damages or liabilities (or actions in
respect thereof) arise out of or are based upon any untrue statement or alleged
untrue statement of any material fact contained in the Offering Document, or any
amendment or supplement thereto, or arise out of or are based upon the omission
or the alleged omission to state therein a material fact necessary in order to
make the statements therein, in the light of the circumstances under which they
were made, not misleading, in each case to the extent, but only to the extent,
that such untrue statement or alleged untrue statement or omission or alleged
omission was made in reliance upon and in conformity with written information
furnished to the Issuer by such Purchaser through Salomon Smith Barney
specifically for use therein (it being understood and agreed that the only such
information consists of the statements set forth in the last paragraph of the
cover page and under the heading "Plan of Distribution" in the Offering
Document), and will reimburse any legal or other expenses reasonably incurred by
the Issuer in connection with investigating or defending any such loss, claim,
damage, liability or action as such expenses are incurred.
(c) Promptly after receipt by an indemnified party under this Section
of notice of the commencement of any action, such indemnified party will, if a
claim in respect thereof is to be made against the indemnifying party under
subsection (a) or (b) above, notify the indemnifying party of the commencement
thereof; but the omission so to notify the indemnifying party will not relieve
it from any liability which it may have to
<PAGE>
any indemnified party otherwise than under subsection (a) or (b) above. In case
any such action is brought against any indemnified party and it notifies the
indemnifying party of the commencement thereof, the indemnifying party will be
entitled to partici pate therein and, to the extent that it may wish, jointly
with any other indemnifying party similarly notified, to assume the defense
thereof, with counsel reasonably satis factory to such indemnified party (who
shall not, except with the consent of the indem nified party (which consent
shall not be unreasonably withheld), be counsel to the indemnifying party), and
after notice from the indemnifying party to such indemnified party of its
election so to assume the defense thereof, the indemnifying party will not be
liable to such indemnified party under this Section for any legal or other
expenses subsequently incurred by such indemnified party in connection with the
defense thereof other than reasonable costs of investigation. No indemnifying
party shall, without the prior written consent of the indemnified party (which
consent shall not be unreasonably withheld), effect any settlement of any
pending or threatened action in respect of which any indemnified party is or
could have been a party and indemnity could have been sought hereunder by such
indemnified party unless such settlement includes an uncondi tional release of
such indemnified party from all liability on any claims that are the subject
matter of such action.
(d) If the indemnification provided for in this Section is unavailable
or insuf ficient to hold harmless an indemnified party under subsection (a) or
(b) above, then each indemnifying party shall contribute to the amount paid or
payable by such indem nified party as a result of the losses, claims, damages or
liabilities referred to in sub section (a) or (b) above (i) in such proportion
as is appropriate to reflect the relative benefits received by the Issuer on the
one hand and the Purchasers on the other from the offering of the Offered
Securities or (ii) if the allocation provided by clause (i) above is not
permitted by applicable law, in such proportion as is appropriate to reflect not
only the relative benefits referred to in clause (i) above but also the relative
fault of the Issuer on the one hand and the Purchasers on the other in
connection with the statements or omissions which resulted in such losses,
claims, damages or liabilities as well as any other relevant equitable
considerations. The relative benefits received by the Issuer on the one hand and
the Purchasers on the other shall be deemed to be in the same proportion as the
total net proceeds from the offering (before deducting expenses but after
deducting the Purchasers' discounts and commissions) received by the Issuer bear
to the total discounts and commissions received by the Purchasers from the
Issuer under this Agreement. The relative fault shall be determined by reference
to, among other things, whether the untrue or alleged untrue statement of a
material fact or the omission or alleged omission to state a material fact
relates to information supplied by the Issuer or the Purchasers and the parties'
relative intent, knowledge, access to infor mation and opportunity to correct or
prevent such untrue statement or omission. The amount paid by an indemnified
party as a result of the losses, claims, damages or liabilities referred to in
the first sentence of this subsection (d) shall be deemed to include any legal
or other expenses reasonably incurred by such indemnified party in connection
with investigating or defending any action or claim which is the subject of this
subsection (d). Notwithstanding the provisions of this subsection (d), no
Purchaser shall be required to contribute any amount in excess of the amount by
which the total price at which the Offered Securities purchased by it were
resold exceeds the amount of any damages which such Purchaser has otherwise been
required to pay by reason of such untrue or alleged untrue statement or omission
or alleged omission. The Purchasers' obligations in this subsection (d) to
contribute are several in proportion to their respective purchase obligations
and not joint.
<PAGE>
(e) The obligations of the Issuer under this Section shall be in
addition to any liability which the Issuer may otherwise have and shall extend,
upon the same terms and conditions, to each person, if any, who controls any
Purchaser within the meaning of the Securities Act or the Exchange Act; and the
obligations of the Purchasers under this Section shall be in addition to any
liability which the respective Purchasers may otherwise have and shall extend,
upon the same terms and conditions, to each person, if any, who controls the
Issuer within the meaning of the Securities Act or the Exchange Act.
8. Termination. This Agreement shall be subject to termination in the
absolute discretion of the Purchasers, by notice given to the Issuer prior to
delivery of and pay ment for the Offered Securities, if prior to such time (i)
trading in any of the Issuer's securities shall have been suspended by the
Commission or the Nasdaq National Market or trading in securities generally on
the Nasdaq National Market or the New York Stock Exchange shall have been
suspended or limited or minimum prices shall have been established on such
Market or Exchange, (ii) a banking moratorium shall have been declared either by
Federal or New York State authorities or (iii) there shall have occurred any
outbreak or escalation of hostilities, declaration by the United States of a
national emergency or war or other calamity or crisis the effect of which on
financial markets is such as to make it, in the judgment of the Purchasers,
impracticable or inad visable to proceed with the offering or delivery of the
Offered Securities as contem plated by the Offering Document.
9. Survival of Certain Representations and Obligations. The respective
indem nities, agreements, representations, warranties and other statements of
the Issuer or their officers and of the several Purchasers set forth in or made
pursuant to this Agreement will remain in full force and effect, regardless of
any investigation, or statement as to the results thereof, made by or on behalf
of any Purchaser, the Issuer or any of their respective representatives,
officers or directors or any controlling person, and will survive delivery of
and payment for the Offered Securities.
10. Notices. All communications hereunder will be in writing and, if
sent to the Purchasers will be mailed, delivered or electronically transmitted
and confirmed to the Purchasers, c/o Salomon Smith Barney General Counsel (fax
no.: (212) 783-2274) and confirmed to the General Counsel, Salomon Smith Barney
at Seven World Trade Center, New York, New York 10048, or, if sent to the Issuer
will be mailed, delivered or electronically transmitted and confirmed to 230
Park Avenue, New York, NY 10169 (fax no.: (212) 922-1637), Attention: Timothy
Graham; provided, however, that any notice to a Purchaser pursuant to Section 7
will be mailed, delivered or electronically transmitted and confirmed to such
Purchaser.
11. Successors. This Agreement will inure to the benefit of and be
binding upon the parties hereto and their respective successors and the
controlling persons referred to in Section 7, and no other person will have any
right or obligation here under, except that holders of Offered Securities shall
be entitled to enforce the agree ments for their benefit contained in the second
and third sentences of Section 5(b) hereof against the Issuer as if such holders
were parties thereto.
12. Counterparts. This Agreement may be executed in any number of
counter parts, each of which shall be deemed to be an original, but all such
counterparts shall together constitute one and the same Agreement.
<PAGE>
13. Applicable Law. This Agreement shall be governed by, and construed
in accordance with, the law of the State of New York without regard to
principles of conflicts of laws.
The Issuer hereby submits to the non-exclusive jurisdiction of the
Federal and state courts in the Borough of Manhattan in The City of New York in
any suit or proceeding arising out of or relating to this Agreement or the
transactions contemplated hereby.
<PAGE>
If the foregoing is in accordance with the Purchasers' understanding of
our agreement, kindly sign and return to us one of the counterparts hereof,
whereupon it will become a binding agreement among the Issuer and the several
Purchasers in accordance with its terms.
Very truly yours,
WinStar Communications, Inc.
By________________________________
Name:
Title:
WinStar Credit Corp.
By________________________________
Name:
Title:
The foregoing Purchase Agreement
is hereby confirmed and accepted
as of the date first above written.
Salomon Brothers Inc
Credit Suisse First Boston Corporation
By Salomon Brothers Inc
By_____________________________________
Name:
Title:
<PAGE>
SCHEDULE A
Number of Shares
of Exchangeable
Purchaser Preferred Stock
- --------------------- ----------------
Salomon Brothers Inc 105,000
Credit Suisse First
Boston Corporation 70,000
----------------
175,000
================
A-1
<PAGE>
ANNEX I
The opinion of Graubard Mollen & Miller, to be delivered
pursuant to Section 6(a) of the Purchase Agreement, shall be to the effect that:
1. Each of the Issuer and WCC has been duly incorporated and
is an existing corporation in good standing under the laws of the State of
Delaware, with corporate power and authority to own its properties and conduct
its business as described in the Offering Document.
2. Each of the Indenture, the Offered Securities and the
Registration Rights Agreement has been duly authorized, and the Registration
Rights Agreement has been duly executed and delivered and conforms in all
material respects to the description thereof contained in the Offering Document;
and the Exchangeable Preferred Stock and the Registration Rights Agreement
constitute valid and legally binding obligations of the Issuer enforceable in
accordance with their terms, subject to bankruptcy, insolvency, fraudulent
transfer, reorganization, moratorium and similar laws of general applicability
relating to or affecting creditors' rights and to general equity principles;
and, with respect to the Registration Rights Agreement, except that rights to
indemnity and contribution may be limited by federal and state securities laws
and public policy considerations.
3. The Issuer is not, and, after giving effect to the offering
and sale of the Offered Securities and the application of the proceeds thereof
as described in the Offering Document, will not be an "investment company" as
defined in the Investment Company Act.
4. No consent, approval, authorization or order of, or filing
with, any governmental agency or body or any court is required for the
consummation of the transactions contemplated by this Agreement in connection
with the issuance or sale of the Offered Securities by the Issuer and WCC and
the consummation of the transactions under the Registration Rights Agreement,
other than as may be required under the Securities Act and the Rules and
Regulations of the Commission thereunder with respect to the Registration Rights
Agreement and the transactions contemplated there under and such as may be
required by securities or blue sky laws of the various states of the United
States and of foreign jurisdictions in connection with the offer and sale of the
Offered Securities.
5. The execution, delivery and performance of the Registration
Rights Agreement and this Agreement, and the issuance and sale of the Offered
Securities and compliance with the terms and provisions thereof will not result
in a breach or violation of any of the terms and provisions of, or constitute a
default under, (A) any statute, rule or regulation or any order known to such
counsel of any governmental agency or body or any court having jurisdiction over
either of the Sellers or any subsidiary of the Issuer or any of their
properties, (B) any agreement or instrument listed as an exhibit to WinStar's
Annual Report on Form 10-K most recently filed with the Commission or listed as
an exhibit to or filed with any subsequent reports filed by WinStar under the
Exchange Act through September 30, 1997, to which the Issuer or any such
subsidiary is a party or by which the Issuer or any such subsidiary is bound or
to which any of the properties of the Issuer or any such subsidiary is subject,
or (C) the charter or by-laws
<PAGE>
2
of the Issuer or any such subsidiary, except, in the case of clause (A) or (B),
breaches, violations or defaults that individually or in the aggregate would not
have a Material Adverse Effect; and the Issuer has full power and corporate
authority to authorize, issue and sell the Offered Securities to be sold by such
Issuer as contemplated by this Agreement.
6. The descriptions in the Offering Document of statutes,
legal and governmental proceedings and contracts and other documents are
accurate in all mate rial respects and fairly present the information purported
to be described therein.
7. This Agreement has been duly authorized, executed and
delivered by each of the Issuer and WCC.
8. Based upon the accuracy of the representations and
warranties of the Issuer set forth in Section 2(u) of this Agreement and of the
Purchasers in Section 4 hereof, it is not necessary in connection with (i) the
offer, sale and delivery of the Offered Securities by the Issuer to the several
Purchasers pursuant to this Agreement or (ii) the resales of the Offered
Securities by the several Purchasers in the manner con templated by this
Agreement, to register the Offered Securities under the Securities Act or to
qualify an indenture in respect thereof under the Trust Indenture Act, other
than in connection with the Issuer's obligations under the Registration Rights
Agreement.
In addition, such counsel shall state that such counsel have
no reason to believe that the Offering Document, or any amendment or supplement
thereto, as of the date hereof and as of the Closing Date, contained any untrue
statement or a material fact or omitted to state any material fact required to
be stated therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading; it being understood
that such counsel need express no opinion as to the financial statements or
other financial data contained in the Offering Document. Insofar as the
preceding sentence relates to MIDCOM or its assets, business, operations or
affairs, it is based solely on such counsel's review of MIDCOM's filing on Form
10-K dated December 31, 1996, and its filing on Form 10-Q dated September 30,
1997, and discussions with personnel of the Issuer responsible for negotiating
the asset purchase agreement relating to the MIDCOM Acquisition.
<PAGE>
1
ANNEX II
The opinion of Willkie Farr & Gallagher, to be delivered
pursuant to Section 6(a) of the Purchase Agreement, shall be to the effect that:
1. No prior or subsequent consent, approval, authorization or
order of the FCC is required to be obtained, and no prior or subsequent notice
to or filing with the FCC is required to be made, in connection with the
offering of Offered Securities.
2. To the best of such counsel's knowledge, the Issuer and its
subsidi aries are in compliance in all material respects with all material terms
and conditions of each License.
3. We are not aware of any event or instance in which the
Issuer is not in compliance with all applicable and material rules, regulations
and policies of the FCC pertaining to the Licenses.
4. To the best of such counsel's knowledge, all of the
Licenses are currently valid and in full force and effect, and there is no
investigation, notice of apparent liability, violation, forfeiture or other
order or complaint issued by or before any court or regulatory body, including
the FCC, or of any other proceedings (other than proceedings relating to the
wireless communications industries generally) which could in any manner
materially threaten or adversely affect the validity or continued effectiveness
of any of the Licenses.
5. We are not aware of any event which (i) results in, or
after notice or lapse of time or both would result in, revocation, suspension,
adverse modification, non-renewal, impairment, restriction or termination of, or
order of forfeiture with respect to, any License or (ii) materially and
adversely affects or could reasonably be expected in the future to materially
adversely affect any of the rights of the Issuer or any of its subsidiaries
thereunder.
6. To the best of such counsel's knowledge, the Issuer and its
subsidi aries have duly filed in a timely manner all material filings, reports,
applications, documents, instruments and information required to be filed by
them under the Communications Act pertaining to the Licenses.
7. We are not aware of any reason to believe that any of the
Licenses will not be renewed in the ordinary course.
8. The FCC has the authority, under certain circumstances, to
modify radio licenses that it has issued. The FCC may propose and/or adopt rules
to auction portions of the 38.6 GHz - 40.0 GHz and surrounding radio spectrum
available for commercial use. The FCC may also propose and/or adopt rules to
segment portions of the 38.6 GHz - 40.0 GHz and surrounding radio spectrum. In
that event, the FCC may adopt changes to the existing regulations governing 38
GHz licensees, which could have an impact on the scope of the Licenses and the
operations of WCI and its subsidiaries. As of the date of this letter, we are
not aware of any official FCC action that may permit or is likely to lead to the
revocation, nonrenewal, modification,
<PAGE>
2
impairment, restriction, or suspension of any License or any right of authority
thereunder in whole or in part.
<PAGE>
1
WinStar Communications, Inc.
230 Park Avenue
New York, NY 10169
December 18, 1997
Dear Sirs:
Reference is made to the Purchase Agreement dated December 17,
1997, among WinStar Communications, Inc., WinStar Credit Corp., Salomon Brothers
Inc and Credit Suisse First Boston Corporation (the "Purchase Agreement"). The
parties hereto hereby agree that the Purchase Agreement is hereby amended as
follows:
1. Paragraph 1 of the Purchase Agreement is hereby amended by
(i) deleting the number "157,500" from the fifth line thereof and inserting in
place thereof the number "165,000" and (ii) deleting the number "17,500" from
the sixth line thereof and inserting in place thereof the number "10,000."
2. Paragraph 3 of the Purchase Agreement is hereby amended by
deleting the words "United States Trust Company of New York" from the third line
of the second paragraph thereof and inserting in place thereof the words
"Continental Stock Transfer & Trust Company."
Except as amended by this letter agreement, the Purchase
Agreement shall remain in full force and effect. This letter agreement shall be
governed by, and construed in accordance with, the law of the State of New York
without regard to principles of conflicts of laws.
If the foregoing is in accordance with your
understanding of our agreement, kindly sign and return to us
<PAGE>
2
one of the counterparts hereof, whereupon it will become a
binding agreement among us.
Very truly yours,
Winstar Communications, Inc.
by
--------------------------
Name:
Title:
WinStar Credit Corp.
by
--------------------------
Name:
Title:
Accepted and agreed to as
of the date first above
written:
Salomon Brothers Inc
Credit Suisse First Boston Corporation
by Salomon Brothers Inc
by
-------------------------
Name:
Title:
<PAGE>
1
WINSTAR COMMUNICATIONS, INC.
CERTIFICATE OF DESIGNATION OF THE POWERS,
PREFERENCES AND RELATIVE, PARTICIPATING, OPTIONAL AND
OTHER SPECIAL RIGHTS OF SERIES C 14 1/4% SENIOR CUMULATIVE
EXCHANGEABLE PREFERRED STOCK DUE 2007 AND QUALIFICATIONS,
LIMITATIONS AND RESTRICTIONS THEREOF
- -------------------------------------------------------------------------------
Pursuant to Section 151 of the
General Corporation Law of the State of Delaware
- -------------------------------------------------------------------------------
WinStar Communications, Inc. (the "Company"), a corporation
organized and existing under the General Corporation Law of the State of
Delaware, does hereby certify that pursuant to authority conferred upon the
board of directors of the Company (the "Board of Directors") by its Restated
Certificate of Incorporation (hereinafter referred to as the "Restated
Certificate of Incorporation"), and pursuant to the provisions of Sections
141(c)(2) and 151 of the General Corporation Law of the State of Delaware, said
Board of Directors is authorized to issue Preferred Stock of the Company in one
or more series and has duly approved and adopted the following resolution on
December 16, 1997 (the "Resolution"):
RESOLVED that, pursuant to the authority vested in the Board
of Directors by its Restated Certificate of Incorporation, the Board of
Directors does hereby create, authorize and provide for the issuance of
Series C 14 1/4% Senior Cumulative Exchangeable Preferred Stock Due
2007, par value $.01 per share, with an Initial Liquidation Preference
of $1,000 per share, initially consisting of up to 350,000 shares (the
"Exchangeable Preferred Stock") having the designations, preferences,
relative, participating, optional and other special rights and the
qualifications, limitations and restrictions thereof that are set forth
in the Restated Certificate of Incorporation and in this Resolution as
follows:
(a) Designation. There is hereby created out of the authorized
and unissued shares of Preferred Stock of the Company a series of Preferred
Stock designated as the "Series C 14 1/4% Senior Exchangeable Preferred Stock
Due 2007" (the "Exchangeable Preferred Stock"). The number of shares
constituting the Exchangeable Preferred Stock shall be 350,000 of which 175,000
shares (the "Initial Exchangeable Preferred Stock") shall be issuable initially
<PAGE>
2
and of which 175,000 shares (the "Registerable Exchangeable Preferred Stock")
shall be issuable in exchange for the Initial Exchangeable Preferred Stock
pursuant to the Registration Rights Agreement. The Initial Exchangeable
Preferred Stock and the Registerable Exchangeable Preferred Stock are referred
to collectively as the "Exchangeable Preferred Stock".
(b) Rank. The Exchangeable Preferred Stock will, with respect
to dividend rights and rights on liquidation, winding-up and dissolution, rank
(i) senior to all classes of Common Stock of the Company and to the Company's 6%
Series A Cumulative Convertible Preferred Stock (the "Series A Preferred Stock")
and to each other class of Capital Stock of the Company or series of Preferred
Stock of the Company established hereafter by the Board of Directors of the
Company, the terms of which do not expressly provide that it ranks senior to, or
on a parity with, the Exchangeable Preferred Stock as to dividend rights and
rights on liquidation, winding-up and dissolution of the Company (collectively
referred to, together with all classes of Common Stock of the Company, as
"Junior Stock"); (ii) on a parity with each class of Capital Stock of the
Company or series of Preferred Stock of the Company established hereafter by the
Board of Directors of the Company, the terms of which expressly provide that
such class or series will rank on a parity with the Exchangeable Preferred Stock
as to dividend rights and rights on liquidation, winding-up and dissolution
(collectively referred to as "Parity Stock"); and (iii) junior to each class of
Capital Stock of the Company or series of Preferred Stock of the Company
established hereafter by the Board of Directors of the Company, the terms of
which expressly provide that such class or series will rank senior to the
Exchangeable Preferred Stock as to dividend rights or rights on liquidation,
winding-up and dissolution of the Company (collectively referred to as "Senior
Stock"). All claims of the holders of the Exchangeable Preferred Stock,
including claims with respect to dividend payments, redemption payments,
mandatory repurchase payments or rights upon liquidation, winding-up or
dissolution, shall rank junior to the claims of the holders of any debt of the
Company and all other creditors of the Company.
(c) Dividends. (i) The Exchangeable Preferred Stock will
accumulate cumulative preferential dividends from the Issue Date of the
Exchangeable Preferred Stock accruing at the rate of 14 1/4% per annum of the
Accumulated Amount with respect to the Exchangeable Preferred Stock, compounded
<PAGE>
3
semiannually on each SemiAnnual Dividend Accrual Date, but, except as provided
for below, dividends on the Exchangeable Preferred Stock will not be payable in
cash. Notwithstanding anything herein to the contrary, if the Specified Debt
Satisfaction Date shall not have occurred before December 15, 2002, the rate
otherwise applicable to the Exchangeable Preferred Stock shall be increased by
150 basis points from December 15, 2002, until the Dividend Payment Date falling
on or after the Specified Debt Satisfaction Date.
In addition to the dividends described in the preceding
paragraph, the Exchangeable Preferred Stock will accumulate additional dividends
(the "Additional Dividends") as follows if any of the following events occur
(each such event in clauses (A), (B) and (C) below being herein called a
"Registration Default"): (A) if by February 5, 1998, neither the Exchange Offer
Registration Statement nor the Shelf Registration Statement has been filed with
the SEC; (B) if by June 20, 1998, neither the Registered Exchange Offer is
consummated nor the Shelf Registration Statement declared effective by the SEC;
or (C) if after June 20, 1998, and after either the Exchange Offer Registration
Statement or the Shelf Registration Statement is declared effective, such
Registration Statement thereafter ceases to be effective or such Registration
Statement or the related prospectus ceases to be usable (in each case except as
permitted below) in connection with resales of Exchangeable Preferred Stock in
accordance with and during the periods specified in the Registration Rights
Agreement. Additional Dividends shall accrue on the shares of Exchangeable
Preferred Stock from and including the date on which any such Registration
Default shall occur, to but excluding the date on which all such Registration
Defaults have been cured, at a rate of .50% per annum of the Accumulated Amount
of such Exchangeable Preferred Stock.
A Registration Default referred to in clause (C) of paragraph
(c)(i) shall be deemed not to have occurred and be continuing in relation to a
Registration Statement or the related prospectus if (i) such Registration
Default has occurred solely as a result of (x) the filing of a post-effective
amendment to the Registration Statement to incorporate annual audited financial
information with respect to the Company where such post-effective amendment is
not yet effective and needs to be declared effective to permit Holders to use
the related prospectus or (y) other material events with respect to the Company
that would need to be described in the Registration Statement or the related
prospectus and (ii) in the case of clause (y), the Company proceeds promptly and
in good faith to amend or supplement
<PAGE>
4
the Registration Statement and related prospectus to describe such events unless
the Company has determined in good faith that there are material legal or
commercial impediments in doing so; provided, however, that in any case if such
Registration Default occurs for a continuous period in excess of 45 days,
Additional Dividends shall be payable in accordance with the immediately
preceding paragraphs of this paragraph (c)(i) from the day such Registration
Default initially occurs until such Registration Default is cured.
Any amounts of Additional Dividends due pursuant to clauses
(A), (B) or (C) of this paragraph (c)(i) or pursuant to the proviso contained in
the preceding sentence will be payable on the regular dividend payment dates
with respect to the Exchangeable Preferred Stock and will accrue and compound
and be payable on the same terms and conditions and subject to the same
limitations as pertain at such time for the payment of regular dividends. The
amount of Additional Dividends for each share of Exchangeable Preferred Stock
will be determined by multiplying the Additional Dividends rate by the
Accumulated Amount with respect to such share, multiplied by a fraction, the
numerator of which is the number of days such Additional Dividend rate was
applicable during such period (determined on the basis of a 360-day year
comprised of twelve 30-day months), and the denominator of which is 360.
(ii) All dividends on the Exchangeable Preferred Stock,
including Additional Dividends, to the extent accrued, shall be cumulative on a
daily basis. Until such time as the Accumulated Amount becomes a fixed and final
amount pursuant to the first proviso to the definition of "Accumulated Amount",
the dividends accruing on the Exchangeable Preferred Stock will be deemed paid
by the periodic adjustments provided for in such definition. Commencing on the
first June 15 or December 15 (each, a "Dividend Payment Date") which is at least
six months after the later of December 15, 2002 and the Specified Debt
Satisfaction Date (the "Cash Payment Date"), regular dividends will be payable
in cash in respect of the Exchangeable Preferred Stock at a rate per annum equal
to 14 1/4% of the Accumulated Amount as of the Dividend Payment Date preceding
the Cash Payment Date. Thereafter, dividends on the Exchangeable Preferred Stock
will be payable semiannually in arrears on each Dividend Payment Date or, if any
such date is not a Business Day, on the next succeeding Business Day, to the
holders of record of the Exchangeable Preferred Stock as of the next preceding
June 1 and December 1. All cash dividends are payable when, as and if declared
by the Board of Directors out of funds legally available therefor.
<PAGE>
5
(iii) All dividends paid with respect to shares of the
Exchangeable Preferred Stock pursuant to this paragraph (c) shall be paid pro
rata to the holders entitled thereto.
(iv) No dividend may be declared or paid upon, or any sum set
apart for the payment of dividends upon, any outstanding share of the
Exchangeable Preferred Stock with respect to any Dividend Period unless all
dividends for all preceding Dividend Periods have been declared and paid or
declared and a sufficient sum set apart for the payment of such dividend, upon
all outstanding shares of Exchangeable Preferred Stock.
(v) The Company will not (A) declare, pay or set apart funds
for the payment of any dividend or other distribution with respect to any Junior
Stock or (B) redeem, purchase or otherwise acquire for consideration any Junior
Stock through a sinking fund or otherwise, unless (1) all accrued and unpaid
dividends with respect to the Exchangeable Preferred Stock and any Parity Stock
at the time such dividends are payable have been paid or funds have been set
apart for payment of such dividends and (2) sufficient funds have been paid or
set apart for the payment of the dividend for the current Dividend Period with
respect to the Exchangeable Preferred Stock and any Parity Stock. No dividend
may be declared or paid or set apart for the payment of dividends by the Company
on any Parity Stock for any period unless full cumulative dividends in respect
of each Dividend Period ending on or before such period shall have been or
contemporaneously are declared and paid (or are deemed declared and paid) in
full or declared and, if payable in cash, a sum in cash sufficient for such
payment set apart for such payment on the Exchangeable Preferred Stock;
provided, however, that if accrued dividends on the Exchangeable Preferred Stock
for all prior Dividend Periods have not been paid in full then any dividend
declared on the Exchangeable Preferred Stock for any Dividend Period and on any
Parity Stock will be declared ratably in proportion to accrued and unpaid
dividends on the Exchangeable Preferred Stock and such Parity Stock.
(vi) Notwithstanding anything herein to the contrary, the
Company may declare and pay dividends on Parity Stock or Junior Stock which are
payable solely in additional shares of or by the increase in the liquidation
value of Parity Stock or Junior Stock, as applicable, or repurchase, redeem or
otherwise acquire Junior Stock in exchange for Junior Stock and Parity Stock in
exchange for Parity Stock or Junior Stock.
<PAGE>
6
(vii) Dividends on account of arrears for any past Dividend
Period and dividends in connection with any optional redemption may be declared
and paid at any time, without reference to any regular Dividend Payment Date, to
holders of record on such date, not more than 45 days prior to the payment
thereof, as may be fixed by the Board of Directors of the Company.
(viii) Dividends payable on the Exchangeable Preferred Stock
shall be computed on the basis of a 360-day year consisting of twelve 30-day
months.
(d) Liquidation Preference. (i) Upon any voluntary or
involuntary liquidation, dissolution or winding-up of the Company, holders of
Exchangeable Preferred Stock will be entitled to be paid, out of the assets of
the Company available for distribution to its stockholders, the Liquidation
Preference of the outstanding shares of Exchangeable Preferred Stock, plus,
without duplication, an amount in cash equal to all accumulated and unpaid
dividends (whether or not earned or declared and including Additional Dividends,
if any,) thereon to the date fixed for liquidation, dissolution or winding-up
(including an amount equal to a prorated dividend for the period from the last
Dividend Payment Date to the date fixed for liquidation, dissolution or
winding-up that would have been payable had the Exchangeable Preferred Stock
been the subject of a redemption pursuant to paragraph (e) on such date) before
any distribution is made on any Junior Stock. If, upon any voluntary or
involuntary liquidation, dissolution or winding up of the Company, the amounts
payable with respect to the Exchangeable Preferred Stock and all Parity Stock
are not paid in full, the Exchangeable Preferred Stock and the Parity Stock will
share equally and ratably (in proportion to the respective amounts that would be
payable on such shares of Exchangeable Preferred Stock and the Parity Stock,
respectively, if all amounts payable thereon had been paid in full) in any
distribution of assets of the Company to which each is entitled. After payment
of the full amount of the Liquidation Preference of the outstanding shares of
Exchangeable Preferred Stock (and, if applicable, an amount equal to a prorated
dividend), the holders of shares of Exchangeable Preferred Stock will not be
entitled to any further participation in any distribution of assets of the
Company.
(ii) For the purposes of this paragraph (d), 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
<PAGE>
7
or into one or more other entities shall be deemed to be a liquidation,
dissolution or winding-up of the Company.
(e) Redemption. (i) Optional Redemption. (A) The Exchangeable
Preferred Stock shall not be redeemable at the option of the Company prior to
December 15, 2002. On or after December 15, 2002, each share of the Exchangeable
Preferred Stock may be redeemed (subject to the legal availability of funds
therefor) at any time, in whole or in part, at the option of the Company, at the
redemption prices (expressed as a percentage of the Accumulated Amount of such
share) set forth below, plus, without duplication, accumulated and unpaid
dividends to the date fixed for redemption (the "Optional Redemption Date")
(including an amount in cash equal to a prorated dividend for the period from
the Dividend Payment Date immediately prior to the Optional Redemption Date)
(the "Optional Redemption Price"), of such Accumulated Amount if redeemed during
the 12-month period beginning December 15 of each of the years set forth below:
Year in which redemption Percentage
occurs
- -------------------------- -----------
2002.................................................. 107.125%
2003.................................................. 105.344%
2004.................................................. 103.563%
2005.................................................. 101.781%
2006 and thereafter................................... 100.000%
(B) In the event of a redemption of only a portion of the then
outstanding shares of Exchangeable Preferred Stock, the Company shall effect
such redemption in compliance with the requirements of the principal national
securities exchange, if any, on which the Exchangeable Preferred Stock is
listed, or if the Exchangeable Preferred Stock is not listed on a national
securities exchange, on a pro rata basis, by lot or such other method as the
Company, in its sole discretion, shall deem fair and appropriate; provided,
however, that the Company may redeem all of the shares held by holders of fewer
than 100 shares (or all of the shares held by holders who would hold less than
100 shares as a result of such redemption), as may be determined by the Company.
(ii) Mandatory Redemption. Each share of the Exchangeable
Preferred Stock (if not earlier redeemed) shall be subject to mandatory
redemption in whole (to the extent of lawfully available funds therefor) on
December 15, 2007 (the "Mandatory Redemption Date") at a price equal to 100%
<PAGE>
8
of the Liquidation Preference of such share, plus, without duplication, all
accumulated and unpaid dividends thereon (including an amount in cash equal to a
prorated dividend thereon from the immediately preceding Dividend Payment Date
to the Mandatory Redemption Date), if any, to the Mandatory Redemption Date (the
"Mandatory Redemption Price").
The Company shall take all actions required or permitted by
Delaware law to permit the redemption described in this paragraph (e)(ii).
(iii) Procedure for Redemption. (A) On and after the Optional
Redemption Date or the Mandatory Redemption Date, as the case may be (the
"Redemption Date"), unless the Company defaults in the payment of the applicable
redemption price, dividends will cease to accumulate on shares of Exchangeable
Preferred Stock called for redemption and all rights of holders of such shares
will terminate except for the right to receive the Optional Redemption Price or
the Mandatory Redemption Price, as the case may be, without interest; provided,
however, that if a notice of redemption shall have been given as provided in
subparagraph (iii)(B) and the funds necessary for redemption (including an
amount in respect of all dividends that will accrue to the Redemption Date)
shall have been segregated and irrevocably set apart by the Company, in trust
for the benefit of the holders of the shares called for redemption, then
dividends shall cease to accumulate on the Redemption Date on the shares to be
redeemed and, at the close of business on the day on which such funds are
segregated and set apart, the holders of the shares to be redeemed shall, with
respect to the shares to be redeemed, cease to be stockholders of the Company
and shall be entitled only to receive the Optional Redemption Price or the
Mandatory Redemption Price, as the case may be, for such shares without interest
from the Redemption Date.
(B) With respect to a redemption pursuant to paragraph (e)(i)
or (e)(ii), the Company will send a written notice of redemption by first class
mail to each holder of record of shares of Exchangeable Preferred Stock, not
fewer than 30 days nor more than 60 days prior to the Redemption Date at its
registered address (the "Redemption Notice"); provided, however, that no failure
to give such notice nor any deficiency therein shall affect the validity of the
procedure for the redemption of any shares of Exchangeable Preferred Stock to be
redeemed except as to the holder or holders to whom the Company has failed to
give said notice
<PAGE>
9
or except as to the holder or holders whose notice was
defective. The Redemption Notice shall state:
(1) whether the redemption is pursuant to
paragraph (e)(i) or (e)(ii) hereof;
(2) the Optional Redemption Price or the Mandatory Redemption
Price, as the case may be;
(3) whether all or less than all the outstanding shares of the
Exchangeable Preferred Stock are to be redeemed and the total number of
shares of the Exchangeable Preferred Stock being redeemed;
(4) the Redemption Date;
(5) that the holder is to surrender to the Company, in the
manner, at the place or places and at the price designated, his
certificate or certificates representing the shares of Exchangeable
Preferred Stock to be redeemed; and
(6) that dividends on the shares of the Exchangeable Preferred
Stock to be redeemed shall cease to accumulate on such Redemption Date
unless the Company defaults in the payment of the Optional Redemption
Price or the Mandatory Redemption Price, as
the case may be.
(C) Each holder of Exchangeable Preferred Stock shall
surrender the certificate or certificates representing such shares of
Exchangeable Preferred Stock to the Company, duly endorsed (or otherwise in
proper form for transfer, as determined by the Company), in the manner and at
the place designated in the Redemption Notice, and on the Redemption Date the
full Optional Redemption Price or Mandatory Redemption Price, as the case may
be, for such shares shall be payable in cash to the person whose name appears on
such certificate or certificates as the owner thereof, and each surrendered
certificate shall be canceled and retired. In the event that less than all of
the shares represented by any such certificate are redeemed, a new certificate
shall be issued representing the unredeemed shares.
(f) Voting Rights. (i) The holders of Exchangeable Preferred
Stock, except as otherwise required under Delaware law or as set forth in
paragraphs (ii) and (iii) below, shall not be entitled to vote on any matter
required or permitted to be voted upon by the stockholders of the Company.
<PAGE>
10
(ii) (A) If (1) dividends on the Exchangeable Preferred Stock
are in arrears and unpaid for six or more Dividend Periods (whether or not
consecutive) (a "Dividend Default"); (2) the Company fails to redeem the
Exchangeable Preferred Stock on December 15, 2007, or fails to otherwise
discharge any redemption obligation with respect to the Exchangeable Preferred
Stock; (3) a breach or violation of any of the provisions set forth under
paragraph (l) below ("Certain Additional Provisions") occurs and the breach or
violation continues for a period of 30 days or more after the Company receives
notice thereof specifying the default from the holders of at least 25% of the
shares of Exchangeable Preferred Stock then outstanding; or (4) the Company
fails to pay at final maturity (giving effect to any applicable grace period)
the principal amount of any Indebtedness of the Company or any Significant
Subsidiary or the final maturity of any such Indebtedness is accelerated because
of a default and the total amount of such Indebtedness unpaid or accelerated
exceeds $25.0 million, then the number of directors constituting the Board of
Directors of the Company will, subject to paragraph (f)(ii)(E), be increased by
two directors and the Holders of the then outstanding shares of Exchangeable
Preferred Stock (together with the holders of Parity Stock upon which like
rights have been conferred and are exercisable), voting separately and as a
class, shall have the right and power to elect the lesser of (x) such two
additional directors or (y) that number of directors constituting at least 25%
of the members of the Board of Directors. Each such event described in clauses
(1),(2),(3) or (4) above is a "Voting Rights Triggering Event".
(B) The voting rights set forth in paragraph (f)(ii)(A) above
will continue until such time as (x) in the case of a Dividend Default, all
dividends in arrears on the Exchangeable Preferred Stock are paid in full in
cash or (y) in all other cases, any failure, breach or default giving rise to
such Voting Rights Triggering Event is remedied by the Company or waived by the
Holders of at least a majority of the outstanding shares of Exchangeable
Preferred Stock then outstanding, at which time the term of any directors
elected pursuant to the provisions of paragraph (f)(ii)(A) above (subject to the
right of holders of any other preferred stock to elect directors) shall
terminate forthwith and the number of directors constituting the Board of
Directors shall be decreased by two (until the occurrence of any subsequent
Voting Rights Triggering Event). At any time after voting power to elect
directors shall have become vested and be continuing in the holders of
Exchangeable Preferred Stock (together with the holders of Parity Stock upon
which like rights have been conferred and
<PAGE>
11
are exercisable) pursuant to paragraph (f)(ii)(A) hereof, or if vacancies shall
exist in the offices of directors elected by such holders, a proper officer of
the Company may, and upon the written request of the holders of record of at
least 25% of the shares of Exchangeable Preferred Stock then outstanding or the
holders of 25% of the shares of Parity Stock then outstanding upon which like
rights have been confirmed and are exercisable addressed to the secretary of the
Company shall, call a special meeting of the Holders of Exchangeable Preferred
Stock and the holders of such Parity Stock for the purpose of electing the
directors which such holders are entitled to elect pursuant to the terms hereof;
provided, however, that no such special meeting shall be called if the next
annual meeting of stockholders of the Company is to be held within 60 days after
the voting power to elect directors shall have become vested, in which case such
meeting shall be deemed to have been called for such next annual meeting. If
such meeting shall not be called by a proper officer of the Company within 20
days after personal service to the secretary of the Company at its principal
executive offices, then the Holders of record of at least 25% of the outstanding
shares of Exchangeable Preferred Stock or the holders of 25% of the shares of
Parity Stock upon which like rights have been confirmed and are exercisable may
designate in writing one of their members to call such meeting at the expense of
the Company, and such meeting may be called by the person so designated upon the
notice required for the annual meetings of stockholders of the Company and shall
be held at the place for holding the annual meetings of stockholders. Any holder
of Exchangeable Preferred Stock or such Parity Stock so designated shall have,
and the Company shall provide, access to the lists of holders of Exchangeable
Preferred Stock and the holders of such Parity Stock to be called pursuant to
the provisions hereof. If no special meeting of the Holders of Exchangeable
Preferred Stock and the holders of such Parity Stock is called as provided in
this paragraph (f)(ii), then such meeting shall be deemed to have been called
for the next annual meeting of stockholders of the Company or special meeting of
the holders of any other capital stock of the Company.
(C) At any meeting held for the purposes of electing directors
at which the Holders of Exchangeable Preferred Stock (together with the holders
of Parity Stock upon which like rights have been conferred and are exercisable)
shall have the right, voting together as a separate class, to elect directors as
aforesaid, the presence in person or by proxy of the holders of at least a
majority in voting power of the outstanding shares of
<PAGE>
12
Exchangeable Preferred Stock (and such Parity Stock) shall be required to
constitute a quorum thereof.
(D) Any vacancy occurring in the office of a director elected
by the Holders of Exchangeable Preferred Stock (and such Parity Stock) may be
filled by the remaining director elected by the Holders of Exchangeable
Preferred Stock (and such Parity Stock) unless and until such vacancy shall be
filled by the Holders of Exchangeable Preferred Stock (and such Parity Stock).
(E) In the event that an event occurs at any time which
results in the holders of any Parity Stock having voting rights to elect
directors to the Board of Directors, holders of Exchangeable Preferred Stock
shall, whether or not such event otherwise constitutes a Voting Rights
Triggering Event pursuant to paragraph (f)(ii)(A), have the voting rights set
forth in paragraphs (f)(ii)(A) and (f)(ii)(B), and such event shall be deemed
(for purposes of this paragraph (f) only) to constitute a Voting Rights
Triggering Event. In addition, in the event that during a time in which
directors elected by the holders of Exchangeable Preferred Stock pursuant to
this paragraph (f)(ii) are serving on the Board of Directors ("Previously-
Elected Directors") an event occurs which results in holders of Parity Stock
having voting rights to elect (voting together with the holders of Exchangeable
Preferred Stock) at least two directors to the Board of Directors, the holders
of Exchangeable Preferred Stock shall vote together with the holders of such
Parity Stock to elect such new directors, and upon the election of the new
directors the Previously-Elected Directors shall (unless such Previously-
Elected Directors are elected as new directors) cease to serve on the Board of
Directors.
(iii) (A) So long as any shares of the Exchangeable Preferred
Stock are outstanding, the Company will not authorize, create or increase the
authorized amount of any class or series of (1) Senior Stock or (2) Parity Stock
that has a mandatory redemption earlier, or an Average Life less, than that of
the Exchangeable Preferred Stock, in each case without the affirmative vote or
consent of holders of at least two-thirds of the shares of Exchangeable
Preferred Stock then outstanding, voting or consenting, as the case may be, as
one class, given in person or by proxy, either in writing or by resolution
adopted at an annual or special meeting.
(B) So long as any shares of the Exchangeable Preferred Stock
are outstanding, the Company will not amend this Certificate of Designation so
as to affect adversely
<PAGE>
13
the specified rights, preferences, privileges or voting rights of Holders of
shares of Exchangeable Preferred Stock or to authorize the issuance of any
additional shares of Exchangeable Preferred Stock without the affirmative vote
or consent of Holders of at least a majority of the issued and outstanding
shares of Exchangeable Preferred Stock, voting or consenting, as the case may
be, as one class, given in person or by proxy, either in writing or by
resolution adopted at an annual or special meeting.
(C) Except as set forth in paragraph (f)(iii)(A) or (B) above,
(x) the creation, authorization or issuance of any shares of any Junior Stock or
Parity Stock, including the designation of a series of Exchangeable Preferred
Stock, or (y) the increase or decrease in the amount of authorized Preferred
Stock, shall not require the consent of Holders of Exchangeable Preferred Stock
and shall not be deemed to affect adversely the rights, preferences, privileges
or voting rights of shares of Exchangeable Preferred Stock.
(D) Prior to the exchange of Exchangeable Preferred Stock for
Exchange Debentures, the Company shall not amend or modify the Exchange
Indenture (except as expressly provided therein in respect of amendments without
the consent of holders of Exchange Debentures) without the affirmative vote or
consent of holders of at least a majority of the shares of Exchangeable
Preferred Stock then outstanding, voting or consenting, as the case may be, as
one class, given in person or by proxy, either in writing or by resolution
adopted at an annual or special meeting.
(iv) In any case in which the Holders of Exchangeable
Preferred Stock shall be entitled to vote pursuant to this paragraph (f) or
pursuant to Delaware law, each Holder of Exchangeable Preferred Stock entitled
to vote with respect to such matters shall be entitled to one vote for each
share of Exchangeable Preferred Stock held.
(g) Exchange. (i) Exchange for Debentures. (A) The Company
may, at its option, on any scheduled Dividend Payment Date following the
Specified Debt Satisfaction Date, exchange the Exchangeable Preferred Stock, in
whole but not in part, for the Exchange Debentures; provided however, that (1)
on the date of such exchange there are no accumulated and unpaid dividends on
the Exchangeable Preferred Stock (including the dividends payable on such date)
or other contractual impediment to such exchange; (2) there shall be funds
legally available sufficient therefor; and (3) the Company shall have delivered
to the Trustee under the Exchange Indenture an
<PAGE>
14
opinion of counsel with respect to the due authorization and
issuance of the Exchange Debentures.
(B) Upon any exchange pursuant to this paragraph (g)(i),
holders of outstanding shares of Exchangeable Preferred Stock will be entitled
to receive $1.00 Accumulated Amount of Exchange Debentures for each $1.00 of
Accumulated Amount of Exchangeable Preferred Stock held by them. The Exchange
Debentures will be issued in registered form, without coupons. Exchange
Debentures issued in exchange for Exchangeable Preferred Stock will be issued in
principal amounts of $1,000 and integral multiples thereof to the extent
possible, and will also be issued in principal amounts less than $1,000 so that
each holder of Exchangeable Preferred Stock will receive certificates
representing the entire amount of Exchange Debentures to which such holder's
shares of Exchangeable Preferred Stock entitle such holder; provided, however,
that the Company may pay cash in lieu of issuing an Exchange Debenture in a
principal amount less than $1,000.
(ii) Procedures. (A) The Company will send a written notice of
exchange (the "Exchange Notice") by mail to each holder of record of shares of
Exchangeable Preferred Stock not fewer than 30 days nor more than 60 days before
the date fixed for such exchange (the "Exchange Date"); provided, however, that
neither failure to give such notice nor any deficiency therein shall affect the
validity of the procedure for the exchange of any shares of Exchangeable
Preferred Stock to be exchanged except as to the holder or holders to whom the
Company has failed to give said notice or except as to the holder or holders
whose notice was defective. The Exchange Notice shall state:
(1) the Exchange Date;
(2) that the holder is to surrender to the Company, in the
manner and at the place or places designated, his certificate or
certificates representing the shares of Exchangeable Preferred Stock to
be exchanged;
(3) that dividends on the shares of Exchangeable Preferred
Stock to be exchanged shall cease to accrue on such Exchange Date
whether or not certificates for shares of Exchangeable Preferred Stock
are surrendered for exchange on such Exchange Date unless the Company
shall default in the delivery of Exchange Debentures; and
<PAGE>
15
(4) that interest on the Exchange Debentures shall accrue from
the Exchange Date whether or not certificates for shares of
Exchangeable Preferred Stock are surrendered for exchange on such
Exchange Date.
(B) On and after the Exchange Date, dividends will cease to
accrue on the outstanding shares of Exchangeable Preferred Stock, and all rights
of the holders of Exchangeable Preferred Stock (except the right to receive
Exchange Debentures, an amount in cash, to the extent applicable, equal to the
accumulated and unpaid dividends to the Exchange Date and, if the Company so
elects, cash in lieu of any Exchange Debenture that is in a principal amount
that is not an integral multiple of $1,000) will terminate. The person entitled
to receive the Exchange Debentures issuable upon such exchange will be treated
for all purposes as the registered holder of such Exchange Debentures.
(C) On or before the Exchange Date, each holder of
Exchangeable Preferred Stock shall surrender the certificate or certificates
representing such shares of Exchangeable Preferred Stock, in the manner and at
the place designated in the Exchange Notice. The Company shall cause the
Exchange Debentures to be executed on the Exchange Date and, upon surrender in
accordance with the Exchange Notice of the certificates for any shares of
Exchangeable Preferred Stock so exchanged, duly endorsed (or otherwise in proper
form for transfer, as determined by the Company), such shares shall be exchanged
by the Company into Exchange Debentures. The Company shall pay interest on the
Exchange Debentures at the rate and on the dates specified therein from the
Exchange Date.
(iii) No Exchange in Certain Cases. Notwithstanding the
foregoing provisions of this paragraph (g), the Company shall not be entitled to
exchange the Exchangeable Preferred Stock for Exchange Debentures if such
exchange, or any term or provision of the Exchange Indenture or the Exchange
Debentures, or the performance of the Company's obligations under the Exchange
Indenture or the Exchange Debentures, shall materially violate or conflict with
any applicable law or agreement or instrument then binding on the Company or if,
at the time of such exchange, the Company is insolvent or if it would be
rendered insolvent by such exchange.
(h) Change of Control. (i) Upon the occurrence of a Change of
Control (the date of such occurrence being the "Change of Control Date"), the
Company shall commence and consummate an offer to purchase each holder's
Exchangeable Preferred Stock in cash pursuant to the offer
<PAGE>
16
described in paragraph (h)(iv) (the "Change of Control Offer") at a purchase
price equal to 101% of the Accumulated Amount thereof, plus, without
duplication, all accrued and unpaid dividends, if any, on such Accumulated
Amount to the Change of Control Payment Date, including an amount in cash equal
to a prorated dividend for the period from the Dividend Payment Date immediately
prior to the Change of Control Payment Date to the Change of Control Payment
Date.
(ii) Prior to the mailing of the notice referred to in
paragraph (h)(iv), but in any event within 30 days following the date on which
the Company knows or reasonably should have known that a Change in Control has
occurred, the Company covenants that it shall promptly determine if the purchase
of the Exchangeable Preferred Stock would violate or constitute a default under
the indebtedness of the Company and (A) repay in full all such indebtedness of
the Company that would prohibit the repurchase of the Exchangeable Preferred
Stock pursuant to a Change of Control Offer or (B) obtain any requisite consents
under instruments governing any such indebtedness of the Company to permit
repurchase of the Exchangeable Preferred Stock. The Company shall first comply
with this paragraph (ii) before it shall repurchase Exchangeable Preferred Stock
pursuant to this paragraph (h).
(iii) If the Company is unable to repay or cause repayment of
all of its indebtedness or to obtain the consents of the holders of indebtedness
as described in paragraph (h)(ii) or otherwise fails to purchase any
Exchangeable Preferred Stock validly tendered as described in paragraph (h)(i),
then the Company will have breached the covenant set forth in paragraph (h)(i)
or (h)(ii), as the case may be, which breach will constitute, in the case of
(h)(ii), a Voting Rights Triggering Event if it continues for a period of 30
consecutive days after written notice is given to the Company by the Holders of
at least 25% in aggregate amount of the Exchangeable Preferred Stock
outstanding, and, in the case of (h)(i), a breach of the covenant without any
waiting period or notice requirements.
(iv) Within 30 days following the date on which the Company
knows or reasonably should have known that a Change in Control has occurred, the
Company must send, by first-class mail, postage prepaid, a notice to each holder
of Exchangeable Preferred Stock. Such notice shall state whether the Company has
elected to make an offer to purchase shares of Exchangeable Preferred Stock and
if it has so elected, such notice shall contain all instructions and materials
necessary to enable such holders to tender Exchangeable Preferred Stock pursuant
to the Change of
<PAGE>
17
Control Offer. If the Company makes a 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 (h) and that all
Exchangeable 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 Exchangeable Preferred Stock not
tendered will continue to accrue dividends;
(D) that, unless the Company defaults in making payment
therefor, any share of Exchangeable 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 shares of Exchangeable
Preferred Stock purchased pursuant to a Change of Control Offer will be
required to surrender stock certificates representing such shares of
Exchangeable 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 Exchangeable 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, a telex, facsimile
transmission or letter setting forth the name of the holder, the number
of shares of Exchangeable Preferred Stock the holder delivered for
purchase and a statement that such holder is withdrawing his election
to have such shares of Exchangeable Preferred Stock purchased;
(G) that holders whose shares of Exchangeable Preferred Stock
are purchased only in part will be
<PAGE>
18
issued a new certificate representing the unpurchased
shares of Exchangeable 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).
(iv) The Company will comply with any tender offer rules under
the Exchange Act which then may be applicable, including Rules 13e-4 and 14e-1,
in connection with any offer made by the Company to repurchase the shares of
Exchangeable 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 of this Certificate of Designation, the Company shall comply with the
applicable securities laws and regulations and shall not be deemed to have
breached its obligations under this Certificate of Designation by virtue
thereof.
(v) On the Change of Control Payment Date the Company shall
(A) accept for payment the shares of Exchangeable 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 Exchangeable Preferred Stock
tendered pursuant to the Change of Control Offer, dividends will cease to accrue
with respect to the shares of Exchangeable 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.
(vi) To accept the Change of Control Offer, the holder of a
share of Exchangeable Preferred Stock shall deliver, on or before the 10th 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 Exchangeable
Preferred Stock with respect to which the Change of Control Offer is being
accepted, duly endorsed for transfer.
(i) Conversion or Exchange. Except as otherwise provided
herein, the holders of shares of Exchangeable Preferred Stock shall not have any
rights hereunder to convert such shares into or exchange such shares for shares
<PAGE>
19
of any other class or classes or of any other series of any class or classes of
Capital Stock of the Company.
(j) Reissuance of Exchangeable Preferred Stock. Shares of
Exchangeable Preferred Stock that have been issued and reacquired in any manner,
including shares purchased or redeemed or exchanged, shall not be reissued as
shares of Exchangeable Preferred Stock and shall (upon compliance with any
applicable provisions of the laws of Delaware) have the status of authorized and
unissued shares of Preferred Stock undesignated as to series and may be
redesignated and reissued as part of any series of Preferred Stock; provided,
however, that so long as any shares of Exchangeable Preferred Stock are
outstanding, any issuance of such shares must be in compliance with the terms
hereof.
(k) Business Day. If any payment, redemption or exchange shall
be required by the terms hereof to be made on a day that is not a Business Day,
such payment, redemption or exchange shall be made on the immediately succeeding
Business Day.
(l) Certain Additional Provisions. The Company
covenants and agrees for the benefit of the Holders as
follows:
(i) SEC Reports. Whether or not the Company is required to
file reports with the SEC, the Company shall file with the SEC all such reports
and other information as it would be required to file with the SEC pursuant to
Sec tion 13 or 15(d) of the Exchange Act. The Company shall supply each Holder,
without cost to such Holder, copies of such reports or other information.
(ii) Limitation on Indebtedness. (A) The Company shall not,
and shall not permit any of its Restricted Subsidiaries to, Incur, any
Indebtedness (other than Indebtedness existing on the Issue Date); provided,
however, that the Company may Incur Indebtedness if, after giving effect to the
Incurrence of such Indebtedness and the receipt and application of the proceeds
therefrom, the Indebtedness to EBITDA Ratio would be greater than zero and less
than 5:1.
(B) Notwithstanding the foregoing paragraph (A), the Company
and any Restricted Subsidiary (except as specified below) may Incur any or all
of the following:
(1) Indebtedness of the Company outstanding at any
time in an aggregate principal amount not to exceed
$125.0 million, less any amount of Indebtedness
<PAGE>
20
Incurred pursuant to this clause (1) and permanently
repaid as provided under paragraph (l)(ix);
(2) Indebtedness (I) to the Company evidenced by an
unsubordinated promissory note or (II) to any of its Restricted
Subsidiaries; provided, however, that any event which results in any
such Restricted Subsidiary ceasing to be a Restricted Subsidiary or any
subsequent transfer of such Indebtedness (other than to the Company or
another Restricted Subsidiary) shall be deemed, in each case, to
constitute an Incurrence of such Indebtedness not permitted by this
clause (2);
(3) Indebtedness issued in exchange for, or the net proceeds
of which are used to refinance or refund, then outstanding
Indebtedness, other than Indebtedness Incurred under clause (1), (2),
(5), (6) or (8) of this paragraph (l)(ii)(B), and any refinancings
thereof in an amount not to exceed the amount so refinanced or refunded
(plus premiums, accrued interest, fees and expenses); provided,
however, that Indebtedness the proceeds of which are used to refinance
or refund Indebtedness that would be pari passu with, or subordinated
in right of payment to, the Exchange Debentures (when issued) shall
only be permitted under this clause (3) if
(I) in case the Indebtedness to be refinanced is pari
passu with the Exchange Debentures, such new Indebtedness, by
its terms or by the terms of any agreement or instrument
pursuant to which such new Indebtedness is outstanding, is
expressly made pari passu with, or subordinate in right of
payment to, the Exchange Debentures,
(II) in case the Indebtedness to be refinanced is
subordinated in right of payment to the Exchange Debentures,
such new Indebtedness, by its terms or by the terms of any
agreement or instrument pursuant to which such new
Indebtedness is outstanding, is expressly made subordinate in
right of payment to the Exchange Debentures at least to the
extent that the Indebtedness to be refinanced is subordinated
to the Exchange Debentures and
(III) such new Indebtedness, determined as of the
date of Incurrence of such new Indebtedness, does not mature
prior to the Stated Maturity of the Indebtedness to be
refinanced or refunded, and the Average Life of such new
Indebtedness is at
<PAGE>
21
least equal to the remaining Average Life of the Indebtedness
to be refinanced or refunded; provided further, however, that
in no event may Indebtedness of the Company be refinanced by
means of any Indebtedness of any Restricted Subsidiary of the
Company pursuant to this clause (3);
(4) Indebtedness (I) in respect of performance, surety or
appeal bonds provided in the ordinary course of business, (II) under
Currency Agreements and Interest Rate Agreements; provided, however,
that such agreements 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 (III) 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 the Restricted Subsidiaries pursuant to such agreements, in any
case Incurred in connection with the disposition of any business,
assets or Restricted Subsidiary of the Company (other than Guarantees
of Indebtedness Incurred by any Person acquiring all or any portion of
such business, assets or Restricted Subsidiary of the Company for the
purpose of financing such acquisition), in a principal amount not to
exceed the gross proceeds actually received by the Company or any
Restricted Subsidiary in connection with such disposition;
(5) Indebtedness of the Company not to exceed, at any one time
outstanding, two times the Net Cash Proceeds received by the Company
from and after October 23, 1995, from the issuance and sale of its
Capital Stock (other than Redeemable Stock and Preferred Stock that
provides for the payment of dividends in cash), including the
Exchangeable Preferred Stock, provided, however, that such Indebtedness
(x) does not mature prior to the Stated Maturity of the Exchange
Debentures and has an Average Life longer than the Exchange Debentures
and (y) is pari passu with or subordinated to the Exchange Debentures;
(6) Indebtedness of any Restricted Subsidiary Incurred
pursuant to any credit agreement of such Restricted Subsidiary in
effect on the Issue Date (and refinancings thereof), up to the amount
of the commit ment under such credit agreement on the Issue Date;
<PAGE>
22
(7) Indebtedness to the extent such Indebtedness is secured by
Liens which are purchase money or other Liens upon equipment or
inventory acquired or held by the Company or any of its Restricted
Subsidiaries taken or obtained by (I) the seller or lessor of such
equip ment or inventory to secure all or a part of the pur chase price
or lease payments therefor or (II) the person who makes advances or
incurs obligations, thereby giving value to the Company to enable it to
purchase or acquire rights in such equipment or inventory, to secure
the repayment of all or a part of the advances so made or obligations
so incurred; provided, however, that such Liens do not extend to or
cover any property or assets of the Company or any Restricted
Subsidiary other than the equipment or inventory acquired;
(8) Indebtedness of any Restricted Subsidiary not to exceed,
at any one time outstanding, 80% of the accounts receivable net of
reserves and allowances for doubtful accounts, determined in accordance
with GAAP, of such Restricted Subsidiary and its Restricted
Subsidiaries (without duplication); provided, however, that such
Indebtedness is not Guaranteed by the Company or any of its Restricted
Subsidiaries;
(9) Indebtedness of the Company, to the extent the proceeds
thereof are immediately used to purchase 1995 Notes or 1997 Notes
tendered in an offer to purchase made as a result of a Change of
Control; and
(10) the Exchange Debentures.
(C) Notwithstanding the foregoing, the Company shall not
Incur, and shall not permit any Restricted Subsidiary to Incur, any Guarantee of
Indebtedness of any Unrestricted Subsidiary.
(D) Notwithstanding the foregoing, the Company shall not
Incur, and shall not permit any Restricted Subsidiary to Incur, any Indebtedness
which restricts the Company's ability to pay cash dividends on, or to redeem on
December 15, 2007, the Exchangeable Preferred Stock in
accordance with its terms.
(E) For purposes of determining compliance with this paragraph
(l)(ii), in the event that an item of Indebtedness meets the criteria of more
than one of the types of Indebtedness described above, the Company, in its sole
discretion, shall classify such item of Indebtedness
<PAGE>
23
and only be required to include the amount and type of such
Indebtedness in one of the above clauses.
(F) For purposes of determining any particular amount of
Indebtedness under this paragraph (l)(ii), 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.
(iii) Limitation on Senior Subordinated Indebted ness. The
Company shall not (1) Incur any Indebtedness, other than the Exchange
Debentures, that is expressly made subordinated in right of payment to any
Senior Indebtedness of the Company unless such Indebtedness, by its terms and by
the terms of any agreement or instrument pursuant to which such Indebtedness is
outstanding is expressly made pari passu with, or subordinate in right of
payment to, the Exchange Debentures pursuant to provisions substantially similar
to those contained in the Exchange Indenture; provided, however, that the
foregoing limitation shall not apply to distinctions between categories of
Senior Indebtedness that exist by reason of any Liens or Guarantees arising or
created in respect of some but not all Senior Indebtedness or (2) Incur any
Indebtedness secured by a Lien if such Indebtedness is not Senior Indebtedness,
unless contemporaneously therewith effective provision is made to secure the
Exchange Debentures equally and ratably with such secured Indebtedness for so
long as such secured Indebted ness is secured by a Lien.
(iv) Limitation on Restricted Payments. (A) The
Company shall not, and shall not permit any Restricted
Subsidiary to, directly or indirectly:
(1) declare or pay any dividend or make any distribution on
its Capital Stock (other than (x) dividends or distributions in respect
of the Exchangeable Preferred Stock or (y) dividends or distributions
payable solely in shares of its or such Restricted Subsidiary's Capital
Stock (other than Redeemable Stock) held by such holders or in options,
warrants or other rights to acquire such shares of Capital Stock) other
than such Capital Stock held by the Company or any of its Restricted
Subsidiaries (and other than pro rata dividends or distributions on
Common Stock of Restricted Subsidiaries);
(2) repurchase, redeem, retire or otherwise acquire for value
any shares of Capital Stock (other than the Exchangeable Preferred
Stock) of the Company
<PAGE>
24
(including options, warrants or other rights to acquire such shares of
Capital Stock) held by Persons other than any Wholly Owned Restricted
Subsidiaries of the Company;
(3) make any voluntary or optional principal payment, or
voluntary or optional redemption, repur chase, defeasance, or other
acquisition or retirement for value, of Indebtedness of the Company
that is sub ordinated in right of payment to the Exchange Debentures;
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) being collectively "Restricted Payments") if, at the time
of, and after giving effect to, the proposed Restricted Payment:
(I) a Default shall have occurred and be
continuing,
(II) except with respect to any Investment (other
than an Investment consisting of the designation of a
Restricted Subsidiary as an Unrestricted Subsidiary), the
Company could not Incur at least $1.00 of Indebtedness under
the first paragraph of the "Limitation on Indebted ness"
covenant, or
(III) the aggregate amount expended for all
Restricted Payments (the amount so expended, 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) after the Deemed Closing Date
shall exceed the sum of (x) 50% of the aggregate amount of the
Adjusted Consolidated Net Income (or, if the Adjusted
Consolidated Net Income is a loss, minus 100% of such amount)
(determined by excluding income resulting from transfers of
assets by the Company or a Restricted Subsidiary to an
Unrestricted Subsidiary) accrued on a cumulative basis during
the period (taken as one accounting period) beginning on the
first day of the fiscal quarter immediately following the
Deemed Closing Date and ending on the last day of the last
fiscal quarter preceding the Transaction Date for which
reports have been filed pursuant to paragraph (l)(i) plus (y)
the aggregate Net Cash Proceeds received by the Company after
the Deemed
<PAGE>
25
Closing Date from the issuance and sale permitted by this
Certificate of Designation of its Capital Stock (other than
Junior Stock or Redeemable Stock), including the Exchangeable
Preferred 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 (in each case,
exclusive of any convertible Indebtedness, Redeemable Stock or
any options, warrants or other rights that are redeemable at
the option of the holder, or are required to be redeemed,
prior to the Stated Maturity of the 1997 Senior Notes, 1997
Senior Subordinated Notes and the Exchange Debentures), plus
(z) an amount equal to the net reduction in Investments (other
than reductions in Permitted Investments and other than
reductions in Investments made pursuant to clause (6) or (7)
of paragraph (l)(iv)(B)) 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 Restricted Subsidiary (except to the extent any
such payment is included in the calculation of Adjusted
Consolidated Net Income), or from redesignations of
Unrestricted Subsidiaries as Restricted Subsidiaries (valued
in each case as provided in the definition of "Investments"),
not to exceed the amount of Investments previously made by the
Company and its Restricted Subsidiaries in such Person.
(B) The provisions of paragraph (l)(iv)(A) shall not prohibit:
(1) 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;
(2) the redemption, repurchase, defeasance or other
acquisition or retirement for value of Indebtedness that is
subordinated in right of payment to the Exchange Debentures, including
premium, if any, and accrued and unpaid interest, with the proceeds of,
or in exchange for, Indebtedness Incurred under clause (3) of paragraph
(l)(ii)(B);
(3) the repurchase, redemption or other acquisi
tion of Capital Stock of the Company (or options,
<PAGE>
26
warrants or other rights to acquire such Capital Stock) in exchange
for, or out of the proceeds of a substan tially concurrent sale of,
shares of Capital Stock or options, warrants or other rights to
purchase such Capital Stock (in each case other than Redeemable Stock)
of the Company;
(4) the making of any other Restricted Payment made by
exchange for, or out of the proceeds of, a sub stantially concurrent
sale of shares of the Capital Stock or options, warrants or other
rights to acquire such Capital Stock (in each case other than
Redeemable Stock) of the Company;
(5) payments or distributions, in the nature of satisfaction
of dissenters' rights, pursuant to or in connection with a
consolidation, merger or transfer of assets that complies with the
provisions of the Certificate of Designation applicable to mergers, con
solidations and transfers of all or substantially all of the property
and assets of the Company;
(6) Investments, not to exceed $15.0 million at
any one time outstanding;
(7) Investments, not to exceed $15.0 million at
any one time outstanding, in entities, substantially
all of the assets of which consist of
Telecommunications Assets;
(8) cash payments in lieu of the issuance of fractional shares
of Common Stock upon conversion (including mandatory conversion) of the
Convertible Notes as provided for in the Convertible Notes Indenture;
(9) cash payments in lieu of the issuance of fractional shares
of Common Stock of the Company upon conversion of any class of
Preferred Stock of the Company; provided, however, that this exception
shall not be available with respect to more than two such conversions
with respect to any such class of Preferred Stock by any given
Affiliate of the Company; and
(10) Investments in entities that directly (or indirectly
through subsidiaries) own licenses granted by the FCC or any other
governmental entity with authority to grant telecommunications
licenses; pro vided, however, that, in each case the Company or a
Restricted Subsidiary shall, at the time of making such Investment,
have an active role in the management or
<PAGE>
27
operation of such entity and in the provision of tele
communications services by such entity;
provided, however, that, except in the case of clauses (1) and (3) of paragraph
(l)(iv)(B), no Voting Rights Triggering Event shall have occurred and be
continuing or occur as a consequence of the actions or payments set forth
herein. Any Investments made other than in cash shall be valued, in good faith,
by the Board of Directors. Any Investment made pursuant to clause (6) or (7) of
paragraph (l)(iv)(B) shall be deemed to be no longer outstanding (and repaid in
full) if and when the Person in which such Investment is made becomes a
Restricted Subsidiary of the Company.
(C) Each Restricted Payment permitted pursuant to paragraph
(l)(iv)(B) (other than the Restricted Payment referred to in clause (2)
thereof), and the Net Cash Proceeds from any issuance and sale of Capital Stock
referred to in clauses (3) or (4) shall be included in calculating whether the
conditions of paragraph (l)(iv)(A)(4)(III) have been met with respect to any
subsequent Restricted Payments.
(D) In the event the proceeds of an issuance of Capital Stock
of the Company are used for the redemption, repurchase or other acquisition of
Indebtedness that is pari passu with the Exchange Debentures or Preferred Stock
that is on a parity with the Exchangeable Preferred Stock then the Net Cash
Proceeds of such issuance shall be included in paragraph (l)(iv)(A)(4)(III) only
to the extent such proceeds are not so used for such redemption, repurchase or
other acquisition.
(v) Limitation on Dividend and Other Payment Restrictions
Affecting Restricted Subsidiaries. The Company shall not, and shall not permit
any Restricted Subsidiary 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 Restricted Subsidiary to (A) pay dividends or make any other
distributions permitted by applicable law on any Capital Stock of such
Restricted
<PAGE>
28
Subsidiary owned by the Company or any other Restricted Subsidiary, (B) pay any
Indebtedness owed to the Company or any other Restricted Subsidiary that owns,
directly or indirectly, any Capital Stock of such Restricted Subsidiary, (C)
make loans or advances to the Company or any other Restricted Subsidiary that
owns, directly or indirectly, any Capital Stock of such Restricted Subsidiary or
(D) transfer any of its property or assets to the Company or any other
Restricted Subsidiary that owns, directly or indirectly, any Capital Stock of
such Restricted Subsidiary. The foregoing provisions shall not prohibit any
encumbrances or restrictions:
(1) existing on the Issue Date in this Certificate of
Designation or any other agreement in effect on the Issue Date, and any
extensions, refinancings, renewals or replacements of such agreements;
provided, however, 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 Exchangeable
Preferred Stock than those encumbrances or restrictions that are then
in effect and that are being extended, refinanced, renewed or replaced;
(2) existing under or by reason of applicable law;
(3) existing with respect to any Person or the property or
assets of such Person acquired by the Company or any Restricted
Subsidiary, 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;
(4) in the case of clause (D) of paragraph (l)(v),
(I) 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,
(II) 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 Restricted Subsidiary
not otherwise prohibited by this Certificate of Designation or
<PAGE>
29
(III) 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 Restricted Subsidiary
in any manner material to the Company or any Restricted
Subsidiary; or
(5) with respect to a Restricted Subsidiary and imposed
pursuant to an agreement that has been entered into for the sale or
disposition of all or substan tially all of the Capital Stock of, or
property and assets of, such Restricted Subsidiary.
(C) Nothing contained in this paragraph (l)(v) shall prevent
the Company or any Restricted Subsidiary from (i) restricting the sale or other
disposition of property or assets of the Company or any of its Restricted
Subsidiaries that secure Indebtedness of the Company or any of its Restricted
Subsidiaries or (ii) creating, incurring, assum ing or suffering to exist any
Liens otherwise permitted under Section 4.09 of the 1997 Senior Notes Indenture
as in effect on the Deemed Closing Date.
(vi) Limitation on the Issuance and Sale of Capital Stock of
Restricted Subsidiaries. The Company shall not sell, and shall not permit any
Restricted Subsidiary, directly or indirectly, to issue or sell, any shares of
Capital Stock of a Restricted Subsidiary (including options, warrants or other
rights to purchase shares of such Capital Stock) except (1) to the Company or a
Wholly Owned Restricted Subsidiary; (2) issuances or sales to foreign nationals
of shares of Capital Stock of foreign Restricted Subsidiaries, to the extent
required by applicable law; (3) if, immediately after giving effect to such
issuance or sale, such Restricted Subsidiary would no longer constitute a
Restricted Subsidiary; or (4) issuances or sales of Common Stock of Restricted
Subsidiaries, other than the Telecommunications Subsidiaries, if within six
months of each such issuance or sale, the Company or such Restricted Subsidiary
applies an amount not less than the Net Cash Proceeds thereof (if any) in
accordance with clause (I) or (II) of paragraph (l)(ix)(A)(x).
(vii) Limitation on Issuances of Guarantees by Restricted
Subsidiaries. (A) The Company shall not permit any Restricted Subsidiary,
directly or indirectly, to Guarantee any Indebtedness of the Company
("Guaranteed Indebtedness"), unless (1) such Restricted Subsidiary
simultaneously executes and delivers a written agreement providing for a
Guarantee (a "Subsidiary Guarantee") of
<PAGE>
30
payment of the Exchangeable Preferred Stock and the Exchange Debentures by such
Restricted Subsidiary and (2) such Restricted Subsidiary waives and will not in
any manner whatsoever claim or take the benefit or advantage of, any rights of
reimbursement, indemnity or subrogation or any other rights against the Company
or any other Restricted Subsidiary as a result of any payment by such Restricted
Subsidiary under its Subsidiary Guarantee; provided, how ever, that this
paragraph shall not be applicable to any Guarantee of any Restricted Subsidiary
that (x) existed at the time such Person became a Restricted Subsidiary and (y)
was not Incurred in connection with, or in contemplation of, such Person
becoming a Restricted Subsidiary. If the Guaranteed Indebtedness is (A) pari
passu with the Exchange Debentures then the Guarantee of such Guaranteed
Indebtedness shall be pari passu with, or subordinated to, the Subsidiary
Guarantee or (B) subordinated to the Exchange Debentures then the Guarantee of
such Guaranteed Indebtedness shall be subordinated to the Subsidiary Guarantee
at least to the extent that the Guaranteed Indebtedness is subordinated to the
Exchange Debentures.
(B) Notwithstanding the foregoing, any Subsidiary Guarantee by
a Restricted Subsidiary shall provide by its terms that it shall be
automatically and unconditionally released and discharged upon (1) any sale,
exchange or transfer, to any Person not an Affiliate of the Company of all of
the Company's and each Restricted Subsidiary's Capital Stock in, or all or
substantially all the assets of, such Restricted Subsidiary (which sale,
exchange or transfer is not prohibited by this Indenture) or (2) the release or
discharge of the Guarantee which resulted in the creation of such Subsidiary
Guarantee, except a discharge or release by or as a result of payment under such
Guarantee.
(viii) Limitation on Transactions with Shareholders and
Affiliates. (A) The Company shall not, and shall not permit any Restricted
Subsidiary 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 Restricted Subsidiary,
except upon fair and reasonable terms no less favorable to the Company or such
Restricted 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 an Affiliate.
<PAGE>
31
(B) The provisions of the foregoing paragraph (l)(viii)(A)
shall not prohibit (1) transactions (I) approved by a majority of the
disinterested members of the Board of Directors or (II) for which the Company or
a Restricted Subsidiary obtains a written opinion of a nationally recognized
investment banking firm stating that the transaction is fair to the Company or
such Restricted Subsidiary from a financial point of view; (2) any trans action
solely between the Company and any of its Wholly Owned Restricted Subsidiaries
or solely between Wholly Owned Restricted Subsidiaries; (3) the payment of
reasonable 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; or (5) any Restricted Payments not prohibited under
paragraph (l)(iv) (other than pursuant to clause (iv) of the definition of
"Permitted Investment" or clause (6) of paragraph (l)(viii)). Notwithstanding
the foregoing, any transaction covered by paragraph (l)(viii)(A) and not covered
by clauses (2) through (4) of paragraph (l)(viii), the aggregate amount of which
exceeds $250,000 in value, must be approved or determined to be fair in the
manner provided for in clause (1)(I) or (II) above.
(ix) Limitation on Asset Sales. (A) The Company will not, and
will not permit any Restricted Subsidiary to, consummate any Asset Sale, unless
(1) the consideration received by the Company or such Restricted Subsidiary is
at least equal to the fair market value of the assets sold or disposed of and
(2) at least 85% of the consideration received consists of cash or Temporary
Cash Investments. In the event and to the extent that the Net Cash Proceeds
received by the Company or its Restricted Subsidiaries from one or more Asset
Sales occurring on or after the Deemed 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 prepared), then the Company shall or shall cause the relevant Restricted
Subsidiary to (x) within six months after the date Net Cash Proceeds so received
exceed 10% of Adjusted Consolidated Net Tangible Assets (I) apply an amount
equal to such excess Net Cash Proceeds to permanently repay Indebtedness of the
Company that is not subordinated to the Exchange Debentures, or Indebtedness of
any Restricted Subsidiary, in each case owing to a Person other than the Company
or any of its Restricted Subsidiaries or (II) invest an equal amount, or the
amount not so applied pursuant to clause (I) (or enter
<PAGE>
32
into a definitive agreement committing to so invest within six months after the
date of such agreement), in property or 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 busi ness of, the Company and its Restricted
Subsidiaries exist ing on the date of such investment (as determined in good
faith by the Board of Directors, whose determination shall be conclusive and
evidenced by a Board Resolution) and (y) apply (no later than the end of the
six-month period referred to in clause (x)) such excess Net Cash Proceeds (to
the extent not applied pursuant to clause (x)) as provided in paragraph (ix)(B).
The amount of such excess Net Cash Proceeds required to be applied (or to be
committed to be applied) during such six-month period as set forth in clause (i)
of the preceding sentence and not applied as so required by the end of such
period shall constitute "Excess Proceeds."
(B) If, as of the first day of any calendar month, the
aggregate amount of Excess Proceeds not thereto fore subject to an Offer to
Purchase pursuant to paragraph (ix)(B) totals at least $10.0 million, the
Company must commence, not later than the 15th Business Day after the first day
of such month, and consummate an Offer to Purchase from the holders of the
Exchangeable Preferred Stock on a pro rata basis a number of shares of
Exchangeable Preferred Stock having an aggregate Accumulated Amount equal to the
Excess Proceeds on such date, at a purchase price per share of Exchangeable
Preferred Stock equal to 101% of such Accumulated Amount on such date of
purchase, plus accrued and unpaid dividends (if any) on such Accumulated Amount
to the date of purchase; provided, however, that no Offer to Purchase shall be
required to be commenced with respect to the Exchangeable Preferred Stock until
the Business Day following the payment date with respect to the offer(s) to
purchase any 1997 Notes and need not be commenced if the Excess Proceeds
remaining after application to the 1997 Notes purchased in such Offer to
Purchase applicable thereto are less than $10.0 million; provided further,
however, that (i) no Exchangeable Preferred Stock may be purchased under
paragraph (l)(ix) unless the Company shall have purchased all 1997 Notes
tendered pursuant to the offer(s) to purchase applicable thereto and (ii) no
Exchangeable Preferred Stock shall be required to be purchased under this
covenant to the extent, and for so long as, such purchase is prohibited under
any indebtedness of the Company.
(x) When Company May Merge or Transfer Assets.
The Company shall not consolidate with or merge with or
<PAGE>
33
into, or sell, convey, transfer, lease or otherwise dispose of all or
substantially all of its property and assets (as an entirety or substantially an
entirety, in one transaction or a series of related transactions) to, any Person
(other than a consolidation or merger with or into a Wholly Owned Restricted
Subsidiary with a positive net worth; provided, however, that, in connection
with any such merger or consolidation, no consideration (other than Common Stock
in the surviving Person or the Company) shall be issued or distributed to the
stockholders of the Company) or permit any Person to merge with or into the
Company unless: (A) the Company shall be the continuing Person, or the Person
(if other than the Company) formed by such consolidation or into which the
Company is merged or that acquired or leased such property and assets of the
Company shall be a corporation organized and validly existing under the laws of
the United States of America or any jurisdiction thereof and shall expressly
assume all of the obligations of the Company on the Exchangeable Preferred Stock
and under this Certificate of Designation; (B) immediately after giving effect
to such transaction, no Default shall have occurred and be continu ing; (C)
immediately after giving effect to such transaction on a pro forma basis the
Company, or any Person becoming the successor obligor of the Exchangeable
Preferred Stock, shall have a Consolidated Net Worth equal to or greater than
the Consolidated Net Worth of the Company immediately prior to such transaction;
(D) immediately after giving effect to such transaction on a pro forma basis the
Company, or any Person becoming the successor obligor of the Exchangeable
Preferred Stock, could Incur at least $1.00 of Indebtedness under paragraph
(l)(ii)(A); and (E) the Company delivers to each Holder of Exchangeable
Preferred Stock an Officers' Certificate (attaching the arithmetical
computations to demonstrate compliance with clauses (C) and, if applicable, (D))
and Opinion of Counsel, in each case stating that such consolidation, merger or
transfer complies with this provision and that all conditions precedent provided
for herein relating to such transaction have been complied with; provided,
however, that clauses (iii) and (iv) above do not apply if, in the good faith
determination of the Board of Directors of the Company, whose determination
shall be evidenced by a Board Resolution, the principal purpose of such
transaction is to change the state of incorporation of the Company; provided
further, however, that any such trans action shall not have as one of its
purposes the evasion of the foregoing limitations.
(m) Certificates. (i) Form and Dating. The Exchangeable
Preferred Stock and the Transfer Agent's certificate of authentication shall be
substantially in the form of Exhibit A, which is hereby incorporated in and
<PAGE>
34
expressly made a part of this Certificate of Designation. The Exchangeable
Preferred Stock certificate may have notations, legends, or endorsements
required by law, stock exchange rule, agreements to which the Company is
subject, if any, or usage (provided that any such notation, legend or
endorsement is in a form acceptable to the Company). Each Exchangeable Preferred
Stock certificate shall be dated the date of its authentication. The terms of
the Exchangeable Preferred Stock certificate set forth in Exhibit A are part of
the terms of this Certificate of Designation.
(A) Global Exchangeable Preferred Stock. Exchangeable
Preferred Stock shall be issued initially in the form of one or more permanent
global certificates in definitive, fully registered form without interest
coupons with the global securities legend and restricted securities legend set
forth in Exhibit A hereto (each, a "Global Security"), which shall be deposited
on behalf of the purchasers of the Exchangeable Preferred Stock represented
thereby with the Securities Custodian, and registered in the name of the
Depositary or a nominee of the Depositary, duly executed by the Company and
authenticated by the Transfer Agent as hereinafter provided. The aggregate
number of shares of Exchangeable Preferred Stock represented by the Global
Securities may from time to time be increased or decreased by adjustments made
on the records of the Transfer Agent and the Depositary or its nominee as
hereinafter provided.
(B) Book-Entry Provisions. This paragraph (m)(i)(B) shall
apply only to a Global Security deposited with or on behalf of the Depositary.
The Company shall execute and the Transfer Agent shall, in
accordance with this paragraph (m)(i)(B) and pursuant to an order of the
Company, authenticate and deliver initially one or more Global Securities that
(a) shall be registered in the name of the Depositary for such Global Security
or Global Securities or the nominee of such Depository and (b) shall be
delivered by the Transfer Agent to such Depository or pursuant to such
Depository's instructions or held by the Transfer Agent as Securities Custodian.
Members of, or participants in, the Depositary ("Agent
Members") shall have no rights under this Certificate of Designation with
respect to any Global Security held on their behalf by the Depositary or by the
Transfer Agent as the Securities Custodian or under such Global Security. The
Depositary may be treated by the Company, the Transfer Agent and any agent of
the Company or
<PAGE>
35
the Transfer Agent as the absolute owner of such Global Security for all
purposes whatsoever. Notwithstanding the foregoing, nothing herein shall prevent
the Company, the Transfer Agent or any agent of the Company or the Transfer
Agent from giving effect to any written certification, proxy or other
authorization furnished by the Depositary or impair, as between the Depositary
and its Agent Members, the operation of customary practices of such Depository
govern ing the exercise of the rights of a holder of a beneficial interest in
any Global Security.
(C) Definitive Exchangeable Preferred Stock. Except as
otherwise provided by applicable law or as provided in paragraph (m)(iii) or
paragraph (m)(iv), owners of beneficial interests in Global Securities will not
be entitled to receive physical delivery of shares of Exchangeable Preferred
Stock in certificated form ("Certificated Exchangeable Preferred Stock").
(ii) Authentication. The Transfer Agent shall authenticate and
deliver: (1) 175,000 shares of Initial Exchangeable Preferred Stock for original
issue and (2) Exchange Securities for issue only in a Registered Exchange Offer
or a Private Exchange pursuant to the Registration Rights Agreement, for a like
Accumulated Amount of Exchangeable Preferred Stock, upon a written order of the
Company signed by two Officers or by an Officer and either an Assistant
Treasurer or an Assistant Secretary of the Company. Such order shall specify the
amount of the Securities to be authenticated and the date on which the original
issue of Securities is to be authenticated and whether the Securities are to be
Initial Exchangeable Preferred Stock or Exchange Securities.
(iii) Transfer and Exchange. (A) Transfer and Exchange of
Definitive Securities. When a Definitive Security is presented to the Transfer
Agent with a request to register the transfer of such Definitive Security or to
exchange such Definitive Security for an equal number of shares of Definitive
Security of other authorized denominations, the Transfer Agent shall register
the transfer or make the exchange as requested if its reasonable requirements
for such transaction are met; provided, however, that the Definitive Security
surrendered for transfer or exchange:
(1) shall be duly endorsed or accompanied by a written
instrument of transfer in form reasonably satisfactory to the Company
and the Transfer Agent, duly executed by the Holder thereof or its
attorney duly authorized in writing; and
<PAGE>
36
(2) is being transferred or exchanged pursuant to an effective
registration statement under the Securities Act, pursuant to paragraph
(m)(iii)(B) or pursuant to clause (I), (II) or (III) below, and is
accompanied by the following additional information and
documents, as applicable:
(I) if such Definitive Security is being delivered to
the Transfer Agent by a Holder for registration in the name of
such Holder, without transfer, a certification from such
Holder to that effect; or
(II) if such Definitive Security is being transferred
to the Company, a certification to that effect; or
(III) if such Definitive Security is being
transferred pursuant to an exemption from registration in
accordance with Rule 144 or Regulation S under the Securities
Act, (i) a certification to that effect and (ii) if the
Company so requests, an Opinion of Counsel or other evidence
reasonably satisfactory to it as to the compliance with the
restrictions set forth in the legend set forth in paragraph
(m)(iii)(D)(i).
(B) Restrictions on Transfer of Definitive Securities for a
Beneficial Interest in Global Securities. Definitive Securities may not be
exchanged for a beneficial interest in a Global Security except upon
satisfaction of the requirements set forth below. Upon receipt by the Transfer
Agent of Definitive Securities, duly endorsed or accompanied by a written
instrument of transfer in form reasonably satisfactory to the Company and the
Transfer Agent, together with:
(1) certification that such Definitive Security is being
transferred (I) to a QIB in accordance with Rule 144A, (II) to an IAI
that has furnished to the Transfer Agent a signed letter containing
certain representations or (III) outside the United States in an
offshore transaction within the meaning of Regulation S and in
compliance with Rule 904 under the Securities Act; and
(2) written instructions directing the Transfer Agent to make,
or to direct the Securities Custodian to make, an adjustment on its
books and records with
<PAGE>
37
respect to such Global Security to reflect an increase in the number of
shares of Exchangeable Preferred Stock represented by the Global
Security, such instructions to contain information regarding the
Depositary account to be credited with such increase,
then the Transfer Agent shall cancel such Definitive Security and cause, or
direct the Securities Custodian to cause, in accordance with the standing
instructions and procedures existing between the Depositary and the Securities
Custodian, the number of shares of Exchangeable Preferred Stock represented by
the Global Security to be increased by the number of shares of the Definitive
Securities to be exchanged and shall credit or cause to be credited to the
account of the Person specified in such instructions a beneficial interest in
the Global Security equal to the number of shares represented by the Definitive
Securities. If no Global Securities are then outstanding and the Global Security
has not been previously exchanged pursuant to paragraph (m)(iv), the Company
shall issue and the Transfer Agent shall authenticate, upon written order of the
Company in the form of an Officers' Certificate, a new Global Security
representing the appropriate number of shares.
(C) Transfer and Exchange of Global Securities.
(i) The transfer and exchange of Global Securities or
beneficial interests therein shall be effected through the Depositary,
in accordance with this Certificate of Designation (including
applicable restrictions on transfer set forth herein, if any) and the
procedures of the Depositary therefor. A transferor of a beneficial
interest in a Global Security shall deliver a written order given in
accordance with the Depositary's procedures containing information
regarding the participant account of the Depositary to be credited with
a beneficial interest in the Global Security and such account shall be
credited in accordance with such instructions with a beneficial
interest in the Global Security and the account of the Person making
the transfer shall be debited by an amount equal to the beneficial
interest in the Global Security being transferred. In the case of a
transfer of a beneficial interest in a Global Security to an IAI, the
transferee must furnish a signed letter to the Transfer Agent
containing certain representations and agreements (the form of which
letter can be obtained from the Company).
<PAGE>
38
(ii) If the proposed transfer is a transfer of a beneficial
interest in one Global Security to a beneficial interest in another
Global Security, the Transfer Agent shall reflect on its books and
records the date and an increase in the number of shares represented by
the Global Security to which such interest is being transferred in an
amount equal to the number of shares to be so transferred, and the
Transfer Agent shall reflect on its books and records the date and a
corresponding decrease in the number of shares represented by Global
Security from which such interest is being transferred.
(iii) Notwithstanding any other provisions of this paragraph
(m) (other than the provisions set forth in paragraph (m)(iv)), a
Global Security may not be transferred as a whole except by the
Depositary to a nominee of the Depositary or by a nominee of the
Depositary to the Depositary or another nominee of the Depositary or by
the Depositary or any such nominee to a successor Depository or a
nominee of such successor Depository.
(iv) In the event that a Global Security is exchanged for
Securities in definitive registered form pursuant to paragraph (m)(iv)
prior to the consummation of a Registered Exchange Offer or the
effectiveness of a Shelf Registration Statement with respect to such
Securities, such Securities may be exchanged only in accordance with
such procedures as are substantially consistent with the provisions of
this paragraph (m)(iii) (including the certification requirements set
forth on the reverse of the Initial Exchangeable Preferred Stock
intended to ensure that such transfers comply with Rule 144A,
Regulation S or such other applicable exemption from registration under
the Securities Act, as the case may be) and such other procedures as
may from time to time be adopted by the Company.
(D) Legend.
(i) Except as permitted by the following para graphs (ii),
(iii), (iv) and (vi), each certificate evidencing the Global Securities
and the Definitive Securities (and all Securities issued in exchange
therefor or in substitution thereof) shall bear a legend in
substantially the following form:
"THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED (THE "SECURITIES
<PAGE>
39
ACT"). THE HOLDER HEREOF, BY PURCHASING THIS SECURITY, AGREES FOR THE
BENEFIT OF THE COMPANY THAT THIS SECURITY MAY NOT BE RESOLD, PLEDGED OR
OTHERWISE TRANSFERRED (X) PRIOR TO THE SECOND ANNIVERSARY OF THE
ISSUANCE HEREOF (OR A PREDECESSOR SECURITY HERETO) OR (Y) BY ANY HOLDER
THAT WAS AN AFFILIATE OF THE COMPANY AT ANY TIME DURING THE THREE
MONTHS PRECEDING THE DATE OF SUCH TRANSFER, IN EITHER CASE OTHER THAN
(1) TO THE COMPANY, (2) SO LONG AS THIS SECURITY IS ELIGIBLE FOR RESALE
PURSUANT TO RULE 144A UNDER THE SECURITIES ACT ("RULE 144A"), TO A
PERSON WHOM THE SELLER REASONABLY BELIEVES IS A QUALIFIED INSTITUTIONAL
BUYER WITHIN THE MEANING OF RULE 144A PURCHASING FOR ITS OWN ACCOUNT OR
FOR THE ACCOUNT OF A QUALIFIED INSTITUTIONAL BUYER TO WHOM NOTICE IS
GIVEN THAT THE RESALE, PLEDGE OR OTHER TRANSFER IS BEING MADE IN
RELIANCE ON RULE 144A (AS INDICATED BY THE BOX CHECKED BY THE
TRANSFEROR ON THE CERTIFICATE OF TRANSFER ON THE REVERSE OF THIS
SECURITY), (3) IN AN OFFSHORE TRANSACTION IN ACCORDANCE WITH REGULATION
S UNDER THE SECURITIES ACT (AS INDICATED BY THE BOX CHECKED BY THE
TRANSFEROR ON THE CERTIFICATE OF TRANSFER ON THE REVERSE OF THIS
SECURITY), (4) TO AN INSTITUTION THAT IS AN "ACCREDITED INVESTOR" AS
DEFINED IN RULE 501(a)(1), (2), (3) OR (7) UNDER THE SECURITIES ACT (AS
INDICATED BY THE BOX CHECKED BY THE TRANSFEROR ON THE CERTIFICATE OF
TRANSFER ON THE REVERSE OF THIS SECURITY) THAT IS ACQUIRING THIS
SECURITY FOR INVESTMENT PURPOSES AND NOT FOR DISTRIBUTION, AND A
CERTIFICATE WHICH MAY BE OBTAINED FROM THE COMPANY IS DELIVERED BY THE
TRANSFEREE TO THE COMPANY AND THE TRANSFER AGENT, (5) PURSUANT TO AN
EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT PROVIDED BY RULE
144 (IF APPLICABLE) UNDER THE SECURITIES ACT, OR (6) PURSUANT TO AN
EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT, IN EACH CASE
IN ACCORDANCE WITH ANY APPLICABLE SECURITIES LAWS OF ANY STATE OF THE
UNITED STATES. AN INSTITUTIONAL ACCREDITED INVESTOR HOLDING THIS
SECURITY AGREES IT WILL FURNISH TO THE COMPANY AND THE TRANSFER AGENT
SUCH CERTIFICATES AND OTHER INFORMATION AS THEY MAY REASONABLY REQUIRE
TO CONFIRM THAT ANY TRANSFER BY IT OF THIS SECURITY COMPLIES WITH THE
FOREGOING RESTRICTIONS. THE HOLDER HEREOF, BY PURCHASING THIS SECURITY,
REPRESENTS AND AGREES FOR THE BENEFIT OF THE COMPANY THAT IT IS (1) A
QUALIFIED INSTITUTIONAL BUYER WITHIN THE MEANING OF RULE 144A OR (2) AN
INSTITUTION THAT IS AN "ACCREDITED INVESTOR" AS DEFINED IN RULE
501(a)(1), (2), (3) OR (7) UNDER THE SECURITIES ACT AND THAT IT IS
HOLDING THIS SECURITY FOR INVESTMENT PURPOSES AND NOT FOR DISTRIBUTION
OR (3) A NON-U.S. PERSON OUTSIDE THE UNITED STATES WITHIN THE MEANING
OF (OR AN ACCOUNT SATISFYING THE REQUIREMENTS OF PARAGRAPH (o)(2) OF
<PAGE>
40
RULE 902 UNDER) REGULATION S UNDER THE SECURITIES ACT."
Each Definitive Security will also bear the following
additional legend:
"IN CONNECTION WITH ANY TRANSFER, THE HOLDER WILL DELIVER TO
THE REGISTRAR AND TRANSFER AGENT SUCH CERTIFICATES AND OTHER
INFORMATION AS SUCH TRANSFER AGENT MAY REASONABLY REQUIRE TO
CONFIRM THAT THE TRANSFER COMPLIES WITH THE FOREGOING
RESTRICTIONS."
(ii) Upon any sale or transfer of a Transfer Restricted
Security (including any Transfer Restricted Security represented by a
Global Security) pursuant to
Rule 144 under the Securities Act:
(A) in the case of any Transfer Restricted Security
that is a Definitive Security, the Registrar shall permit the
Holder thereof to exchange such Transfer Restricted Security
for a Definitive Security that does not bear the legends set
forth above and rescind any restriction on the transfer of
such Transfer Restricted Security; and
(B) in the case of any Transfer Restricted Security
that is represented by a Global Security, the Registrar shall
permit the Holder thereof to exchange such Transfer Restricted
Security for a Definitive Security that does not bear the
legends set forth above and rescind any restriction on the
transfer of such Transfer Restricted Security,
in either case, if the Holder certifies in writing to the Transfer Agent that
its request for such exchange was made in reliance on Rule 144 (such
certification to be in the form set forth on the reverse of the Initial
Security).
(iii) After a transfer of any Exchangeable Preferred Stock
during the period of the effectiveness of a Shelf Registration
Statement with respect to such Exchangeable Preferred Stock, all
requirements pertaining to legends on such Exchangeable Preferred Stock
will cease to apply, the requirements requiring that any such
Exchangeable Preferred Stock be issued in global form will cease to
apply, and Exchangeable Preferred Stock in certificated or global form
without legends will be available to the transferee of the Holder of
such Exchangeable Preferred Stock upon
<PAGE>
41
exchange of such transferring Holder's certificated Exchangeable
Preferred Stock. Upon the occurrence of any of the circumstances
described in this paragraph, the Company will deliver an Officers'
Certificate to the Transfer Agent instructing the Transfer Agent to
issue Securities without legends.
(iv) Upon the consummation of a Registered Exchange Offer with
respect to the Exchangeable Preferred Stock pursuant to which certain
Holders of such Exchangeable Preferred Stock are offered Exchange
Securities in exchange for their Exchangeable Preferred Stock, all
requirements pertaining to such Exchangeable Preferred Stock that
Exchangeable Preferred Stock be issued in global form will cease to
apply, and certificated Exchangeable Preferred Stock with the
restricted securities legend set forth in Exhibit A hereto will be
available to Holders of such Exchangeable Preferred Stock that do not
exchange their Exchangeable Preferred Stock, and Exchange Securities in
certificated or global form will be available to Holders that exchange
such Exchangeable Preferred Stock in such Registered Exchange Offer.
Upon the occurrence of any of the circumstances described in this
paragraph, the Company will deliver an Officers' Certificate to the
Transfer Agent instructing the Transfer Agent to issue Securities
without legends.
(v) Upon the consummation of a Private Exchange with respect
to the Exchangeable Preferred Stock pursuant to which Holders of such
Exchangeable Preferred Stock are offered Private Exchange Securities in
exchange for their Exchangeable Preferred Stock, all requirements
pertaining to such Exchangeable Preferred Stock that Exchangeable
Preferred Stock issued to certain Holders be issued in global form will
continue to apply, and Private Exchange Securities in global form will
be available to Holders that exchange such Exchangeable Preferred Stock
in such Private Exchange.
(vi) Upon a sale or transfer of any Exchangeable Preferred
Stock acquired pursuant to Regulation S, all requirements pertaining to
legends on such Exchangeable Preferred Stock will cease to apply, the
requirements requiring any such Exchangeable Preferred Stock be issued
in global form will cease to apply, and Exchangeable Preferred Stock in
certificated or global form without the restricted security legend will
be available to the transferee of the Holder of such Exchangeable
Preferred Stock.
<PAGE>
42
(E) Cancelation or Adjustment of Global Security. At such time
as all beneficial interests in a Global Security have either been exchanged for
certificated or Definitive Securities, redeemed, repurchased or canceled, such
Global Security shall be returned by the Depositary to the Transfer Agent for
cancelation or retained and canceled by the Transfer Agent. At any time prior to
such cancelation, if any beneficial interest in a Global Security is exchanged
for certificated or Definitive Securities, redeemed, repurchased or canceled,
the number of shares of Exchangeable Preferred Stock represented by such Global
Security shall be reduced and an adjustment shall be made on the books and
records of the Transfer Agent (if it is then the Securities Custodian for such
Global Security) with respect to such Global Security, by the Transfer Agent or
the Securities Custodian, to reflect such reduction.
(F) Obligations with Respect to Transfers and
Exchanges of Securities.
(i) To permit registrations of transfers and exchanges, the
Company shall execute and the Transfer Agent shall authenticate
certificated Securities, Definitive Securities and Global Securities at
the Transfer Agent's request.
(ii) No service charge shall be made for any registration of
transfer or exchange, the Company may require payment of a sum
sufficient to cover any transfer tax, assessments or similar or other
governmental charge payable in connection with any registration of
transfer or exchange of Exchangeable Preferred Stock.
(iii) The Transfer Agent shall not be required to register the
transfer of or exchange of any Security for a period beginning 15 days
before the mailing of a notice of redemption or an offer to repurchase
Securities or 15 days before an interest payment date.
(iv) Prior to the due presentation for registra tion of
transfer of any Security, the Company, the Transfer Agent and the
Paying Agent may deem and treat the person in whose name a Security is
registered as the absolute owner of such Security for the purpose of
receiving payment of principal of and interest on such Security and for
all other purposes whatsoever, whether or not such Security is overdue,
and none of the Company, the Trustee, the Paying Agent, the Transfer
Agent shall be affected by notice to the contrary.
<PAGE>
43
(v) All Securities issued upon any transfer or exchange
pursuant to the terms of this Certificate of Designation shall be
entitled to the same benefits under this Certificate of Designation as
the Securities surrendered upon such transfer or exchange.
(G) No Obligation of the Transfer Agent.
(i) The Transfer Agent shall have no responsibility or
obligation to any beneficial owner of a Global Security, a member of,
or a participant in the Depositary or any other Person with respect to
the accuracy of the records of the Depositary or its nominee or of any
participant or member thereof, with respect to any ownership interest
in the Securities or with respect to the delivery to any participant,
member, beneficial owner or other Person (other than the Depositary) of
any notice (including any notice of redemption or repurchase) or the
payment of any amount, under or with respect to such Securities. All
notices and communications to be given to the Holders and all payments
to be made to Holders under the Securities shall be given or made only
to the registered Holders (which shall be the Depositary or its nominee
in the case of a Global Security). The rights of beneficial owners in
any Global Security shall be exercised only through the Depositary
subject to the applicable rules and procedures of the Depositary. The
Transfer Agent may rely and shall be fully protected in relying upon
information furnished by the Depositary with respect to its members,
participants and any beneficial owners.
(ii) The Transfer Agent shall have no obligation or duty to
monitor, determine or inquire as to compliance with any restrictions on
transfer imposed under this Certificate of Designation or under
applicable law with respect to any transfer of any interest in any
Security (including any transfers between or among Depository
participants, members or beneficial owners in any Global Security)
other than to require delivery of such certificates and other
documentation or evidence as are expressly required by, and to do so if
and when expressly required by, the terms of this Certificate of
Designation, and to examine the same to determine substantial
compliance as to form with the express requirements hereof.
(iv) Certificated Securities
(A) A Global Security deposited with the Depositary or with
the Transfer Agent as Securities
<PAGE>
44
Custodian pursuant to paragraph (m)(i) shall be transferred to the beneficial
owners thereof in the form of certificated Securities in a number of shares of
Exchangeable Preferred Stock representing such Global Security, in exchange for
such Global Security, only if such transfer complies with paragraph (m)(iii) and
(i) the Depositary notifies the Company that it is unwilling or unable to
continue as a Depository for such Global Security or if at any time the
Depositary ceases to be a "clearing agency" registered under the Exchange Act,
and a successor depositary is not appointed by the Company within 90 days of
such notice, or (ii) a Voting Rights Triggering Event has occurred and is
continuing or (iii) the Company, in its sole discretion, notifies the Transfer
Agent in writing that it elects to cause the issuance of certificated Securities
under this Certificate of Designation.
(B) Any Global Security that is transferable to the beneficial
owners thereof pursuant to this paragraph (m)(iv) shall be surrendered by the
Depositary to the Transfer Agent, to be so transferred, in whole or from time to
time in part, without charge, and the Transfer Agent shall authenticate and
deliver, upon such transfer of each portion of such Global Security, an equal
amount of shares of Exchangeable Preferred Stock represented by certificated
Securities of authorized denominations. Any portion of a Global Security
transferred pursuant to this paragraph shall be executed, authenticated and
delivered only in denominations of $1,000 and any integral multiple thereof and
registered in such names as the Depositary shall direct. Certificated
Exchangeable Preferred Stock delivered in exchange for an interest in the Global
Security shall, except as otherwise provided by paragraph (m)(iii)(D), bear the
restricted securities legend set forth in Exhibit 4 hereto.
(C) Subject to the provisions of paragraph (m)(iv)(B), the
registered Holder of a Global Security may grant proxies and otherwise authorize
any Person, including Agent Members and Persons that may hold interests through
Agent Members, to take any action which a Holder is entitled to take under this
Certificate of Designation or the Securities.
(D) In the event of the occurrence of either of the events
specified in paragraph (m)(iv)(A)(ii) or (iii), the Company will promptly make
available to the Transfer Agent a reasonable supply of certificated Securities
in definitive, fully registered form without interest coupons.
<PAGE>
45
(n) Certain Definitions. As used in this Certificate of
Designation, the following terms shall have the following meanings (and (1)
terms defined in the singular have comparable meanings when used in the plural
and vice versa, (2) "including" means including without limitation, (3) "or" is
not exclusive and (4) an accounting term not otherwise defined has the meaning
assigned to it in accordance with United States generally accepted accounting
principles as in effect on the Issue Date and all accounting calculations will
be determined in accordance with such principles), unless the content otherwise
requires:
"1995 Notes" means the 1995 Senior Notes and the
Convertible Notes.
"1997 Notes" means the 1997 Senior Notes, the 1997 Senior
Subordinated Notes and the Equipment Notes.
"1995 Senior Notes" means the 14% Senior Discount Notes due
2005 of the Company.
"1997 Senior Notes" means the 14 1/2% Senior Deferred Interest
Notes Due 2005 of the Company.
"1997 Senior Notes Indenture" means the Indenture dated March
1, 1997, between the Company and United States Trust Company of New York, with
respect to the 1997 Senior Notes.
"1997 Senior Subordinated Notes" means the 15%
Senior Subordinated Deferred Interest Notes Due 2007 of the
Company.
"Accumulated Amount" means, as of any date (the "Specified
Date"), the amount provided below with respect to each $1,000 Initial
Liquidation Preference of Exchangeable
Preferred Stock:
(i) If the Specified Date occurs on one of the following dates
(each, a "SemiAnnual Dividend Accrual Date"), the Accumulated Amount
will equal the amount set forth below for such SemiAnnual Dividend
Accrual Date:
SemiAnnual Dividend Accumulated
Accrual Date Amount
- ---------------------- -----------
June 15, 1998 $1,068.387
December 15, 1998 1,144.509
June 15, 1999 1,226.055
<PAGE>
46
SemiAnnual Dividend Accumulated
Accrual Date Amount
- ---------------------- -----------
December 15, 1999 1,313.412
June 15, 2000 1,406.992
December 15, 2000 1,507.241
June 15, 2001 1,614.632
December 15, 2001 1,729.674
June 15, 2002 1,852.913
December 15, 2002 1,984.933
June 15, 2003 2,141.247
December 15, 2003 2,309.870
June 15, 2004 2,491.772
December 15, 2004 2,687.999
June 15, 2005 2,899.679
December 15, 2005 3,128.029
June 15, 2006 3,374.361
December 15, 2006 3,640.092
June 15, 2007 3,926.750
December 15, 2007 4,235.981
(ii) if the Specified Date occurs before the first SemiAnnual
Dividend Accrual Date, the Accumulated Amount will equal the sum of (A)
the Initial Liquidation Preference and (B) an amount equal to the
product of (1) the Accumulated Amount for the first SemiAnnual Dividend
Accrual Date less the Initial Liquidation Preference multiplied by (2)
a fraction, the numerator of which is the number of days elapsed from
the Issue Date to the Specified Date, using a 360-day year of twelve
30-day months, and the denominator of which is the number of days from
the Issue Date to the first SemiAnnual Dividend Accrual Date, using a
360-day year of twelve 30-day months;
(iii) if the Specified Date occurs between two SemiAnnual
Dividend Accrual Dates, the Accumulated Amount will equal the sum of
(A) the Accumulated Amount for the SemiAnnual Dividend Accrual Date
immediately preceding such Specified Date and (B) an amount equal to
the product of (1) the Accumulated Amount for the immediately following
SemiAnnual Dividend Accrual Date less the Accumulated Amount for the
immediately pre ceding SemiAnnual Dividend Accrual Date multiplied by
(2) a fraction, the numerator of which is the number of days elapsed
from the immediately preceding SemiAnnual Dividend Accrual Date to the
Specified Date, using a 360-day year or twelve 30-day months, and the
denominator of which is 180; or
(iv) if the Specified Date occurs after the last SemiAnnual
Dividend Accrual Date, the Accumulated Amount will equal the
Accumulated Amount as of the last
SemiAnnual Dividend Accrual Date;
<PAGE>
47
provided, however, that at all times on and after the Dividend Payment Date
immediately preceding the Cash Payment Date, the Accumulated Amount shall equal
the Accumulated Amount as of such Dividend Payment Date; and provided, further,
that if the rate applicable to the Exchangeable Preferred Stock shall have been
increased pursuant to (1) paragraph (c)(i), the Accumulated Amount shall be
recal culated as if dividends with respect to the Exchangeable Preferred Stock
had been accruing at a rate of 15 3/4% from December 15, 2002, to the Dividend
Payment Date falling on or after the Specified Debt Satisfaction Date or (2) as
a result of a Registration Default, the Accumulated Amount shall be recalculated
as if dividends with respect to the Exchangeable Preferred Stock had been
accruing at a rate of 14 3/4% from the date of such Registration Default to but
excluding the date all Registration Defaults have been cured.
"Adjusted Consolidated Net Income" means, for any period, the
aggregate net income (or loss) of the Company and its Restricted Subsidiaries
for such period determined in conformity with GAAP; provided, however, that the
following items shall be excluded in computing Adjusted Consolidated Net Income
(without duplication): (i) the net income of any Person (other than net income
attributable to a Restricted Subsidiary) in which any Person (other than the
Company or any of its Restricted Subsidiaries) has a joint interest and the net
income of any Unrestricted Subsidiary, except to the extent of the amount of
dividends or other distributions actually paid to the Company or any of its
Restricted Subsidiaries by such other Person, including, without limitation, an
Unrestricted Subsidiary during such period; (ii) solely for the purposes of
calculating the amount of Restricted Payments that may be made pursuant to
clause (4)(III) of paragraph (l)(iv)(A) (and in such case, except to the extent
includable pursuant to clause (i) above), the net income (or loss) of any Person
accrued prior to the date it becomes a Restricted Subsidiary or is merged into
or consolidated with the Company or any of its Restricted Subsidiaries or all or
substantially all of the property and assets of such Person are acquired by the
Company or any of its Restricted Subsidiaries; (iii) the net income of any
Restricted Subsidiary to the extent that the declaration or payment of dividends
or similar distributions by such Restricted 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 Restricted Subsidiary; (iv) any gains or losses
(on an after-tax basis) attributable to Asset Sales; (v) except for purposes of
calculating the amount of Restricted
<PAGE>
48
Payments that may be made pursuant to clause (4)(III) of paragraph (l)(iv)(A),
any amount paid as, or accrued for, cash dividends on Preferred Stock of the
Company or any Restricted Subsidiary owned by Persons other than the Company and
any of its Restricted Subsidiaries; and (vi) all extraordinary gains and
extraordinary losses.
"Adjusted Consolidated Net Tangible Assets" means the total
amount of assets of the Company and its Restricted 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 (i) all current liabilities of the Company and its Restricted
Subsidiaries (excluding intercompany items) and (ii) all goodwill, trade names,
trademarks, patents, unamortized debt discount and expense and other like
intangibles (other than licenses issued by the FCC), all as set forth on the
quarterly or annual consolidated balance sheet of the Company and its Restricted
Subsidiaries, prepared in conformity with GAAP and most recently filed with the
SEC pursuant to paragraph (l)(i); provided, however, that the value of any
licenses issued by the FCC shall, in the event of an auction for similar
licenses, be equal to the fair market value ascribed thereto in good faith by
the Board of Directors and evidenced by a Board Resolution.
"Affiliate" means, as applied to any Person, any other Person
directly or indirectly controlling, controlled by, or under direct or indirect
common control with, such Person. For purposes of this definition, "control"
(includ ing, with correlative meanings, the terms "controlling," "controlled by"
and "under common control with"), as applied to any Person, means the
possession, directly or indirectly, of the power to direct or cause the
direction of the manage ment and policies of such Person, whether through the
owner ship of voting securities, by contract or otherwise.
"Asset Acquisition" means (i) an investment by the Company or
any of its Restricted Subsidiaries in any other Person pursuant to which such
Person shall become a Restricted Subsidiary of the Company or shall be merged
into or consolidated with the Company or any of its Restricted Subsidiaries or
(ii) an acquisition by the Company or any of its Restricted Subsidiaries of the
property and assets of any Person other than the Company or any of its
Restricted Subsidiaries that constitute substantially all of a division or line
of business of such Person.
<PAGE>
49
"Asset Sale" means any sale, transfer or other disposition
(including by way of merger, consolidation or sale-leaseback transactions) in
one transaction or a series of related transactions by the Company or any of its
Restricted Subsidiaries to any Person other than the Company or any of its
Restricted Subsidiaries of (i) all or any of the Capital Stock of any Restricted
Subsidiary, (ii) all or substantially all of the property and assets of an
operating unit or business of the Company or any of its Restricted Subsidiaries
or (iii) any other property or assets of the Company or any of its Restricted
Subsidiaries outside the ordinary course of business of the Company or such
Restricted Subsidiary and, in each case, that is not governed by the provisions
of the Exchange Indenture applicable to mergers, consolidations, and sales of
assets of the Company; provided, however, that the following shall not be
included within the meaning of "Asset Sale": (A) sales or other dispositions of
inventory, receivables and other current assets; (B) sales or other dispositions
of equipment that has become worn out, obsolete or damaged or otherwise
unsuitable for use in connection with the business of the Company or its
Restricted Subsidiaries and (C) a sub stantially simultaneous exchange of, or a
sale or disposi tion (other than 85% or more for cash or cash equivalents) by
the Company or any of its Restricted Subsidiaries of, licenses issued by the FCC
or applications or bids therefor; provided, however, that the consideration
received by the Company or any such Restricted Subsidiary in connection with
such exchange, sale or disposition shall be equal to the fair market value of
licenses so exchanged, sold or disposed of, as determined by the Board of
Directors; and (D) except for purposes of the definition of "Indebtedness to
EBITDA Ratio", any sale or other disposition of securities of an Unrestricted
Subsidiary.
"Average Life" means, as of the date of determina tion, with
respect to any Indebtedness or Preferred Stock, the quotient obtained by
dividing (i) the sum of the products of the numbers of years from the date of
determination to the dates of each successive scheduled principal payment of
such Indebtedness or redemption or similar payment with respect to such
Preferred Stock multi plied by the amount of such payment by (ii) the sum of all
such payments.
"Board of Directors" means the Board of Directors of the
Company or any committee thereof duly authorized to act on behalf of such Board.
"Board Resolution" means a copy of a resolution,
certified by the Secretary or Assistant Secretary of the
<PAGE>
50
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 Exchangeable 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.
"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 now outstanding
or issued after the date of the Exchange Indenture, including, without
limitation, all Common Stock and Preferred Stock.
"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;
and "Capitalized Lease Obligations" means the discounted present value of the
rental obligations under such lease.
"Change of Control" means such time as (i) a "person" or
"group" (within the meaning of Sections 13(d) and 14(d)(2) of the Securities
Exchange Act of 1934, as amended (the "Exchange Act")), other than the Permitted
Investor, becomes the ultimate "beneficial owner" (as defined in Rule 13d-3
under the Exchange Act) of Voting Stock representing more than 50% of the total
voting power of the Voting Stock of the Company on a fully diluted basis or (ii)
individuals who on the Deemed Closing Date consti tuted the Board of Directors
(together with any new directors whose election by the Board of Directors or
whose nomination for election by the Company's stockholders was approved by a
vote of at least two-thirds of the members of the Board of Directors then in
office who either were members of the Board of Directors on the Deemed Closing
Date or whose election or nomination for election was previously so approved)
cease for any reason to constitute a majority of the members of the Board of
Directors then in office.
"Common Stock" means, with respect to any Person, any and all
shares, interests, participations or other equivalents (however designated,
whether voting or non-voting) of such Person's common stock, whether now out
standing or issued after the date of the Exchange Indenture, including, without
limitation, all series and classes of such common stock.
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51
"Company" means the party named as such in this Certificate of
Designation until a successor replaces it and, thereafter, means the successor.
"Consolidated EBITDA" means, for any period, the sum of the
amounts for such period of (i) Adjusted Consolidated Net Income, (ii)
Consolidated Interest Expense, to the extent such amount was deducted in
calculating Adjusted Consolidated Net Income, (iii) income taxes, to the extent
such amount was deducted in calculating Adjusted Consolidated Net Income (other
than income taxes (either positive or negative) attributable to extraordinary
and non recurring gains or losses or sales of assets), (iv) depreci ation
expense, to the extent such amount was deducted in calculating Adjusted
Consolidated Net Income, (v) amortiza tion expense, to the extent such amount
was deducted in calculating Adjusted Consolidated Net Income, and (vi) all other
noncash 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 noncash items increasing Adjusted
Consolidated Net Income, all as determined on a consolidated basis for the
Company and its Restricted Subsidiaries in conformity with GAAP; provided,
however, that, if any Restricted Subsidiary is not a Wholly Owned Restricted
Subsidiary, Consolidated EBITDA shall be reduced (to the extent not otherwise
reduced in accordance with GAAP) by an amount equal to (A) the amount of the
Adjusted Consolidated Net Income attributable to such Restricted Subsidiary
multi plied by (B) the quotient of (1) the number of shares of outstanding
Common Stock of such Restricted Subsidiary not owned on the last day of such
period by the Company or any of its Restricted Subsidiaries divided by (2) the
total number of shares of outstanding Common Stock of such Restricted Subsidiary
on the last day of such period.
"Consolidated Interest Expense" means, for any period, the
aggregate amount of interest in respect of Indebtedness (including 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 commis sions, discounts and other fees and
charges owed with respect to letters of credit and bankers' acceptance
financing; the net costs associated with Interest Rate Agreements; and
Indebtedness that is Guaranteed or secured by the Company or any of its
Restricted Subsidiaries) 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 Restricted Subsidiaries during such
period; excluding, however, (i) any
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52
amount of such interest of any Restricted Subsidiary if the net income of such
Restricted Subsidiary is excluded in the calculation of Adjusted Consolidated
Net Income pursuant to clause (iii) of the definition thereof (but only in the
same proportion as the net income of such Restricted Subsidiary is excluded from
the calculation of Adjusted Consolidated Net Income pursuant to clause (iii) of
the definition thereof) and (ii) any premiums, fees and expenses (and any
amortization thereof) payable in connection with the offering of the Exchange
Debentures and the 1997 Notes and the Incurrence of the WSAC Loan, all as
determined on a con solidated basis (without taking into account Unrestricted
Subsidiaries) in conformity with GAAP.
"Consolidated Net Worth" means, at any date of determination,
stockholders' equity as set forth on the most recently available quarterly or
annual consolidated balance sheet of the Company and its Restricted Subsidiaries
(which shall be as of a date not more than 90 days prior to the date of such
computation, and which shall not take into account Unrestricted Subsidiaries),
less any amounts attributable to Redeemable Stock or any equity security
convertible into or exchangeable for Indebtedness, the cost of treasury stock
and the principal amount of any promissory notes receivable from the sale of the
Capital Stock of the Company or any of its Restricted Subsidiaries, each item to
be determined in conformity with GAAP (excluding the effects of foreign currency
exchange adjustments under Financial Accounting Standards Board Statement of
Financial Accounting Standards No. 52).
"Convertible Notes" means the 14% Convertible
Senior Subordinated Discount Notes due 2005 of the Company.
"Convertible Notes Indenture" means the Indenture dated as of
October 23, 1995, between the Company and United States Trust Company of New
York pursuant to which the Convertible Notes were issued.
"Currency Agreement" means any foreign exchange contract,
currency swap agreement or other similar agreement or arrangement designed to
protect the Company or any of its Restricted Subsidiaries against fluctuations
in currency values to or under which the Company or any of its Restricted
Subsidiaries is a party or a beneficiary on the date of this Certificate of
Designation or becomes a party or a beneficiary hereafter.
"Deemed Closing Date" means March 18, 1997.
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53
"Default" means any event that is, or after notice or passage
of time or both would be, a Voting Rights Triggering Event.
"Definitive Security" means a certificated share of
Exchangeable Preferred Stock or Exchange Security bearing, if required, the
restricted securities legend set
forth in paragraph (m)(iii)(D).
"Depositary" means The Depository Trust Company, its nominees
and their respective successors.
"Dividend Period" means each period between two consecutive
SemiAnnual Dividend Accrual Dates and the period from the Issue Date to the
first SemiAnnual Dividend Accrual Date.
"DTC" means The Depository Trust Company or any successor
depository for the Global Exchangeable Preferred Stock.
"Equipment Notes" means the $200.0 million of 12 1/2%
Guaranteed Senior Secured Notes Due 2004 of WEC and the $50.0 million of 12 1/2%
Guaranteed Senior Secured Notes Due 2004 of WEC II.
"Equipment Note Guarantees" means the Company's
Guarantees of the Equipment Notes.
"Exchange Act" means the Securities Exchange Act
of 1934, as amended.
"Exchange Date" means the date on which the Securities are
exchanged for the Exchangeable Preferred Stock.
"Exchange Debentures" means the debentures
issuable pursuant to the Exchange Indenture.
"Exchange Indenture" means the form of Indenture governing the
Exchange Debentures to be filed with the Secretary of the Company.
"Exchange Offer Registration Statement" means a registration
statement filed with the SEC with respect to a Registered Exchange Offer.
"Exchange Securities" means the Registerable Exchangeable
Preferred Stock to be issued pursuant to this Certificate of Designation in
connection with a Registered
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54
Exchange Offer or a Private Exchange pursuant to a
Registration Rights Agreement.
"fair market value" means the price that would be paid in an
arm's-length transaction between an informed and willing seller under no
compulsion to sell and an informed and willing buyer under no compulsion to buy,
as determined in good faith by the Board of Directors (whose determination shall
be conclusive) and evidenced by a Board Resolution.
"FCC" means the United States Federal Communications
Commission and any state or local tele communications authority, department,
commission or agency (and any successors thereto).
"GAAP" means generally accepted accounting prin ciples in the
United States of America as in effect as of the date of the Exchange Indenture,
including, without limitation, those set forth in the opinions and pronounce
ments 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 in the Exchange Indenture shall be computed in conformity with GAAP
applied on a con sistent basis, except that calculations made for purposes of
determining compliance with the terms of the covenants and with other provisions
of this Certificate of Designation and the Exchange Indenture shall be made
without giving effect to (i) the amortization of any expenses incurred in connec
tion with the offering of the Exchange Debentures and the WSAC Loan and the 1997
Notes and (ii) except as otherwise provided, the amortization of any amounts
required or permitted by Accounting Principles Board Opinion Nos. 16 and 17.
"Guarantee" means any obligation, contingent or otherwise, of
any Person directly or indirectly guaranteeing any Indebtedness or other
obligation of any other Person and, without limiting the generality of the
foregoing, any obligation, direct or indirect, contingent or otherwise, of such
Person (i) to purchase or pay (or advance or supply funds for the purchase or
payment of) such Indebtedness or other obligation of such other Person (whether
arising by virtue of partnership arrangements, or by agreements to keep-well, to
purchase assets, goods, securities or ser vices, to take-or-pay, or to maintain
financial statement conditions or otherwise) or (ii) entered into for purposes
of assuring in any other manner the obligee of such Indebtedness or other
obligation of the payment thereof or
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55
to protect such obligee against loss in respect thereof (in whole or in part);
provided, however, 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.
"Holder" means the Person in whose name a share of
Exchangeable Preferred Stock is registered on the Transfer Agent's books.
"IAI" means an institutional "accredited investor" as
described in Rule 501(a)(1), (2), (3) or (7) under the Securities Act.
"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, with respect to the Company and its Restricted
Subsidiaries, an "Incurrence" of Indebtedness by reason of a Person becoming a
Restricted Subsidiary of the Company; provided, however, 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), (i) all indebtedness of such Person for
borrowed money, (ii) all obligations of such Person evidenced by bonds,
debentures, notes or other similar instruments (whether negotiable or
non-negotiable), (iii) all obligations of such Person in respect of letters of
credit or other similar instruments (including reimbursement obligations with
respect thereto), (iv) 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 after the date of placing such property in service or taking
delivery and title thereto or the completion of such services, except trade
payables, (v) all obligations of such Person as lessee under Capitalized Leases,
(vi) 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,
however, 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, (vii) all Indebtedness of other Persons Guaranteed by such
Person to the extent such Indebtedness is Guaranteed by such Person and (viii)
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
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56
the outstanding balance at such date of all unconditional obligations as
described above and, with respect to con tingent obligations that are included
in any of clauses (i) through (viii) above, the maximum liability upon the occur
rence of the contingency giving rise to the obligation; provided, however, that
(A) the amount outstanding at any time of any Indebtedness issued with original
issue discount is (1) for purposes of determining the Indebtedness to EBITDA
Ratio, 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 conform ity with GAAP and (2) for all other purposes, the amount
determined in clause (1) on the date such Indebtedness is originally Incurred
and (B) Indebtedness shall not include any liability for federal, state, local
or other taxes.
"Indebtedness to EBITDA Ratio" means, as at any date of
determination, the ratio of (i) the aggregate amount of Indebtedness of the
Company and its Restricted Subsidi aries on a consolidated basis ("Consolidated
Indebtedness") as at the date of determination (the "Transaction Date") to (ii)
the Consolidated EBITDA of the Company for the then most recent four full fiscal
quarters for which reports have been filed pursuant to paragraph (l)(i) (such
four full fiscal quarter period being referred to herein as the "Four Quarter
Period"); provided, however, that (x) pro forma effect shall be given to any
Indebtedness Incurred from the beginning of the Four Quarter Period through the
Transaction Date (including any Indebtedness Incurred on the Transaction Date),
to the extent outstanding on the Transaction Date, (y) if during the period
commencing on the first day of such Four Quarter Period through the Transaction
Date (the "Reference Period"), the Company or any of the Restricted Subsidiaries
shall have engaged in any Asset Sale, Consolidated EBITDA for such period shall
be reduced by an amount equal to the EBITDA (if positive), or increased by an
amount equal to the EBITDA (if negative), directly attributable to the assets
which are the subject of such Asset Sale and any related retirement of
Indebtedness as if such Asset Sale and related retirement of Indebtedness had
occurred on the first day of such Reference Period or (z) if during such
Reference Period the Company or any of the Restricted Subsidiaries shall have
made any Asset Acquisition, Consolidated EBITDA of the Company shall be
calculated on a pro forma basis as if such Asset Acquisition and any Incurrence
of Indebtedness to finance such Asset Acquisition had taken place on the first
day of such Reference Period.
"Initial Liquidation Preference" per share of Exchangeable
Preferred Stock means $1,000.
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57
"Interest Rate Agreement" means any interest rate protection
agreement, interest rate future agreement, inter est rate option agreement,
interest rate swap agreement, interest rate cap agreement, interest rate collar
agreement, interest rate hedge agreement or other similar agreement or
arrangement designed to protect the Company or any of its Restricted
Subsidiaries against fluctuations in interest rates in respect of Indebtedness
to or under which the Company or any of its Restricted Subsidiaries is a party
or a beneficiary on the date of the Exchange Indenture or becomes a party or a
beneficiary hereafter; provided, how ever, that the notional principal amount
thereof does not exceed the principal amount of the Indebtedness of the Company
and its Restricted Subsidiaries that bears interest at floating rates.
"Investment" 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 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 Restricted
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 (i) the designation of a Restricted Subsidiary as an Unrestricted
Subsidiary and (ii) the fair market value of the Capital Stock held by the
Company and the Restricted Subsidiaries of any Person that has ceased to be a
Restricted Subsidiary by reason of any transaction permitted by clause (3) of
paragraph (l)(vi). For purposes of the definition of "Unrestricted Subsidiary"
and paragraph (l)(iv), (i) "Investment" shall include the fair market value of
the assets (net of liabilities) of any Restricted Subsidiary of the Company at
the time that such Restricted Subsidiary of the Company is designated an
Unrestricted Subsidiary and shall exclude the fair market value of the assets
(net of liabilities) of any Unrestricted Subsidiary at the time that such
Unrestricted Subsidiary is designated a Restricted Subsidiary of the Company and
(ii) any property transferred to or from an Unrestricted Subsidiary shall be
valued at its fair market value at the time of such transfer, in each case as
determined by the Board of Directors in good faith.
"Issue Date" means the date on which the Exchangeable
Preferred Stock is originally issued.
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58
"Lien" means any mortgage, pledge, security inter est,
encumbrance, lien or charge of any kind (including, without limitation, any
conditional sale or other title retention agreement or lease in the nature
thereof, any sale with recourse against the seller or any Affiliate of the
seller, or any agreement to give any security interest).
"Liquidation Preference" means the Accumulated Amount of the
Exchangeable Preferred Stock from time to time.
"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 (except to the extent such
obligations are financed or sold with recourse to the Company or any Restricted
Subsidiary of the Company) and proceeds from the 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 Restricted Subsidiaries, taken as a whole,
(iii) pay ments 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 Restricted
Subsidiary of the Company 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 indemnifica tion 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 obliga tions (to the extent corresponding to the principal, but not
interest, component thereof) when received in the form of cash or cash
equivalents (except to the extent such obliga tions are financed or sold with
recourse to the Company or any Restricted Subsidiary of the Company) and
proceeds from the conversion of other property received when converted to cash
or cash equivalents, net of attorneys' fees, accountants' fees, underwriters' or
placement agents' fees,
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59
discounts or commissions and brokerage, consultant and other fees incurred in
connection with such issuance or sale and net of taxes paid or payable by the
Company or any of its subsidiaries as a result thereof.
"Offer to Purchase" means an offer to purchase Exchangeable
Preferred Stock by the Company from the Holders required by paragraph (h) or
paragraph (l)(ix) and which is commenced by mailing a notice to each Holder
stating: (i) the covenant pursuant to which the offer is being made and that all
shares of Exchangeable Preferred Stock validly tendered will be accepted for
payment on a pro rata basis; (ii) the purchase price and the Payment Date; (iii)
that any shares of Exchangeable Preferred Stock not tendered will continue to
accrue dividends or interest pursuant to their terms; (iv) that, unless the
Company defaults in the payment of the purchase price, any shares of
Exchangeable Preferred Stock accepted for payment pursuant to the Offer to
Purchase shall cease to accrue dividends or interest on and after the Payment
Date; (v) that Holders electing to have shares of Exchangeable Preferred Stock
purchased pursuant to the Offer to Purchase will be required to surrender the
applicable security together with the form entitled "Option of the Holder to
Elect Purchase" on the reverse side thereof completed, to the Paying Agent at
the address specified in the notice prior to the close of business on the
Business Day immediately preceding the Payment Date; (vi) that Holders will be
entitled to withdraw their election if the Paying Agent receives, not later than
the close of business on the third Business Day immediately preceding the
Payment Date, a telegram, facsimile transmission or letter setting forth the
name of such Holder, the number of shares of Exchangeable Preferred Stock
delivered for purchase and a statement that such Holder is withdrawing his
election to have such securities purchased; and (vii) that Holders whose
Exchangeable Preferred Stock are being purchased only in part will be issued new
shares of Exchangeable Preferred Stock equal in amount (and accrued and unpaid
dividends or interest) to the unpurchased portion thereof. On the Payment Date,
the Company shall (i) accept for payment on a pro rata basis any Exchangeable
Preferred Stock or portions thereof tendered pursuant to an Offer to Purchase;
(ii) deposit with the Paying Agent money sufficient to pay the purchase price of
all Exchangeable Preferred Stock or portions thereof so accepted; and (iii)
deliver, or cause to be delivered, to the Paying Agent all Exchangeable
Preferred Stock or portions thereof so accepted together with an Officers'
Certificate specifying the Securities or portions thereof accepted for payment
by the Company. The Paying Agent shall promptly mail to the Holders of the
Exchangeable Preferred Stock so accepted for payment in an amount equal
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60
to the purchase price. The Company will publicly announce the results of an
Offer to Purchase as soon as practicable after the Payment Date. The Transfer
Agent shall act as the Paying Agent for an Offer to Purchase Exchangeable
Preferred Stock. The Company will comply with Rule 14e-1 under the Exchange Act
and any other securities laws and regulations thereunder to the extent such laws
and regulations are applicable, in the event that the Company is required to
repurchase Exchangeable Preferred Stock pursuant to an Offer to Purchase.
"Officer" means, with respect to the Company, (i) the Chairman
of the Board, the Vice Chairman of the Board, the Chief Executive Officer, the
President, any Vice President, the Chief Financial Officer and (ii) the
Treasurer or any Assistant Treasurer, or the Secretary or
any Assistant Secretary.
"Officers' Certificate" means a certificate signed by one
Officer listed in clause (i) of the definition thereof and one Officer listed in
clause (ii) of the defini tion thereof; provided, however, that any such
certificate may be signed by any two of the Officers listed in clause (i) of the
definition thereof in lieu of being signed by one Officer listed in clause (i)
of the definition thereof and one Officer listed in clause (ii) of the defini
tion thereof.
"Opinion of Counsel" means a written opinion signed by legal
counsel who may be an employee of or counsel to the Company.
"Payment Date" means the date of purchase, which shall be a
Business Day no earlier than 30 days nor later than 60 days from the date a
notice is mailed pursuant to an Offer to Purchase.
"Permitted Investment" means (i) an Investment in a Restricted
Subsidiary or a Person which will, upon the making of such Investment, become a
Restricted Subsidiary or be merged or consolidated with or into or transfer or
convey all or substantially all its assets to, the Company or a Restricted
Subsidiary; (ii) Temporary Cash Investments; (iii) 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; (iv) loans or
advances to employees in a principal amount not to exceed $1.0 million at any
one time outstanding; (v) stock, obliga tions or securities received in
satisfaction of judgments; (vi) Investments, to the extent that the
consideration provided by the Company or any of its Restricted
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61
Subsidiaries consists solely of Capital Stock (other than Redeemable Stock) of
the Company; (vii) notes payable to the Company that are received by the Company
as payment of the purchase price for Capital Stock (other than Redeemable Stock)
of the Company; and (viii) acquisitions of a minority equity interest in
entities engaged in the telecommunica tions business; provided, however, that
(A) the acquisition of a majority equity interest in such entities is not per
mitted under U.S. law without FCC consent, (B) the Company or one of its
Restricted Subsidiaries has the right to acquire Capital Stock representing a
majority of the voting power of the Voting Stock of such entity upon receipt of
FCC consent and (C) in the event that such consent has not been obtained within
18 months of funding such Investment, the Company or one of its Restricted
Subsidiaries has the right to sell such minority equity interest in the seller
thereof for consideration consisting of the consideration originally paid by the
Company and its Restricted Subsidiaries for such minority equity interest.
"Permitted Investor" means William J. Rouhana, Jr.
"Person" means any individual, corporation, part nership,
limited liability company, joint venture, associa tion, joint stock company,
trust, unincorporated organiza tion, government or any agency or political
subdivision thereof or any other entity.
"Preferred Stock" means, with respect to any Person, any and
all shares, interests, participations or other equivalents (however designated,
whether voting or non-voting) of such Person's preferred or preference stock,
whether now outstanding or issued after the Issue Date, including, without
limitation, all series and classes of such preferred or preference stock.
"Private Exchange" means the offer by the Company, pursuant to
Section 1 of the Registration Rights Agreement, to issue and deliver to certain
purchasers, in exchange for the Exchangeable Preferred Stock held by such
purchasers as part of their initial distribution, a like Liquidation Preference
of Private Exchange Securities.
"Private Exchange Securities" means Registerable Exchangeable
Preferred Stock of the Company identical in all material respects (including the
existence of restrictions on transfer under the Securities Act and the
securities laws of the several states of the United States) to the Exchangeable
Preferred Stock.
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62
"QIB" means a "qualified institutional buyer" as described in
Rule 144A under the Securities Act.
"Redeemable Stock" means any class or series of Capital Stock
of any Person that by its terms or otherwise is (i) required to be redeemed
prior to the Stated Maturity of the Exchange Debentures, (ii) redeemable at the
option of the holder of such class or series of Capital Stock at any time prior
to the Stated Maturity of the Exchange Debentures (unless the redemption price
is, at the Company's option, without conditions precedent, payable solely in
Common Stock (other than Redeemable Stock) of the Company) or (iii) con vertible
into or exchangeable for Capital Stock referred to in clause (i) or (ii) above
or Indebtedness having a scheduled maturity prior to the Stated Maturity of the
Exchange Debentures; provided, however, that any Capital Stock that would not
constitute Redeemable Stock but for provisions thereof giving holders thereof
the right to require such Person to repurchase or redeem such Capital Stock upon
the occurrence of an "asset sale" or "change of control" occurring prior to the
Stated Maturity of the Exchange Debentures shall not constitute Redeemable Stock
if the "asset sale" or "change of control" provisions applica ble to such
Capital Stock are no more favorable to the holders of such Capital Stock than
the provisions of paragraph (h) and paragraph (l)(ix) and such Capital Stock
specifically provides that such Person will not repurchase or redeem any such
stock pursuant to such provision prior to the Company's repurchase of such
Securities as are required to be repurchased pursuant to paragraph (h) and
paragraph (l)(ix).
"Registered Exchange Offer" means the offer by the Company,
pursuant to the Registration Rights Agreement, to holders of Initial
Exchangeable Preferred Stock to issue and deliver to such holders, in exchange
for the Initial Exchangeable Preferred Stock, a like number of Registerable
Exchangeable Preferred Stock registered under the Securities Act.
"Registration Rights Agreement" means the
Registration Rights Agreement dated December 17, 1997, among
the Company, Salomon Brothers Inc and Credit Suisse First
Boston Corporation.
"Restricted Payment" with respect to any Person means (i) the
declaration or payment of any dividends or any other distributions of any sort
in respect of, in the case of the Company, any Junior Stock or, in the case of
any Restricted Subsidiary, any Capital Stock (including any payment in
connection with any merger or consolidation
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63
involving such Person) or similar payment to the direct or indirect holders of
such Stock (other than dividends or distributions payable solely in Junior Stock
(other than Disqualified Stock) and dividends or distributions to the extent
paid to the Company or a Restricted Subsidiary, and other than pro rata
dividends or other distributions made by a Subsidiary that is not a Wholly Owned
Restricted Subsidiary to minority stockholders (or owners of an equivalent
interest in the case of a Subsidiary that is an entity other than a
corporation)), (ii) the purchase, redemption or other acquisition or retirement
for value of any Junior Stock of the Company or Capital Stock of any direct or
indirect parent of the Company or (iii) the making of any Investment in any
Person (other than a Permitted Investment).
"Restricted Subsidiary" means any Subsidiary of
the Company other than an Unrestricted Subsidiary.
"SEC" means the Securities and Exchange Commis
sion.
"Securities" means the Initial Exchangeable Preferred Stock
and the Exchange Securities, treated as a single class.
"Securities Act" means the Securities Act of 1933,
as amended.
"Securities Custodian" means the custodian with respect to a
Global Security (as appointed by the Depositary), or any successor person
thereto who shall initially be the Transfer Agent.
"Senior Indebtedness" means the following obligations of the
Company, whether outstanding on the Issue Date or thereafter Incurred: (i) all
Indebtedness and all other monetary obligations of the Company under the 1995
Senior Notes, the 1997 Senior Notes and the Equipment Note Guarantees, (ii) all
other Indebtedness of the Company (other than the 1997 Senior Subordinated
Notes, Exchange Debentures and the Convertible Notes), including principal and
interest on such Indebtedness, unless such Indebtedness, by its terms or by the
terms of any agreement or instrument pursuant to which such Indebtedness is
issued, is pari passu with, or subordinated in right of payment to, the Exchange
Debentures and (iii) all fees, expenses and indemnities payable in connection
with the 1995 Senior Notes, the 1997 Senior Notes and the Equipment Note
Guarantees (including any agreements pursuant to which the 1995 Senior Notes,
the 1997 Senior Notes or Equipment Note Guarantees were issued);
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64
provided, however, that the term "Senior Indebtedness" shall not include (a) any
Indebtedness of the Company that, when Incurred and without respect to any
election under Section 1111(b) of the Bankruptcy Code, was without recourse to
the Company, (b) any Indebtedness of the Company to a Subsidiary of the Company
or to a joint venture in which the Company has an interest, (c) any Indebtedness
of the Company, to the extent not permitted pursuant to paragraph (l)(ii) or
(l)(iii), (d) any repurchase, redemption or other obligation in respect of
Redeemable Stock, (e) any Indebtedness to any employee of the Company or any of
its Subsidiaries, (f) any liability for federal, state, local or other taxes
owed or owing by the Company or (g) any trade payables of the Company. Senior
Indebtedness of the Company will also include interest accruing subsequent to
events of bankruptcy of the Company and its Subsidiaries at the rate provided
for in the document governing such Senior Indebtedness, whether or not such
interest is an allowed claim enforceable against the debtor in a bankruptcy case
under federal bankruptcy law.
"Shelf Registration Statement" means a registration statement
filed with the SEC covering resales of Exchangeable Preferred Stock as provided
for, under certain circumstances, pursuant to the Registration Rights Agreement.
"Significant Subsidiary" means, at any date of determination,
any Restricted Subsidiary of the Company that, together with its Subsidiaries,
(i) for the most recent fiscal year of the Company, accounted for more than 10%
of the consolidated revenues of the Company and its Restricted Subsidiaries or
(ii) as of the end of such fiscal year, was the owner of more than 10% of the
consolidated assets of the Company and its Restricted Subsidiaries, all as set
forth on the most recently available consolidated financial statements of the
Company for such fiscal year.
"Specified Debt Satisfaction Date" means the date on which all
obligations under each of the Specified Indentures shall have been satisfied in
full.
"Specified Indentures" means the each of the following: (i)
the Convertible Senior Subordinated Discount Notes Indenture dated October 23,
1995, governing the Company's 14% Convertible Senior Subordinated Discount Notes
due 2005; (ii) the Senior Discount Notes Indenture dated October 23, 1995,
governing the Company's 14% Senior Discount Notes due 2005; (iii) the Senior
Deferred Interest Notes Indenture dated as of March 1, 1997, governing the
Company's 14 1/2% Senior Deferred Interest Notes due 2005; (iv)
<PAGE>
65
the Guaranteed Senior Secured Notes Indenture dated as of March 1, 1997,
governing the 12 1/2% Senior Secured Notes of WinStar Equipment Corp. due 2004;
(v) the Guaranteed Senior Secured Notes Indenture of WinStar Equipment II Corp.
due 2004; and (vi) the Senior Subordinated Deferred Interest Notes Indenture
dated as of October 1, 1997, governing the Company's 15% Senior Deferred
Interest Notes due 2007.
"Stated Maturity" means, (i) with respect to any debt
security, the date specified in such debt security as the fixed date on which
the final installment of principal of such debt security is due and payable and
(ii) with respect to any scheduled installment of principal of or interest on
any debt security, the date specified in such debt security as the fixed date on
which such installment is due and payable.
"Subsidiary" means, with respect to any Person, any
corporation, association or other business entity of which Voting Stock
representing more than 50% of the voting power of the outstanding Voting Stock
is owned, directly or indirectly, by such Person and one or more other
Subsidiaries of such Person.
"Telecommunications Assets" means any (i) entity or business
substantially all the revenues of which are derived from (a) providing
transmission of sound, data or video; (b) the sale or provision of phone cards,
"800" services, voice mail, switching, enhanced telecommunications services,
telephone directory or telephone number informa tion services or
telecommunications network intelligence; or (c) any business ancillary or
directly related to the busi nesses referred to in clause (a) or (b) above and
(ii) any assets used primarily to effect such transmission or provide the
products or services referred to in clause (a) or (b) above and any directly
related or ancillary assets includ ing, without limitation, licenses and
applications, bids and agreements to acquire licenses, or other authority to pro
vide transmission services previously granted, or to be granted, by the FCC.
"Telecommunications Subsidiary" means (i) WCI Gateway, WinStar
Wireless, Inc., WinStar Telecommunications, Inc., WinStar Milliwave, Inc.,
WinStar Locate, Inc., and WinStar Wireless Fiber Corp. and, in each case, its
suc cessors and (ii) any other Restricted Subsidiary of the Company that holds
more than a de minimis amount of Telecommunications Assets.
"Temporary Cash Investment" means any of the
following: (i) direct obligations of the United States or
<PAGE>
66
any agency thereof or obligations fully and unconditionally guaranteed by the
United States or any agency thereof; (ii) 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, any state thereof or any foreign country
recognized by the United States, and which bank or trust company has capital,
surplus and undivided profits aggregating in excess of $50.0 million (or the
foreign currency equivalent thereof) and has outstanding deposits or debt which
is rated "A" (or such 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; (iii) repurchase obligations with a
term of not more than 30 days for underlying securities of the types described
in clause (i) above entered into with a bank meeting the qualifications
described in clause (ii) above; (iv) commercial paper, maturing not more than
six months after the date of acquisition, issued by a corpora tion (other than
an Affiliate of the Company) organized and in existence under the laws of the
United States, any state thereof or any foreign country recognized by the United
States with a rating at the time as of which any investment therein is made of
"P-1" (or higher) according to Moody's Investors Service, Inc. or "A-1" (or
higher) according to Standard & Poor's Ratings Group; and (v) securities with
maturities of six months or less from the date of acquisi tion issued or fully
and unconditionally guaranteed by any state, commonwealth or territory of the
United States, or by any political subdivision or taxing authority thereof, and
rated at least "A" by Standard & Poor's Ratings Group or Moody's Investors
Service, Inc.
"Transaction Date" means, with respect to the Incurrence of
any Indebtedness by the Company or any of its Restricted 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.
"Transfer Agent"" means Continental Stock Transfer & Trust
Company and any successor thereto.
"Transfer Restricted Securities" means Definitive Securities
and any other Securities that bear or are required to bear the legend set forth
in paragraph (m)(iii)(D) hereto.
<PAGE>
67
"Trustee" means the party named as such in the Exchange
Indenture until a successor replaces it and, thereafter, means the successor.
"Uniform Commercial Code" means the New York Uniform
Commercial Code as in effect from time to time.
"Unrestricted Subsidiary" means (i) any Subsidiary of the
Company that at the time of determination shall be designated an Unrestricted
Subsidiary by the Board of Directors in the manner provided below and (ii) any
Subsidiary of an Unrestricted Subsidiary. The Board of Directors may designate
any Restricted Subsidiary of the Company (including any newly acquired or newly
formed Subsidiary of the Company), other than a guarantor of the Securities, to
be an Unrestricted Subsidiary unless such Subsidiary owns any Capital Stock of,
or owns or holds any Lien on any property of, the Company or any Restricted
Subsidiary; provided, however, that neither the Company nor its Restricted
Subsidiaries has any Guarantee of any Indebtedness of such Subsidiary
outstanding at the time of such designation and either (A) the Subsidiary to be
so designated has total assets of $1,000 or less or (B) if such Subsidiary has
assets greater than $1,000, that such desig nation would be permitted under
paragraph (l)(iv). Notwith standing the foregoing, WinStar New Media Company
Inc., Non Fiction Films Inc. and WinStar Global Products, Inc. and their
Subsidiaries are Unrestricted Subsidiaries. The Board of Directors may designate
any Unrestricted Subsidiary to be a Restricted Subsidiary of the Company;
provided, however, that immediately after giving effect to such designation (x)
the Company could Incur $1.00 of additional Indebtedness under paragraph
(l)(ii)(A) and (y) no Default shall have occurred and be continuing. Any such
designation by the Board of Directors shall be evidenced by promptly delivering
to Holders of the Exchangeable Preferred Stock a copy of the Board Resolution
giving effect to such designation and an Officers' Certificate certifying that
such designation complied with the foregoing provisions. Anything to the
contrary contained herein or in the Exchange Indenture not withstanding, no
Telecommunications Subsidiary may be designated an Unrestricted Subsidiary.
"Voting Stock" means with respect to any Person, Capital Stock
of any class or kind ordinarily having the power to vote for the election of
directors, managers or other voting members of the governing body of such
Person.
"WEC" means WinStar Equipment Corp. and its successors.
<PAGE>
68
"WEC II" means WinStar Equipment II Corp. and its
successors.
"WSAC" means WinStar Switch Acquisition Corp. and
its successors.
"WSAC Credit Agreement" means the Credit Agreement dated as of
October 17, 1997, among WSAC, the Lenders named therein, Credit Suisse First
Boston, as documentation agent, and Salomon Brothers Inc, as syndication agent
and collateral and administrative agent, as in effect from time to time.
"WSAC Loan" means all Indebtedness and other obligations of
WSAC arising in connection with the WSAC Credit Agreement.
"WCI Gateway" means WinStar Gateway Network, Inc.
and its successors.
"Wholly Owned" means, with respect to any Subsidiary of any
Person, such Subsidiary if all of the out standing Capital Stock in such
Subsidiary (other than any director's qualifying shares or Investments by
foreign nationals mandated by applicable law) is owned by such Person or one or
more Wholly Owned Subsidiaries of such Person.
<PAGE>
69
IN WITNESS WHEREOF, said WinStar Communications, Inc., has
caused this Certificate of Designation to be signed by Frederic Rubin, its Vice
President and Treasurer, this 22nd day of December, 1997.
WINSTAR COMMUNICATIONS, INC.,
by _____________________________
Name:
Title:
<PAGE>
1
EXHIBIT A
FORM OF EXCHANGEABLE PREFERRED STOCK
FACE OF SECURITY
[THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED (THE "SECURITIES ACT"). THE HOLDER HEREOF, BY PURCHASING THIS
SECURITY, AGREES FOR THE BENEFIT OF THE COMPANY THAT THIS SECURITY MAY NOT BE
RESOLD, PLEDGED OR OTHERWISE TRANSFERRED (X) PRIOR TO THE SECOND ANNIVERSARY OF
THE ISSUANCE HEREOF (OR A PREDECESSOR SECURITY HERETO) OR (Y) BY ANY HOLDER THAT
WAS AN AFFILIATE OF THE COMPANY AT ANY TIME DURING THE THREE MONTHS PRECEDENT
THE DATE OF SUCH TRANSFER, IN EITHER CASE OTHER THAN (1) TO THE COMPANY, (2) SO
LONG AS THIS SECURITY IS ELIGIBLE FOR RESALE PURSUANT TO RULE 144A UNDER THE
SECURITIES ACT ("RULE 144A"), TO A PERSON WHOM THE SELLER REASONABLY BELIEVES IS
A QUALIFIED INSTITUTIONAL BUYER WITHIN THE MEANING OF RULE 144A PURCHASING FOR
ITS OWN ACCOUNT OR FOR THE ACCOUNT OF A QUALIFIED INSTITUTIONAL BUYER TO WHOM
NOTICE IS GIVEN THAT THE RESALE, PLEDGE OR OTHER TRANSFER IS BEING MADE IN
RELIANCE ON RULE 144A (AS INDICATED BY THE BOX CHECKED BY THE TRANSFEROR ON THE
CERTIFICATE OF TRANSFER ON THE REVERSE OF THIS SECURITY), (3) IN AN OFFSHORE
TRANSACTION IN ACCORDANCE WITH REGULATION S UNDER THE SECURITIES ACT (AS
INDICATED BY THE BOX CHECKED BY THE TRANSFEROR ON THE CERTIFICATE OF TRANSFER ON
THE REVERSE OF THIS SECURITY), (4) PURSUANT TO AN EXEMPTION FROM REGISTRATION
UNDER THE SECURITIES ACT PROVIDED BY RULE 144 (IF APPLICABLE) UNDER THE
SECURITIES ACT OR (5) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE
SECURITIES ACT, IN EACH CASE IN ACCORDANCE WITH ANY APPLICABLE SECURITIES LAWS
OF ANY STATE OF THE UNITED STATES.]*
[THE HOLDER HEREOF, BY PURCHASING THIS SECURITY, REPRESENTS AND AGREES
FOR THE BENEFIT OF THE COMPANY THAT IT IS (1) A QUALIFIED INSTITUTIONAL BUYER
WITHIN THE MEANING OF RULE 144A OR (2) A NON-US PERSON OUTSIDE THE UNITED STATES
WITHIN THE MEANING OF (OR AN ACCOUNT SATISFYING THE REQUIREMENTS OF PARAGRAPH
(o)(2) OF RULE 902 UNDER) REGULATION S UNDER THE SECURITIES ACT.]*
[UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED
REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"),
NEW YORK, NEW YORK, TO THE COMPANY OR ITS AGENT FOR REGISTRATION OF TRANSFER,
EXCHANGE OF PAYMENT, AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF
CEDE & CO. OR SUCH OTHER NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF
DTC (AND ANY PAYMENT IS MADE TO CEDE & CO., OR TO SUCH OTHER ENTITY AS IS
REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC) ANY TRANSFER, PLEDGE OR
<PAGE>
2
OTHER USE HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH
AS THE REGISTERED OWNER HEREOF, CEDE & CO. HAS AN INTEREST HEREIN.]*
[TRANSFERS OF THIS GLOBAL SECURITY SHALL BE LIMITED TO
TRANSFERS IN WHOLE, BUT NOT IN PART, TO NOMINEES OF DTC OR TO A SUCCESSOR
THEREOF OR SUCH SUCCESSOR'S NOMINEE AND TRANSFERS OF PORTIONS OF THIS GLOBAL
SECURITY SHALL BE LIMITED TO TRANSFERS MADE IN ACCORDANCE WITH THE RESTRICTIONS
SET FORTH IN THE CERTIFICATE OF DESIGNATION REFERRED TO BELOW.]*
Certificate Number Number of Shares of Exchangeable
Preferred Stock
[ ] [ ]
CUSIP NO.: [ ]
14 1/4% Senior Cumulative Exchangeable
Preferred Stock Due 2007
(par value $0.01) (Initial Liquidation Preference $1,000
per share)
of
WinStar Communications, Inc.
WinStar Communications, Inc., a Delaware corporation (the
"Company"), hereby certifies that [ ] (the "Holder") is the registered owner of
fully paid and non-assessable preferred securities of the Company designated the
Series C 14 1/4% Senior Cumulative Exchangeable Preferred Stock Due 2007 (par
value $0.01) (liquidation preference $1,000 per share) (the "Exchangeable
Preferred Stock"). The shares of Exchangeable Preferred Stock are transferable
on the books and records of the Registrar, in person or by a duly authorized
attorney, upon surrender of this certificate duly endorsed and in proper form
for transfer. The designation, rights, privileges, restrictions, preferences and
other terms and provisions of the Exchangeable Preferred Stock represented
hereby are issued and shall in all respects be subject to the provisions of the
Certificate of Designation dated December 22, 1997, as the same may be amended
from time to time (the "Certificate of Designation"). Capitalized terms
- --------
* Subject to removal if not a global security.
<PAGE>
3
used herein but not defined shall have the meaning given them in the Certificate
of Designation. The Company will provide a copy of the Certificate of
Designation to a Holder without charge upon written request to the Company at
its principal place of business.
Reference is hereby made to select provisions of the
Exchangeable Preferred Stock set forth on the reverse hereof, and to the
Certificate of Designation, which select provisions and the Certificate of
Designation shall for all purposes have the same effect as if set forth at this
place.
Upon receipt of this certificate, the Holder is bound by the
Certificate of Designation and is entitled to the benefits thereunder.
Unless the Transfer Agent's Certificate of Authentication
hereon has been properly executed, these shares of Exchangeable Preferred Stock
shall not be entitled to any benefit under the Certificate of Designation or be
valid or obligatory for any purpose.
IN WITNESS WHEREOF, the Company has executed this certificate
this 22nd day of December, 1997.
WINSTAR COMMUNICATIONS, INC.,
By: ______________________________
Name:
Title:
[Seal]
By: ______________________________
Name:
Title:
<PAGE>
4
TRANSFER AGENT'S CERTIFICATE OF AUTHENTICATION
This is one of the Exchangeable Preferred Stock referred to in
the within mentioned Certificate of Designation.
Dated: December 22, 1997
Continental Stock Transfer &
Trust Company
as Transfer Agent,
By:___________________________
Authorized Signatory
<PAGE>
5
REVERSE OF SECURITY
Dividends on each share of Exchangeable Preferred Stock shall
accrue at a rate per annum set forth in the face hereof or as provided in the
Certificate of Designation (including Additional Dividends).
The shares of Exchangeable Preferred Stock shall be redeemable
as provided in the Certificate of Designation. The shares of Exchangeable
Preferred Stock shall be exchangeable into the Company's 14 1/4% Senior
Subordinated Deferred Interest Notes Due 2007 in the manner and according to the
terms set forth in the Certificate of Designation.
As required under Delaware law, the Company shall furnish to
any Holder upon request and without charge, a full summary statement of the
designations, voting rights preferences, limitations and special rights of the
shares of each class or series authorized to be issued by the Company so far as
they have been fixed and determined and the authority of the Board of Directors
to fix and determine the designations, voting rights, preferences, limitations
and special rights of the class and series of shares of the Company.
<PAGE>
6
ASSIGNMENT
FOR VALUE RECEIVED, the undersigned assigns and transfers the
shares of Exchangeable Preferred Stock evidenced hereby to:__________________
_____________________________________________________________________________
_____________________________________________________________________________
_____________________________________________________________________________
(Insert assignee's social security or tax identification
number)
_____________________________________________________________________________
_____________________________________________________________________________
_____________________________________________________________________________
_____________________________________________________________________________
_____________________________________________________________________________
(Insert address and zip code of assignee)
and irrevocably appoints:
_____________________________________________________________________________
_____________________________________________________________________________
_____________________________________________________________________________
agent to transfer the shares of Exchangeable Preferred Stock evidenced hereby on
the books of the Transfer Agent and Registrar. The agent may substitute another
to act for him or her.
Date:
Signature:___________________________________________________________________
(Sign exactly as your name appears on the other side of this Exchangeable
Preferred Stock Certificate)
Signature Guarantee:**________________________________________________________
- --------
** (Signature must be guaranteed by an "eligible guarantor
institution" that is, a bank, stockbroker, savings and loan association or
credit union meeting the requirements of the Registrar, which requirements
include membership or participation in the Securities Transfer Agents Medallion
Program ("STAMP") or such other "signature guarantee program" as may be
determined by the Registrar in addition to, or in substitution for, STAMP, all
in accordance with the Securities Exchange Act of 1934, as amended.)
<PAGE>
1
EXECUTION COPY
WINSTAR COMMUNICATIONS, INC.
Series C 14-1/4% Senior Cumulative Exchangeable
Preferred Stock Due 2007
REGISTRATION RIGHTS AGREEMENT
December 17, 1997
Salomon Smith Barney
Salomon Brothers Inc
Credit Suisse First Boston Corporation
c/o Salomon Brothers Inc
Seven World Trade Center
New York, New York 10048
Ladies and Gentlemen:
WinStar Communications, Inc., a Delaware corporation (the "Issuer"),
and WinStar Credit Corp., a Delaware corporation and a wholly owned subsidiary
of the Issuer ("WCC" and together with the Issuer, the "Sellers") have agreed to
issue and sell to Salomon Brothers Inc and Credit Suisse First Boston
Corporation (the "Initial Purchasers"), upon the terms set forth in a purchase
agreement of even date herewith (the "Purchase Agreement"), 165,000 shares and
10,000 shares, respectively, of the Issuer's Series C 14-1/4% Senior Cumulative
Exchangeable Preferred Stock Due 2007 (the "Exchangeable Preferred Stock"). As
an inducement to the Initial Purchasers, the Issuer agrees with the Initial
Purchasers, for the benefit of the holders of the Initial Securities (as defined
below) (including, without limitation, the Initial Purchasers), the Exchange
Securities (as defined below) and the Private Exchange Securities (as defined
below) (collectively the "Holders"), as follows:
1. Registered Exchange Offer. The Issuer shall, at the Issuer's cost,
prepare and, not later than 45 days after (or if the 45th day is not a business
day, the first business day thereafter) the date of original issue of the
Exchangeable Preferred Stock (the "Issue Date"), file with the Securities and
Exchange Commission (the "Commission") a registration statement (the "Exchange
Offer Registration Statement") on an appropriate form under the Securities Act
of 1933, as amended (the "Securities Act"), with respect to a proposed offer
(the "Registered Exchange Offer") to the Holders of the Initial Securities, who
are not prohibited by any law or policy of the Commission from participating in
such a Registered Exchange Offer, to issue and deliver to such Holders, in
exchange for their respective shares of Exchangeable Preferred Stock or Exchange
Debentures (as defined in the Purchase Agreement), as the case may be (the
"Initial Securities"), a like aggregate liquidation preference of Exchangeable
Preferred Stock or a like aggregate principal amount of Exchange Debentures, as
the case may be, of the Issuer (collectively, the "Exchange Securities")
identical in all material respects to the Initial Securities (except for the
transfer restrictions relating to the Exchangeable Preferred Stock or Exchange
Debentures), that would be registered under the Securities Act. The Issuer shall
use its best efforts to cause such Exchange Offer Registration Statement to
become effective under the Securities Act within 150 days (or if the 150th day
is not a business day, the first business day thereafter) after the Issue Date
and shall keep the Exchange Offer Registration Statement effective for not less
than 30 days (or longer, if required by
<PAGE>
2
applicable law) after
the date notice of the Registered Exchange Offers is mailed to the Holders (such
period being called the "Exchange Offer Registration Period").
If the Issuer effects the Registered Exchange Offer, the Issuer will be
entitled to close such Registered Exchange Offer 30 days after the commencement
thereof provided that the Issuer has accepted all the Initial Securities
theretofore validly tendered in accordance with the terms of the Registered
Exchange Offer.
Following the declaration of the effectiveness of the Exchange Offer
Registration Statement, the Issuer shall promptly commence the Registered
Exchange Offer, it being the objective of such Registered Exchange Offer to
enable each Holder of the Initial Securities electing to exchange such Initial
Securities for Exchange Securities (assuming that such Holder is not an
affiliate of the Issuer within the meaning of the Securities Act, acquires the
Exchange Securities in the ordinary course of such Holder's business and has no
arrangements with any person to participate in the distribution of the Exchange
Securities and is not prohibited by any law or policy of the Commission from
participating in the Registered Exchange Offer) to trade such Exchange
Securities from and after their receipt without any limitations or restrictions
under the Securities Act and without material restrictions under the securities
laws of the several states of the United States.
The Issuer acknowledges that, pursuant to current interpretations by
the Commission's staff of Section 5 of the Securities Act, in the absence of an
applicable exemption therefrom, (i) each Holder which is a broker-dealer
electing to exchange Initial Securities, acquired for its own account as a
result of market making activities or other trading activities, for Exchange
Securities (an "Exchanging Dealer"), is required to deliver a prospectus
containing the information set forth in Annex A hereto on the cover, in Annex B
hereto in the "Exchange Offer Procedures" section and the "Purpose of the
Exchange Offer" section, and in Annex C hereto in the "Plan of Distribution"
section of such prospectus in connection with a sale of any such Exchange
Securities received by such Exchanging Dealer pursuant to a Registered Exchange
Offer and (ii) an Initial Purchaser that elects to sell Exchange Securities
acquired in exchange for Initial Securities constituting any portion of an
unsold allotment is required to deliver a prospectus containing the information
required by Items 507 or 508 of Regulation S-K under the Securities Act, as
applicable, in connection with such sale.
The Issuer shall use its best efforts to keep the Exchange Offer
Registration Statement effective and to amend and supplement the prospectus
contained therein, in order to permit such prospectus to be lawfully delivered
by all persons subject to the prospectus delivery requirements of the Securities
Act for such period of time as such persons must comply with such requirements
in order to resell the Exchange Securities; provided, however, that (i) in the
case where such prospectus and any amendment or supplement thereto must be
delivered by an Exchanging Dealer or an Initial Purchaser, such period shall be
the lesser of 180 days and the date on which all Exchanging Dealers and the
Initial Purchasers have sold all Exchange Securities held by them (unless such
period is extended pursuant to Section 3(j) below) and (ii) the Issuer shall
make such prospectus and any amendment or supplement thereto, available to any
broker-dealer for use in connection with any resale of any Exchange Securities
for a period not less than 90 days after the consummation of the Registered
Exchange Offer.
<PAGE>
3
If, upon consummation of the Registered Exchange Offer, any Initial
Purchaser holds Exchangeable Preferred Stock or Exchangeable Debentures acquired
by it as part of its initial distribution, the Issuer, simultaneously with the
delivery of the Exchange Securities pursuant to the Registered Exchange Offer,
shall issue and deliver to such Initial Purchaser upon the written request of
such Initial Purchaser, in exchange (the "Private Exchange") for the respective
Securities held by such Initial Purchaser, a like liquidation preference of
Exchangeable Preferred Stock or a like aggregate principal amount of Exchange
Debentures of the Issuer identical in all material respects (including the
existence of restrictions on transfer under the Securities Act and the
securities laws of the several states of the United States) to the Exchangeable
Preferred Stock or the Exchange Debentures, as the case may be (collectively,
the "Private Exchange Securities"). The Initial Securities, the Exchange
Securities and the Private Exchange Securities are herein collectively called
the "Securities".
In connection with the Registered Exchange Offer, the Issuer shall:
(a) mail to each Holder a copy of the prospectus forming part of the
Exchange Offer Registration Statement, together with an appropriate letter of
transmittal and related documents;
(b) keep the Registered Exchange Offer open for not less than 30 days
(or longer, if required by applicable law) after the date notice thereof is
mailed to the Holders;
(c) utilize the services of a depositary for the Registered Exchange
Offer with an address in the Borough of Manhattan, The City of New York, which
may be the Trustee or an affiliate of the Trustee;
(d) permit Holders to withdraw tendered Initial Securities at any time
prior to the close of business, New York time, on the last business day on which
the Registered Exchange Offer shall remain open; and
(e) otherwise comply with all applicable laws.
As soon as practicable after the close of the Registered Exchange Offer
or Private Exchange, as the case may be, the Issuer shall:
(x) accept for exchange all the Initial Securities validly tendered and
not withdrawn pursuant to the Registered Exchange Offer or the Private Exchange,
as the case may be (such acceptance constituting the "consummation" of such
Registered Exchange Offer notwithstanding the fact that not all of the Initial
Securities may have been so tendered);
(y) deliver to the Company's transfer agent for the Exchangeable
Preferred Stock (the "Transfer Agent") , in the case of Exchangeable Preferred
Stock, or the trustee for the Exchange Debentures (the "Trustee"), in the case
of Exchange Debentures, for cancellation all the Initial Securities so accepted
for exchange; and
(z) cause the Transfer Agent, in the case of Exchangeable Preferred
Stock, or the Trustee, in the case of Exchange Debentures, to authenticate and
deliver promptly to each Holder which validly tendered Initial Securities,
Exchange Securities or Private Exchange Securities, as the case may be, equal in
liquidation preference or principal amount, as applicable, to the Initial
Securities of such Holder so accepted for exchange.
<PAGE>
4
The Certificate of Designation governing the Exchangeable Preferred
Stock (the "Certificate of Designation") and the Indenture governing the
Exchange Debentures (the "Indenture") will provide that the Exchange Securities
subject to the Certificate of Designation or the Indenture will not be subject
to the transfer restrictions set forth in the Certificate of Designation or the
Indenture. The Certificate of Designation and the Indenture will also provide
that all the Initial Securities, Exchange Securities and Private Exchange
Securities subject to such Certificate of Designation or Indenture will vote and
consent together on all matters as one class and that none of the Initial
Securities, Exchange Securities or Private Exchange Securities subject to such
Certificate of Designation or Indenture will have the right to vote or consent
as a separate class from one another on any matter.
Dividends or interest, as applicable, on each Exchange Security or
Private Exchange Security issued pursuant to a Registered Exchange Offer or
Private Exchange will accrue from the last SemiAnnual Dividend Accrual Date or
SemiAnnual Interest Accrual Date (as such terms are defined in the Certificate
of Designation and the Indenture, respectively), as applicable, on which
dividends or interest was accrued on the Initial Security surrendered in
exchange therefor or, if no dividends or interest have been accrued on such
Initial Security, from the date of original issue of such Initial Security.
Each Holder tendering Initial Securities in a Registered Exchange Offer
shall be required to represent to the Issuer that at the time of the
consummation of such Registered Exchange Offer (i) any Exchange Securities
received by such Holder will be acquired in the ordinary course of business,
(ii) such Holder will have no arrangements or understanding with any person to
participate in the distribution of the Initial Securities or the Exchange
Securities within the meaning of the Securities Act, (iii) such Holder is not an
"affiliate," as defined in Rule 405 of the Securities Act, of the Issuer or if
it is an affiliate, such Holder will comply with the registration and prospectus
delivery requirements of the Securities Act to the extent applicable, (iv) if
such Holder is not a broker-dealer, that it is not engaged in, and does not
intend to engage in, the distribution of the Exchange Securities and (v) if such
Holder is a broker-dealer, that it will receive Exchange Securities for its own
account in exchange for Initial Securities that were acquired as a result of
market-making activities or other trading activities and that it will be
required to acknowledge that it will deliver a prospectus in connection with any
resale of such Exchange Securities.
Notwithstanding any other provisions hereof, the Issuer will ensure
that (i) the Exchange Offer Registration Statement and any amendment thereto and
any prospectus forming a part thereof and any supplement thereto complies in all
material respects with the Securities Act and the rules and regulations
thereunder, (ii) the Exchange Offer Registration Statement and any amendment
thereto does not, when it becomes effective, contain an untrue statement of a
material fact or omit to state a material fact required to be stated therein or
necessary to make the statements therein not misleading and (iii) any prospectus
forming part of the Exchange Offer Registration Statement, and any supplement to
such prospectus, does not include an untrue statement of a material fact or omit
to state a material fact required to be stated therein or necessary in order to
make the statements therein, in the light of the circumstances under which they
were made, not misleading.
2. Shelf Registration. If, (i) because of any change in law or in
applicable interpretations thereof by the staff of the Commission, the Issuer is
not permitted to effect the Registered Exchange Offer, as contemplated by
Section 1 hereof, (ii) the Registered
<PAGE>
5
Exchange Offer is not consummated within 180 days of the Issue Date, (iii) any
Initial Purchaser so requests with respect to the Initial Securities (or the
Private Exchange Securities) not eligible to be exchanged for Exchange
Securities in a Registered Exchange Offer and held by it following consummation
of the Registered Exchange Offers or (iv) any Holder of Initial Securities
(other than an Exchanging Dealer) is not eligible to participate in the
Registered Exchange Offer or, in the case of any Holder (other than an
Exchanging Dealer) that participates in the Registered Exchange Offer, such
Holder does not receive freely tradeable Exchange Securities on the date of the
exchange, the Issuer shall take the following actions:
(a) The Issuer shall, at its cost, as promptly as practicable (but in
no event more than 30 days after so required or requested pursuant to this
Section 2) file with the Commission and thereafter shall use its best efforts to
cause to be declared effective a registration statement or statements (the
"Shelf Registration Statement" and, together with the Exchange Offer
Registration Statement, a "Registration Statement") on an appropriate form under
the Securities Act relating to the offer and sale of the Transfer Restricted
Securities (as defined in Section 6 hereof) by the Holders thereof from time to
time in accordance with the methods of distribution set forth in the Shelf
Registration Statement and Rule 415 under the Securities Act (hereinafter, the
"Shelf Registration"); provided, however, that no Holder (other than an Initial
Purchaser) shall be entitled to have the Securities held by it covered by such
Shelf Registration Statement unless such Holder agrees in writing to be bound by
all the provisions of this Agreement applicable to such Holder.
(b) The Issuer shall use its best efforts to keep the Shelf
Registration Statement continuously effective in order to permit the prospectus
included therein to be lawfully delivered by the Holders of the relevant
Securities, for a period of two years (or for such longer period if extended
pursuant to Section 3(j) below) from the date of its effectiveness or such
shorter period that will terminate when all the Securities covered by the Shelf
Registration Statement (i) have been sold pursuant thereto or (ii) are eligible
for sale under Rule 144(k) under the Securities Act. The Issuer shall be deemed
not to have used its best efforts to keep the Shelf Registration Statement
effective during the requisite period if it voluntarily takes any action (other
than any action permitted to be taken under this Agreement) that would result in
Holders of Securities covered thereby not being able to offer and sell such
Securities during that period, unless such action is required by applicable law.
(c) Notwithstanding any other provisions of this Agreement to the
contrary, the Issuer shall cause the Shelf Registration Statement and the
related prospectus and any amendment or supplement thereto, as of the effective
date of the Shelf Registration Statement, amendment or supplement, (i) to comply
in all material respects with the applicable requirements of the Securities Act
and the rules and regulations of the Commission and (ii) not to contain any
untrue statement of a material fact or omit to state a material fact required to
be stated therein or necessary in order to make the statements therein, in light
of the circumstances under which they were made, not misleading.
3. Registration Procedures. In connection with any Shelf Registration
contemplated by Section 2 hereof and, to the extent applicable, any Registered
Exchange Offer contemplated by Section 1 hereof, the following provisions shall
apply:
(a) The Issuer shall (i) furnish to each Initial Purchaser, prior to
the filing thereof
<PAGE>
6
with the Commission, a copy of the Registration Statement and each amendment
thereof and each supplement, if any, to the prospectus included therein and, in
the event that an Initial Purchaser (with respect to any portion of an unsold
allotment from the original offering) is participating in the Registered
Exchange Offer or the Shelf Registration, shall use its best efforts to reflect
in each such document, when so filed with the Commission, such comments as such
Initial Purchaser reasonably and timely may propose; (ii) include the
information set forth in Annex A hereto on the cover, in Annex B hereto in the
"Exchange Offer Procedures" section and the "Purpose of the Exchange Offer"
section and in Annex C hereto in the "Plan of Distribution" section of the
prospectus forming a part of the Exchange Offer Registration Statement and
include the information set forth in Annex D hereto in the Letter of Transmittal
delivered pursuant to such Registered Exchange Offer; (iii) if requested by an
Initial Purchaser, include the information required by Items 507 or 508 of
Regulation S-K under the Securities Act, as applicable, in the prospectus
forming a part of the Exchange Offer Registration Statement; (iv) include within
the prospectus contained in the Exchange Offer Registration Statement a section
entitled "Plan of Distribution," reasonably acceptable to the Initial
Purchasers, which shall contain a summary statement of the positions taken or
policies made by the staff of the Commission with respect to the potential
"underwriter" status of any broker-dealer that is the beneficial owner (as
defined in Rule 13d-3 under the Securities Exchange Act of 1934, as amended (the
"Exchange Act")) of Exchange Securities received by such broker-dealer in such
Registered Exchange Offer (a "Participating Broker-Dealer"), whether such
positions or policies have been publicly disseminated by the staff of the
Commission or such positions or policies, in the reasonable judgment of the
Initial Purchasers based upon advice of counsel (which may be in-house counsel),
represent the prevailing views of the staff of the Commission; and (v) in the
case of a Shelf Registration, include the names of the Holders, who propose to
sell Securities pursuant to the Shelf Registration Statement, as selling
securityholders.
(b) The Issuer shall give written notice to the Initial Purchasers, the
Holders of the Securities and any Participating Broker-Dealer from whom the
Issuer has received prior written notice that it will be a Participating
Broker-Dealer in a Registered Exchange Offer (which notice pursuant to clauses
(ii)-(v) hereof shall be accompanied by an instruction to suspend the use of the
prospectus until the requisite changes have been made):
(i) when the Registration Statement or any amendment thereto has been
filed with the Commission and when the Registration Statement or any
post-effective amendment thereto has become effective;
(ii) of any request by the Commission for amendments or supplements to
the Registration Statement or the prospectus included therein or for additional
information;
(iii) of the issuance by the Commission of any stop order suspending
the effectiveness of the Registration Statement or the initiation of any
proceedings for that purpose;
(iv) of the receipt by the Issuer or its legal counsel of any
notification with respect to the suspension of the qualification of the
Securities for sale in any jurisdiction or the initiation or threatening of any
proceeding for such purpose; and
(v) of the happening of any event that requires the Issuer to make
changes in the Registration Statement or the prospectus in order that the
Registration Statement or the
<PAGE>
7
prospectus does not contain an untrue statement of a material fact nor omit to
state a material fact required to be stated therein or necessary to make the
statements therein (in the case of the prospectus, in light of the circumstances
under which they were made) not misleading.
(c) The Issuer shall make every reasonable effort to obtain the
withdrawal at the earliest possible time, of any order suspending the
effectiveness of the Registration Statement.
(d) The Issuer shall furnish to each Holder of Securities included
within the coverage of the Shelf Registration, without charge, at least one copy
of the Shelf Registration Statement and any post-effective amendment thereto,
including financial statements and schedules, and, if the Holder so requests in
writing, all exhibits thereto (including those, if any, incorporated by
reference).
(e) The Issuer shall deliver to each Exchanging Dealer and each Initial
Purchaser, and to any other Holder who so requests, without charge, at least one
copy of the Exchange Offer Registration Statement and any post-effective
amendment thereto, including financial statements and schedules, and, if any
Initial Purchaser or any such Holder requests, all exhibits thereto (including
those incorporated by reference).
(f) The Issuer shall, during the Shelf Registration Period, deliver to
each Holder of Securities included within the coverage of the Shelf
Registration, without charge, as many copies of the prospectus (including each
preliminary prospectus) included in the Shelf Registration Statement and any
amendment or supplement thereto as such person may reasonably request. The
Issuer consents, subject to the provisions of this Agreement, to the use of the
prospectus or any amendment or supplement thereto by each of the selling Holders
of the Securities in connection with the offering and sale of the Securities
covered by the prospectus, or any amendment or supplement thereto, included in
the Shelf Registration Statement.
(g) The Issuer shall deliver to each Initial Purchaser, any Exchanging
Dealer, any Participating Broker-Dealer and such other persons required to
deliver a prospectus following the Registered Exchange Offers, without charge,
as many copies of the final prospectus included in the Exchange Offer
Registration Statement and any amendment or supplement thereto as such persons
may reasonably request. The Issuer consents, subject to the provisions of this
Agreement, to the use of the prospectus or any amendment or supplement thereto
by any Initial Purchaser, if necessary, any Participating Broker-Dealer and such
other persons required to deliver a prospectus following the Registered Exchange
Offers in connection with the offering and sale of the Exchange Securities
covered by the prospectus, or any amendment or supplement thereto, included in
such Exchange Offer Registration Statement.
(h) Prior to any public offering of the Securities, pursuant to any
Registration Statement, the Issuer shall register or qualify or cooperate with
the Holders of the Securities included therein and their respective counsel in
connection with the registration or qualification of the Securities for offer
and sale under the securities or "blue sky" laws of such states of the United
States as any Holder of the Securities reasonably requests in writing and do any
and all other acts or things necessary or advisable to enable the offer and sale
in such jurisdictions of the Securities covered by such Registration Statement;
provided, however, that the Issuer shall not be required to (i) qualify
generally to do
<PAGE>
8
business in any jurisdiction where it is not then so qualified or (ii) take any
action which would subject them to general service of process or to taxation in
any jurisdiction where it is not then so subject.
(i) The Issuer shall cooperate with the Holders of the Securities to
facilitate the timely preparation and delivery of certificates representing the
Securities to be sold pursuant to any Registration Statement free of any
restrictive legends and in such denominations and registered in such names as
the Holders may request a reasonable period of time prior to sales of the
Securities pursuant to such Registration Statement.
(j) Upon the occurrence of any event contemplated by paragraphs (ii)
through (v) of Section 3(b) above during the period for which the Issuer is
required to maintain an effective Registration Statement, the Issuer shall
promptly prepare and file a post-effective amendment to the Registration
Statement or a supplement (by way of incorporation by reference from an Exchange
Act report or otherwise) to the related prospectus and any other required
document so that, as thereafter delivered to Holders of the Initial Securities
or purchasers of Securities, the prospectus will not contain an untrue statement
of a material fact or omit to state any material fact required to be stated
therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading. If the Issuer notifies
the Initial Purchasers, the Holders of the Securities and any known
Participating Broker-Dealer in accordance with paragraphs (ii) through (v) of
Section 3(b) above to suspend the use of the prospectus until the requisite
changes to the prospectus have been made, then the Initial Purchasers, the
Holders of the Securities and any such Participating Broker-Dealers shall
suspend use of such prospectus, and the period of effectiveness of the Shelf
Registration Statement provided for in Section 2(b) above (unless and until the
Securities covered thereby are eligible for sale under Rule 144(k) under the
Securities Act) or the Exchange Offer Registration Statement provided for in
Section 1 above, as the case may be, shall be extended by the number of days
from and including the date of the giving of such notice to and including the
date when the Initial Purchasers, the Holders of the Securities and any known
Participating Broker-Dealer shall have received such amended or supplemented
prospectus pursuant to this Section 3(j).
(k) Not later than the effective date of the applicable Registration
Statement, the Issuer will provide CUSIP numbers for the Initial Securities, the
Exchange Securities or the Private Exchange Securities, as the case may be, and
provide the Transfer Agent or the Trustee, as applicable, with printed
certificates for the Initial Securities, the Exchange Securities or the Private
Exchange Securities, as the case may be, in forms eligible for deposit with The
Depository Trust Company.
(l) The Issuer will comply with all rules and regulations of the
Commission to the extent and so long as they are applicable to the Registered
Exchange Offers or the Shelf Registration and the Issuer will make generally
available to the Issuer's security holders (or otherwise provide in accordance
with Section 11(a) of the Securities Act) an earnings statement satisfying the
provisions of Section 11(a) of the Securities Act, no later than 45 days after
the end of a 12-month period (or 90 days, if such period is a fiscal year)
beginning with the first month of the Issuer's first fiscal quarter commencing
after the effective date of the Registration Statement, which statement shall
cover such 12-month period.
<PAGE>
9
(m) The Issuer shall cause any indenture governing the Exchange Securities
(the "Exchange Indenture") to be qualified under the Trust Indenture Act of
1939, as amended, in a timely manner and containing such changes, if any, as
shall be necessary for such qualification. In the event that such qualification
would require the appointment of a new trustee under the Exchange Indenture, the
Issuer shall appoint a new trustee thereunder pursuant to the applicable
provisions of such Exchange Indenture.
(n) The Issuer may require each Holder of Securities to be sold
pursuant to the Shelf Registration Statement to furnish to the Issuer such
information regarding the Holder, his or her ownership of Securities and the
distribution of the Securities as the Issuer may from time to time reasonably
require for inclusion in the Shelf Registration Statement, and the Issuer may
exclude from such registration the Securities of any Holder that fails to
furnish such information within a reasonable time after receiving such request.
(o) The Issuer shall enter into such customary agreements (including if
requested an underwriting agreement in customary form) and take all such other
action, if any, as any Holder of the Securities shall reasonably request in
order to facilitate the disposition of the Securities pursuant to any Shelf
Registration.
(p) In the case of any Shelf Registration, the Issuer shall (i) make
reasonably available for inspection by the Holders of the Securities, any
underwriter participating in any disposition pursuant to the Shelf Registration
Statement and any attorney, accountant or other agent retained by the Holders of
the Securities or any such underwriter all relevant financial and other records,
pertinent corporate documents and properties of the Issuer and (ii) cause the
Issuer's officers, directors, employees, accountants and auditors to supply all
relevant information reasonably requested by the Holders of the Securities or
any such underwriter, attorney, accountant or agent in connection with the Shelf
Registration Statement, in each case, as shall be reasonably necessary to enable
such persons, to conduct a reasonable investigation within the meaning of
Section 11 of the Securities Act; provided, however, that the foregoing
inspection and information gathering shall be coordinated on behalf of the
Initial Purchasers by you and on behalf of the other parties, by one counsel
designated by and on behalf of such other parties as described in Section 4
hereof; provided, further, that any records, documents, properties or
information that are designated by the Issuer as confidential at the time of
delivery of such records, documents, properties or information shall be kept
confidential by such persons, unless (i) such records, documents, properties or
information are in the public domain or otherwise publicly available, (ii)
disclosure of such records, documents, properties or information is required by
court or administrative order or (iii) disclosure of such records, documents,
properties or information, in the written opinion of counsel to such person, is
otherwise required by law (including, without limitation, pursuant to the
requirements of the Securities Act).
(q) In the case of any Shelf Registration, the Issuer if requested by
any Holder of Securities covered thereby, shall cause (i) its counsel to deliver
an opinion and updates thereof relating to the Securities in customary form
addressed to such Holders and the managing underwriters, if any, thereof and
dated, in the case of the initial opinion, the effective date of such Shelf
Registration Statement (it being agreed that the matters to be covered by such
opinion shall include, without limitation, the due incorporation and good
standing of the Issuer and its subsidiaries; the due authorization, execution
and delivery of the relevant agreement of the type referred to in Section 3(o)
hereof; the due authorization, execution, authentication and issuance, and the
validity and enforceability, of the applicable Securities; the absence of
governmental approvals required to be obtained
<PAGE>
10
in connection with the Shelf Registration Statement, the offering and sale of
the applicable Securities, or any agreement of the type referred to in Section
3(o) hereof; the compliance as to form of such Shelf Registration Statement and
any documents incorporated by reference therein and of the Exchange Indenture
with the requirements of the Securities Act and the Trust Indenture Act,
respectively; and, as of the date of the opinion and as of the effective date of
the Shelf Registration Statement or most recent post-effective amendment
thereto, as the case may be, the absence from such Shelf Registration Statement
and the prospectus included therein, as then amended or supplemented, and from
any documents incorporated by reference therein of an untrue statement of a
material fact or the omission to state therein a material fact required to be
stated therein or necessary to make the statements therein not misleading (in
the case of any such documents, in the light of the circumstances existing at
the time that such documents were filed with the Commission under the Exchange
Act); (ii) its officers to execute and deliver all customary documents and
certificates and updates thereof reasonably requested by any underwriters of the
applicable Securities and (iii) its independent public accountants to provide to
the selling Holders of the applicable Securities and any underwriter therefor a
comfort letter in customary form and covering matters of the type customarily
covered in comfort letters in connection with primary underwritten offerings,
subject to receipt of appropriate documentation as contemplated, and only if
permitted, by Statement of Auditing Standards No. 72.
(r) In the case of the Registered Exchange Offer, if requested by any
Initial Purchaser or any known Participating Broker-Dealer, the Issuer shall
cause (i) its counsel to deliver to such Initial Purchaser or such Participating
Broker-Dealer signed opinions in the forms attached as Annex I and Annex II to
the Purchase Agreement with such changes as are customary in connection with the
preparation of a Registration Statement and (ii) its independent public
accountants to deliver to such Initial Purchaser or such Participating
Broker-Dealer a comfort letter, in customary form, meeting the requirements as
to the substance thereof as set forth in Section 6(f) of the Purchase Agreement,
with appropriate date changes.
(s) If a Registered Exchange Offer or a Private Exchange is to be
consummated, upon delivery of the Initial Securities by Holders to the Issuer
(or to such other Person as directed by the Issuer) in exchange for the Exchange
Securities or the Private Exchange Securities, as the case may be, the Issuer
shall mark, or cause to be marked, on the Initial Securities so exchanged that
such Initial Securities are being canceled in exchange for the Exchange
Securities or the Private Exchange Securities, as the case may be; in no event
shall the Initial Securities be marked as paid or otherwise satisfied.
(t) The Issuer shall (a) if the Initial Securities have been rated
prior to the initial sale of such Initial Securities, use its best efforts to
confirm such ratings will apply to the Securities covered by a Registration
Statement, or (b) if the Initial Securities were not previously rated, use
commercially reasonable efforts to cause the Securities covered by a
Registration Statement to be rated with the appropriate rating agencies, if so
requested by Holders of a majority in aggregate principal amount of Securities
covered by such Registration Statement, or by the managing underwriters, if any.
(u) In the event that any broker-dealer registered under the Exchange
Act shall underwrite any Securities or participate as a member of an
underwriting syndicate or selling group or "assist in the distribution" (within
the meaning of the Conduct Rules of the National Association of Securities
Dealers, Inc. ("NASD")) thereof, whether as a
<PAGE>
11
Holder of such Securities or as an underwriter, a placement or sales agent or a
broker or dealer in respect thereof, or otherwise, the Issuer shall assist such
broker-dealer in complying with the requirements of such Conduct Rules,
including, without limitation, by (i) if Rule 2720 thereto shall so require,
engaging (solely, except in the case of an Initial Purchaser, at such
broker-dealer's expense) a "qualified independent underwriter" (as defined in
Rule 2720) to participate in the preparation of the Registration Statement
relating to such Securities, to exercise usual standards of due diligence in
respect thereto and, if any portion of the offering contemplated by such
Registration Statement is an underwritten offering or is made through a
placement or sales agent, to recommend the yield of such Securities, (ii)
indemnifying any such qualified independent underwriter to the extent of the
indemnification of underwriters provided in Section 5 hereof and (iii) providing
such information to such broker-dealer as may be required in order for such
broker-dealer to comply with the requirements of the Rules of Fair Practice of
the NASD.
(v) The Issuer shall use its best efforts to take all other steps
necessary to effect the registration of the Securities covered by a Registration
Statement contemplated hereby.
4. Registration Expenses. The Issuer shall bear all fees and expenses
incurred by the Issuer in connection with the performance of its obligations
under Sections 1 through 3 hereof, whether or not the respective Registered
Exchange Offer or a Shelf Registration is filed or becomes effective, and, in
the event of a Shelf Registration, shall bear or reimburse the Holders of the
Securities covered thereby for the reasonable fees and disbursements of one firm
of counsel designated by the Holders of a majority in principal amount or
liquidation preference of the Securities covered thereby to act as counsel for
the Holders of the Securities in connection therewith. Each Holder of the
Securities shall pay all underwriting discounts, if any, and commissions and
transfer taxes, if any, relating to the sale or disposition of such Holder's
Securities.
5. Indemnification. (a) The Issuer agrees to indemnify and hold
harmless each Holder of the Securities, any Participating Broker-Dealer and each
person, if any, who controls such Holder or such Participating Broker-Dealer
within the meaning of the Securities Act or the Exchange Act (each Holder, any
Participating Broker-Dealer and such controlling persons are referred to
collectively as the "Indemnified Parties") from and against any losses, claims,
damages or liabilities, joint or several, or any actions in respect thereof
(including, but not limited to, any losses, claims, damages, liabilities or
actions relating to purchases and sales of the Securities) to which each
Indemnified Party may become subject under the Securities Act, the Exchange Act
or otherwise, insofar as such losses, claims, damages, liabilities or actions
arise out of or are based upon any untrue statement or alleged untrue statement
of a material fact contained in a Registration Statement or prospectus or in any
amendment or supplement thereto or in any preliminary prospectus relating to a
Shelf Registration, or arise out of, or are based upon, the omission or alleged
omission to state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading, and shall reimburse, as
incurred, the Indemnified Parties for any legal or other expenses reasonably
incurred by them in connection with investigating or defending any such loss,
claim, damage, liability or action in respect thereof; provided, however, that
(i) the Issuer shall not be liable in any such case to the extent that such
loss, claim, damage or liability arises out of or is based upon any untrue
statement or alleged untrue statement or omission or alleged omission made in a
Registration Statement or prospectus or in any amendment or supplement thereto
or in any preliminary prospectus relating to a Shelf Registration in reliance
upon and in conformity with written information pertaining to such Holder and
furnished to the Issuer by or on
<PAGE>
12
behalf of such Holder specifically for inclusion therein and (ii) with respect
to any untrue statement or omission or alleged untrue statement or omission made
in any preliminary prospectus relating to a Shelf Registration Statement, the
indemnity agreement contained in this subsection (a) shall not inure to the
benefit of any Holder or Participating Broker- Dealer from whom the person
asserting any such losses, claims, damages or liabilities purchased the
Securities concerned, to the extent that a prospectus relating to such
Securities was required to be delivered by such Holder or Participating
Broker-Dealer under the Securities Act in connection with such purchase and any
such loss, claim, damage or liability of such Holder or Participating
Broker-Dealer results from the fact that there was not sent or given to such
person, at or prior to the written confirmation of the sale of such Securities
to such person, a copy of the final prospectus if the Issuer had previously
furnished copies thereof to such Holder or Participating Broker-Dealer; provided
further, however, that this indemnity agreement will be in addition to any
liability which the Issuer may otherwise have to such Indemnified Party. The
Issuer shall also indemnify underwriters, their officers and directors and each
person who controls such underwriters within the meaning of the Securities Act
or the Exchange Act to the same extent as provided above with respect to the
indemnification of the Holders of the Securities if requested by such Holders.
(b) Each Holder of the Securities, severally and not jointly, will
indemnify and hold harmless the Issuer and each person, if any, who controls the
Issuer within the meaning of the Securities Act or the Exchange Act from and
against any losses, claims, damages or liabilities or any actions in respect
thereof, to which the Issuer or any such controlling person may become subject
under the Securities Act, the Exchange Act or otherwise, insofar as such losses,
claims, damages, liabilities or actions arise out of or are based upon any
untrue statement or alleged untrue statement of a material fact contained in a
Registration Statement or prospectus or in any amendment or supplement thereto
or in any preliminary prospectus relating to a Shelf Registration, or arise out
of or are based upon the omission or alleged omission to state therein a
material fact necessary to make the statements therein not misleading, but in
each case only to the extent that the untrue statement or omission or alleged
untrue statement or omission was made in reliance upon and in conformity with
written information pertaining to such Holder and furnished to the Issuer by or
on behalf of such Holder specifically for inclusion therein; and, subject to the
limitation set forth immediately preceding this clause, shall reimburse, as
incurred, the Issuer for any legal or other expenses reasonably incurred by the
Issuer or any such controlling person in connection with investigating or
defending any loss, claim, damage, liability or action in respect thereof. This
indemnity agreement will be in addition to any liability which such Holder may
otherwise have to the Issuer or any of its controlling persons.
(c) Promptly after receipt by an indemnified party under this Section 5
of notice of the commencement of any action or proceeding (including a
governmental investigation), such indemnified party will, if a claim in respect
thereof is to be made against the indemnifying party under this Section 5,
notify the indemnifying party of the commencement thereof; but the omission so
to notify the indemnifying party will not, in any event, relieve the
indemnifying party from any obligations to any indemnified party other than the
indemnification obligation provided in paragraph (a) or (b) above. In case any
such action is brought against any indemnified party, and it notifies the
indemnifying party of the commencement thereof, the indemnifying party will be
entitled to participate therein and, to the extent that it may wish, jointly
with any other indemnifying party similarly notified, to assume the defense
thereof, with counsel reasonably satisfactory to
<PAGE>
13
such indemnified party (who shall not, except with the consent of the
indemnified party, be counsel to the indemnifying party), and after notice from
the indemnifying party to such indemnified party of its election so to assume
the defense thereof the indemnifying party will not be liable to such
indemnified party under this Section 5 for any legal or other expenses, other
than reasonable costs of investigation, subsequently incurred by such
indemnified party in connection with the defense thereof. No indemnifying party
shall, without the prior written consent of the indemnified party, effect any
settlement of any pending or threatened action in respect of which any
indemnified party is or could have been a party and indemnity could have been
sought hereunder by such indemnified party unless such settlement includes an
unconditional release of such indemnified party from all liability on any claims
that are the subject matter of such action.
(d) If the indemnification provided for in this Section 5 is
unavailable or insufficient to hold harmless an indemnified party under
subsections (a) or (b) above, then each indemnifying party shall contribute to
the amount paid or payable by such indemnified party as a result of the losses,
claims, damages or liabilities (or actions in respect thereof) referred to in
subsection (a) or (b) above (i) in such proportion as is appropriate to reflect
the relative benefits received by the indemnifying party or parties on the one
hand and the indemnified party on the other from the exchange of the respective
Initial Securities, pursuant to the relevant Registered Exchange Offers, or (ii)
if the allocation provided by the foregoing clause (i) is not permitted by
applicable law, in such proportion as is appropriate to reflect not only the
relative benefits referred to in clause (i) above but also the relative fault of
the indemnifying party or parties on the one hand and the indemnified party on
the other in connection with the statements or omissions that resulted in such
losses, claims, damages or liabilities (or actions in respect thereof) as well
as any other relevant equitable considerations. The relative fault of the
parties shall be determined by reference to, among other things, whether the
untrue or alleged untrue statement of a material fact or the omission or alleged
omission to state a material fact relates to information supplied by the Issuer
on the one hand or such Holder or such other indemnified party, as the case may
be, on the other, and the parties' relative intent, knowledge, access to
information and opportunity to correct or prevent such statement or omission.
The amount paid by an indemnified party as a result of the losses, claims,
damages or liabilities referred to in the first sentence of this subsection (d)
shall be deemed to include any legal or other expenses reasonably incurred by
such indemnified party in connection with investigating or defending any action
or claim which is the subject of this subsection (d). Notwithstanding any other
provision of this Section 5(d), the Holders of the Securities shall not be
required to contribute any amount in excess of the amount by which the net
proceeds received by such Holders from the sale of the Securities pursuant to a
Registration Statement exceeds the amount of damages which such Holders have
otherwise been required to pay by reason of such untrue or alleged untrue
statement or omission or alleged omission. No person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Securities Act)
shall be entitled to contribution from any person who was not guilty of such
fraudulent misrepresentation. For purposes of this paragraph (d), each person,
if any, who controls such indemnified party within the meaning of the Securities
Act or the Exchange Act shall have the same rights to contribution as such
indemnified party and each person, if any, who controls the Issuer within the
meaning of the Securities Act or the Exchange Act shall have the same rights to
contribution as the Issuer.
(e) The agreements contained in this Section 5 shall survive the sale
of the Securities pursuant to a Registration Statement and shall remain in full
force and effect,
<PAGE>
14
regardless of any termination or cancellation of this Agreement or any
investigation made by or on behalf of any indemnified party.
6. Additional Amounts Under Certain Circumstances. (a) Additional
dividends or interest, as applicable (the "Additional Amounts"), with respect to
the Securities shall be assessed as follows if any of the following events occur
(each such event in clauses (i) through (iii) below a "Registration Default"):
(i) If by February 5, 1998, neither the Exchange Offer Registration
Statement nor a Shelf Registration Statement relating to such series of
Securities has been filed with the Commission;
(ii) If by June 20, 1998, neither the Registered Exchange Offer
relating to such series of Securities is consummated nor, if required in lieu
thereof, a Shelf Registration Statement relating to such series of Securities is
declared effective by the Commission; or
(iii) If, after June 20, 1998, and after either the Exchange Offer
Registration Statement or the Shelf Registration Statement relating to such
series of Securities is declared effective (A) such Registration Statement
thereafter ceases to be effective (except as permitted in paragraph (b)); or (B)
such Registration Statement or the related prospectus ceases to be usable
(except as permitted in paragraph (b)) in connection with resales of Transfer
Restricted Securities during the periods specified herein because either (1) any
event occurs as a result of which the related prospectus forming part of such
Registration Statement would include any untrue statement of a material fact or
omit to state any material fact necessary to make the statements therein in the
light of the circumstances under which they were made not misleading, or (2) it
shall be necessary to amend such Registration Statement or supplement the
related prospectus, to comply with the Securities Act or the Exchange Act or the
respective rules thereunder (such period of time during which the Registration
Statement is not effective or the Registration Statement or the related
prospectus is not useable being referred to as a "Blackout Period").
Additional Amounts shall accrue on the Securities covered by the
Registration Statement to which the Registration Default relates over and above
the interest or dividends set forth in the title of such Securities from and
including the date on which any such Registration Default shall occur to but
excluding the date on which all such Registration Defaults relating to the
Securities have been cured, at a rate of 0.50% per annum (the "Additional
Amounts Rate").
(b) A Blackout Period referred to in Section 6(a)(iii) shall be deemed
not to be a Registration Default in relation to a Registration Statement or the
related prospectus if (i) the Blackout Period has occurred solely as a result of
(x) the filing of a post-effective amendment to such Shelf Registration
Statement to incorporate annual audited financial information with respect to
the Issuer where such post-effective amendment is not yet effective and needs to
be declared effective to permit Holders to use the related prospectus or (y) the
occurrence of other material events with respect to the Issuer that would need
to be described in such Registration Statement or the related prospectus and
(ii) in the case of clause (y), the Issuer is proceeding promptly and in good
faith to amend or supplement (including by way of filing documents under the
Exchange Act which are incorporated by reference into the Registration
Statement) such Registration Statement and related prospectus to describe such
events; provided, however, that in any case if such Blackout Period occurs for a
continuous period in excess of 45 days, a Registration Default shall be
<PAGE>
15
deemed to have occurred on the 46th day of such Blackout Period and Additional
Amounts shall be payable in accordance with the above paragraph from the day
such Registration Default occurs until such Registration Default is cured or
until the Company is no longer required pursuant to this Agreement to keep such
Registration Statement effective or such Registration Statement or Prospectus
useable.
(c) Any Additional Amounts due pursuant to clause (a)(i), (a)(ii) or
(a)(iii) of Section 6 above will accrue on each SemiAnnual Dividend Accrual Date
or SemiAnnual Interest Accrual Date, as the case may be, commencing with the
first SemiAnnual Dividend Accrual Date or SemiAnnual Interest Accrual Date
following the applicable Registration Default. Additional Amounts will be
determined by multiplying the Additional Amounts Rate by the Accumulated Amount
(as such term is defined in the Certificate of Designation relating to the
Exchangeable Preferred Stock and the Exchange Indenture, as applicable) of such
Securities on the relevant SemiAnnual Dividend Accrual Date or SemiAnnual
Interest Accrual Date, as applicable, multiplied by a fraction, the numerator of
which is the number of days such Additional Amounts Rate was applicable during
such period (determined on the basis of a 360-day year comprised of twelve
30-day months), and the denominator of which is 360. Payments or accruals of
Additional Amounts on the Securities will be made to the Holders of such
Securities on the regular record date immediately preceding the relevant
SemiAnnual Dividend Accrual Date or SemiAnnual Interest Accrual Date, as
applicable.
(d) "Transfer Restricted Securities" means each Security until (i) the
date on which such Security has been exchanged by a person other than a
broker-dealer for a freely transferrable Exchange Security in the Registered
Exchange Offer, (ii) following the exchange by a broker-dealer in a Registered
Exchange Offer of such Security for an Exchange Security, the date on which such
Exchange Security is sold to a purchaser who receives from such broker-dealer on
or prior to the date of such sale a copy of the prospectus contained in the
Exchange Offer Registration Statement, (iii) the date on which such Security has
been effectively registered under the Securities Act and disposed of in
accordance with the Shelf Registration Statement or (iv) the date on which such
Security is distributed to the public pursuant to Rule 144 under the Securities
Act or is saleable pursuant to Rule 144(k) under the Securities Act.
7. Rules 144 and 144A. The Issuer shall use its best efforts to file
the reports required to be filed by it under the Securities Act and the Exchange
Act in a timely manner and, if at any time the Issuer is not required to file
such reports, it will, upon the request of any Holder of Transfer Restricted
Securities, make publicly available other information so long as necessary to
permit sales of its securities pursuant to Rules 144 and 144A. The Issuer
covenants that it will take such further action as any Holder of Transfer
Restricted Securities may reasonably request, all to the extent required from
time to time to enable such Holder to sell Transfer Restricted Securities
without registration under the Securities Act within the limitation of the
exemptions provided by Rules 144 and 144A (including the requirements of Rule
144A(d)(4)). The Issuer will provide a copy of this Agreement to prospective
purchasers of Initial Securities (or Private Exchange Securities) identified to
the Issuer by the Initial Purchasers upon request. Upon the request of any
Holder of Transfer Restricted Securities, the Issuer shall deliver to such
Holder a written statement as to whether it has complied with such requirements.
Notwithstanding the foregoing, nothing in this Section 7 shall be deemed to
require the Issuer to register any of its securities pursuant to the Exchange
Act.
<PAGE>
16
8. Underwritten Registrations. If any of the Transfer Restricted
Securities covered by any Shelf Registration are to be sold in an underwritten
offering, the investment banker or investment bankers and manager or managers
that will administer the offering ("Managing Underwriters") will be selected by
the Holders of a majority in aggregate principal amount of such Transfer
Restricted Securities to be included in such offering.
No person may participate in any underwritten registration hereunder
unless such person (i) agrees to sell such person's Transfer Restricted
Securities on the basis reasonably provided in any underwriting arrangements
approved by the persons entitled hereunder to approve such arrangements and (ii)
completes and executes all questionnaires, powers of attorney, indemnities,
underwriting agreements and other documents reasonably required under the terms
of such underwriting arrangements.
9. Miscellaneous.
(a) Amendments and Waivers. The provisions of this Agreement may not be
amended, modified or supplemented, and waivers or consents to departures from
the provisions hereof may not be given, except by the Issuer and the written
consent of the Holders of a majority in principal amount of the Securities
affected by such amendment, modification, supplement, waiver or consents.
(b) Notices. All notices and other communications provided for or
permitted hereunder shall be made in writing by hand delivery, first-class mail,
facsimile transmission, or air courier which guarantees overnight delivery:
(1) if to a Holder of the Securities, at the most current
address given by such Holder to the Issuer in accordance with the provisions of
this Section 9(b).
(2) if to the Initial Purchasers, at the following address:
Salomon Smith Barney
Seven World Trade Center
New York, NY 10048
Attention: General Counsel
with a copy to:
Cravath, Swaine & Moore
Worldwide Plaza
825 Eighth Avenue
New York, NY 10019-7475
Attention: Kris F. Heinzelman
(3) if to the Issuer, at the following address:
WinStar Communications, Inc.
230 Park Avenue
New York, NY 10169
Fax No.: (212) 922-1637
Attention: Timothy Graham
<PAGE>
17
with a copy to:
Graubard Mollen & Miller
600 Third Avenue
New York, NY 10016
Attention: David A. Miller
All such notices and communications shall be deemed to have been duly
given: at the time delivered by hand, if personally delivered; three business
days after being deposited in the mail, postage prepaid, if mailed; when receipt
is acknowledged by recipient's facsimile machine operator, if sent by facsimile
transmission; and on the day delivered, if sent by overnight air courier
guaranteeing next day delivery.
(c) No Inconsistent Agreements. The Issuer has not, as of the date
hereof, entered into, nor shall they, on or after the date hereof, enter into,
any agreement with respect to its securities that is inconsistent with the
rights granted to the Holders herein or otherwise conflicts with the provisions
hereof.
(d) Successors and Assigns. This Agreement shall be binding upon the
Issuer and its successors and assigns.
(e) Counterparts. This Agreement may be executed in any number of
counterparts and by the parties hereto in separate counterparts, each of which
when so executed shall be deemed to be an original and all of which taken
together shall constitute one and the same agreement.
(f) Headings. The headings in this Agreement are for convenience of
reference only and shall not limit or otherwise affect the meaning hereof.
(g) Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED
IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK WITHOUT REGARD TO
PRINCIPLES OF CONFLICTS OF LAWS.
(h) Severability. If any one or more of the provisions contained
herein, or the application thereof in any circumstance, is held invalid, illegal
or unenforceable, the validity, legality and enforceability of any such
provision in every other respect and of the remaining provisions contained
herein shall not be affected or impaired thereby.
(i) Securities Held by the Issuer. Whenever the consent or approval of
Holders of a specified percentage of principal amount of Securities is required
hereunder, Securities held by the Issuer or its affiliates (other than
subsequent Holders of Securities if such subsequent Holders are deemed to be
affiliates solely by reason of their holdings of such Securities) shall not be
counted in determining whether such consent or approval was given by the Holders
of such required percentage.
<PAGE>
18
If the foregoing is in accordance with your understanding of our
agreement, please sign and return to the Issuer a counterpart hereof, whereupon
this instrument, along with all counterparts, will become a binding agreement
among the several Initial Purchasers and the Issuer in accordance with its
terms.
Very truly yours,
WINSTAR COMMUNICATIONS, INC.,
By:____________________________
Name:
Title:
WINSTAR CREDIT CORP.,
By:____________________________
Name:
Title:
The foregoing Registration Rights
Agreement is hereby confirmed and accepted as
of the date first above written.
SALOMON BROTHERS INC
CREDIT SUISSE FIRST BOSTON CORPORATION
By: SALOMON BROTHERS INC
By:______________________
Name:
Title:
<PAGE>
1
ANNEX A
Each broker-dealer that receives Exchange Securities for its own
account pursuant to an Exchange Offer must acknowledge that it will deliver a
prospectus in connection with any resale of such Exchange Securities. The Letter
of Transmittal states that by so acknowledging and by delivering a prospectus, a
broker-dealer will not be deemed to admit that it is an "underwriter" within the
meaning of the Securities Act. This Prospectus, as it may be amended or
supplemented from time to time, may be used by a broker-dealer in connection
with resales of Exchange Securities received in exchange for Initial Securities
where such Initial Securities were acquired by such broker-dealer as a result of
market-making activities or other trading activities. The Issuer has agreed
that, for a period of 180 days after the Expiration Date (as defined herein),
they will make this Prospectus available to any broker-dealer for use in
connection with any such resale. See "Plan of Distribution."
A-1
<PAGE>
1
ANNEX B
Each broker-dealer that receives Exchange Securities for its own
account in exchange for Initial Securities, where such Initial Securities were
acquired by such broker-dealer as a result of market-making activities or other
trading activities, must acknowledge that it will deliver a prospectus in
connection with any resale of such Exchange Securities.
See "Plan of Distribution."
B-1
<PAGE>
1
ANNEX C
PLAN OF DISTRIBUTION
Each broker-dealer that receives Exchange Securities for its own account
pursuant to an Exchange Offer must acknowledge that it will deliver a prospectus
in connection with any resale of such Exchange Securities. This Prospectus, as
it may be amended or supplemented from time to time, may be used by a
broker-dealer in connection with resales of Exchange Securities received in
exchange for Initial Securities where such Initial Securities were acquired as a
result of market-making activities or other trading activities. The Issuer has
agreed that, for a period of 180 days after the Expiration Date, it will make
this prospectus, as amended or supplemented, available to any broker-dealer for
use in connection with any such resale. In addition, until , 199 , all
dealers effecting transactions in the Exchange Securities may be required to
deliver a prospectus.
1/
The Issuer will not receive any proceeds from any sale of Exchange
Securities by broker-dealers. Exchange Securities received by broker-dealers for
their own account pursuant to an Exchange Offer may be sold from time to time in
one or more transactions in the over-the-counter market, in negotiated
transactions, through the writing of options on the Exchange Securities or a
combination of such methods of resale, at market prices prevailing at the time
of resale, at prices related to such prevailing market prices or negotiated
prices. Any such resale may be made directly to purchasers or to or through
brokers or dealers who may receive compensation in the form of commissions or
concessions from any such broker-dealer or the purchasers of any such Exchange
Securities. Any broker-dealer that resells Exchange Securities that were
received by it for its own account pursuant to an Exchange Offer and any broker
or dealer that participates in a distribution of such Exchange Securities may be
deemed to be an "underwriter" within the meaning of the Securities Act and any
profit on any such resale of Exchange Securities and any commission or
concessions received by any such persons may be deemed to be underwriting
compensation under the Securities Act. The Letter of Transmittal states that, by
acknowledging that it will deliver and by delivering a prospectus, a
broker-dealer will not be deemed to admit that it is an "underwriter" within the
meaning of the Securities Act.
For a period of 180 days after the Expiration Date the Issuer will promptly
send additional copies of this Prospectus and any amendment or supplement to
this Prospectus to any broker-dealer that requests such documents in the Letter
of Transmittal. The Issuer has agreed to pay all expenses incidental to the
Exchange Offers (including the reasonable expenses of one counsel for the
Holders of the Securities) other than commissions or concessions of any brokers
or dealers and will indemnify the Holders of the Securities (including any
broker-dealers) against certain liabilities, including liabilities under the
Securities Act.
- --------
1/ In addition, the legend required by Item 502(e) of Regulation S-K will
appear on the back cover page of the Exchange Offer prospectus.
C-1
<PAGE>
1
ANNEX D
|_| CHECK HERE IF YOU ARE A BROKER-DEALER AND WISH TO RECEIVE
10 ADDITIONAL COPIES OF THE PROSPECTUS AND 10 COPIES OF ANY
AMENDMENTS OR SUPPLEMENTS THERETO.
Name:___________________________________________________
Address:________________________________________________
________________________________________________________
If the undersigned is not a broker-dealer, the undersigned represents that it is
not engaged in, and does not intend to engage in, a distribution of Exchange
Securities. If the undersigned is a broker-dealer that will receive Exchange
Securities for its own account in exchange for Initial Securities that were
acquired as a result of market-making activities or other trading activities, it
acknowledges that it will deliver a prospectus in connection with any resale of
such Exchange Securities; however, by so acknowledging and by delivering a
prospectus, the undersigned will not be deemed to admit that it is an
"underwriter" within the meaning of the Securities Act.
D-1
<PAGE>
WINSTAR*
Exhibit 99.1
CONTACTS:
Financial Community Press
Michelle Davis David Walker
Manager of Investor Relations (212) 584-4089
(212) 584-4053 [email protected]
WINSTAR TO RAISE $175 MILLION IN PREFERRED STOCK OFFERING
NEW YORK - DECEMBER 17, 1997, WINSTAR COMMUNICATIONS, INC.
(NASDAQ-WCII) announced today it has signed a purchase agreement with two
investment banks to raise $175 million through a Rule 144A institutional private
placement of Senior Cumulative Exchangeable Preferred Stock. The company will
use the proceeds of this offering, which is expected to close on December 22, to
fund acquisitions, for working capital and general corporate purposes. The
Exchangeable Preferred Stock is not convertible and there is no common equity
associated with this offering.
The Exchangeable Preferred Stock carries an annual dividend rate of 14.25% and
must be redeemed by the company in 2007. Dividends will accrue and compound
semiannually, but will not be payable in cash until the company's outstanding
debt is repaid. If the company does not make cash payments of dividends
beginning December 15, 2002, the annual dividend rate will increase to 15.75%.
WinStar may redeem the entire issue of Exchangeable Preferred Stock at a premium
on or after December 15, 2002. In addition, subsequent to the company's
repayment of its outstanding debt, the company may exchange all Exchangeable
Preferred Stock for 14.25% Senior Subordinated Deferred Interest Notes due 2007.
The Exchangeable Preferred Stock will not be, and has not been, registered under
the Securities Act of 1933 and may not be offered or sold in the United States
absent registration or an applicable exemption from registration requirements.
WinStar Communications, Inc. is a national local communications company, serving
business customers, long-distance carriers, fiber-based competitive access
providers, mobile communications companies, local telephone companies, and other
customers with broadband local communications needs. The company provides its
Wireless Fiber(sm) services using its licenses in the 38 GHz spectrum. The
company also provides long-distance, Internet and information services.
WinStar is a registered trademark and Wireless Fiber is a service mark of
WinStar Communications, Inc.
WinStar Communications Inc.
230 Park Avenue, Suite 2700, New York, NY 10159
Tel 212 584-4000 Fax 212 867 1565
<PAGE>
WINSTAR* Exhibit 99.2
CONTACTS:
Financial Community Press
Michelle Davis Laura Abbott
Manager of Investor Relations (212) 584-4076
(212) 584-4053 [email protected]
WINSTAR COMPLETES $175 MILLION PRIVATE PLACEMENT
OF PREFERRED STOCK
NEW YORK - DECEMBER 22, 1997, WINSTAR COMMUNICATIONS, INC.
(NASDAQ-WCII) said today that it has completed its previously announced $175
million Rule 144A institutional private placement of Senior Cumulative
Exchangeable Preferred Stock, as scheduled. The offering was placed by Salomon
Smith Barney and Credit Suisse First Boston. The Exchangeable Preferred Stock is
not convertible and there is no common equity associated with this offering.
WinStar Communications, Inc. is a national local communications company, serving
business customers, long-distance carriers, fiber-based competitive access
providers, mobile communications companies, local telephone companies, and other
customers with broadband local communications needs. The company provides its
Wireless Fiber(sm) services using its licenses in the 38 GHz spectrum. The
company also provides long-distance, Internet and information services.
WinStar is a registered trademark and Wireless Fiber is a service mark of
WinStar Communications, Inc.
WinStar Communications Inc.
230 Park Avenue, Suite 2700, New York, NY 10159
Tel 212 584-4000 Fax 212 867 1565
<PAGE>
