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EXHIBIT 4.1
CERTIFICATE OF DESIGNATION OF VOTING POWER,
DESIGNATION PREFERENCES
AND RELATIVE, PARTICIPATING, OPTIONAL AND
OTHER SPECIAL RIGHTS
AND QUALIFICATIONS, LIMITATIONS
AND RESTRICTIONS
OF
14.12% SERIES H
REDEEMABLE PREFERRED STOCK DUE 2009
OF
INTERMEDIA COMMUNICATIONS INC.
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Pursuant to Section 151 of the
General Corporation Law of the State of Delaware
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Intermedia Communications Inc., a Delaware corporation (the "Company")
certifies that pursuant to the authority contained in Article Fourth of its
Restated Certificate of Incorporation, as amended (the "Certificate of
Incorporation"), and in accordance with the provisions of Section 151 of the
General Corporation Law of the State of Delaware, the Board of Directors of the
Company at a meeting duly called and held on October 31, 2000, duly approved
and adopted the following resolution which resolution remains in full force and
effect on the date hereof:
RESOLVED, that pursuant to the authority vested in the Board of
Directors by the Certificate of Incorporation, the Board of Directors does
hereby designate, create, authorize and provide for the issue of a series of
preferred stock having a par value of $1.00 per share, which shall be
designated as Series H Redeemable Preferred Stock due 2009 (the "Series H
Preferred Stock") consisting of 22,500 shares,
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and the Series H Preferred Stock shall have the following voting powers,
preferences and relative, participating, optional and other special rights, and
qualifications, limitations and restrictions thereof as follows:
1. Certain Definitions. Unless the context otherwise requires,
the terms defined in this paragraph 1 shall have, for all purposes of this
resolution, the meanings herein specified (with terms defined in the singular
having comparable meanings when used in the plural).
"Acquired Debt" means, with respect to any specified Person,
(i) Indebtedness of any other Person existing at the time such other Person is
merged with or into or became a Subsidiary of such specified Person, including,
without limitation, Indebtedness incurred in connection with, or in
contemplation of, such other Person merging with or into or becoming a
Subsidiary of such specified Person, and (ii) Indebtedness secured by a Lien
encumbering any asset acquired by such specified Person.
"Affiliate" of any specified Person means any other Person
directly or indirectly controlling or controlled by or under direct or indirect
common control with such specified Person. For purposes of this definition,
"control" (including, with correlative meanings, the terms "controlling,"
"controlled by" and "under common control with"), as used with respect to any
Person, shall mean the possession, directly or indirectly, of the power to
direct or cause the direction of the management or policies of such Person,
whether through the ownership of voting securities, by agreement or 107.06%
otherwise; provided, however, that beneficial ownership of 25% or more of the
voting securities of a Person shall be deemed to be control.
"Applicable Redemption Price" means a price per share equal
to the redemption prices specified below (expressed as percentages of the
Liquidation .. 105.65% Preference thereof), in each case, together with
accumulated and unpaid dividends (including an amount in cash equal to a
prorated dividend for any partial dividend period) to the date of redemption if
redeemed during the 12-month period commencing on January 1 of each of the
years set forth below:
2000 .......................................... 107.06%
2001 .......................................... 105.65%
2002 .......................................... 104.24%
2003 .......................................... 102.83%
2004 .......................................... 101.41%
2005 and thereafter ........................... 100.00%
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"Asset Sale" means when the Company and its Subsidiaries,
whether in a single transaction or a series of related transactions occurring
within any twelve-month period, (i) sell, lease, convey, dispose of or
otherwise transfer any assets (including by way of a Sale and Leaseback
Transaction) (other than sales, leases, conveyances, dispositions or other
transfers (A) in the ordinary course of business, (B) to the Company by any
Subsidiary of the Company or from the Company to any Subsidiary of the Company,
(C) that constitute a Restricted Payment, Investment or dividend or
distribution permitted under Section 9(a) hereof or (D) that constitute the
disposition of all or substantially all of the assets of the Company pursuant
to Section 9(d) hereof) or (ii) issue or sell Equity Interests in any of its
Subsidiaries (other than an issuance or sale of Equity Interests of any such
Subsidiary to the Company or a Subsidiary), if, in the case of either (i) or
(ii) above, in a single transaction or a series of related transactions
occurring within any twelve-month period, such assets or securities (x) have a
Fair Market Value in excess of $2.0 million or (y) are sold or otherwise
disposed of for net proceeds in excess of $2.0 million.
"Average Weighted Interest Rate" means (a) the average weight
of the interest rates charged under the Credit Facility, the Series B Preferred
Stock, the Existing Senior Notes and the Existing Senior Subordinated Notes (or
replacements of such instruments), as determined by you, which determination
shall be conclusive absent manifest error plus (b) 300 basis points.
"Beneficial Owner" means a beneficial owner as defined in
Rules 13d-3 and 13d-5 under the Exchange Act (or any successor rules),
including the provision of such Rules that a Person shall be deemed to have
beneficial ownership of all securities that such Person has a right to acquire
within 60 days; provided that a Person will not be deemed a beneficial owner
of, or to own beneficially, any securities if such beneficial ownership (1)
arises solely as a result of a revocable proxy delivered in response to a proxy
or consent solicitation made pursuant to, and in accordance with, the Exchange
Act and (2) is not also then reportable on Schedule 13D or Schedule 13G (or any
successor schedule) under the Exchange Act.
"Capital Lease Obligation" means, at the time any
determination thereof is to be made, the amount of the liability in respect of
a capital lease that would at such time be so required to be capitalized on the
balance sheet in accordance with GAAP.
"Capital Stock" means (i) in the case of a corporation,
corporate stock, (ii) in the case of an association or business entity, any and
all shares, interests, participations, rights or other equivalents (however
designated) of corporate stock and (iii) in the case of a partnership,
partnership interests (whether general or limited) and any other interest or
participation that confers on a Person the right to receive a share of the
profits and losses of, or distributions of assets of, such partnership.
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"Change of Control" means the occurrence of any of the
following: (i) the sale, lease, transfer, conveyance or other disposition, in
one or a series of related transactions, of all or substantially all of the
assets of the Company and its Subsidiaries, taken as a whole, to any Person or
group (as such term is used in Section 13(d)(3) and 14(d)(2) of the Exchange
Act), (ii) the adoption of a plan relating to the liquidation or dissolution of
the Company, (iii) any Person or group (as defined above) is or becomes the
Beneficial Owner, directly or indirectly, of more than 50% of the total Voting
Stock or Total Common Equity of the Company, including by way of merger,
consolidation or otherwise or (iv) the first day on which a majority of the
members of the Board of Directors of the Company are not Continuing Directors.
"Closing Price" on any Trading Day with respect to the per
share price of any shares of Capital Stock means the last reported sale price
regular way or, in case no such reported sale takes place on such day, the
average of the reported closing bid and asked prices regular way, in either
case on the New York Stock Exchange or, if such shares of Capital Stock are not
listed or admitted to trading on such exchange, on the principal national
securities exchange on which such shares are listed or admitted to trading or,
if not listed or admitted to trading on any national securities exchange, on
the Nasdaq National Market or, if such shares are not listed or admitted to
trading on any national securities exchange or quoted on Nasdaq National Market
but the issuer is a Foreign Issuer (as defined in Rule 3b-4(b) under the
Exchange Act) and the principal securities exchange on which such shares are
listed or admitted to trading is a Designated Offshore Securities Market (as
defined in Rule 902(a) under the Securities Act), the average of the reported
closing bid and asked prices regular way on such principal exchange, or, if
such shares are not listed or admitted to trading on any national securities
exchange or quoted on Nasdaq National Market and the issuer and principal
securities exchange do not meet such requirements. The average of the closing
bid and asked prices in the over-the-counter market as furnished by any New
York Stock Exchange member firm that is selected from time to time by the
Company for that purpose.
"Common Stock" of any Person means Capital Stock of such
Person that does not rank prior, as to the payment of dividends or as to the
distribution of assets upon any voluntary or involuntary liquidation,
dissolution or winding up of such Person, to shares of Capital Stock of any
other class of such Person.
"Consolidated Cash Flow Leverage Ratio" with respect to any
Person means the ratio of the Consolidated Indebtedness and Liquidation
Preference of such Person to the Consolidated EBITDA of such Person for the
relevant period; provided, however, that (1) if the Company or any Subsidiary
of the Company has incurred any Indebtedness (including Acquired Debt) or if
the Company has issued any Disqualified Stock or if any Subsidiary of the
Company has issued any Disqualified Stock or Preferred Stock since the
beginning of such period that remains outstanding on the date
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of such determination or if the transaction giving rise to the need to
calculate the Consolidated Cash Flow Leverage Ratio is an incurrence of
Indebtedness (including Acquired Debt) or the issuance of Disqualified Stock by
the Company, Consolidated EBITDA and Consolidated Indebtedness and Liquidation
Preference for such period will be calculated after giving effect on a pro
forma basis to (A) such Indebtedness, Disqualified Stock or Preferred Stock, as
applicable, as if such Indebtedness had been incurred or such stock had been
issued on the first day of such period, (B) the discharge of any other
Indebtedness or Preferred Stock repaid, repurchased, defeased or otherwise
discharged with the proceeds of such new Indebtedness or sale of stock as if
such discharge had occurred on the first day of such period, and (C) the
interest income realized by the Company or its Subsidiaries on the proceeds of
such Indebtedness or of such stock sale, to the extent not yet applied at the
date of determination, assuming such proceeds earned interest at the rate in
effect on the date of determination from the first day of such period through
such date of determination, (2) if since the beginning of such period the
Company or any Subsidiary of the Company has made any sale of assets
(including, without limitation, any Asset Sales or pursuant to any Sale and
Leaseback Transaction), Consolidated EBITDA for such period will be (A) reduced
by an amount equal to Consolidated EBITDA (if positive) directly attributable
to the assets which are the subject of such sale of assets for such period or
(B) increased by an amount equal to Consolidated EBITDA (if negative) directly
attributable thereto for such period and (3) if since the beginning of such
period the Company or any Subsidiary of the Company (by merger or otherwise)
has made an Investment in any Subsidiary of the Company (or any Person which
becomes a Subsidiary of the Company) or has made an acquisition of assets,
including, without limitation, any acquisition of assets occurring in
connection with a transaction causing a calculation of Consolidated EBITDA to
be made hereunder, which constitutes all or substantially all of an operating
unit of a business, Consolidated EBITDA for such period will be calculated
after giving pro forma effect thereto (including the incurrence of any
Indebtedness (including Acquired Debt)) as if such Investment or acquisition
occurred on the first day of such period. For purposes of this definition,
whenever pro forma effect is to be given to an acquisition of assets, the pro
forma calculations will be determined in good faith by a responsible financial
or accounting Officer of the Company, provided, however, that such Officer
shall assume (i) the historical sales and gross profit margins associated with
such assets for any consecutive 12-month period ended prior to the date of
purchase (provided that the first month of such 12-month period will be no more
than 18 months prior to such date of purchase) and (ii) other expenses as if
such assets had been owned by the Company since the first day of such period.
If any Indebtedness (including, without limitation, Acquired Debt) or stock
bears a floating rate of interest and is being given pro forma effect, the
interest on such Indebtedness will be calculated as if the rate in effect on
the date of determination had been the applicable rate for the entire period.
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"Consolidated EBITDA" as of any date of determination means
the Consolidated Net Income for such period (but without giving effect to
adjustments, accruals, deductions or entries resulting from purchase accounting
extraordinary losses or gains and any gains or losses from any Asset Sales),
plus the following to the extent deducted in calculating such Consolidated Net
Income: (i) provision for taxes based on income or profits of such Person and
its Subsidiaries for such period, (ii) Consolidated Interest Expense, (iii)
depreciation, amortization (including amortization of goodwill and other
intangibles) and other non-cash charges (excluding any such non-cash charge to
the extent that it represents an accrual of or reserve for cash charges in any
future period or amortization of a prepaid cash expense that was paid in a
prior period and excluding non-cash interest and dividend income) of such
Person and its Subsidiaries for such period, in each case, on a consolidated
basis and determined in accordance with GAAP. Notwithstanding the foregoing,
the provision for taxes on the income or profits of, and the depreciation,
amortization, interest expense and other non-cash charges of, a Subsidiary of
the referent Person shall be added to Consolidated Net Income to compute
Consolidated EBITDA only to the extent (and in the same proportion) that the
Net Income of such Subsidiary was included in calculating the Consolidated Net
Income of such Person and only if a corresponding amount would be permitted at
the date of determination to be dividended to the Company by such Subsidiary,
or loaned to the Company by any such Subsidiary, without prior approval (that
has not been obtained), pursuant to the terms of its charter and all
agreements, instruments, judgments, decrees, orders, statutes, rules and
governmental regulations applicable to that Subsidiary or its stockholders.
"Consolidated Indebtedness and Liquidation Preference" means,
with respect to any Person, as of any date of determination, the aggregate
amount of Indebtedness and liquidation preference of Preferred Stock of such
Person and its Subsidiaries as of such date calculated on a consolidated basis
in accordance with GAAP consistently applied.
"Consolidated Interest Expense" means, for any Person, for
any period, the aggregate of the following for such Person for such period
determined on a consolidated basis in accordance with GAAP: (a) the amount of
interest in respect of Indebtedness (including amortization of original issue
discount, amortization of debt issuance costs, and non-cash interest payments
on any Indebtedness, the interest portion of any deferred payment obligation
and after taking into account the effect of elections made under any Interest
Rate Agreement, however denominated with respect to such Indebtedness), (b) the
amount of Redeemable Dividends (to the extent not already included in
Indebtedness in determining Consolidated Interest Expense for the relevant
period) and (c) the interest component of rentals in respect of any Capital
Lease Obligation paid, in each case whether accrued or scheduled to be paid or
accrued by such Person during such period to the extent such amounts were
deducted in computing
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Consolidated Net Income, determined on a consolidated basis in accordance with
GAAP. For purposes of this definition interest on a Capital Lease Obligation
shall be deemed to accrue at an interest rate reasonably determined by such
Person to be the rate of interest implicit in such Capital Lease Obligation in
accordance with GAAP consistently applied.
"Consolidated Net Income" means, with respect to any Person
for any period, the aggregate of the Net Income of such Person and its
Subsidiaries for such period, on a consolidated basis, determined in accordance
with GAAP; provided that:
(i) the Net Income of any Person that is not a
Subsidiary or that is accounted for by the equity method of accounting
shall be included only to the extent of the amount of dividends or
distributions paid in cash to the referent Person or a Subsidiary
thereof,
(ii) the Net Income of any Subsidiary shall be excluded
to the extent that the declaration or payment of dividends or other
distributions by that Subsidiary of that Net Income is not at the date
of determination permitted without any prior governmental approval
(which has not been obtained) or, directly or indirectly, by operation
of the terms of its charter or any agreement, instrument, judgment,
decree, order, statute, rule or governmental regulation applicable to
that Subsidiary or its stockholders,
(iii) the Net Income of any Person acquired in a pooling
of interests transaction for any period prior to the date of such
acquisition shall be excluded,
(iv) the cumulative effect of a change in accounting
principles shall be excluded, and
(v) the Net Income of any Unrestricted Subsidiary shall
be excluded, whether or not distributed to the Company or one of its
Subsidiaries.
"Contingent Investment" means, with respect to any Person,
any guarantee by such Person of the performance of another Person or any
commitment by such Person to invest in another Person. Any Investment that
consists of a Contingent Investment shall be deemed made at the time that the
guarantee of performance or the commitment to invest is given, and the amount
of such Investment shall be the maximum monetary obligation under such
guarantee of performance or commitment to invest. To the extent that a
Contingent Investment is released or lapses without payment under the guarantee
of performance or the commitment to invest, such Investment shall be deemed not
made to the extent of such release or lapse. With respect to any Contingent
Investment, the payment of the guarantee of performance or the payment under
the commitment to invest shall not be deemed to be an additional Investment.
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"Continuing Directors" means, as of any date of
determination, any member of the Board of Directors of the Company who (i) was
a member of such Board of Directors on the Issue Date or (ii) was nominated for
election or elected to such Board of Directors with the affirmative vote of a
majority of the Continuing Directors who were members of such Board at the time
of such nomination or election.
"Credit Facility" means the Revolving Credit Agreement, dated
as of December 22, 1999, as amended, among the Company, Bank of America, N.A.,
as administrative agent, The Bank of New York, and the other agents and lenders
from time to time parties thereto, which permits the Company to borrow up to
$350 million in unrestricted cash.
"Date of Determination" means the Issue Date, and thereafter,
the first day of each calendar month.
"Dated Date" means, with respect to any share of Series H
Preferred Stock, the date such share was issued by the Company.
"Default" means any event that is or with the passage of time
or the giving of notice or both would be an Event of Default.
"Disqualified Stock" means any Capital Stock to the extent
that, and only to the extent that, by its terms (or by the terms of any
security into which it is convertible or for which it is exchangeable), or upon
the happening of any event, matures or is mandatorily redeemable, pursuant to a
sinking fund obligation or otherwise, or is redeemable at the option of the
holder thereof, in whole or in part, on or prior to October 31, 2009; provided,
however, that any Capital Stock which would not constitute Disqualified Stock
but for provisions thereof giving holders thereof the right to require the
Company to repurchase or redeem such Capital Stock upon the occurrence of a
Change of Control occurring prior to October 31, 2009 shall not constitute
Disqualified Stock if the change in control provisions applicable to such
Capital Stock are no more favorable to the holders of such Capital Stock than
the provisions applicable to the Series H Preferred Stock contained in Section
8 hereof and such Capital Stock specifically provides that the Company will not
repurchase or redeem any such stock pursuant to such provisions prior to the
Company's repurchase of such Series H Preferred Stock as are required to be
repurchased pursuant to Section 8 hereof.
"Dividend Rate" means the greater of 14.12% and the Average
Weighted Interest Rate, as determined on and in effect from and including each
Date of Determination. If on any Date of Determination the Average Weighted
Interest Rate cannot reasonably be determined, the Dividend Rate will be
14.12%.
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"Eligible Institution" means a commercial banking institution
that has combined capital and surplus of not less than $500 million or its
equivalent in foreign currency, whose debt is rated "A" (or higher) according
to S&P or Moody's at the time as of which any investment or rollover therein is
made.
"Equity Interests" means Capital Stock and all warrants,
options or other rights to acquire Capital Stock or that are measured by the
value of Capital Stock (but excluding any debt security that is convertible
into or exchangeable for Capital Stock).
"Event of Default" means any Voting Rights Triggering Event.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended (or any successor act), and the rules and regulations thereunder.
"Existing Indebtedness" means the Notes, the Existing Senior
Notes, the Existing Senior Subordinated Notes and all other Indebtedness of the
Company and its Subsidiaries in existence on the Issue Date.
"Existing Junior Preferred Stock" means the Company's 7%
Series D Junior Convertible Preferred Stock, 7% Series E Junior Convertible
Preferred Stock, 7% Series F Junior Convertible Preferred Stock and 7% Series G
Junior Convertible Participating Preferred Stock.
"Existing Senior Notes" means the Company's 9-1/2% Senior
Notes due 2009, 12-1/2% Senior Notes due 2006, 11-1/4% Senior Discount Notes
due 2007, 8- 7/8% Senior Notes due 2007, 8-1/2% Senior Notes due 2008 and 8.60%
Senior Notes due 2008.
"Existing Senior Subordinated Notes" means the Company's
12-1/4% Senior Subordinated Notes due 2009.
"Fair Market Value" means with respect to any asset or
property, the sale value that would be obtained 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.
"GAAP" means generally accepted accounting principles set
forth in the opinions and pronouncements of the Accounting Principles Board of
the American Institute of Certified Public Accountants and statements and
pronouncements of the Financial Accounting Standards Board or in such other
statements by such other entity as may be approved by a significant segment of
the accounting profession of the United States, which are in effect on the
Issue Date.
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"Government Securities" means direct obligations of, or
obligations guaranteed by, the United States of America for the payment of
which guarantee or obligations the full faith and credit of the United States
is pledged.
"Guarantee" means a guarantee (other than by endorsement of
negotiable instruments for collection in the ordinary course of business),
direct or indirect, in any manner (including, without limitation, letters of
credit and reimbursement agreements in respect thereof), of all or any part of
any Indebtedness.
"Hedging Obligations" means, with respect to any Person, the
obligations of such Person under Interest Rate Agreements.
"Indebtedness" means, with respect to any Person, any
indebtedness of such Person, whether or not contingent, in respect of borrowed
money or evidenced by bonds, notes, debentures or similar instruments or
letters of credit (or reimbursement agreements in respect thereof) or
representing the balance deferred and unpaid of the purchase price of any
property (including pursuant to capital leases) or representing any Hedging
Obligations, except any such balance that constitutes an accrued expense or
trade payable, if and to the extent any of the foregoing (other than Hedging
Obligations or letters of credit) would appear as a liability upon a balance
sheet of such Person prepared in accordance with GAAP, all indebtedness of
others secured by a Lien on any asset of such Person (whether or not such
indebtedness is assumed by such Persons), all obligations to purchase, redeem,
retire, defease or otherwise acquire for value any Disqualified Stock or any
warrants, rights or options to acquire such Disqualified Stock valued, in the
case of Disqualified Stock, at the greatest amount payable in respect thereof
on a liquidation (whether voluntary or involuntary) plus accrued and unpaid
dividends, the liquidation value of any Preferred Stock issued by Subsidiaries
of such Person plus accrued and unpaid dividends, and also includes, to the
extent not otherwise included, the Guarantee of items that would be included
within this definition and any amendment, supplement, modification, deferral,
renewal, extension or refunding of any of the above; notwithstanding the
foregoing, in no event will performance bonds or similar security for
performance be deemed Indebtedness so long as such performance bonds or similar
security for performance would not appear as a liability on a balance sheet of
such Person prepared in accordance with GAAP; and provided further, that the
amount of any Indebtedness in respect of any Guarantee shall be the maximum
principal amount of the Indebtedness so guaranteed; it being understood that
Indebtedness with respect to this Certificate of Designation does not include
any obligation with respect to the Series H Preferred Stock.
"Interest Rate Agreements" means (i) interest rate swap
agreements, interest rate cap agreements and interest rate collar agreements
and (ii) other agreements or arrangements designed to protect such Person
against fluctuations in interest rates.
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"Investments" means, with respect to any Person, all
investments by such Person in other Persons (including Affiliates) in the forms
of loans, Guarantees, Contingent Investments, advances or capital contributions
(excluding commission, travel and similar advances to officers and employees
made in the ordinary course of business), purchases or other acquisitions for
consideration of Indebtedness, Equity Interests or other securities of any
other Person and all other items that are or would be classified as investments
on a balance sheet prepared in accordance with GAAP; provided, however, that
any investment to the extent made with Capital Stock of the Company (other than
Disqualified Stock) shall not be deemed an "Investment" for purposes of this
Certificate of Designation.
"Issue Date" means the initial issuance date of any shares of
Series H Preferred Stock.
"Joint Venture" means a Person in the Telecommunications
Business in which the Company holds less than a majority of the shares of
Voting Stock or an Unrestricted Subsidiary in the Telecommunications Business.
"Lien" means, with respect to any asset, any mortgage, lien,
pledge, charge, security interest or encumbrance of any kind in respect of such
asset, whether or not filed, recorded or otherwise perfected under applicable
law (including any conditional sale or other title retention agreement, any
lease in the nature thereof, any option or other agreement to sell or give a
security interest in and any filing of or agreement to give any financing
statement under the Uniform Commercial Code (or equivalent statutes) of any
jurisdiction).
"Liquidation Preference" means $10,000 per share of Series H
Preferred Stock.
"Marketable Securities" means:
(i) Government Securities;
(ii) any certificate of deposit maturing not more than
270 days after the date of acquisition issued by, or time deposit of,
an Eligible Institution;
(iii) commercial paper maturing not more than 270 days
after the date of acquisition issued by a corporation (other than an
Affiliate of the Company) with a rating at the time as of which any
investment therein is made, of "A-1" (or higher) according to S&P or
"P-1" (or higher) according to Moody's;
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(iv) any banker's acceptances or money market deposit
accounts issued or offered by an Eligible Institution; and
(v) any fund investing exclusively in investments of the
types described in clauses (i) through (iv) above.
"Merger" means the merger contemplated by the Merger
Agreement.
"Merger Agreement" means the Agreement and Plan of Merger by
and among WorldCom, Inc., a Georgia corporation, WildCat Acquisition Corp., a
Delaware corporation and the Company, dated as of September 1, 2000.
"Moody's" means Moody's Investors Service, Inc. and its
successors.
"Net Income" means, with respect to any Person, the net
income (loss) of such Person, determined in accordance with GAAP and before any
reduction in respect of preferred stock dividends, excluding, however, (i) any
gain (but not loss), together with any related provision for taxes on such gain
(but not loss), realized in connection with (a) any Asset Sale (including,
without limitation, dispositions pursuant to sale and leaseback transactions)
or (b) the disposition of any securities by such Person or any of its
Subsidiaries or the extinguishment of any Indebtedness of such Person or any of
its Subsidiaries and (ii) any extraordinary gain (but not loss), together with
any related provision for taxes on such extraordinary gain (but not loss).
"Notes" means any Senior Subordinated Notes issued pursuant
to the Senior Subordinated Note Purchase Agreement (the "Note Purchase
Agreement"), dated as of October 31, 2000, between the Company and WorldCom,
Inc., as purchaser, as amended or supplemented from time to time.
"Note Purchase Agreement" is defined above in the definition
of "Notes".
"Officer" means, with respect to any Person, the Chairman of
the Board, the Chief Executive Officer, the President, the Chief Operating
Officer, the Chief Financial Officer, the Treasurer, any Assistant Treasurer,
Controller, Secretary or any Vice-President of such Person.
"Officers' Certificate" means a certificate signed by two
Officers of the Company, one of whom must be the principal executive officer,
principal financial officer, treasurer or principal accounting officer of the
Company.
"Permitted Investment" means (a) any Investments in the
Company or any Subsidiary of the Company; (b) any Investments in Marketable
Securities;
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(c) Investments by the Company or any Subsidiary of the Company in a Person, if
as a result of such Investment (i) such Person becomes a Subsidiary of the
Company or (ii) such Person is merged, consolidated or amalgamated with or
into, or transfers or conveys substantially all of its assets to, or is
liquidated into, the Company or a Subsidiary of the Company; (d) any
Investments in property or assets to be used in (A) any line of business in
which the Company or any of its Subsidiaries was engaged on the Issue Date or
(B) any Telecommunications Business; (e) Investments in any Person in
connection with the acquisition of such Person or substantially all of the
property or assets of such Person by the Company or any Subsidiary of the
Company; provided that within 180 days from the first date of any such
Investment, either (A) such Person becomes a Subsidiary of the Company or any
of its Subsidiaries or (B) the amount of any such Investment is repaid in full
to the Company or any of its Subsidiaries; (f) Investments pursuant to any
agreement or obligation of the Company or a Subsidiary, in effect on the Issue
Date or on the date a Subsidiary becomes a Subsidiary (provided that any such
agreement was not entered into in contemplation of such Subsidiary becoming a
Subsidiary), to make such Investments; (g) Investments in prepaid expenses,
negotiable instruments held for collection and lease, utility and workers'
compensation, performance and other similar deposits; (h) Hedging Obligations
permitted to be incurred by Section 9(b) hereof; (i) bonds, notes, debentures
or other securities received as a result of Asset Sales; and (j) the Investment
deemed to have been made by the Company at such time as the Web Hosting
Subsidiary ceases to be a Subsidiary of the Company by reason of the issuance
or sale of Equity Interests in the Web Hosting Subsidiary to the extent that
the book value of such Investment at the time such Investment is deemed to have
been made does not exceed $200.0 million in the aggregate.
"Person" means any individual, corporation, partnership,
joint venture, association, joint stock company, trust, unincorporated
organization, government or any agency or political subdivision thereof or any
other entity.
"Preferred Stock" as applied to the Capital Stock of any
Person, means Capital Stock of such Person of any class or classes (however
designated) that ranks prior, as to payment of dividends or as to the
distribution of assets upon any voluntary or involuntary liquidation,
dissolution or winding up of such Person, to shares of Capital Stock of any
other class of such Person.
"Redeemable Dividend" means, for any dividend with regard to
Disqualified Stock and Preferred Stock, the quotient of the dividend divided by
the difference between one and the maximum statutory federal income tax rate
(expressed as a decimal number between 1 and 0) then applicable to the issuer
of such Disqualified Stock or Preferred Stock.
<PAGE> 14
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"Restricted Investment" means an Investment other than a
Permitted Investment.
"S&P" means Standard & Poor's Rating Group and its
successors.
"Sale and Leaseback Transaction" means, with respect to any
Person, any direct or indirect arrangement pursuant to which any property
(other than Capital Stock) is sold by such Person or a Subsidiary of such
Person and is thereafter leased back from the purchaser or transferee thereof
by such Person or one of its Subsidiaries.
"Senior Note Indenture" means any indenture governing
Existing Senior Notes, as amended or supplemented from time to time.
"Senior Subordinated Note Indenture" means the indenture
governing the Existing Senior Subordinated Notes, as amended or supplemented
from time to time.
"Series B Preferred Stock" means the Company's 13-1/2% Series
B Redeemable Exchangeable Preferred Stock due 2009.
"Subsidiary" of any Person means (i) any corporation,
association or business entity of which more than 50% of the total voting power
of shares of Capital Stock entitled (without regard to the occurrence of any
contingency) to vote in the election of directors, managers or trustees thereof
is at the time owned or controlled, directly or indirectly, by such Person or
one or more of the other Subsidiaries of such Person or a combination thereof
and (ii) any partnership (a) the sole general partner or the managing general
partner of which is such Person or a Subsidiary of such Person or (b) the only
general partners of which are such Person or one or more Subsidiaries of such
Person or any combination thereof; provided that any Unrestricted Subsidiary
shall be excluded from this definition of "Subsidiary."
"Telecommunications Business" means, when used in reference
to any Person, that such Person is engaged primarily in the business of (i)
transmitting, or providing services relating to the transmission of, voice,
video or data through owned or leased transmission facilities, (ii) creating,
developing or marketing communications related network equipment, software and
other devices for use in a Telecommunications Business or (iii) evaluating,
participating or pursuing any other activity or opportunity that is related to
those identified in (i) or (ii) above; provided that the determination of what
constitutes a Telecommunications Business shall be made in good faith by the
Board of Directors of the Company.
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"Telecommunications Related Assets" means all assets, rights
(contractual or otherwise) and properties, whether tangible or intangible, used
in connection with a Telecommunications Business.
"Total Common Equity" of any Person means, as of any date of
determination (and as modified for purposes of the definition of "Change of
Control"), the product of (i) the aggregate number of outstanding primary
shares of Common Stock of such Person on such day (which shall not include any
options or warrants on, or securities convertible or exchangeable into, shares
of Common Stock of such Person) and (ii) the average Closing Price of such
Common Stock over the 20 consecutive Trading Days immediately preceding such
day. If no such Closing Price exists with respect to shares of any such class,
the value of such shares for purposes of clause (ii) of the preceding sentence
shall be determined by the Board of Directors of the Company in good faith and
evidenced by a resolution of the Board of Directors.
"Total Market Capitalization" of any Person means, as of any
day of determination, the sum of (1) the consolidated Indebtedness of such
Person and its Subsidiaries (except in the case of the Company, in which case
of the Company and its Subsidiaries) on such day, plus (2) the product of (i)
the aggregate number of outstanding primary shares of Common Stock of such
Person on such day (which shall not include any options or warrants on, or
securities convertible or exchangeable into, shares of Common Stock of such
Person) and (ii) the average Closing Price of such Common Stock over the 20
consecutive Trading Days immediately preceding such day, plus (3) the
liquidation value of any outstanding share of Preferred Stock of such Person on
such day. If no such Closing Price exists with respect to shares of any such
class, the value of such shares for purposes of clause (2) of the preceding
sentence shall be determined by the Company's Board of Directors in good faith
and evidenced by a resolution of the Board of Directors.
"Trading Day", with respect to a securities exchange or
automated quotation system, means a day on which such exchange or system is
open for a full day of trading.
"Unrestricted Subsidiary" means any Subsidiary that is
designated by the Board of Directors as an Unrestricted Subsidiary pursuant to
a Board Resolution.
"Vendor Indebtedness" means any Indebtedness of the Company
or any Subsidiary incurred in connection with the acquisition or construction
of Telecommunications Related Assets.
"Voting Stock" of any Person means Capital Stock of such
Person which ordinarily has voting power for the election of directors (or
Persons performing similar
<PAGE> 16
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functions) of such Person, whether at all times or only so long as no senior
class of securities has such voting power by reason of any contingency.
"Web Hosting Subsidiary" means the Subsidiary of the Company
substantially all of the assets of which consist of assets used exclusively in
the conduct of the Company's internet web hosting business.
2. Ranking. The Series H Preferred Stock shall rank, with
respect to dividend distributions and distributions upon the liquidation,
winding-up and dissolution of the Company, (i) senior to all classes of common
stock of the Company and to each other class of capital stock or series of
preferred stock issued by the Company established after the Issue Date by the
Board of Directors the terms of which do not expressly provide that it ranks
senior to or on a parity with the Series H Preferred Stock as to dividend
distributions and distributions upon the liquidation, winding-up and
dissolution of the Company (collectively referred to with the common stock of
the Company as "Junior Securities"); (ii) on a parity with the Existing Junior
Preferred Stock, any additional shares of Existing Junior Preferred Stock or
Series H Preferred Stock issued by the Company in the future and any other
class of capital stock or series of preferred stock issued by the Company
established after the Issue Date by the Board of Directors, the terms of which
expressly provide that such class or series will rank on a parity with the
Series H Preferred Stock as to dividend distributions and distributions upon
the liquidation, winding-up and dissolution of the Company (collectively
referred to as "Parity Securities"); and (iii) junior to the Series B Preferred
Stock and each class of capital stock or series of preferred stock issued by
the Company established after the Issue Date by the Board of Directors the
terms of which expressly provide that such class or series will rank senior to
the Series H Preferred Stock as to dividend distributions and distributions
upon liquidation, winding-up and dissolution of the Company (collectively
referred to as "Senior Securities").
No dividend whatsoever shall be declared or paid upon, or any
sum set apart for the payment of dividends upon, any outstanding share of the
Series H 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 Senior Securities.
3. Dividends. (a) The holders of shares of the Series H
Preferred Stock shall be entitled to receive, when, as and if dividends are
declared by the Board of Directors out of funds of the Company legally
available therefor, cumulative preferential dividends with respect to each
share of Series H Preferred Stock from the Dated Date accruing at the Dividend
Rate of the Liquidation Preference per share per annum, payable quarterly in
arrears on each of the last days of March, June, September and December or, if
any such date is not a Business Day, on the next succeeding Business
<PAGE> 17
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Day (each, a "Dividend Payment Date"), to the holders of record as of the next
preceding March 15, June 15, September 15 and December 15, (each, a "Record
Date"). Dividends shall be payable in cash. Dividends payable on the Series H
Preferred Stock will be computed on the basis of a 360-day year consisting of
twelve 30-day months and will be deemed to accrue on a daily basis.
(b) Dividends on the Series H Preferred Stock shall
accrue whether or not the Company has earnings or profits, whether or not there
are funds legally available for the payment of such dividends and whether or
not dividends are declared. Dividends will accumulate to the extent they are
not paid on the Dividend Payment Date for the period to which they relate. The
Company shall take all actions required or permitted under the Delaware General
Corporation Law (the "DGCL") to permit the payment of dividends on the Series H
Preferred Stock, including, without limitation, through the revaluation of its
assets in accordance with the DGCL, to make or keep funds legally available for
the payment of dividends.
(c) No dividend whatsoever shall be declared or paid
upon, or any sum set apart for the payment of dividends upon, any outstanding
share of the Series H 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 Series H Preferred Stock. Unless full
cumulative dividends on all outstanding shares of Series H Preferred Stock for
all past dividend periods shall have been declared and paid, or declared and a
sufficient sum for the payment thereof set apart, then: (i) no dividend (other
than a dividend payable solely in shares of any Junior Securities) shall be
declared or paid upon, or any sum set apart for the payment of dividends upon,
any shares of Junior Securities; (ii) no other distribution shall be declared
or made upon, or any sum set apart for the payment of any distribution upon,
any shares of Junior Securities, other than a distribution consisting solely of
Junior Securities; (iii) no shares of Junior Securities shall be purchased,
redeemed or otherwise acquired or retired for value (excluding an exchange for
shares of other Junior Securities) by the Company or any of its Subsidiaries;
and (iv) no monies shall be paid into or set apart or made available for a
sinking or other like fund for the purchase, redemption or other acquisition or
retirement for value of any shares of Junior Securities by the Company or any
of its Subsidiaries. Holders of the Series H Preferred Stock will not be
entitled to any dividends, whether payable in cash, property or stock, in
excess of the full cumulative dividends as herein described.
4. Liquidation Rights. Upon any voluntary or involuntary
liquidation, dissolution or winding-up of the Company or reduction or decrease
in its capital stock resulting in a distribution of assets to the holders of
any class or series of the Company's capital stock, each holder of shares of
the Series H Preferred Stock will be entitled to
<PAGE> 18
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payment out of the assets of the Company available for distribution of an
amount equal to the Liquidation Preference per share of Series H Preferred
Stock held by such holder, plus accrued and unpaid dividends, if any, to the
date fixed for liquidation, dissolution, winding-up or reduction or decrease in
capital stock, before any distribution is made on any Junior Securities,
including, without limitation, common stock of the Company. After payment in
full of the Liquidation Preference and all accrued and unpaid dividends, if
any, to which holders of Series H Preferred Stock are entitled, such holders
will not be entitled to any further participation in any distribution of assets
of the Company. If, upon any voluntary or involuntary liquidation, dissolution
or winding-up of the Company, the amounts payable with respect to the Series H
Preferred Stock and all other Parity Securities are not paid in full, the
holders of the Series H Preferred Stock and the Parity Securities will share
equally and ratably in any distribution of assets of the Company in proportion
to the full liquidation preference and accumulated and unpaid dividends, if
any, to which each is entitled. However, neither the voluntary sale,
conveyance, exchange or transfer (for cash, shares of stock, securities or
other consideration) of all or substantially all of the property or assets of
the Company nor the consolidation or merger of the Company with or into one or
more Persons will be deemed to be a voluntary or involuntary liquidation,
dissolution or winding-up of the Company or reduction or decrease in capital
stock, unless such sale, conveyance, exchange or transfer shall be in
connection with a liquidation, dissolution or winding-up of the business of the
Company or reduction or decrease in capital stock.
5. Redemption by the Company. (a) On October 31, 2009 (the
"Mandatory Redemption Date"), the Company shall be required to redeem (subject
to the legal availability of funds therefor) all outstanding shares of Series H
Preferred Stock at a price in cash equal to the Applicable Redemption Price.
The Company shall not be required to make sinking fund payments with respect to
the Series H Preferred Stock. The Company shall take all actions required or
permitted under the DGCL to permit such redemption.
(b) The Series H Preferred Stock may be redeemed at any
time, in whole or in part, at the option of the Company at the Applicable
Redemption Price.
(c) In case of redemption of less than all of the shares
of Series H Preferred Stock at the time outstanding, the shares to be redeemed
shall be selected pro rata or by lot as determined by the Company in its sole
discretion.
(d) Notice of any redemption shall be sent by or on
behalf of the Company not less than 30 nor more than 60 days prior to the date
specified for redemption in such notice (including the Mandatory Redemption
Date, the "Redemption Date"), by first class mail, postage prepaid, to all
holders of record of the Series H
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Preferred Stock at their last addresses as they shall appear on the books of
the Company; provided, however, that no failure to give such notice or any
defect therein or in the mailing thereof shall affect the validity of the
proceedings for the redemption of any shares of Series H Preferred Stock except
as to the holder to whom the Company has failed to give notice or except as to
the holder to whom notice was defective. In addition to any information
required by law or by the applicable rules of any exchange upon which Series H
Preferred Stock may be listed or admitted to trading, such notice shall state:
(i) whether such redemption is being made pursuant to the optional or the
mandatory redemption provisions hereof; (ii) the Redemption Date; (iii) the
Applicable Redemption Price; (iv) the number of shares of Series H Preferred
Stock to be redeemed and, if less than all shares held by such holder are to be
redeemed, the number of such shares to be redeemed; (v) the place or places
where certificates for such shares are to be surrendered for payment of the
Applicable Redemption Price, including any procedures applicable to redemptions
to be accomplished through book-entry transfers; and (vi) that dividends on the
shares to be redeemed will cease to accumulate on the Redemption Date. Upon the
mailing of any such notice of redemption, the Company shall become obligated to
redeem at the time of redemption specified thereon all shares called for
redemption.
(e) If notice has been mailed in accordance with
Section 5(d) above and provided that on or before the Redemption Date specified
in such notice, all funds necessary for such redemption shall have been set
aside by the Company, separate and apart from its other funds in trust for the
pro rata benefit of the holders of the shares so called for redemption, so as
to be, and to continue to be available therefor, then, from and after the
Redemption Date, dividends on the shares of the Series H Preferred Stock so
called for redemption shall cease to accumulate, and said shares shall no
longer be deemed to be outstanding and shall not have the status of shares of
Series H Preferred Stock, and all rights of the Holders thereof as stockholders
of the Company (except the right to receive from the Company the Applicable
Redemption Price) shall cease. Upon surrender, in accordance with said notice,
of the certificates for any shares so redeemed (properly endorsed or assigned
for transfer, if the Company shall so require and the notice shall so state),
such shares shall be redeemed by the Company at the Applicable Redemption
Price. In case fewer than all the shares represented by any such certificate
are redeemed, a new certificate or certificates shall be issued representing
the unredeemed shares without cost to the holder thereof.
(f) Any funds deposited with a bank or trust company for
the purpose of redeeming Series H Preferred Stock shall be irrevocable except
that:
(i) the Company shall be entitled to receive
from such bank or trust company the interest or other earnings, if
any, earned on any money so deposited
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in trust, and the holders of any shares redeemed shall have no claim
to such interest or other earnings; and
(ii) any balance of monies so deposited by the
Company and unclaimed by the holders of the Series H Preferred Stock
entitled thereto at the expiration of two years from the applicable
Redemption Date shall be repaid, together with any interest or other
earnings earned thereon, to the Company, and after any such repayment,
the holders of the shares entitled to the funds so repaid to the
Company shall look only to the Company for payment without interest or
other earnings.
(g) No Series H Preferred Stock may be redeemed except
with funds legally available for the purpose. The Company shall take all
actions required or permitted under the DGCL to permit any such redemption.
(h) Notwithstanding the foregoing provisions of this
Section 5, unless the full cumulative dividends on all outstanding shares of
Series H Preferred Stock shall have been paid or contemporaneously are declared
and paid for all past dividend periods, none of the shares of Series H
Preferred Stock shall be redeemed unless all outstanding shares of Series H
Preferred Stock are simultaneously redeemed.
(i) All shares of Series H Preferred Stock redeemed
pursuant to this Section 5 shall be restored to the status of authorized and
unissued shares of preferred stock, without designation as to series and may
thereafter be reissued as shares of any series of preferred stock other than
shares of Series H Preferred Stock.
6. [Intentionally Omitted.]
7. Voting Rights. (a) The holders of record of outstanding
shares of Series H Preferred Stock shall be entitled to vote, together with all
the outstanding shares of common stock, and not by class, except as otherwise
required by Delaware law, on all matters on which holders of common stock are
entitled to vote. Each outstanding share of Series H Preferred Stock shall be
entitled to one-tenth of one vote per share of Series H Preferred Stock.
Additionally, the holders of record of shares of the Series H Preferred Stock
shall have voting rights as required by law and as hereinafter provided in this
Section 7.
(b) Upon:
(i) the accumulation of accumulated and unpaid
dividends on the outstanding Series H Preferred Stock in an amount
equal to six (6) quarterly dividends (whether or not consecutive);
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(ii) the failure of the Company to satisfy any
mandatory redemption or repurchase obligation (including, without
limitation, pursuant to any required Change of Control Offer) with
respect to the Series H Preferred Stock;
(iii) the failure of the Company to make a Change
of Control Offer on the terms and in accordance with the provisions
described below in Section 8 hereof;
(iv) the failure of the Company to comply with
any of the other covenants or agreements set forth in this Certificate
of Designation and the continuance of such failure for 60 consecutive
days or more after notice; or
(v) default under any mortgage, indenture or
instrument under which there may be issued or by which there may be
secured or evidenced any Indebtedness for money borrowed by the
Company or any of its Subsidiaries (or the payment of which is
guaranteed by the Company or any of its Subsidiaries) whether such
Indebtedness or Guarantee now exists, or is created after the Issue
Date, which default (1) is caused by a failure to pay principal of or
premium, if any, or interest on such Indebtedness prior to the
expiration of the grace period provided in such Indebtedness on the
date of such default (a "Payment Default") or (2) results in the
acceleration of such Indebtedness prior to its express maturity and,
in each case, the principal amount of any such Indebtedness, together
with the principal amount of any other such Indebtedness under which
there has been a Payment Default or the maturity of which has been so
accelerated, aggregates $5.0 million or more (each of the events
described in clauses (i), (ii), (iii), (iv) and (v) being referred to
herein as a "Voting Rights Triggering Event");
then the holders of a majority of the outstanding shares of Series H Preferred
Stock, voting as a separate single class, shall be entitled to elect such
number of members to the Board of Directors of the Company constituting at
least 20% of the then existing Board of Directors before such election (rounded
to the nearest whole number); provided, however, that such number shall be no
less than one nor greater than two, and the number of members of the Company's
Board of Directors shall be immediately and automatically increased by one or
two, as the case may be. The voting rights provided for in this Section 7 shall
be the exclusive remedy for the holders of the Series H Preferred Stock for any
violation by the Company of its obligations under this Certificate of
Designation that constitutes an Event of Default.
(c) Whenever such voting right shall have vested, such
right may be exercised initially either at a special meeting of the holders of
Series H Preferred Stock, called as hereinafter provided, or at any annual
meeting of stockholders held for the purpose of electing directors, and
thereafter at such annual meetings or by the written consent of the holders of
Series H Preferred Stock. Such right of the holders of Series H
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Preferred Stock to elect directors may be exercised until (i) all dividends in
arrears shall have been paid in full and (ii) all other Voting Rights
Triggering Events have been cured or waived, at which time the term of such
directors previously elected shall thereupon terminate, and such directors
shall be deemed to have resigned.
(d) At any time when such voting right shall have vested
in the holders of Series H Preferred Stock and if such right shall not already
have been initially exercised, a proper officer of the Company shall, upon the
written request of holders of record of 10% or more of the Series H Preferred
Stock then outstanding, addressed to the Secretary of the Company, call a
special meeting of holders of Series H Preferred Stock. Such meeting shall be
held at the earliest practicable date upon the notice required for annual
meetings of stockholders at the place for holding annual meetings of
stockholders of the Company or, if none, at a place designated by the Secretary
of the Company. If such meeting shall not be called by the proper officers of
the Company within 30 days after the personal service of such written request
upon the Secretary of the Company, or within 30 days after mailing the same
within the United States, by registered mail, addressed to the Secretary of the
Company at its principal office (such mailing to be evidenced by the registry
receipt issued by the postal authorities), then the holders of record of 10% of
the shares of Series H Preferred Stock then outstanding may designate in
writing a holder of Series H Preferred Stock to call such meeting at the
expense of the Company, and such meeting may be called by such person so
designated upon the notice required for annual meetings of stockholders and
shall be held at the place for holding annual meetings of the Company or, if
none, at a place designated by such holder. Any holder of Series H Preferred
Stock that would be entitled to vote at such meeting shall have access to the
stock books of the Company for the purpose of causing a meeting of stockholders
to be called pursuant to the provisions of this Section 7. Notwithstanding the
provisions of this paragraph, however, no such special meeting shall be called
if any such request is received less than 90 days before the date fixed for the
next ensuing annual or special meeting of stockholders.
(e) If any director so elected by the holders of Series
H Preferred Stock shall cease to serve as a director before his term shall
expire, the holders of Series H Preferred Stock then outstanding may, at a
special meeting of the holders called as provided above, elect a successor to
hold office for the unexpired term of the director whose place shall be vacant.
(f) The Company shall not, without the affirmative vote
or consent of the holders of at least a majority of the shares of Series H
Preferred Stock then outstanding (with shares held by the Company or any of its
Affiliates not being considered to be outstanding for this purpose) voting or
consenting as the case may be, as one class:
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(i) authorize, create (by way of
reclassification or otherwise) or issue any Senior Securities or any
obligation or security convertible into or evidencing the right to
purchase, shares of any class or series of Senior Securities, except,
the Company may issue Senior Securities pursuant to Section 9(b)
hereof;
(ii) authorize, create (by way of
reclassification or otherwise) or issue any Parity Securities or any
obligation or security convertible or exchangeable into or evidencing
a right to purchase, shares of any class or series of Parity
Securities, except, the Company may authorize and issue: (i) shares of
the Series H Preferred Stock as provided herein and additional shares
of Series H Preferred Stock pursuant to the Note Purchase Agreement
and (ii) Parity Securities pursuant to Section 9(b) hereof;
(iii) amend or otherwise alter this Certificate
of Designation (including the provisions of Section 8 hereof) in any
manner that adversely affects the specified rights, preferences,
privileges or voting rights of holders of Series H Preferred Stock;
(iv) authorize the issuance of any additional
shares of Series H Preferred Stock other than pursuant to the Note
Purchase Agreement; or
(v) waive any existing Voting Rights Triggering
Event or compliance with any provision of this Certificate of
Designation;
provided, however, that the Company may not amend the Change of Control
provisions of this Certificate of Designation (including the related
definitions) without the approval of the holders of at least 66-2/3% of the
then outstanding shares of Series H Preferred Stock, voting or consenting, as
the case may be, as one class.
(g) Without the consent of each holder affected, an
amendment or waiver of the Company's Certificate of Incorporation or of this
Certificate of Designation may not (with respect to any shares of Series H
Preferred Stock held by a non-consenting holder):
(i) alter the voting rights with respect to the
Series H Preferred Stock or reduce the number of shares of Series H
Preferred Stock whose holders must consent to an amendment, supplement
or waiver;
(ii) (x) reduce the Liquidation Preference of or
(y) change the Mandatory Redemption Date of any share of Series H
Preferred Stock or (z) alter the provisions with respect to the
redemption of the Series H Preferred Stock other than (in the case of
this clause (z)) as provided in Section 8(f) hereof;
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(iii) reduce the rate of or change the time for
payment of dividends on any share of Series H Preferred Stock;
(iv) waive the consequences of any failure to
pay dividends on the Series H Preferred Stock;
(v) make any share of Series H Preferred Stock
payable in any form other than that stated in this Certificate of
Designation;
(vi) make any change in the provisions of this
Certificate of Designation relating to waivers of the rights of
holders of Series H Preferred Stock to receive the Liquidation
Preference and dividends on the Series H Preferred Stock;
(vi) waive a redemption payment with respect to
any share of Series H Preferred Stock (except as provided with respect
to Section 8 hereof); or
(vii) make any change in the foregoing amendment
and waiver provisions.
(h) The Company in its sole discretion may, without the
vote or consent of any holders of the Series H Preferred Stock, amend or
supplement this Certificate of Designation:
(i) to cure any ambiguity, defect or
inconsistency;
(ii) to provide for uncertificated Series H
Preferred Stock in addition to or in place of certificated Series H
Preferred Stock; or
(iii) to make any change that would provide any
additional rights or benefits to the holders of the Series H Preferred
Stock or that does not adversely affect the legal rights under this
Certificate of Designation of any such holder.
Except as set forth above, (a) the creation, authorization or issuance of any
shares of Junior Securities, Parity Securities or Senior Securities or (b) the
increase or decrease in the amount of authorized capital stock of any class,
including any preferred stock, shall not require the consent of the holders of
the Series H Preferred Stock and shall not be deemed to affect adversely the
rights, preferences, privileges, special rights or voting rights of holders of
shares of Series H Preferred Stock.
8. Change of Control. (a) Subject to paragraph 8(f), upon the
occurrence of a Change of Control, the Company shall make an offer (the "Change
of Control Offer") to each holder of shares of Series H Preferred Stock to
repurchase all or any part (but not, in the case of any holder requiring the
Company to purchase less than all of the
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shares of Series H Preferred Stock held by such holder, any fractional shares)
of such holder's Series H Preferred Stock at an offer price in cash equal to
101% of the aggregate Liquidation Preference thereof plus accumulated and
unpaid dividends, if any, thereon to the date of purchase (the "Change of
Control Payment").
(b) The Change of Control Offer shall include all
instructions and materials necessary to enable holders to tender their shares
of Series H Preferred Stock.
(c) The Company shall comply with the requirements of
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 connection
with the repurchase of the Series H Preferred Stock as a result of a Change of
Control.
(d) Within 30 days following any Change of Control, the
Company shall mail a notice to each holder stating:
(i) that the Change of Control Offer is being
made pursuant to this Section 8 and that all shares of Series H
Preferred Stock tendered will be accepted for payment;
(ii) the purchase price and the purchase date,
which shall be no earlier than 30 days nor later than 60 days from the
date such notice is mailed (the "Change of Control Payment Date");
(iii) that any share of Series H Preferred Stock
not tendered will continue to accumulate dividends;
(iv) that, unless the Company fails to pay the
Change of Control Payment, all shares of Series H Preferred Stock
accepted for payment pursuant to the Change of Control Offer shall
cease to accumulate dividends after the Change of Control Payment
Date;
(v) that holders electing to have any shares of
Series H Preferred Stock purchased pursuant to a Change of Control
Offer will be required to surrender the shares of Series H Preferred
Stock, with the form entitled "Option of Holder to Elect Purchase"
which shall be included with the Notice of Change of Control
completed, to the Paying Agent at the address specified in the notice
prior to the close of business on the third Business Day preceding the
Change of Control 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 second Business Day
<PAGE> 26
26
preceding the Change of Control Payment Date, a telegram, telex,
facsimile transmission or letter setting forth the name of the holder,
the number of shares of Series H Preferred Stock delivered for
purchase, and a statement that such holder is withdrawing his election
to have such shares purchased; and
(vii) the circumstances and relevant facts
regarding such Change of Control (including, but not limited to,
information with respect to pro forma historical financial information
after giving effect to such Change of Control and information
regarding the Person or Persons acquiring control).
(e) On the Change of Control Payment Date, the Company
shall, to the extent lawful, (i) accept for payment all shares of Series H
Preferred Stock or portions thereof properly tendered pursuant to the Change of
Control Offer, (ii) promptly mail to each holder of shares of Series H
Preferred Stock tendered an amount equal to the Change of Control Payment in
respect of all shares of Series H Preferred Stock or portions thereof so
tendered and (iii) promptly issue a new certificate representing the shares of
Series H Preferred Stock equal in Liquidation Preference amount to any
unpurchased portion of the shares of Series H Preferred Stock surrendered, if
any. The Company shall publicly announce the results of the Change of Control
Offer on or as soon as practicable after the Change of Control Payment Date.
(f) Notwithstanding the foregoing, if, at the time of a
Change of Control, the Company is prohibited by the terms of any Indebtedness
from purchasing shares of Series H Preferred Stock that may be tendered by
holders pursuant to a Change of Control Offer, prior to complying with the
provisions of this Section 8, but in any event within 90 days following a
Change of Control, the Company shall either (i) repay in full all outstanding
Indebtedness or (ii) obtain the requisite consents, if any, under all
agreements governing outstanding Indebtedness to permit the repurchase of
Series H Preferred Stock required by this covenant. The Company must first
comply with the covenants in its outstanding Indebtedness or take the actions
described in the preceding sentence before it will be required to repurchase
shares of Series H Preferred Stock in the event of a Change of Control;
provided, that if the Company fails to comply with the covenant described in
the preceding sentence, the sole remedy to holders of Series H Preferred Stock
will be the voting rights arising from a Voting Rights Triggering Event.
Moreover, the Company will not repurchase or redeem any Series H Preferred
Stock pursuant to this Change of Control provision prior to the Company's
repurchase of the Existing Senior Notes and Existing Senior Subordinated Notes
pursuant to the Change of Control covenants in the Senior Notes Indentures and
Senior Subordinated Notes Indenture.
(g) The Company shall not be required to make a Change
of Control Offer upon a Change of Control if a third party makes the Change of
Control Offer in the
<PAGE> 27
27
manner, at the times and otherwise in compliance with the requirements set
forth in this Section 8 applicable to a Change of Control Offer made by the
Company and purchases all shares of Series H Preferred Stock validly tendered
and not withdrawn under such Change of Control Offer.
9. Certain Covenants. (a) Restricted Payments.
The Company and its Subsidiaries shall not, directly or
indirectly:
(i) declare or pay any dividend or make any distribution
on account of any Equity Interests of the Company that are Junior
Securities or of any of its Subsidiaries other than dividends or
distributions payable (A) in Junior Securities of the Company that are
not Disqualified Stock or (B) to the Company or any Subsidiary;
(ii) purchase, redeem, defease, retire or otherwise
acquire for value ("Retire" and correlatively, a "Retirement") any
Equity Interests of the Company that are Junior Securities or of any
of its Subsidiaries or other Affiliate of the Company (other than any
such Equity Interests owned by the Company or any Subsidiary);
(iii) make any Restricted Investment (all such payments
and other actions set forth in clauses (i) through (iii) above being
collectively referred to as "Restricted Payments"), unless, at the
time of such Restricted Payment:
(A) no Default or Event of Default has occurred
and is continuing or would occur as a consequence thereof;
(B) after giving effect to such Restricted
Payment on a pro forma basis as if such Restricted Payment
had been made at the beginning of the applicable four-quarter
period, the Company could incur at least $1.00 of additional
Indebtedness pursuant to the Consolidated Cash Flow Leverage
Ratio test described under Section 9(b) hereof; and
(C) such Restricted Payment, together with the
aggregate of all other Restricted Payments made by the
Company and its Subsidiaries after the Issue Date including
any Restricted Payments made pursuant to clauses (i), (iii)
and (iv) of the next paragraph), is less than the sum of
(w) 50% of the Consolidated Net
Income of the Company for the period (taken as one
accounting period) from June 30, 1996 to the end of
the Company's most recently ended fiscal quarter for
<PAGE> 28
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which internal financial statements are available at
the time of such Restricted Payment (or, if such
Consolidated Net Income for such period is a
deficit, less 100% of such deficit), plus
(x) 100% of the aggregate net cash
proceeds received by the Company from the issue or
sale of Equity Interests of the Company or of debt
securities or Disqualified Stock of the Company that
have been converted into such Equity Interests
(other than Equity Interests (or convertible debt
securities) sold to a Subsidiary of the Company and
other than Disqualified Stock or debt securities
that have been converted into Disqualified Stock)
after June 30, 1996 (other than any such Equity
Interests, the proceeds of which were used as set
forth in clause (ii) below), plus
(y) 100% of the sum of, without
duplication, (1) aggregate dividends or
distributions received by the Company or any
Subsidiary from any Joint Venture (other than
dividends or distributions to pay any obligations of
such Joint Venture to Persons other than the Company
or any Subsidiary, such as income taxes), with
non-cash distributions to be valued at the lower of
book value or Fair Market Value as determined by the
Board of Directors, (2) the amount of the principal
and interest payments received since the Issue Date
by the Company or any Subsidiary from any Joint
Venture and (3) the net proceeds from the sale of an
Investment in a Joint Venture received by the
Company or any Subsidiary; provided that there is no
obligation to return any such amounts to the Joint
Venture, and excluding any such dividend,
distribution, interest payment or net proceeds that
constitutes a return of capital invested pursuant to
clause (vi) of the next succeeding paragraph, plus
(z) $10.0 million.
The foregoing provisions will not prohibit:
(i) the payment of any dividend within 60 days after the
date of declaration thereof, if at such date of declaration such
payment would have complied with the provisions hereof;
(ii) the Retirement of any Junior Securities of the
Company or Equity Interests of any Subsidiary of the Company, in
exchange for, or out of the proceeds of the substantially concurrent
sale (other than to a Subsidiary of the
<PAGE> 29
29
Company) of, Junior Securities of the Company (other than Disqualified
Stock) or other Equity Interests of such Subsidiary that is not
Disqualified Stock;
(iii) the Retirement of any Junior Securities of the
Company or any Subsidiary of the Company held by any member of the
Company's (or any of its Subsidiaries') management pursuant to any
management equity subscription agreement or stock option agreement;
provided that the aggregate price paid for all such repurchased,
redeemed, acquired or retired Equity Interests shall not exceed $5.0
million in any twelve-month period plus the aggregate cash proceeds
received by the Company during such twelve-month period from any
reissuance of Equity Interests by the Company to members of management
of the Company and its Subsidiaries; and
(iv) Investments in any Joint Venture; provided that at
the time any such Investment is made, such Investment will not cause
the aggregate amount of Investments at any one time outstanding under
this clause (iv) to exceed the greater of (x) $25.0 million and (y) 5%
of the Total Common Equity of the Company;
(v) the payment of cash in lieu of fractional shares (a)
payable as dividends on Equity Interests of the Company or (b)
issuable upon conversion of or in exchange for securities convertible
into or exchangeable for Equity Interests of the Company or (c)
issuable as a result of a corporate reorganization; provided that, in
the case of (a) and (b), the issuance of such Equity Interests or
securities and, in the case of (c), such corporate reorganization, is
permitted under the terms of this Agreement; and
(vi) Investments with the net cash proceeds received by
the Company from the issue or sale of Equity Interests of the Company
(other than Disqualified Stock) after December 31, 1997;
provided, however, that at the time of, and after giving effect to, any
Restricted Payment permitted under clauses (i), (ii), (iii), and (iv), no
Default or Event of Default shall have occurred and be continuing.
A Permitted Investment that ceases to be a Permitted
Investment pursuant to the definition thereof, shall become a Restricted
Investment, deemed to have been made on the date that it ceases to be a
Permitted Investment.
The Board of Directors may designate any Subsidiary to be an
Unrestricted Subsidiary if such designation would not cause a Default or an
Event of Default. For purposes of making such determination, all outstanding
Investments by the
<PAGE> 30
30
Company and its Subsidiaries (except to the extent repaid in cash) in such
Subsidiary so designated will be deemed to be Restricted Payments at the time
of such designation and will reduce the amount available for Restricted
Payments under the first paragraph of this covenant. All such outstanding
Investments will be deemed to constitute Investments in an amount equal to the
greatest of (x) the net book value of such Investments at the time of such
designation, (y) the Fair Market Value of such Investments at the time of such
designation and (z) the original Fair Market Value of such Investments at the
time they were made. Such designation will only be permitted if such Restricted
Payment would be permitted at such time.
The Board of Directors of the Company may at any time
designate any Unrestricted Subsidiary to be a Subsidiary; provided that such
designation shall be deemed to be an incurrence of Indebtedness by a Subsidiary
of the Company of any outstanding Indebtedness of such Unrestricted Subsidiary
and such designation shall only be permitted if (i) such Indebtedness is
permitted under Section 9(b) hereof and (ii) no Default or Event of Default
would be in existence following such designation.
(b) Incurrence of Indebtedness and Issuance of
Disqualified Stock or Preferred Stock.
(i) The Company and its Subsidiaries shall not,
directly or indirectly, create, incur, issue, assume,
guarantee or otherwise become directly or indirectly liable
for the payment of (collectively, "incur" and, correlatively,
"incurred" and "incurrence") any Indebtedness (including,
without limitation, Acquired Debt) and
(ii) The Company and its Subsidiaries shall not
issue any Disqualified Stock or any Preferred Stock (other
than Series H Preferred Stock pursuant to this Certificate of
Designation and the Note Purchase Agreement),
provided, however, that the Company and/or any of its Subsidiaries may incur
Indebtedness (including, without limitation, Acquired Debt) or issue shares of
Disqualified Stock or any Preferred Stock if, after giving effect to the
incurrence of such Indebtedness or the issuance of such Disqualified Stock or
Preferred Stock, the Consolidated Cash Flow Leverage Ratio for the Company's
most recently ended four full fiscal quarters for which internal financial
statements are available immediately preceding the date of such incurrence or
issuance does not exceed 5.0 to 1, determined on a pro forma basis (including a
pro forma application of the net proceeds therefrom), as if the additional
Indebtedness had been incurred, or the Disqualified Stock or Preferred Stock
had been issued, as the case may be, at the beginning of such four-quarter
period. If the Company incurs any Indebtedness or issues or redeems any
Preferred Stock or Disqualified Stock subsequent to the commencement of the
period for which such ratio is
<PAGE> 31
31
being calculated but prior to the event for which the calculation of the ratio
is made, then the ratio will be calculated giving pro forma effect to any such
incurrence of Indebtedness, or such issuance or redemption of Disqualified
Stock or Preferred Stock as if the same had occurred at the beginning of the
applicable period. In making such calculation on a pro forma basis, interest
attributable to Indebtedness bearing a floating interest rate shall be computed
as if the rate in effect on the date of computation had been the applicable
rate for the entire period.
The foregoing limitation will not apply to (with each
exception to be given independent effect):
(a) the incurrence by the Company and/or any of its
Subsidiaries of Indebtedness under the Credit Facility;
(b) the incurrence by the Company and/or any of its
Subsidiaries of Vendor Indebtedness; provided that the aggregate amount of such
Vendor Indebtedness incurred does not exceed 80% of the total cost of the
Telecommunications Related Assets financed therewith (or 100% of the total cost
of the Telecommunications Related Assets financed therewith if such Vendor
Indebtedness was extended for the purchase of tangible physical assets and was
so financed by the vendor thereof or an affiliate of such vendor);
(c) the incurrence by the Company and/or any of its
Subsidiaries of the Existing Indebtedness, including the Notes;
(d) the incurrence by the Company and/or any of its
Subsidiaries of Indebtedness in an aggregate amount not to exceed $50.0 million
at any one time outstanding;
(e) the incurrence by the Company of Indebtedness or
Preferred Stock in an aggregate principal amount not to exceed 2.0 times the
net cash proceeds received by the Company after June 30, 1996 from the issuance
and sale of Equity Interests of the Company plus the fair market value of
Equity Interests (other than Disqualified Stock) issued in connection with any
acquisition of any Telecommunications Business;
(f) the incurrence by the Company and/or any of its
Subsidiaries of Acquired Debt in connection with any acquisition of any
Telecommunications Business in an amount not to exceed $50.0 million;
(g) the incurrence (a "Permitted Refinancing") by the
Company and/or any of its Subsidiaries of Indebtedness issued in exchange for,
or the proceeds of which are used to refinance, replace, refund or defease
("Refinance" and correlatively,
<PAGE> 32
32
"Refinanced" and "Refinancing") Indebtedness (or the incurrence of Preferred
Stock or Disqualified Stock to Refinance Preferred Stock or Disqualified Stock,
as the case may be), other than Indebtedness incurred pursuant to clause (a)
above, but only to the extent that:
(1) the net proceeds of such Refinancing
Indebtedness or Refinancing Capital Stock, as the case may be, does
not exceed the principal amount of and premium, if any, and accrued
interest on the Indebtedness so Refinanced (or if such Indebtedness
was issued at an original issue discount, the original issue price
plus amortization of the original issue discount at the time of the
repayment of such Indebtedness) or the liquidation preference of the
Capital Stock so Refinanced plus the fees, expenses and costs of such
Refinancing and reasonable prepayment premiums, if any, in connection
therewith;
(2) the Refinancing Indebtedness or the
Refinancing Capital Stock, as the case may be, shall have a final
maturity no earlier than, and a Weighted Average Life to Maturity
equal to or greater than, the final maturity and Weighted Average Life
to Maturity of the Indebtedness or Capital Stock being Refinanced; and
(3) if the Capital Stock being Refinanced is
subordinated in right of payment to the Series H Preferred Stock, the
Refinancing Capital Stock shall be subordinated in right of payment to
the Series H Preferred Stock on terms at least as favorable to the
holders of the Series H Preferred Stock as those contained in the
documentation governing the Capital Stock being so Refinanced;
(h) the incurrence by the Company or any of its
Subsidiaries of intercompany Indebtedness between or among the Company and any
of its Subsidiaries;
(i) the incurrence by the Company or any of its
Subsidiaries of Hedging Obligations that are incurred for the purpose of fixing
or hedging interest rate or foreign currency risk with respect to any floating
rate Indebtedness that is permitted by the terms of this Certificate of
Designation to be outstanding;
(j) the incurrence by the Company of additional
Indebtedness under the Note Purchase Agreement; and
(k) the incurrence by the Company of Junior Securities
that are not Disqualified Stock.
For purposes of determining compliance with this covenant, in
the event that an item of Indebtedness, Disqualified Stock or Preferred Stock
meets the criteria of
<PAGE> 33
33
more than one of the categories described in clauses (a) through (j) above or
is entitled to be incurred pursuant to the first paragraph of this covenant,
the Company shall, in its sole discretion, classify such item in any manner
that complies with this covenant and such item will be treated as having been
incurred pursuant to only one of such clauses or pursuant to the first
paragraph herein. Accrual of interest or dividends, the accretion of accreted
value or liquidation preference and the payment of interest or dividends in the
form of additional Indebtedness, common stock or Preferred Stock shall not be
deemed to be an incurrence of Indebtedness or issuance of Disqualified Stock or
Preferred Stock for purposes of this covenant.
(c) Dividend and Other Payment Restrictions Affecting
Subsidiaries.
The Company and its Subsidiaries shall not, directly or
indirectly, create or otherwise cause to become effective any consensual
encumbrance or restriction on the ability of any Subsidiary to:
(i) pay dividends or make any other
distributions to the Company or any of its Subsidiaries on its Capital
Stock or with respect to any other interest or participation in, or
measured by, its profits, or pay any Indebtedness owed to the Company
or any of its Subsidiaries;
(ii) make loans or advances to the Company or
any of its Subsidiaries; or
(iii) transfer any of its properties or assets to
the Company or any of its Subsidiaries;
except for such encumbrances or restrictions existing as of the Issue Date or
under or by reason of:
(a) Existing Indebtedness;
(b) applicable law;
(c) any instrument governing Acquired Debt as in effect
at the time of acquisition (except to the extent such Indebtedness was
incurred in connection with, or in contemplation of, such
acquisition), which encumbrance or restriction is not applicable to
any Person, or the properties or assets of any Person, other than the
Person, or the property or assets of the Person, so acquired;
(d) by reason of customary non-assignment provisions in
leases entered into in the ordinary course of business and consistent
with past practices;
<PAGE> 34
34
(e) Indebtedness or Preferred Stock in respect of a
Permitted Refinancing, provided that the restrictions contained in the
agreements governing such Refinancing Indebtedness or Refinancing
Capital Stock are not materially more restrictive than those contained
in the agreements governing the Indebtedness or Capital Stock being
refinanced;
(f) with respect to clause (iii) above, purchase money
obligations for property acquired in the ordinary course of business,
Vendor Indebtedness incurred in connection with the purchase or lease
of Telecommunications Related Assets or performance bonds or similar
security for performance which liens securing such obligations do not
cover any asset other than the asset acquired or, in the case of
performance bonds or similar security for performance, the assets
associated with the Company's performance;
(g) Indebtedness incurred under clause (a) of the
Section 9(b) hereof;
(h) this Certificate of Designation and the Series H
Preferred Stock;
(i) the Note Purchase Agreement and the Notes, the
Senior Note Indentures and the Existing Senior Notes, the Senior
Subordinated Note Indenture and the Existing Senior Subordinated
Notes, or future Indebtedness with substantially similar restrictions,
if any, to the Notes, Existing Senior Notes or the Existing Senior
Subordinated Notes.
(j) in the case of clauses (a), (c), (e), (g), (h) and
(i) above, any amendments, modifications, restatements, renewals,
increases, supplements, refundings, replacements or refinancings
thereof; provided that such amendments, modifications, restatements,
renewals, increases, supplements, refundings, replacements or
refinancings are not materially more restrictive with respect to such
dividend and other payment restrictions than those contained in such
instruments as in effect on the date of their incurrence or, if later,
the Issue Date.
(d) Merger, Consolidation or Sale of Assets.
With the exception of the Merger, the Company shall not
consolidate or merge with or into (whether or not the Company is the surviving
entity), or sell, assign, transfer, lease, convey or otherwise dispose of all
or substantially all of its properties or assets in one or more related
transactions to, another corporation, Person or entity unless:
(i) the Company is the surviving entity or the
entity or Person formed by or surviving any such consolidation or
merger (if other than the Company) or to which such sale, assignment,
transfer, lease, conveyance or other disposition has
<PAGE> 35
35
been made is a corporation organized or existing under the laws of the
United States, any state thereof or the District of Columbia;
(ii) the entity or Person formed by or surviving
any such consolidation or merger (if other than the Company) or the
entity or Person to which such sale, assignment, transfer, lease,
conveyance or other disposition has been made (the "Surviving Person")
assumes all the obligations of the Company under the Series H
Preferred Stock;
(iii) immediately after such transaction no
Default or Event of Default exists;
(iv) if the holders of at least 85% of the
common stock of the Surviving Person immediately after such
transaction are not, directly or indirectly, the same as the holders
of the common stock of the Company immediately prior to such
transaction, the Surviving Person, at the time of such transaction
after giving pro forma effect thereto as if such transaction had
occurred at the beginning of the applicable fiscal quarter (including
any Indebtedness incurred or anticipated to be incurred in connection
with or in respect of such transaction or series of transactions),
either (A) could incur at least $1.00 of additional Indebtedness
pursuant to the Consolidated Cash Flow Leverage Ratio test described
under Section 9(b) hereof or (B) would have (x) Total Market
Capitalization of at least $1.0 billion and (y) total Indebtedness
(net of cash and cash equivalents that are not restricted cash or
restricted cash equivalents as reflected on the Company's consolidated
balance sheet as at the time of such event) in an amount no greater
than 40% of its Total Market Capitalization; and
(v) such transaction would not result in the
loss, material impairment or adverse modification or amendment of any
authorization or license of the Company or its Subsidiaries that would
have a material adverse effect on the business or operations of the
Company and its Subsidiaries taken as a whole.
(e) Transactions with Affiliates.
The Company and its Subsidiaries shall not sell, lease,
transfer or otherwise dispose of any of their respective properties or assets
to, or purchase any property or assets from, or enter into any contract,
agreement, understanding, loan, advance or guarantee with, or for the benefit
of, any Affiliate (each of the foregoing, an "Affiliate Transaction"), unless:
(i) such Affiliate Transaction is on terms that
are no less favorable to the Company or the relevant Subsidiary than
those that would have been obtained in
<PAGE> 36
36
a comparable transaction by the Company or such Subsidiary with an
unrelated Person; and
(ii) such Affiliate Transaction is approved by a
majority of the disinterested directors on the Board of Directors of
the Company;
provided that
(a) transactions pursuant to any employment, stock
option or stock purchase agreement entered into by the Company or any
of its Subsidiaries, or any grant of stock, in the ordinary course of
business that are approved by the Board of Directors of the Company,
(b) transactions between or among the Company and its
Subsidiaries,
(c) transactions permitted by the provisions of this
Certificate of Designation described above under Section 9(a) hereof,
and
(d) loans and advances to employees and officers of the
Company or any of its Subsidiaries in the ordinary course of business
in an aggregate principal amount not to exceed $1.0 million at any one
time outstanding,
shall not be deemed Affiliate Transactions.
(f) Reports.
In the event the Company is not required or shall cease to be
required to file annual and quarterly reports pursuant to Section 13(a) or
15(d) of the Exchange Act (SEC Reports"), the Company will nevertheless
continue to file such reports with the Commission (unless the Commission will
not accept such a filing). Whether or not required by the Exchange Act to file
SEC Reports with the Commission, so long as any shares of Series H Preferred
Stock are outstanding, the Company will furnish copies of the SEC Reports to
the holders of Series H Preferred Stock at the time the Company is required to
make such information available to investors who request it in writing.
(g) Asset Sales.
The Company and its Subsidiaries shall not, whether in a
single transaction or a series of related transactions occurring within any
twelve-month period,
(i) sell, lease, convey, dispose or otherwise
transfer any assets (including by way of a Sale and Leaseback
Transaction) other than sales, leases,
<PAGE> 37
37
conveyances, dispositions or other transfers (A) in the ordinary
course of business, (B) to the Company by any Subsidiary of the
Company or from the Company to any Subsidiary of the Company, (C) that
constitute a Restricted Payment, Investment or dividend or
distribution permitted under Section 9(a) hereof or (D) that
constitute the disposition of all or substantially all of the assets
of the Company pursuant to Section 9(d) hereof or
(ii) issue or sell Equity Interests in any of
its Subsidiaries (other than an issuance or sale of Equity Interests
of any such Subsidiary to the Company or a Subsidiary of the Company),
if, in the case of either (i) or (ii) above, in a single transaction or a
series of related transactions occurring within any twelve-month period, such
assets or securities:
(x) have a Fair Market Value in excess of $2.0 million;
or
(y) are sold or otherwise disposed of for net proceeds
in excess of $2.0 million (each of the foregoing, an "Asset Sale"),
unless:
(a) no Default or Event of Default exists or
would occur as a result thereof;
(b) the Company, or such Subsidiary, as the
case may be, receives consideration at the time of such Asset
Sale at least equal to the Fair Market Value, of the assets
or securities issued or sold or otherwise disposed of; and
(c) except with respect to an Asset Sale
constituting the issuance or sale of Equity Interests in the
Web Hosting Subsidiary, at least 75% of the consideration
therefor received by the Company or such Subsidiary is in the
form of cash; provided, however, that (A) the amount of (x)
any liabilities (as shown on the Company's or such
Subsidiary's most recent balance sheet or in the notes
thereto), of the Company or any Subsidiary of the Company
(other than liabilities that are by their terms subordinated
to the Notes) that are assumed by the transferee of any such
assets and (y) any notes, obligations or other securities
received by the Company or any such Subsidiary from such
transferee that are immediately converted by the Company or
such Subsidiary into cash, shall be deemed to be cash (to the
extent of the cash received in the case of subclause (y)) for
purposes of this clause (c); and (B) an amount equal to the
Fair Market Value (determined as set forth in clause (b)
above) of (1) Telecommunications Related Assets received by
the Company or any
<PAGE> 38
38
such Subsidiary from the transferee that will be used by the
Company or any such Subsidiary in the operation of a
Telecommunications Business in the United States and (2) the
Voting Stock of any Person engaged in the Telecommunications
Business in the United States received by the Company or any
such Subsidiary (provided that such Voting Stock is converted
to cash within 270 days or such Person concurrently becomes
or is a Subsidiary of the Company) shall be deemed to be cash
for purposes of this clause (c).
The foregoing provisions shall not apply to a sale, lease,
conveyance or other disposition of all or substantially all of the assets of
the Company, which shall be governed by Section 9(d) hereof.
10. [Intentionally Omitted.]
11. Amendment. This Certificate of Designation shall not be
amended, either directly or indirectly, or through merger or consolidation with
another entity, in any manner that would alter or change the powers,
preferences or special rights of the Series H Preferred Stock so as to affect
them adversely without the affirmative vote of the holders of a majority or
more of the outstanding Series H Preferred Stock, voting separately as a class.
12. Except as may otherwise be required by law, the shares of
Series H Preferred Stock shall not have any voting powers, preferences and
relative, participating, optional or other special rights, other than those
specifically set forth in this resolution (as such resolution may be amended
from time to time) and in the Certificate of Incorporation. The shares of
Series H Preferred Stock shall have no preemptive or subscription rights.
13. The headings of the various subdivisions hereof are for
convenience of reference only and shall not affect the interpretation of any of
the provisions hereof.
14. If any voting powers, preferences and relative,
participating, optional and other special rights of the Series H Preferred
Stock and qualifications, limitations and restrictions thereof set forth in
this resolution (as such resolution may be amended from time to time) is
invalid, unlawful or incapable of being enforced by reason of any rule of law
or public policy, all other voting powers, preferences and relative,
participating, optional and other special rights of Series H Preferred Stock
and qualifications, limitations and restrictions thereof set forth in this
resolution (as so amended) which can be given effect without the invalid,
unlawful or unenforceable voting powers, preferences and relative,
participating, optional and other
<PAGE> 39
39
special rights of Series H Preferred Stock and qualifications, limitations and
restrictions thereof shall, nevertheless, remain in full force and effect, and
no voting powers, preferences and relative, participating, optional or other
special rights of Series H Preferred Stock and qualifications, limitations and
restrictions thereof herein set forth shall be deemed dependent upon any other
such voting powers, preferences and relative, participating, optional or other
special rights of Series H Preferred Stock and qualifications, limitations and
restrictions thereof unless so expressed herein.
15. Form of Series H Preferred Stock. The shares of Series H
Preferred Stock will be issued in the form of registered definitive
certificates (the "Certificated Securities"). Upon such issuance, the Company
shall register such Certificated Securities in the name of, and cause the same
to be delivered to, the purchaser thereof (or the nominee of the purchaser).
Each Certificated Security will bear a legend to the following effect, unless
the Company determines otherwise in compliance with applicable law (the
"Restricted Shares Legend"):
"THE SECURITY (OR ITS PREDECESSOR) EVIDENCED HEREBY WAS ORIGINALLY
ISSUED IN A TRANSACTION EXEMPT FROM REGISTRATION UNDER SECTION 5 OF
THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE " "), AND
THE SECURITY EVIDENCED HEREBY MAY NOT BE OFFERED, SOLD OR OTHERWISE
TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION OR AN APPLICABLE
EXEMPTION THEREFROM. THE HOLDER OF THE SECURITY EVIDENCED HEREBY
AGREES FOR THE BENEFIT OF THE COMPANY THAT (A) SUCH SECURITY MAY BE
RESOLD, PLEDGED OR OTHERWISE TRANSFERRED, ONLY (1) IN ACCORDANCE WITH
AN EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT,
(2) TO THE COMPANY OR (3) PURSUANT TO AN EFFECTIVE REGISTRATION
STATEMENT AND, IN EACH CASE, IN ACCORDANCE WITH THE APPLICABLE
SECURITIES LAWS OF ANY STATE OF THE UNITED STATES OR ANY OTHER
APPLICABLE JURISDICTION AND (B) THE HOLDER WILL, AND EACH SUBSEQUENT
HOLDER IS REQUIRED TO, NOTIFY ANY PURCHASER FROM IT OF THE SECURITY
EVIDENCED HEREBY OF THE RESALE RESTRICTIONS SET FORTH IN (A) ABOVE."
16. Payment. (a) The Company shall maintain (i) an office or
agency where shares of Series H Preferred Stock may be presented for payment
(the "Paying Agent") and (ii) a Registrar, which shall be an office or an
agency where shares of Series H Preferred Stock may be presented for transfer.
The Company may appoint the Registrar and the Paying Agent and may appoint one
or more additional paying agents in such other locations as it shall determine.
The Company may change any Paying Agent
<PAGE> 40
40
without prior notice to any holder. The Company shall notify the Registrar of
the name and address of any Paying Agent appointed by the Company. If the
Company fails to appoint or maintain another entity as Paying Agent, the
Registrar shall act as such. Notwithstanding the foregoing, the Company or any
of its Affiliates may act as Paying Agent, Registrar or coregistrar.
(b) Neither the Company nor the Registrar shall be
required (A) to issue, countersign or register the transfer of or
exchange any share of Series H Preferred Stock during a period
beginning at the opening of business 15 days before any Mandatory
Redemption Date (as defined under Section 5(a)) and ending at the
close of business on such Mandatory Redemption Date or (B) to register
the transfer of or exchange any share of Series H Preferred Stock
selected for redemption.
(c) If shares of Series H Preferred Stock are issued
upon the transfer, exchange or replacement of shares of Series H
Preferred Stock bearing the Restricted Shares Legend, or if a request
is made to remove such Restricted Shares Legend on shares of Series H
Preferred, the shares of Series H Preferred Stock so issued shall bear
the Restricted Shares Legend, unless the holders of such shares shall
request such Restricted Shares Legend be removed, and outside counsel
for such holders provides the Company with a written opinion
satisfactory to the Company that the transfer of such shares is no
longer restricted by the Securities Act.
(d) Each holder of a share of Series H Preferred Stock
agrees to indemnify the Company and the Registrar against any
liability that directly results from the transfer, exchange or
assignment by such holder of such holder's share of Series H Preferred
Stock in violation of any provision of this Certificate of Designation
and/or applicable Federal or state securities law; provided, however,
that such indemnity shall not apply to acts of wilful misconduct or
gross negligence on the part of the Company or the Registrar, as the
case may be.
(e) Payments due on the shares of Series H Preferred
Stock shall be payable at the office or agency of the Paying Agent
maintained for such purpose in The City Of New York and at any other
office or agency maintained by the Paying Agent for such purpose. If
any such payment is in cash, it shall be payable in United States
dollars by wire transfer of immediately available funds (provided that
appropriate wire instructions have been received by the Paying Agent
at least 15 days prior to the applicable date of payment) to a United
States dollar account maintained by the holder with, a bank located in
New York City; provided that, if there are ever more than 10 holders
of Series H Preferred Stock, at the option of the Company payment of
dividends in cash may be made by check mailed to the address of the
person entitled thereto as such address shall appear in the Series H
Preferred Share Register; and provided further that
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41
any payment to a holder in excess of $100,000 shall be made by wire
transfer of immediately available funds at the request of such holder.
<PAGE> 42
42
IN WITNESS WHEREOF, the Company has caused this certificate to be duly
executed by ____________________, Chairman of the Board, President and Chief
Executive Officer of the Company and attested by ____________________, Senior
Vice President, Chief Financial Officer and Secretary of the Company, this
____________________ day of ____________________.
INTERMEDIA COMMUNICATIONS INC.
By:
-------------------------------------
Name:
-------------------------------------
Title:
-------------------------------------
Chairman of the Board, President and
Chief Executive Officer
ATTEST:
By:
---------------------------
Name:
---------------------------
Title:
---------------------------
Senior Vice President,
Chief Financial Officer
and Secretary
