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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 13D
UNDER THE SECURITIES EXCHANGE ACT OF 1934
(AMENDMENT NO. 1 )*
IXC Communications, Inc.
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(Name of Issuer)
Common Stock, $0.01 per share
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(Title of Class of Securities)
450713102
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(CUSIP Number)
Michael M. Pastore, Esq., Vice President, General Electric Investment
Corporation, 3003 Summer Street, Stamford, CT 06904
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(Name, Address and Telephone Number of Person Authorized to Receive Notices
and Communications)
APRIL 1, 1997
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(Date of Event which Requires Filing of this Statement)
If the filing person has previously filed a statement on Schedule 13G to report
the acquisition which is the subject of this Schedule 13D, and is filing this
schedule because of Rule 13d-1(b)(3) or (4), check the following box / /.
Check the following box if a fee is being paid with the statement / /. (A fee is
not required only if the reporting person: (1) has a previous statement on file
reporting beneficial ownership of more than five percent of the class of
securities described in Item 1; and (2) has filed no amendment subsequent
thereto reporting beneficial ownership of five percent or less of such class.)
(See Rule 13d-7.)
NOTE: Six copies of this statement, including all exhibits, should be filed with
the Commission. See Rule 13d-1(a) for other parties to whom copies are to be
sent.
*The remainder of this cover page shall be filled out for a reporting person's
initial filing on this form with respect to the subject class of securities, and
for any subsequent amendment containing information which would alter
disclosures provided in a prior cover page.
The information required on the remainder of this cover page shall not be deemed
to be "filed" for the purpose of Section 18 of the Securities Exchange Act of
1934 ("Act") or otherwise subject to the liabilities of that section of the Act
but shall be subject to all other provisions of the Act (however, see the
Notes).
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SCHEDULE 13D
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CUSIP NO. 450713102 PAGE 2 OF 76 PAGES
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1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
Trustees of General Electric Pension Trust
I.R.S. # 14-6015763
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2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) / /
(b) / /
Not applicable
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3 SEC USE ONLY
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4 SOURCE OF FUNDS*
WC
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5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO
ITEMS 2(d) or 2(e) / /
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6 CITIZENSHIP OR PLACE OF ORGANIZATION
New York State
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7 SOLE VOTING POWER
NUMBER OF
8,289,258 shares (9,568,030 shares upon conversion of
SHARES Preferred Stock)
BENEFICIALLY -------------------------------------------------------------
8 SHARED VOTING POWER
OWNED BY
0
EACH
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REPORTING 9 SOLE DISPOSITIVE POWER
PERSON 8,289,258 shares (9,568,030 shares upon conversion of
Preferred Stock)
WITH
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10 SHARED DISPOSITIVE POWER
0
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11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
8,289,258 shares (9,568,030 shares upon conversion of preferred stock)
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12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES CERTAIN SHARES*
/ /
Not Applicable
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13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
26.9% (29.8% upon conversion of preferred stock)
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14 TYPE OF REPORTING PERSON*
EP
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*SEE INSTRUCTIONS BEFORE FILLING OUT!
INCLUDE BOTH SIDES OF THE COVER PAGE, RESPONSES TO ITEMS 1-7
(INCLUDING EXHIBITS) OF THE SCHEDULE, AND THE SIGNATURE ATTESTATION.
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NOTE: This Amendment No. 1 amends a Statement on Schedule 13D (the
"Statement") and is being filed to report beneficial ownership by the Trustees
of General Electric Pension Trust, a New York common law trust ("GEPT") in the
stock of IXC Communications, Inc., a Delaware corporation (the "Issuer"). Unless
defined herein, all capitalized terms shall have the meanings set forth in the
Agreement (defined below). The Items from the Statement are amended as follows:
ITEM 2. IDENTITY AND BACKGROUND
This statement is filed on behalf of the Trustees of General
Electric Pension Trust, a New York common law trust ("GEPT")(sometimes also
referred to as the "Reporting Person").
The address of the principal offices of GEPT is 3003 Summer Street,
Stamford, Connecticut 06904.
For information with respect to the identity of each Trustee of GEPT
see Schedule I attached hereto.
During the last five years, neither the Reporting Person nor, to the
best knowledge of the Reporting Person, any person identified in Schedule I has
(i) been convicted in a criminal proceeding (excluding traffic violations or
similar misdemeanors) or (ii) been a party to a civil proceeding of a judicial
or administrative body of competent jurisdiction and as a result of such a
proceeding was or is subject to a judgement, decree or final order enjoining
future violations of, or prohibiting or mandating activities subject to, federal
or state securities laws or finding any violation with respect to such laws.
The Reporting Person and, to the best knowledge of the Reporting
Person, all persons identified in Schedule I are United States citizens.
ITEM 3. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION
On April 1, 1997 ("Date of Purchase"), the Trustees of General
Electric Pension Trust bought 300,000 shares of 7 1/4% Junior Convertible
Preferred Stock due 2007 of the Issuer ("Preferred Stock") from Credit Suisse
First Boston Corporation and Dillon, Read & Co. Inc. (collectively, the
"Sellers") for $30,000,000. GEPT obtained the funds for this purchase from
general funds held by the Trust.
ITEM 4. PURPOSE OF TRANSACTION
In its Statement, GEPT disclosed that it acquired the shares of
Common Stock reported therein as an investment in the regular course of
business. GEPT acquired the shares of Preferred Stock reported herein as an
investment in the regular course of business. GEPT intends to review its
investment in the Issuer from time to time and, depending on market
considerations and other factors, may convert its shares of Preferred Stock into
shares of
Page 3 of 76 Pages
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Common Stock, and may purchase or sell shares of Common Stock, if appropriate
opportunities to do so are available, on such terms and at such times as it
considers advisable.
Except as noted below, the Reporting Person does not have any
special voting rights on any matter required or permitted to be voted upon by
the stockholders of the Issuer other than voting rights possessed by all holders
of Common Stock. However, if the dividends on the Preferred Stock are in arrears
and unpaid for six or more Dividend Periods or if the Issuer fails to redeem the
Preferred Stock in a timely manner, as required by the Agreement, the number of
directors constituting the Board of Directors of the Issuer will increase by two
(2) members and the holders of Preferred Stock, voting separately and as a class
(voting together with the holders of Parity Stock, as defined in the Certificate
of Designations, upon which like rights have been conferred and are
exercisable), shall elect them to the Board.
Subject to the foregoing, the Reporting Person does not have any
present plans or proposals which relate to or would result in:
(a) The acquisition by any person of additional securities of
the Issuer, or the disposition of securities of the Issuer;
(b) An extraordinary corporate transaction, such as a merger,
reorganization or liquidation, involving the Issuer or any of its
subsidiaries;
(c) A sale or transfer of a material amount of assets of the
Issuer or any of its subsidiaries;
(d) Any change in the present board of directors or management of
the Issuer, including any plans or proposals to change the number of directors
or to fill any existing vacancies on the board;
(e) Any material change in the present capitalization or
dividend policy of the Issuer;
(f) Any other material change in the Issuer's business or
corporate structure;
(g) Changes in the Issuer's charter, bylaws or instruments
corresponding thereto or other actions which may impede the acquisition of
control of the Issuer by any person;
(h) Causing a class of securities of the Issuer to be delisted
from a national securities exchange or to cease to be authorized to be quoted in
an inter-dealer quotation system of a registered national securities
association;
(i) A class of equity securities of the Issuer becoming eligible
for termination of registration pursuant to Section 12(g)(4) of the Securities
Exchange Act of 1934, as amended; or
(j) Any action similar to any of those enumerated above.
Page 4 of 76 Pages
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ITEM 5. INTEREST IN SECURITIES OF ISSUER
(a) As of the date hereof, GEPT has sole beneficial ownership of
9,568,030 shares of Common Stock representing approximately 29.8% of the shares
of Common Stock outstanding. This number reflects the ownership of shares of
Common Stock upon conversion of 300,000 shares of Preferred Stock purchased from
the Sellers on April 1, 1997, which shares of Preferred Stock are convertible,
in the aggregate, into 1,278,772 shares of Common Stock, pursuant to the
conversion provisions of the Agreement.
(b) GEPT has sole power to vote or to direct the vote, in the case
of shares of Common Stock, and to dispose or direct the disposition of the
shares of Common Stock and Preferred Stock beneficially owned by GEPT.
(c) Except as disclosed herein, neither GEPT nor any person
identified in Schedule I has effected any transaction in shares of Common Stock
and Preferred Stock during the preceding 60 days.
(d) GEPT has the sole right to receive or direct the receipt of
dividends from, or the proceeds from the sale of, the shares of Common Stock and
Preferred Stock owned by it.
(e) Not Applicable.
ITEM 6. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS OR RELATIONSHIPS WITH
RESPECT TO SECURITIES OF THE ISSUER
CERTIFICATE OF DESIGNATIONS
On April 1, 1997, GEPT purchased the Preferred Stock, which were
subject to terms and conditions set forth in a Certificate of Designation of the
Powers, Preferences and Relative, Participating, Optional and Other Special
Rights of 7 1/4% Junior Convertible Preferred Stock Due 2007 and Qualifications,
Limitations and Restrictions Thereof (the "Agreement") dated
as of March 31, 1997, attached hereto as Exhibit 1.
REGISTRATION RIGHTS AGREEMENT
The Certificate of Designations also reserved for holders of the
Preferred Stock certain rights set forth in the Registration Rights Agreement,
dated as of March 25, 1997 (the "Registration Rights Agreement"), by and among
the Issuer and the Sellers. A copy of the Registration Rights Agreement is
attached hereto as Exhibit 2.
Page 5 of 76 Pages
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ITEM 7. MATERIAL TO BE FILED AS EXHIBITS
1. Certificate of Designations, dated as of March 31, 1997,
executed by the Issuer.
2. Registration Rights Agreement, dated as of March 25, 1997, by
and among the Issuer and the Sellers.
Page 6 of 76 Pages
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SIGNATURE
After reasonable inquiry and to the best of my knowledge and belief,
I certify that the information set forth in this statement is true, correct and
complete.
Dated: April 23, 1997
TRUSTEES OF GENERAL ELECTRIC
PENSION TRUST
By: /s/ Alan M. Lewis
---------------------------
Name: Alan M. Lewis
Title: Trustee
Page 7 of 76 Pages
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SCHEDULE I
GENERAL ELECTRIC PENSION TRUST
3003 Summer Street, P.O. Box 7900
Stamford, Connecticut 06904
The names of the Trustees of General Electric Pension Trust are as
follows:
Eugene K. Bolton
Michael J. Cosgrove
Ralph R. Layman
Alan M. Lewis
Robert A. MacDougall
John H. Myers
Donald W. Torey
Page 8 of 76 Pages
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Exhibit 1
CONFORMED COPY
CERTIFICATE OF DESIGNATION OF THE POWERS,
PREFERENCES AND RELATIVE, PARTICIPATING, OPTIONAL
AND OTHER SPECIAL RIGHTS OF 7 1/4% JUNIOR
CONVERTIBLE PREFERRED STOCK DUE 2007 AND
QUALIFICATIONS, LIMITATIONS AND RESTRICTIONS THEREOF
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Pursuant to Section 151 of the
General Corporation Law of the State of Delaware
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IXC Communications, Inc. (the "Company"), a corporation organized
and existing under the General Corporation Law of the State of Delaware, does
hereby certify that, pursuant to authority conferred upon the board of directors
of the Corporation (the "Board of Directors") by its Restated Certificate of
Incorporation (hereinafter referred to as the "Restated Certificate of
Incorporation"), and pursuant to the provisions of Section 151 of the General
Corporation Law of the State of Delaware, said Board of Directors, at a meeting
duly called and held on March 28, 1997, duly approved and adopted the following
resolution (the "Resolution"):
RESOLVED that, pursuant to the authority vested in the Board of
Directors by its Certificate of Incorporation, the Board of Directors does
hereby create, authorize and provide for the issuance of 7 1/4% Junior
Convertible Preferred Stock Due 2007, par value $.01 per share, with a stated
value initially of $100 per share, consisting of up to 1,400,000 shares having
the designation, preferences, relative, participating, optional and other
special rights and the qualifications, limitations and restrictions thereof that
are set forth in the Restated Certificate of Incorporation and in this
Resolution as follows:
(a) DESIGNATION. There is hereby created out of the authorized
and unissued shares of Preferred Stock of the Company a series of Preferred
Stock designated as the "7 1/4% Junior Convertible Preferred Stock Due 2007"
(the "Convertible Preferred Stock"). The number of shares constituting the
Convertible Preferred Stock shall be 1,400,000. The liquidation preference of
the Convertible Preferred Stock shall be $100 per share (the "Liquidation
Preference").
(b) RANK. The Convertible Preferred Stock will, with respect to
dividend rights and rights on liquidation, winding-up and dissolution, rank (i)
senior to all classes of common stock and to each other class of Capital Stock
or series of Preferred Stock established hereafter by the Board of Directors of
the Company, the terms of which do not expressly provide that it ranks senior
to, or on a parity with, the Convertible Preferred Stock
PAGE 19 OF 86 PAGES
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as to dividend rights and rights on liquidation, winding-up and dissolution of
the Company (collectively referred to, together with all classes of common stock
of the Company, as "Junior Stock"); (ii) on a parity with each other class of
Capital Stock or series of Preferred Stock established hereafter by the Board of
Directors of the Company, the terms of which expressly provide that such class
or series will rank on a parity with the Convertible Preferred Stock as to
dividend rights and rights on liquidation, winding-up and dissolution
(collectively referred to as "Parity Stock"); and (iii) junior to each share of
Series 3 Preferred Stock now or hereafter outstanding and junior to each class
of Capital Stock or series of Preferred Stock established hereafter by the Board
of Directors of the Company, the terms of which hereafter established classes or
series expressly provide that such class or series will rank senior to the
Convertible Preferred Stock as to dividend rights or rights on liquidation,
winding-up and dissolution of the Company (collectively referred to as "Senior
Stock"). The Company may not authorize, create or increase the authorized amount
of any class or series of Senior Stock without the approval of the holders of at
least two-thirds of the shares of Convertible Preferred Stock then outstanding,
voting or consenting, as the case may be, as one class. All claims of the
holders of the Convertible Preferred Stock, including claims with respect to
dividend payments, redemption payments, mandatory repurchase payments or rights
upon liquidation, winding-up or dissolution, shall rank junior to the claims of
the holders of any debt of the Company and all other creditors of the Company.
(c) DIVIDENDS. (i) Holders of the outstanding shares of
Convertible Preferred Stock will be entitled to receive, when, as and if
declared by the Board of Directors of the Company, out of funds legally
available therefor, dividends on each share of the Convertible Preferred Stock
at a rate per annum equal to 7 1/4% of the Liquidation Preference of such share
payable quarterly (each such quarterly period being herein called a "Dividend
Period"). In addition to the dividends described in the preceding sentence,
holders of outstanding shares of Convertible Preferred Stock which are Transfer
Restricted Securities will be entitled to additional dividends (the "Additional
Dividends"), when, as and if declared by the Board of Directors of the Company,
out of funds legally available therefor, with respect to the shares of
Convertible Preferred Stock, which Additional Dividends shall accrue as follows
if any of the following events occur (each such event in clauses (A) and (B)
below being herein called a "Registration Default"): (A) if by August 31, 1997,
the Shelf Registration Statement has not been declared effective by the
Commission; or (B) if after the Shelf Registration Statement is declared
effective (1) the Shelf Registration Statement thereafter ceases to be
effective; or (2) the Shelf Registration Statement or the related prospectus
ceases to be usable (in each case except as permitted below) in connection with
resales of Transfer Restricted Securities in accordance with and during the
periods specified herein because either (I) any event occurs as a result of
which the related prospectus forming part of such Shelf Registration Statement
would include any untrue statement of a material fact or omit to state any
material fact necessary to make the statements therein in the light of the
circumstances under which they were made not misleading, or (II) it shall be
necessary to amend such Shelf Registration Statement or supplement the related
prospectus, to comply with the Securities Act or the Exchange Act or the
respective rules thereunder.
Additional Dividends shall accrue on the shares of Convertible
Preferred Stock which are Transfer Restricted Securities from and including the
date on which any such
PAGE 20 OF 86 PAGES
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Registration Default shall occur, to but excluding the date on which all such
Registration Defaults have been cured, at a rate of 7 3/4% per annum.
A Registration Default referred to in clause (B) of paragraph
(c)(i) shall be deemed not to have occurred and be continuing in relation to the
Shelf Registration Statement or the related prospectus if (i) such Registration
Default has occurred solely as a result of (x) the filing of a post-effective
amendment to the Shelf Registration Statement to incorporate annual audited
financial information with respect to the Company where such post-effective
amendment is not yet effective and needs to be declared effective to permit
Holders to use the related prospectus or (y) other material events with respect
to the Company that would need to be described in the Shelf Registration
Statement or the related prospectus and (ii) in the case of clause (y), the
Company proceeds promptly and in good faith to amend or supplement the Shelf
Registration Statement and related prospectus to describe such events unless the
Company has determined in good faith that there are material legal or commercial
impediments in doing so; PROVIDED, HOWEVER, that in any case if such
Registration Default occurs for a continuous period in excess of 45 days,
Additional Dividends shall be payable in accordance with the immediately
preceding paragraphs of this paragraph (c)(i) from the day such Registration
Default initially occurs until such Registration Default is cured.
Any amounts of Additional Dividends due pursuant to clauses (A)
or (B) of this paragraph (c)(i) or pursuant to the proviso contained in the
preceding sentence will be payable on the regular dividend payment dates with
respect to the Convertible Preferred Stock and on the same terms and conditions
and subject to the same limitations as pertain at such time for the payment of
regular dividends. The amount of Additional Dividends will be determined by
multiplying the applicable Additional Dividends rate by the aggregate
liquidation preference of the outstanding shares of Convertible Preferred Stock,
multiplied by a fraction, the numerator of which is the number of days such
Additional Dividend rate was applicable during such period (determined on the
basis of a 360-day year comprised of twelve 30-day months), and the denominator
of which is 360.
All dividends on the Convertible Preferred Stock, including
Additional Dividends, to the extent accrued, shall be cumulative, whether or not
earned or declared, on a daily basis from the Issue Date or, in the case of
additional shares of Convertible Preferred Stock issued in payment of a
dividend, from the date of issuance of such additional shares of Convertible
Preferred Stock, and shall be payable quarterly in arrears on March 31, June 30,
September 30 and December 31 of each year (each a "Dividend Payment Date"),
commencing on June 30, 1997 to holders of record on the March 15, June 15,
September 15 and December 15 immediately preceding the relevant Dividend Payment
Date. Any dividend on the Convertible Preferred Stock payable pursuant to this
paragraph (c)(i) on or prior to March 31, 1999 shall be, at the option of the
Company, payable (1) in cash or (2) through the issuance of a number of
additional shares (rounded to the nearest whole share) of Convertible Preferred
Stock (the "Additional Shares") equal to the dividend amount divided by the
Liquidation Preference of such Additional Shares. With respect to dividends
accrued after March 31, 1999, all dividends shall be payable in cash; PROVIDED,
HOWEVER, that to the extent and for so long as the Company is prohibited by the
terms of any of its indebtedness then outstanding or by the terms of the Series
3 Preferred Stock of the Company or any agreement
PAGE 21 OF 86 PAGES
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or instrument to which the Company is then subject, from paying cash dividends
on the Convertible Preferred Stock, such dividends will accrue on each share at
the rate per annum equal to 8 3/4% of the Liquidation Preference per share
(instead of the 7 1/4% rate set forth in the first paragraph of this paragraph
(c)(i)) (together with any Additional Dividends then payable, which for purposes
of this paragraph shall be payable at a rate of 0.50% over and above the 8 3/4%
rate) payable through the issuance of a number of Additional Shares (rounded to
the nearest whole share) equal to the dividend amount on such share divided by
the Liquidation Preference of such Additional Shares on the relevant Dividend
Payment Date. Except as provided herein, accrued and unpaid dividends, if any,
will not bear interest or bear dividends thereon.
(ii) All dividends paid with respect to shares of the Convertible
Preferred Stock pursuant to paragraph (c)(i) shall be paid pro rata to the
holders entitled thereto.
(iii) No full dividends may be declared or paid or set apart for
the payment of dividends by the Company on any Parity Stock for any period
unless full cumulative dividends in respect of each Dividend Period ending on or
before such period shall have been or contemporaneously are declared and paid
(or are deemed declared and paid) in full or declared and, if payable in cash, a
sum in cash sufficient for such payment set apart for such payment on the
Convertible Preferred Stock. If full dividends are not so paid, the Convertible
Preferred Stock will share dividends pro rata with the Parity Stock.
(iv) The Company will not (A) declare, pay or set apart funds for
the payment of any dividend or other distribution with respect to any Junior
Stock or (B) redeem, purchase or otherwise acquire for consideration any Junior
Stock through a sinking fund or otherwise, unless (1) all accrued and unpaid
dividends with respect to the Convertible Preferred Stock and any Parity Stock
at the time such dividends are payable have been paid or funds have been set
apart for payment of such dividends and (2) sufficient funds have been paid or
set apart for the payment of the dividend for the current dividend period with
respect to the Convertible Preferred Stock and any Parity Stock. As used herein,
the term "dividend" does not include dividends payable solely in shares of
Junior Stock on Junior Stock or in options, warrants or rights to holders of
Junior Stock to subscribe or purchase any Junior Stock.
(v) Dividends on account of arrears for any past Dividend Period
and dividends in connection with any optional redemption may be declared and
paid at any time, without reference to any regular Dividend Payment Date, to
holders of record on such date, not more than 45 days prior to the payment
thereof, as may be fixed by the Board of Directors of the Company.
(vi) Dividends payable on the Convertible Preferred Stock for any
period other than a Dividend Period shall be computed on the basis of a 360-day
consisting year of twelve 30-day months and the actual number of days elapsed in
the period for which payable. Dividends payable on the Convertible Preferred
Stock for a full Dividend Period will be computed by dividing the per annum
dividend rate by four.
PAGE 22 OF 86 PAGES
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(vii) Certificates of Common Stock relating to Convertible
Preferred Stock surrendered for conversion by a registered Holder during the
period from the close of business on any regular record date next preceding any
Dividend Payment Date to the opening of business on such Dividend Payment Date
(except Convertible Preferred Shares called for redemption on a Redemption Date
within such period) must be accompanied by payment in cash of an amount equal to
the accrued but unpaid dividends thereon which such registered Holder is to
receive on such Dividend Payment Date with respect to the Convertible Preferred
Stock so surrendered.
(d) LIQUIDATION PREFERENCE. (i) Upon any voluntary or involuntary
liquidation, dissolution or winding-up of the Company, holders of Convertible
Preferred Stock will be entitled to be paid, out of the assets of the Company
available for distribution to its stockholders, the Liquidation Preference of
the outstanding shares of Convertible Preferred Stock, plus, without
duplication, an amount in cash equal to all accumulated and unpaid dividends
(whether or not earned or declared and including Additional Dividends, if any,)
thereon to the date fixed for liquidation, dissolution or winding-up (including
an amount equal to a prorated dividend for the period from the last Dividend
Payment Date to the date fixed for liquidation, dissolution or winding-up that
would have been payable had the Convertible Preferred Stock been the subject of
an Optional Redemption on such date) before any distribution is made on any
Junior Stock. If, upon any voluntary or involuntary liquidation, dissolution or
winding up of the Company, the amounts payable with respect to the Convertible
Preferred Stock and all Parity Stock are not paid in full, the Convertible
Preferred Stock and the Parity Stock will share equally and ratably (in
proportion to the respective amounts that would be payable on such shares of
Convertible Preferred Stock and the Parity Stock, respectively, if all amounts
payable thereon had been paid in full) in any distribution of assets of the
Company to which each is entitled. After payment of the full amount of the
Liquidation Preference of the outstanding shares of Convertible Preferred Stock
(and, if applicable, an amount equal to a prorated dividend), the holders of
shares of Convertible Preferred Stock will not be entitled to any further
participation in any distribution of assets of the Company.
(ii) For the purposes of this paragraph (d), neither the sale,
conveyance, exchange or transfer (for cash, shares of stock, securities or other
consideration) of all or substantially all of the property or assets of the
Company nor the consolidation or merger of the Company with or into one or more
other entities shall be deemed to be a liquidation, dissolution or winding-up of
the Company.
(e) REDEMPTION. (i) OPTIONAL REDEMPTION. (A) The Convertible
Preferred Stock shall not be redeemable prior to April 3, 2000. On or after
April 3, 2000, each share of the Convertible Preferred Stock may be redeemed
(subject to the legal availability of funds therefor) at any time, in whole or
in part, at the option of the Company, at the redemption prices (expressed as a
percentage of the Liquidation Preference of such share) set forth below, plus,
without duplication, an amount in cash equal to all accrued and unpaid
Liquidated Damages and all accrued and unpaid dividends to the date fixed for
redemption (the "Optional Redemption Date") (including an amount in cash equal
to a prorated dividend for the period from the Dividend Payment Date immediately
prior to the Optional Redemption Date) (the
PAGE 23 OF 86 PAGES
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"Optional Redemption Price"). Notwithstanding the foregoing, prior to April 1,
2002, the Company shall only have the option to redeem shares of Convertible
Preferred Stock if, during the period of 30 consecutive Trading Days ending on
the Trading Day immediately preceding the date that the Redemption Notice is
mailed to holders, the Closing Bid Price for the Common Stock exceeded 150% of
the Conversion Price effective on the date of such Redemption Notice for at
least 20 of such Trading Days. If redeemed during the 12-month period beginning
April 1 of each of the years set forth below (or in the case of the year 2000,
April 3), the Optional Redemption Price per share shall be the applicable
percentage of the Liquidation Preference of such share set forth below plus,
without duplication, in each case, an amount in cash equal to all accrued and
unpaid Liquidated Damages and all accrued and unpaid dividends (including an
amount equal to a prorated dividend from the immediately preceding Dividend
Payment Date to the Optional Redemption Date), if any, to the Optional
Redemption Date:
YEAR IN WHICH REDEMPTION OCCURS PERCENTAGE
------------------------------- ----------
2000 ......................................... 104.83%
2001 ......................................... 104.03%
2002 ......................................... 103.22%
2003 ......................................... 102.42%
2004 ......................................... 101.61%
2005 ......................................... 100.81%
2006 ......................................... 100.000%
(B) In the event of a redemption of only a portion of the then
outstanding shares of Convertible Preferred Stock, the Company shall effect such
redemption on a pro rata basis, except that the Company may redeem all of the
shares held by holders of fewer than 100 shares (or all of the shares held by
holders who would hold less than 100 shares as a result of such redemption), as
may be determined by the Company.
(ii) MANDATORY REDEMPTION. Each share of the Convertible
Preferred Stock (if not earlier redeemed or converted) shall be subject to
mandatory redemption in whole (to the extent of lawfully available funds
therefor) on March 31, 2007 (the "Mandatory Redemption Date") at a price equal
to 100% of the Liquidation Preference of such share, plus, without duplication,
all accrued and unpaid Liquidated Damages and accrued and unpaid dividends
thereon (including an amount equal to a prorated dividend thereon from the
immediately preceding Dividend Payment Date to the Mandatory Redemption Date),
if any, to the Mandatory Redemption Date (the "Mandatory Redemption Price").
(iii) PROCEDURE FOR REDEMPTION. (A) On and after the Optional
Redemption Date or the Mandatory Redemption Date, as the case may be (the
"Redemption Date"), unless the Company defaults in the payment of the applicable
redemption price, dividends will cease to accumulate on shares of Convertible
Preferred Stock called for redemption and all rights of holders of such shares
will terminate except for the right to receive the Optional Redemption Price or
the Mandatory Redemption Price, as the case may be, without interest; PROVIDED,
HOWEVER, that if a notice of redemption shall have been given as provided in
PAGE 24 OF 86 PAGES
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paragraph (iii)(B) and the funds necessary for redemption (including an amount
in respect of all dividends that will accrue to the Redemption Date) shall have
been segregated and irrevocably set apart by the Company, in trust for the
benefit of the holders of the shares called for redemption, then dividends shall
cease to accumulate on the Redemption Date on the shares to be redeemed and, at
the close of business on the day on which such funds are segregated and set
apart, the holders of the shares to be redeemed shall, with respect to the
shares to be redeemed, cease to be stockholders of the Company and shall be
entitled only to receive the Optional Redemption Price or the Mandatory
Redemption Price, as the case may be, for such shares without interest from the
Redemption Date.
(B) With respect to a redemption pursuant to paragraph (e)(i) or
(e)(ii), the Company will send a written notice of redemption by first class
mail to each holder of record of shares of Convertible Preferred Stock, not
fewer than 15 days nor more than 60 days prior to the Redemption Date at its
registered address (the "Redemption Notice"); PROVIDED, HOWEVER, that no failure
to give such notice nor any deficiency therein shall affect the validity of the
procedure for the redemption of any shares of Convertible Preferred Stock to be
redeemed except as to the holder or holders to whom the Company has failed to
give said notice or except as to the holder or holders whose notice was
defective. The Redemption Notice shall state:
(1) whether the redemption is pursuant to paragraph (e)(i) or
(e)(ii) hereof;
(2) the Optional Redemption Price or the Mandatory Redemption
Price, as the case may be;
(3) whether all or less than all the outstanding shares of the
Convertible Preferred Stock are to be redeemed and the total number of shares of
the Convertible Preferred Stock being redeemed;
(4) the Redemption Date;
(5) that the holder is to surrender to the Company, in the
manner, at the place or places and at the price designated, his certificate or
certificates representing the shares of Convertible Preferred Stock to be
redeemed; and
(6) that dividends on the shares of the Convertible Preferred
Stock to be redeemed shall cease to accumulate on such Redemption Date unless
the Company defaults in the payment of the Optional Redemption Price or the
Mandatory Redemption Price, as the case may be.
(C) Each holder of Convertible Preferred Stock shall surrender
the certificate or certificates representing such shares of Convertible
Preferred Stock to the Company, duly endorsed (or otherwise in proper form for
transfer, as determined by the Company), in the manner and at the place
designated in the Redemption Notice, and on the Redemption Date the full
Optional Redemption Price or Mandatory Redemption Price, as the case may be, for
such shares shall be payable in cash to the person whose name appears on such
certificate or
PAGE 25 OF 86 PAGES
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certificates as the owner thereof, and each surrendered certificate shall be
canceled and retired. In the event that less than all of the shares represented
by any such certificate are redeemed, a new certificate shall be issued
representing the unredeemed shares.
(f) VOTING RIGHTS. (i) The holders of Convertible Preferred
Stock, except as otherwise required under Delaware law or as set forth in
paragraphs (ii) and (iii) below, shall not be entitled or permitted to vote on
any matter required or permitted to be voted upon by the stockholders of the
Company.
(ii) (A) If (1) dividends on the Convertible Preferred Stock are
in arrears and unpaid for six or more Dividend Periods (whether or not
consecutive) (a "Dividend Default"); or (2) the Company fails to redeem the
Convertible Preferred Stock on March 31, 2007, or fails to otherwise discharge
any redemption obligation with respect to the Convertible Preferred Stock, then
the number of directors constituting the Board of Directors of the Company will
be increased by two and the Holders of the then outstanding shares of
Convertible Preferred Stock (together with the holders of Parity Stock upon
which like rights have been conferred and are exercisable), voting separately
and as a class, shall have the right and power to elect such two additional
directors. Each such event described in clauses (1) or (2) above is a "Voting
Rights Triggering Event". A Voting Rights Triggering Event shall not be deemed
to have occurred if at the time of such event there are less than 200,000 shares
of Convertible Preferred Stock then outstanding.
(B) The voting rights set forth in subparagraph (f)(ii)(A) above
will continue until such time as (x) in the case of a Dividend Default, all
dividends in arrears on the Convertible Preferred Stock are paid in full in
cash, (y) in all other cases, any failure, breach or default giving rise to such
Voting Rights Triggering Event is remedied or waived by the Holders of at least
two-thirds of the shares of Convertible Preferred Stock then outstanding or (z)
at any time there are less than 200,000 shares of Convertible Preferred Stock
outstanding, at which time the term of any directors elected pursuant to the
provisions of subparagraph (f)(ii)(A) above shall terminate and the number of
directors constituting the Board of Directors shall be decreased by two (until
the occurrence of any subsequent Voting Rights Triggering Event). At any time
after voting power to elect directors shall have become vested and be continuing
in the holders of Convertible Preferred Stock (together with the holders of
Parity Stock upon which like rights have been conferred and are exercisable)
pursuant to subparagraph (f)(ii)(A) hereof, or if vacancies shall exist in the
offices of directors elected by such holders, a proper officer of the Company
may, and upon the written request of the holders of record of at least 25% of
the shares of Convertible Preferred Stock then outstanding or the holders of 25%
of the shares of Parity Stock then outstanding upon which like rights have been
confirmed and are exercisable addressed to the secretary of the Company shall,
call a special meeting of the Holders of Convertible Preferred Stock and the
holders of such Parity Stock for the purpose of electing the directors which
such holders are entitled to elect pursuant to the terms hereof; provided,
HOWEVER, that no such special meeting shall be called if the next annual meeting
of stockholders of the Company is to be held within 60 days after the voting
power to elect directors shall have become vested, in which case such meeting
shall be deemed to have been called for such next annual meeting. If such
meeting shall not be called by a proper officer of the Company within 20 days
after personal service to the
PAGE 26 OF 86 PAGES
<PAGE>
secretary of the Company at its principal executive offices, then the Holders of
record of at least 25% of the outstanding shares of Convertible Preferred Stock
or the holders of 25% of the shares of Parity Stock upon which like rights have
been confirmed and are exercisable may designate in writing one of their members
to call such meeting at the expense of the Company, and such meeting may be
called by the person so designated upon the notice required for the annual
meetings of stockholders of the Company and shall be held at the place for
holding the annual meetings of stockholders. Any holder of Convertible Preferred
Stock or such Parity Stock so designated shall have, and the Company shall
provide, access to the lists of holders of Convertible Preferred Stock and the
holders of such Parity Stock to be called pursuant to the provisions hereof. If
no special meeting of the Holders of Convertible Preferred Stock and the holders
of such Parity Stock is called as provided in this paragraph (f)(ii), then such
meeting shall be deemed to have been called for the next annual meeting of
stockholders of the Company or special meeting of the holders of any other
capital stock of the Company.
(C) At any meeting held for the purposes of electing directors at
which the Holders of Convertible Preferred Stock (together with the holders of
Parity Stock upon which like rights have been conferred and are exercisable)
shall have the right, voting together as a separate class, to elect directors as
aforesaid, the presence in person or by proxy of the holders of at least a
majority in voting power of the outstanding shares of Convertible Preferred
Stock (and such Parity Stock) shall be required to constitute a quorum thereof.
(D) Any vacancy occurring in the office of a director elected by
the Holders of Convertible Preferred Stock (and such Parity Stock) may be filled
by the remaining director elected by the Holders of Convertible Preferred Stock
(and such Parity Stock) unless and until such vacancy shall be filled by the
Holders of Convertible Preferred Stock (and such Parity Stock).
(iii) (A) So long as any shares of the Convertible Preferred
Stock are outstanding, the Company will not authorize, create or increase the
authorized amount of any class or series of Senior Stock without the affirmative
vote or consent of holders of at least two-thirds of the shares of Convertible
Preferred Stock then outstanding, voting or consenting, as the case may be, as
one class, given in person or by proxy, either in writing or by resolution
adopted at an annual or special meeting (except that no such vote or consent
shall be required for the issuance of additional shares of Series 3 Preferred
Stock to be paid as dividends on such Series 3 Preferred Stock pursuant to the
terms of such Series 3 Preferred Stock).
(B) So long as any shares of the Convertible Preferred Stock are
outstanding, the Company will not amend this Certificate of Designation so as to
affect adversely the specified rights, preferences, privileges or voting rights
of Holders of shares of Convertible Preferred Stock or to authorize the issuance
of any additional shares of Convertible Preferred Stock (except to authorize the
issuance of additional shares of Convertible Preferred Stock to be paid as
dividends on the Convertible Preferred Stock, for which no consent shall be
necessary) without the affirmative vote or consent of Holders of at least
two-thirds of the issued and outstanding shares of Convertible Preferred Stock,
voting or consenting, as the case
PAGE 27 OF 86 PAGES
<PAGE>
may be, as one class, given in person or by proxy, either in writing or by
resolution adopted at an annual or special meeting.
(C) Except as set forth in paragraph (f)(iii)(A) or (B) above,
(x) the creation, authorization or issuance of any shares of any Junior Stock,
Parity Stock or Senior Stock, including the designation of a series of
Convertible Preferred Stock, or (y) the increase or decrease in the amount of
authorized Capital Stock of any class, including Preferred Stock, shall not
require the consent of Holders of Convertible Preferred Stock and shall not be
deemed to affect adversely the rights, preferences, privileges or voting rights
of shares of Convertible Preferred Stock.
(iv) In any case in which the Holders of Convertible Preferred
Stock shall be entitled to vote pursuant to this paragraph (f) or pursuant to
Delaware law, each Holder of Convertible Preferred Stock entitled to vote with
respect to such matters shall be entitled to one vote for each share of
Convertible Preferred Stock held.
(v) Except as required by law, the Holders of the Convertible
Preferred Stock will not be entitled to vote on any merger or consolidation
involving the Company or a sale of all or substantially all the assets of the
Company.
(g) CONVERSION. (i) At any time after 60 days from the Issue
Date, at the option of the Holder thereof, any share of Convertible Preferred
Stock may be converted at the Liquidation Preference thereof into fully paid and
nonassessable Common Stock (calculated as to each conversion to the nearest
1/100 of a share), at the Conversion Price, determined as hereinafter provided,
in effect at the time of conversion. Such conversion right shall expire at the
close of business on the Mandatory Redemption Date. In case a share of
Convertible Preferred Stock is called for optional redemption, such conversion
right in respect of the share of Convertible Preferred Stock so called shall
expire at the close of business on the applicable Optional Redemption Date,
unless the Company defaults in making the payment due upon redemption.
The price at which Common Stock shall be delivered upon
conversion (herein called the "Conversion Price") shall be initially $23.46 per
share of Common Stock. The Conversion Price shall be adjusted in certain
instances as provided in paragraph (g)(iv) and paragraph (g)(v).
(ii) In order to exercise the conversion privilege, the Holder of
any share of Convertible Preferred Stock to be converted shall surrender the
certificate for such share of Convertible Preferred Stock, duly endorsed or
assigned to the Company or in blank, at the office of the Transfer Agent or at
any office or agency of the Company maintained for that purpose, accompanied by
written notice to the Company in the form of Exhibit B that the Holder elects to
convert such share of Convertible Preferred Stock or, if fewer than all of the
shares of Convertible Preferred Stock represented by a single share certificate
are to be converted, the number of shares represented thereby to be converted.
Except as provided in paragraph (c)(viii), no payment or adjustment shall be
made upon any conversion on account of any dividends accrued on the shares of
Convertible Preferred Stock surrendered for
PAGE 28 OF 86 PAGES
<PAGE>
conversion or on account of any dividends on the Common Stock issued upon
conversion. Such notice shall also contain the office or the address to which
the Company should deliver shares of Common Stock issuable upon conversion (and
any other payments or certificates related thereto). Except as provided in
paragraph (c)(viii), in no event shall the Company be obligated to pay any
converting Holder any unpaid dividend, whether or not in arrears, on converted
shares or any dividends on the shares of Common Stock issued upon such
conversion.
Shares of Convertible Preferred Stock shall be deemed to have
been converted immediately prior to the close of business on the day of
surrender of such shares of Convertible Preferred Stock for conversion in
accordance with the foregoing provisions, and at such time the rights of the
Holders of such shares of Convertible Preferred Stock as Holders shall cease,
and the person or persons entitled to receive the Common Stock issuable upon
conversion shall be treated for all purposes as the record holder or holders of
such Common Stock at such time. As promptly as practicable on or after the
conversion date, the Company shall issue and shall deliver to such office or
agency as the converting Holder shall have designated in its written notice to
the Company a certificate or certificates for the number of full Common Stock
issuable upon conversion, together with payment in lieu of any fraction of a
share, as provided in paragraph (g)(iii) hereof.
In the case of any conversion of fewer than all the shares of
Convertible Preferred Stock evidenced by a certificate, upon such conversion the
Company shall execute and the Transfer Agent shall authenticate and deliver to
the Holder thereof (at the address designated by such Holder), at the expense of
the Company, a new certificate or certificates representing the number of
unconverted shares of Convertible Preferred Stock.
(iii) No fractional Common Stock shall be issued upon the
conversion of a share of Convertible Preferred Stock. If more than one share of
Convertible Preferred Stock shall be surrendered for conversion at one time by
the same holder, the number of full shares of Common Stock which shall be
issuable upon conversion thereof shall be computed on the basis of the aggregate
shares of Convertible Preferred Stock so surrendered. Instead of any fractional
share of Common Stock which would otherwise be issuable upon conversion of any
share of Convertible Preferred Stock, the Company shall pay a cash adjustment in
respect of such fraction in an amount equal to the same fraction of the closing
price (as defined in paragraph (g)(iv)(7)) per share of Common Stock at the
close of business on the Business Day prior to the day of conversion.
(iv) The Conversion Price shall be adjusted from time to time by
the Company as follows:
(1) If the Company shall hereafter pay a dividend or make a
distribution in Common Stock to all holders of any outstanding class or series
of Common Stock of the Company, the Conversion Price in effect at the opening of
business on the date following the date fixed for the determination of
shareholders entitled to receive such dividend or other distribution shall be
reduced by multiplying such Conversion Price by a fraction of which the
numerator shall be the number of shares of Common Stock outstanding at the close
of
PAGE 29 OF 86 PAGES
<PAGE>
business on the Record Date (as defined in paragraph (g)(iv)(7)) fixed for
such determination and the denominator shall be the sum of such number of
outstanding shares and the total number of shares constituting such dividend or
other distribution, such reduction to become effective immediately after the
opening of business on the day following the Record Date. If any dividend or
distribution of the type described in this paragraph (g)(iv)(i) is declared but
not so paid or made, the Conversion Price shall again be adjusted to the
Conversion Price which would then be in effect if such dividend or distribution
had not been declared.
(2) If the Company shall offer or issue rights or warrants to all
holders of its outstanding Common Stock entitling them to subscribe for or
purchase Common Stock at a price per share less than the Current Market Price
(as defined in paragraph (g)(iv)(7)) on the Record Date fixed for the
determination of shareholders entitled to receive such rights or warrants, the
Conversion Price shall be adjusted so that the same shall equal the price
determined by multiplying the Conversion Price in effect at the opening of
business on the date after such Record Date by a fraction of which the numerator
shall be the number of shares of Common Stock outstanding at the close of
business on the Record Date plus the number of shares of Common Stock which the
aggregate offering price of the total number of shares of Common Stock subject
to such rights or warrants would purchase at such Current Market Price and of
which the denominator shall be the number of shares of Common Stock outstanding
at the close of business on the Record Date plus the total number of additional
shares of Common Stock subject to such rights or warrants for subscription or
purchase. Such adjustment shall become effective immediately after the opening
of business on the day following the Record Date fixed for determination of
shareholders entitled to purchase or receive such rights or warrants. To the
extent that shares of Common Stock are not delivered pursuant to such rights or
warrants, upon the expiration or termination of such rights or warrants the
Conversion Price shall again be adjusted to be the Conversion Price which would
then be in effect had the adjustments made upon the issuance of such rights or
warrants been made on the basis of delivery of only the number of shares of
Common Stock actually delivered. If such rights or warrants are not so issued,
the Conversion Price shall again be adjusted to be the Conversion Price which
would then be in effect if such date fixed for the determination of shareholders
entitled to receive such rights or warrants had not been fixed. In determining
whether any rights or warrants entitle the holders to subscribe for or purchase
Common Stock at less than such Current Market Price, and in determining the
aggregate offering price of such shares of Common Stock, there shall be taken
into account any consideration received for such rights or warrants, with the
value of such consideration, if other than cash, to be determined by the Board
of Directors.
(3) If the outstanding shares of Common Stock shall be subdivided
into a greater number of shares of Common Stock, the Conversion Price in effect
at the opening of business on the day following the day upon which such
subdivision becomes effective shall be proportionately reduced, and, conversely,
if the outstanding shares of Common Stock shall be combined into a smaller
number of shares of Common Stock, the Conversion Price in effect at the opening
of business on the day following the day upon which such combination becomes
effective shall be proportionately increased, such reduction or increase,
PAGE 30 OF 86 PAGES
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as the case may be, to become effective immediately after the opening of
business on the day following the day upon which such subdivision or combination
becomes effective.
(4) If the Company shall, by dividend or otherwise, distribute to
all holders of its shares of Common Stock shares of any class of capital stock
of the Company (other than any dividends or distributions to which paragraph
(g)(iv)(1) applies) or evidences of its indebtedness, cash or other assets
(including securities, but excluding any rights or warrants of a type referred
to in paragraph (g)(iv)(2) and excluding dividends and distributions paid
exclusively in cash and excluding any capital stock, evidences of indebtedness,
cash or assets distributed upon a merger or consolidation to which paragraph
(g)(v) applies) (the foregoing hereinafter in this paragraph (g)(iv)(4) called
the "Distributed Securities"), then, in each such case, the Conversion Price
shall be reduced so that the same shall be equal to the price determined by
multiplying the Conversion Price in effect immediately prior to the close of
business on the Record Date (as defined in paragraph (g)(iv)(7)) with respect to
such distribution by a fraction of which the numerator shall be the Current
Market Price (determined as provided in paragraph (g)(iv)(7)) of the Common
Stock on such date less the fair market value (as determined by the Board of
Directors, whose determination shall be conclusive and described in a resolution
of the Board of Directors) on such date of the portion of the Distributed
Securities so distributed applicable to one share of Common Stock and the
denominator shall be such Current Market Price, such reduction to become
effective immediately prior to the opening of business on the day following the
Record Date; PROVIDED, HOWEVER, that, in the event the then fair market value
(as so determined) of the portion of the Distributed Securities so distributed
applicable to one share of Common Stock is equal to or greater than the Current
Market Price on the Record Date, in lieu of the foregoing adjustment, adequate
provision shall be made so that each holder of Convertible Preferred Stock shall
have the right to receive upon conversion of a share of Convertible Preferred
Stock (or any portion thereof) the amount of Distributed Securities such holder
would have received had such holder converted such share of Convertible
Preferred Stock (or portion thereof) immediately prior to such Record Date. If
such dividend or distribution is not so paid or made, the Conversion Price shall
again be adjusted to be the Conversion Price which would then be in effect if
such dividend or distribution had not been declared. If the Board of Directors
determines the fair market value of any distribution for purposes of this
paragraph (g)(iv)(4) by reference to the actual or when issued trading market
for any securities comprising all or part of such distribution, it must in doing
so consider the prices in such market over the same period used in computing the
Current Market Price pursuant to paragraph (g)(iv)(7) to the extent possible.
Rights or warrants distributed by the Company to all holders of Common Stock
entitling the holders thereof to subscribe for or purchase shares of the
Company's capital stock (either initially or under certain circumstances), which
rights or warrants, until the occurrence of a specified event or events
("Dilution Trigger Event"): (i) are deemed to be transferred with such Common
Stock; (ii) are not exercisable; and (iii) are also issued in respect of future
issuances of Common Stock, shall be deemed not to have been distributed for
purposes of this paragraph (g)(iv)(4) (and no adjustment to the Conversion Price
under this paragraph (g)(iv)(4) shall be required) until the occurrence of the
earliest Dilution Trigger Event, whereupon such rights and warrants shall be
deemed to have been distributed and an
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appropriate adjustment to the Conversion Price under this paragraph (g)(iv)(4)
shall be made. If any such rights or warrants, including any such existing
rights or warrants distributed prior to the date hereof, are subject to
subsequent events, upon the occurrence of each of which such rights or warrants
shall become exercisable to purchase different securities, evidences of
indebtedness or other assets, then the occurrence of each such event shall be
deemed to be such date of issuance and record date with respect to new rights or
warrants (and a termination or expiration of the existing rights or warrants
without exercise by the holder thereof). In addition, in the event of any
distribution (or deemed distribution) of rights or warrants, or any Dilution
Trigger Event with respect thereto, that was counted for purposes of calculating
a distribution amount for which an adjustment to the Conversion Price under this
paragraph (g)(iv)(4) was made, (1) in the case of any such rights or warrants
which shall all have been redeemed or repurchased without exercise by any
holders thereof, the Conversion Price shall be readjusted upon such final
redemption or repurchase to give effect to such distribution or Dilution Trigger
Event, as the case may be, as though it were a cash distribution, equal to the
per share redemption or repurchase price received by a holder or holders of
Common Stock with respect to such rights or warrants (assuming such holder had
retained such rights or warrants), made to all holders of Common Stock as of the
date of such redemption or repurchase, and (2) in the case of such rights or
warrants which shall have expired or been terminated without exercise by any
holders thereof, the Conversion Price shall be readjusted as if such rights and
warrants had not been issued.
Notwithstanding any other provision of this paragraph (g)(iv)(4) to the
contrary, capital stock, rights, warrants, evidences of indebtedness, other
securities, cash or other assets (including, without limitation, any rights
distributed pursuant to any shareholder rights plan) shall be deemed not to have
been distributed for purposes of this paragraph (g)(iv)(4) if the Company makes
proper provision so that each holder of shares of Convertible Preferred Stock
who converts a share of Convertible Preferred Stock (or any portion thereof)
after the date fixed for determination of shareholders entitled to receive such
distribution shall be entitled to receive upon such conversion, in addition to
the Common Stock issuable upon such conversion, the amount and kind of such
distributions that such holder would have been entitled to receive if such
holder had, immediately prior to such determination date, converted such share
of Convertible Preferred Stock into Common Stock.
For purposes of this paragraph (g)(iv)(4) and paragraphs (g)(iv)(1) and (2), any
dividend or distribution to which this paragraph (g)(iv)(4) is applicable that
also includes Common Stock, or rights or warrants to subscribe for or purchase
Common Stock to which paragraph (g)(iv)(2) applies (or both), shall be deemed
instead to be (1) a dividend or distribution of the evidences of indebtedness,
cash, assets, shares of capital stock, rights or warrants other than (A) such
shares of Common Stock or (B) rights or warrants to which paragraph (g)(iv)(2)
applies (and any Conversion Price reduction required by this paragraph
(g)(iv)(4) with respect to such dividend or distribution shall then be made)
immediately followed by (2) a dividend or distribution of such Common Stock or
such rights or warrants (and any further Conversion Price reduction required by
paragraph (g)(iv)(1) and (2) with respect to such dividend or distribution shall
then be made), except that (1) the Record Date of such dividend or distribution
shall be substituted as "the Record Date fixed for the determination of
stockholders entitled to receive such
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dividend or other distribution", "Record Date fixed for such determination" and
"Record Date" within the meaning of paragraph (g)(iv)(1) and as "the Record Date
fixed for the determination of shareholders entitled to receive such rights or
warrants", "the date fixed for the determination of the shareholders entitled to
receive such rights or warrants" and "such Record Date" within the meaning of
paragraph (g)(iv)(2), and (2) any share of Common Stock included in such
dividend or distribution shall not be deemed "outstanding at the close of
business on the date fixed for such determination" within the meaning of
paragraph (g)(iv)(1).
(5) If the Company shall, by dividend or otherwise, distribute to all
holders of its Common Stock cash (excluding any cash that is distributed upon a
merger or consolidation to which paragraph (g)(v) applies or as part of a
distribution referred to in paragraph (g)(iv)) in an aggregate amount that,
combined together with (1) the aggregate amount of any other such distributions
to all holders of its Common Stock made exclusively in cash within the 12 months
preceding the date of payment of such distribution, and in respect of which no
adjustment pursuant to this paragraph (g)(iv)(5) has been made, and (2) the
aggregate of any cash plus the fair market value (as determined by the Board of
Directors, whose determination shall be conclusive and described in a resolution
of the Board of Directors) of consideration payable in respect of any tender
offer by the Company or a Subsidiary of the Company for all or any portion of
the Common Stock concluded within the 12 months preceding the date of payment of
such distribution, and in respect of which no adjustment pursuant to paragraph
(g)(iv)(4) has been made, exceeds 12.5% of the product of the Current Market
Price (determined as provided in paragraph (g)(iv)(7)) on the Record Date with
respect to such distribution times the number of shares of Common Stock
outstanding on such date, then, and in each such case, immediately after the
close of business on such date, the Conversion Price shall be reduced so that
the same shall equal the price determined by multiplying the Conversion Price in
effect immediately prior to the close of business on such Record Date by a
fraction (i) the numerator of which shall be equal to the Current Market Price
on the Record Date less an amount equal to the quotient of (x) the excess of
such combined amount over such 12.5% amount divided by (y) the number of shares
of Common Stock outstanding on the Record Date and (ii) the denominator of which
shall be equal to the Current Market Price on such Record Date; PROVIDED,
HOWEVER, that, if the portion of the cash so distributed applicable to one share
of Common Stock is equal to or greater than the Current Market Price of the
Common Stock on the Record Date, in lieu of the foregoing adjustment, adequate
provision shall be made so that each holder of Convertible Preferred Stock shall
have the right to receive upon conversion of a share of Convertible Preferred
Stock (or any portion thereof) the amount of cash such holder would have
received had such holder converted such share of Convertible Preferred Stock (or
portion thereof) immediately prior to such Record Date. If such dividend or
distribution is not so paid or made, the Conversion Price shall again be
adjusted to be the Conversion Price which would then be in effect if such
dividend or distribution had not been declared.
(6) If a tender or exchange offer made by the Company or any of
its Subsidiaries for all or any portion of the Common Stock expires and such
tender or exchange offer (as amended upon the expiration thereof) requires the
payment to
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shareholders (based on the acceptance (up to any maximum specified in
the terms of the tender offer) of Purchased Shares (as defined below)) of an
aggregate consideration having a fair market value (as determined by the Board
of Directors, whose determination shall be conclusive and described in a
resolution of the Board of Directors) that, combined together with (1) the
aggregate of the cash plus the fair market value (as determined by the Board of
Directors, whose determination shall be conclusive and described in a resolution
of the Board of Directors), as of the expiration of such tender offer, of
consideration payable in respect of any other tender offers, by the Company or
any of its Subsidiaries for all or any portion of the Common Stock expiring
within the 12 months preceding the expiration of such tender offer and in
respect of which no adjustment pursuant to this paragraph (g)(iv)(6) has been
made and (2) the aggregate amount of any distributions to all holders of the
Common Stock made exclusively in cash within 12 months preceding the expiration
of such tender offer and in respect of which no adjustment pursuant to paragraph
(g)(iv)(5) has been made, exceeds 12.5% of the product of the Current Market
Price (determined as provided in paragraph (g)(iv)(7)) as of the last time (the
"Expiration Time") tenders could have been made pursuant to such tender offer
(as it may be amended) times the number of shares of Common Stock outstanding
(including any tendered shares) at the Expiration Time, then, and in each such
case, immediately prior to the opening of business on the day after the date of
the Expiration Time, the Conversion Price shall be adjusted so that the same
shall equal the price determined by multiplying the Conversion Price in effect
immediately prior to the close of business on the date of the Expiration Time by
a fraction of which the numerator shall be the number of shares of Common Stock
outstanding (including any tendered shares) at the Expiration Time multiplied by
the Current Market Price of the Common Stock on the Trading Day next succeeding
the Expiration Time and the denominator shall be the sum of (x) the fair market
value (determined as aforesaid) of the aggregate consideration payable to
shareholders based on the acceptance (up to any maximum specified in the terms
of the tender offer) of all shares validly tendered and not withdrawn as of the
Expiration Time (the shares deemed so accepted, up to any such maximum, being
referred to as the "Purchased Shares") and (y) the product of the number of
shares of Common Stock outstanding (less any Purchased Shares) at the Expiration
Time and the Current Market Price of the Common Stock on the Trading Day next
succeeding the Expiration Time, such reduction (if any) to become effective
immediately prior to the opening of business on the day following the Expiration
Time. If the Company is obligated to purchase shares pursuant to any such tender
offer, but the Company is permanently prevented by applicable law from effecting
any such purchases or all such purchases are rescinded, the Conversion Price
shall again be adjusted to be the Conversion Price which would then be in effect
if such tender offer had not been made. If the application of this paragraph
(g)(iv)(6) to any tender offer would result in an increase in the Conversion
Price, no adjustment shall be made for such tender offer under this paragraph
(g)(iv)(6).
(7) For purposes of this paragraph (g)(iv), the following terms shall
have the meaning indicated:
"closing price" with respect to any securities on any day means the closing
price on such day or, if no such sale takes place on such day, the average of
the reported high and low prices on such day, in each case on The Nasdaq
National Market or the New York Stock
PAGE 34 OF 86 PAGES
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Exchange, as applicable, or, if such security is not listed or admitted to
trading on such national market or exchange, on the principal national
securities exchange or quotation system on which such security is quoted or
listed or admitted to trading, or, if not quoted or listed or admitted to
trading on any national securities exchange or quotation system, the average of
the high and low prices of such security on the over-the-counter market on the
day in question as reported by the National Quotation Bureau Incorporated or a
similar generally accepted reporting service, or, if not so available, in such
manner as furnished by any New York Stock Exchange member firm selected from
time to time by the Board of Directors for that purpose, or a price determined
in good faith by the Board of Directors, whose determination shall be conclusive
and described in a resolution of the Board of Directors.
"Current Market Price" means the average of the daily closing prices per share
of Common Stock for the 10 consecutive trading days immediately prior to the
date in question; PROVIDED, HOWEVER, that (A) if the "ex" date (as hereinafter
defined) for any event (other than the issuance or distribution requiring such
computation) that requires an adjustment to the Conversion Price pursuant to
paragraphs (g)(iv)(1), (2), (3), (4), (5) or (6) occurs during such 10
consecutive trading days, the closing price for each trading day prior to the
"ex" date for such other event shall be adjusted by multiplying such closing
price by the same fraction by which the Conversion Price is so required to be
adjusted as a result of such other event, (B) if the "ex" date for any event
(other than the issuance or distribution requiring such computation) that
requires an adjustment to the Conversion Price pursuant to paragraphs
(g)(iv)(1), (2), (3), (4), (5) or (6) occurs on or after the "ex" date for the
issuance or distribution requiring such computation and prior to the day in
question, the closing price for each trading day on and after the "ex" date for
such other event shall be adjusted by multiplying such closing price by the
reciprocal of the fraction by which the Conversion Price is so required to be
adjusted as a result of such other event and (C) if the "ex" date for the
issuance or distribution requiring such computation is prior to the day in
question, after taking into account any adjustment required pursuant to clause
(A) or (B) of this proviso, the closing price for each trading day on or after
such "ex" date shall be adjusted by adding thereto the amount of any cash and
the fair market value (as determined by the Board of Directors in a manner
consistent with any determination of such value for purposes of paragraphs
(g)(iv)(4) or (5), whose determination shall be conclusive and described in a
resolution of the Board of Directors) of the evidence of indebtedness, shares of
capital stock or assets being distributed applicable to one Common Stock as of
the close of business on the day before such "ex" date. For purposes of any
computation under paragraph (g)(vi), the Current Market Price on any date shall
be deemed to be the average of the daily closing prices per share of Common
Stock for such day and the next two succeeding trading days; PROVIDED, HOWEVER,
that, if the "ex" date for any event (other than the tender offer requiring such
computation) that requires an adjustment to the Conversion Price pursuant to
paragraph (g)(iv)(1), (2), (3), (4), (5) or (6) occurs on or after the
Expiration Time for the tender or exchange offer requiring such computation and
prior to the day in question, the closing price for each trading day on and
after the "ex" date for such other event shall be adjusted by multiplying such
closing price by the reciprocal of the fraction by which the Conversion Price is
so required to be adjusted as a result of such other event. For purposes of this
paragraph, the term "ex" date (I) when used with respect to any issuance or
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distribution, means the first date on which the Common Stock trades regular way
on the relevant exchange or in the relevant market from which the closing price
was obtained without the right to receive such issuance or distribution, (II)
when used with respect to any subdivision or combination of Common Stock, means
the first date on which the Common Stock trades regular way on such exchange or
in such market after the time at which such subdivision or combination becomes
effective and (III) when used with respect to any tender or exchange offer means
the first date on which the Common Stock trades regular way on such exchange or
in such market after the Expiration Time of such offer. Notwithstanding the
foregoing, whenever successive adjustments to the Conversion Price are called
for pursuant to this paragraph (g)(iv), such adjustments shall be made to the
Current Market Price as may be necessary or appropriate to effectuate the intent
of this paragraph (g)(iv) and to avoid unjust or inequitable results, as
determined in good faith by the Board of Directors.
"fair market value" shall mean the amount which a willing buyer would pay a
willing seller in an arm's-length transaction.
"Record Date" shall mean, with respect to any dividend, distribution or other
transaction or event in which the holders of Common Stock have the right to
receive any cash, securities or other property or in which the Common Stock (or
other applicable security) is exchanged for or converted into any combination of
cash, securities or other property, the date fixed for determination of
shareholders entitled to receive such cash, securities or other property
(whether such date is fixed by the Board of Directors or by statute, contract or
otherwise).
(8) No adjustment in the Conversion Price shall be required unless
such adjustment would require an increase or decrease of at least 1% in such
price; PROVIDED, HOWEVER, that any adjustments which by reason of this paragraph
(g)(iv)(8) are not required to be made shall be carried forward and taken into
account in any subsequent adjustment. All calculations under this paragraph
(g)(iv)(8) shall be made by the Company and shall be made to the nearest cent or
to the nearest one-hundredth of a share, as the case may be. No adjustment need
be made for a change in the par value or no par value of the Common Stock.
(9) Whenever the Conversion Price is adjusted as herein provided, the
Company shall promptly file with the Transfer Agent an Officers' Certificate
setting forth the Conversion Price after such adjustment and setting forth a
brief statement of the facts requiring such adjustment. Promptly after delivery
of such certificate, the Company shall prepare a notice of such adjustment of
the Conversion Price setting forth the adjusted Conversion Price and the date on
which each adjustment becomes effective and shall mail such notice of such
adjustment of the Conversion Price to each holder of Convertible Preferred Stock
at such holder's last address appearing on the register of holders maintained
for that purpose within 20 days of the effective date of such adjustment.
Failure to deliver such notice shall not affect the legality or validity of any
such adjustment.
(10) In any case in which this paragraph (g)(iv) provides that an
adjustment shall become effective immediately after a Record Date for an event,
the Company may
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<PAGE>
defer until the occurrence of such event issuing to the holder of any share of
Convertible Preferred Stock converted after such Record Date and before the
occurrence of such event the additional Common Stock issuable upon such
conversion by reason of the adjustment required by such event over and above the
Common Stock issuable upon such conversion before giving effect to such
adjustment.
(11) For purposes of this paragraph (g)(iv), the number of shares of
Common Stock at any time outstanding shall not include shares held in the
treasury of the Company but shall include shares issuable in respect of scrip
certificates issued in lieu of fractions of Common Stock. The Company shall not
pay any dividend or make any distribution on Common Stock held in the treasury
of the Company.
(v) In case of any consolidation of the Company with, or merger of the
Company into, any other corporation, or in case of any merger of another
corporation into the Company (other than a merger which does not result in any
reclassification, conversion, exchange or cancellation of outstanding shares of
Common Stock of the Company), or in case of any conveyance or transfer of the
properties and assets of the Company substantially as an entirety, the holder of
each share of Convertible Preferred Stock then outstanding shall have the right
thereafter, during the period such Convertible Preferred Stock shall be
convertible as specified in paragraph (g)(i), to convert such share of
Convertible Preferred Stock only into the kind and amount of securities, cash
and other property receivable upon such consolidation, merger, conveyance or
transfer by a holder of the number of shares of Common Stock of the Company into
which such share of Convertible Preferred Stock might have been converted
immediately prior to such consolidation, merger, conveyance or transfer,
assuming such holder of Common Stock of the Company failed to exercise his
rights of election, if any, as to the kind or amount of securities, cash and
other property receivable upon such consolidation, merger, conveyance or
transfer (provided that, if the kind or amount of securities, cash and other
property receivable upon such consolidation, merger, conveyance or transfer is
not the same for each share of Common Stock of the Company in respect of which
such rights of election shall not have been exercised ("nonelecting share"),
then for the purpose of this paragraph (g)(v) the kind and amount of securities,
cash and other property receivable upon such consolidation, merger, conveyance
or transfer by each nonelecting share shall be deemed to be the kind and amount
so receivable per share by a plurality of the nonelecting shares). Such
securities shall provide for adjustments which, for events subsequent to the
effective date of the triggering event, shall be as nearly equivalent as may be
practicable to the adjustments provided for in this paragraph (g)(v). The above
provisions of this Section shall similarly apply to successive consolidations,
mergers, conveyances or transfers.
(vi) In case:
(1) the Company shall declare a dividend (or any other
distribution) on its Common Stock payable otherwise than in cash out of its
earned surplus; or
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(2) the Company shall authorize the granting to all holders of its
Common Stock of rights or warrants to subscribe for or purchase any shares of
capital stock of any class or of any other rights; or
(3) of any reclassification of the Common Stock of the Company
(other than a subdivision or combination of its outstanding Common Stock), or of
any consolidation or merger to which the Company is a party and for which
approval of any shareholders of the Company is required, or the sale or transfer
of all or substantially all the assets of the Company; or
(4) of the voluntary or involuntary dissolution, liquidation or
winding up of the Company;
then the Company shall cause to be filed with the Transfer Agent and at each
office or agency maintained for the purpose of conversion of the Convertible
Preferred Stock, and shall cause to be mailed to all holders at their last
addresses as they shall appear in the Convertible Preferred Stock Register, at
least 20 days (or 10 days in any case specified in clause (1) or (2) above)
prior to the applicable date hereinafter specified, a notice stating (x) the
date on which a record is to be taken for the purpose of such dividend,
distribution, rights or warrants, or, if a record is not to be taken, the date
as of which the holders of Common Stock of record to be entitled to such
dividend, distribution, rights or warrants are to be determined or (y) the date
on which such reclassification, consolidation, merger, sale, transfer,
dissolution, liquidation or winding up is expected to become effective, and the
date as of which it is expected that holders of Common Stock of record shall be
entitled to exchange their Common Stock for securities, cash or other property
deliverable upon such reclassification, consolidation, merger, sale, transfer,
dissolution, liquidation or winding up. Failure to give the notice requested by
this Section or any defect therein shall not affect the legality or validity of
any dividend, distribution, right, warrant, reclassification, consolidation,
merger, sale, transfer, dissolution, liquidation or winding up, or the vote upon
any such action.
(vii) The Company shall at all times reserve and keep available,
free from preemptive rights, out of its authorized but unissued shares of Common
Stock (or out of its authorized shares of Common Stock held in the treasury of
the Company), for the purpose of effecting the conversion of the Convertible
Preferred Stock, the full number of Common Stock then issuable upon the
conversion of all outstanding shares of Convertible Preferred Stock.
(viii) The Company will pay any and all document, stamp or
similar issue or transfer taxes that may be payable in respect of the issue or
delivery of Common Stock on conversion of the Convertible Preferred Stock
pursuant hereto. The Company shall not, however, be required to pay any tax
which may be payable in respect of any transfer involved in the issue and
delivery of shares of Common Stock in a name other than that of the holder of
the share of Convertible Preferred Stock or the shares of Convertible Preferred
Stock to be converted, and no such issue or delivery shall be made unless and
until the Person requesting such issue has paid to the Company the amount of any
such tax, or has established to the satisfaction of the Company that such tax
has been paid.
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(ix) (1) Notwithstanding any other provision in the preceding
paragraphs to the contrary, if any Change in Control occurs then, if the Company
does not elect to make a Change in Control Offer, the Conversion Price in effect
shall be adjusted immediately after such Change in Control as described below.
In addition, in the event of a Common Stock Change in Control (as defined in
this paragraph (g)(ix)), each share of the Convertible Preferred Stock shall be
convertible solely into common stock of the kind received by holders of Common
Stock as the result of such Common Stock Change in Control. For purposes of
calculating any adjustment to be made pursuant to this paragraph in the event of
a Change in Control, immediately after such Change in Control:
(A) in the case of a Non-Stock Change in Control (as defined in
this paragraph (g)(ix)), the Conversion Price shall thereupon become the lower
of (x) the Conversion Price in effect immediately prior to such Non-Stock Change
in Control, but after giving effect to any other prior adjustments, and (y) the
result obtained by multiplying the greater of the Applicable Price (as defined
in this paragraph (g)(ix)) or the then applicable Reference Market Price (as
defined in this paragraph (g)(ix)) by a fraction of which the numerator shall be
$100.00 and the denominator shall be the then current Optional Redemption Price
per share; and
(B) in the case of a Common Stock Change in Control, the
Conversion Price in effect immediately prior to such Common Stock Change in
Control, but after giving effect to any prior adjustments, shall thereupon be
adjusted by multiplying such Conversion Price by a fraction, of which the
numerator shall be the Purchaser Stock Price (as defined in this paragraph
(g)(ix)) and the denominator shall be the Applicable Price; PROVIDED, HOWEVER,
that in the event of a Common Stock Change in Control in which (x) 100% of the
value of the consideration received by a holder of Common Stock is common stock
of the successor, acquiror, or other third party (and cash, if any, is paid with
respect to any fractional interests in such common stock resulting from such
Common Stock Change in Control) and (y) all of the Common Stock will have been
exchanged for, converted into, or acquired for, common stock (and cash with
respect to fractional interests) of the successor, acquiror or other third
party, the Conversion Price in effect immediately prior to such Common Stock
Change in Control shall thereupon be adjusted by multiplying such Conversion
Price by a fraction, of which the numerator shall be one (1) and the denominator
shall be the number of shares of common stock of the successor, acquiror, or
other third party received by a holder of one share of Common Stock as a result
of such Common Stock Change in Control.
(3) For purposes of this paragraph (ix), the following terms
shall have the meanings indicated:
"Applicable Price" means (i) in the event of a Non-Stock Change
in Control in which the holders of the Common Stock receive only cash, the
amount of cash received by the holder of one share of Common Stock and (ii) in
the event of any other Non-Stock Change in Control or any Common Stock Change in
Control, the average of the Closing Bid Prices for the Common Stock during the
ten Trading Days prior to and including the record date for the determination of
the holders of Common Stock entitled to receive cash, securities, property or
other assets in connection with such Non-Stock Change in Control or
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<PAGE>
Common Stock Change in Control or, if there is no such record date, the date
upon which the holders of the Common Stock shall have the right to receive such
cash, securities, property or other assets, in each case, as adjusted in good
faith by the Board of Directors to appropriately reflect any of the events
referred to in paragraph (g)(iv)(1) through (6).
"Common Stock Change in Control" means any Change in Control in
which more than 50% of the value (as determined in good faith by the Board of
Directors of the Company) of the consideration received by holders of Common
Stock consists of common stock that for each of the ten consecutive Trading Days
referred to in the preceding paragraph has been admitted for listing or admitted
for listing subject to notice of issuance on a national securities exchange or
quoted on The Nasdaq National Market; PROVIDED, HOWEVER, that a Change in
Control shall not be a Common Stock Change in Control unless either (i) the
Company continues to exist after the occurrence of such Change in Control and
the outstanding shares of Convertible Preferred Stock continue to exist as
outstanding shares of Convertible Preferred Stock, or (ii) not later than the
occurrence of such Change in Control, the outstanding shares of Convertible
Preferred Stock are converted into or exchanged for shares of convertible
preferred stock of a corporation succeeding to the business of the Company,
which convertible preferred stock has powers, preferences and relative,
participating, optional or other rights, and qualifications, limitations and
restrictions, substantially similar to those of the Convertible Preferred Stock.
"Non-Stock Change in Control" means any Change in Control other
than a Common Stock Change in Control.
"Purchaser Stock Price" means, with respect to any Common Stock
Change in Control, the product of (i) the number of shares of common stock
received in such Common Stock Change of Control for each share of Common Stock,
and (ii) the average of the per share Closing Prices for the common stock
received in such Common Stock Change in Control for the ten consecutive Trading
Days prior to and including the record date for the determination of the holders
of Common Stock entitled to receive such common stock, or if there is no such
record date, the date upon which the holders of the Common Stock shall have the
right to receive such common stock, in each case, as adjusted in good faith by
the Board of Directors to appropriately reflect any of the events referred to in
paragraph (g)(iv)(1) through (6); provided, HOWEVER, that if no such Closing
Prices exist, then the Purchaser Stock Price shall be set at a price determined
in good faith by the Board of Directors of the Company.
"Reference Market Price" shall initially mean $13.50 (which is an
amount equal to 66-2/3% of the reported last sale price for the Common Stock on
The Nasdaq National Market on March 25, 1997), and in the event of any
adjustment to the conversion prices other than as a result of a Change in
Control, the Reference Market Price shall also be adjusted so that the ratio of
the Reference Market Price to the Conversion Price after giving effect to any
such adjustment shall always be the same as the ratio of $13.50 to the initial
Conversion Price set forth in paragraph (g)(i).
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<PAGE>
(h) CHANGE IN CONTROL. (i) Upon the occurrence of a Change of
Control (the date of such occurrence being the "Change in Control Date"), the
Company shall be obligated to (1) purchase all or a portion of each holder's
Convertible Preferred Stock in cash pursuant to the offer described in paragraph
(h)(iii) (the "Change of Control Offer") at a purchase price equal to 100% of
the Liquidation Preference, plus, without duplication, all accrued and unpaid
Liquidated Damages and all accrued and unpaid dividends, if any, to the Change
of Control Payment Date, including an amount in cash equal to a prorated
dividend for the period from the Dividend Payment Date immediately prior to the
Change of Control Payment Date to the Change of Control Payment Date or (2)
adjust the conversion price as provided under paragraph (g)(ix). Notwithstanding
the foregoing, the Company shall, prior to electing to make a Change of Control
Offer, make an offer to redeem all outstanding shares of Series 3 Preferred
Stock.
(ii) Prior to the mailing of the notice referred to in paragraph
(h)(iii), but in any event within 15 days following the date on which the
Company knows or reasonably should have known that a Change in Control has
occurred, the Company covenants that it shall promptly determine if the purchase
of the Convertible Preferred Stock would violate or constitute a default under
the Indenture or other indebtedness of the Company.
(iii) Within 15 days following the date on which the Company
knows or reasonably should have known that a Change in Control has occurred, the
Company must send, by first-class mail, postage prepaid, a notice to each holder
of Convertible Preferred Stock. Such notice shall state whether the Change of
Control Offer would be permitted under the Indenture or other indebtedness of
the Company, and if permitted, such notice shall contain all instructions and
materials necessary to enable such holders to tender Convertible Preferred Stock
pursuant to the Change of Control Offer. If the Change of Control Offer would be
permitted under the Indenture or other indebtedness of the Company, such notice
shall state:
(A) that a Change of Control has occurred, that the Change of
Control Offer is being made pursuant to this paragraph (h) and that all
Convertible Preferred Stock validly tendered and not withdrawn will be accepted
for payment;
(B) the purchase price (including the amount of accrued
dividends, if any) and the purchase date (which must be no earlier than 30 days
nor later than 75 days from the date such notice is mailed, other than as may be
required by law) (the "Change of Control Payment Date");
(C) that any shares of Convertible Preferred Stock not tendered
will continue to accrue dividends;
(D) that, unless the Company defaults in making payment therefor,
any share of Convertible Preferred Stock accepted for payment pursuant to the
Change of Control Offer shall cease to accrue dividends after the Change of
Control Payment Date;
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(E) that holders electing to have any shares of Convertible
Preferred Stock purchased pursuant to a Change of Control Offer will be required
to surrender such shares of Convertible Preferred Stock, properly endorsed for
transfer, together with such other customary documents as the Company and the
Transfer Agent may reasonably request to the Transfer Agent and registrar for
the Convertible Preferred Stock at the address specified in the notice prior to
the close of business on the Business Day prior to the Change of Control Payment
Date;
(F) that holders will be entitled to withdraw their election if
the Company receives, not later than five Business Days prior to the Change of
Control Payment Date, a telegram, a telex, facsimile transmission or letter
setting forth the name of the holder, the number of shares of Convertible
Preferred Stock the holder delivered for purchase and a statement that such
holder is withdrawing his election to have such shares of Convertible Preferred
Stock purchased;
(G) that holders whose shares of Convertible Preferred Stock are
purchased only in part will be issued a new certificate representing the
unpurchased shares of Convertible Preferred Stock; and
(H) the circumstances and relevant facts regarding such Change of
Control.
If the Change of Control Offer would not be permitted under the
Indenture or other indebtedness of the Company, such notice shall state the
Conversion Price as adjusted pursuant to paragraph (g)(ix).
(iv) The Company will comply with any tender offer rules under
the Exchange Act which then may be applicable, including Rules 13e-4 and 14e-1,
in connection with any offer required to be made by the Company to repurchase
the shares of Convertible Preferred Stock as a result of a Change of Control. To
the extent that the provisions of any securities laws or regulations conflict
with provisions of this Certificate of Designation, the Company shall comply
with the applicable securities laws and regulations and shall not be deemed to
have breached its obligations under this Certificate of Designation by virtue
thereof.
(v) On the Change of Control Payment Date the Company shall (A)
accept for payment the shares of Convertible Preferred Stock validly tendered
pursuant to the Change of Control Offer, (B) pay to the holders of shares so
accepted the purchase price therefor in cash and (C) cancel and retire each
surrendered certificate. Unless the Company defaults in the payment for the
shares of Convertible Preferred Stock tendered pursuant to the Change of Control
Offer, dividends will cease to accrue with respect to the shares of Convertible
Preferred Stock tendered and all rights of holders of such tendered shares will
terminate, except for the right to receive payment therefor, on the Change of
Control Payment Date.
(vi) To accept the Change of Control Offer, the holder of a share
of Convertible Preferred Stock shall deliver, on or before the 10th day prior to
the Change of Control Payment Date, written notice to the Company (or an agent
designated by the Company for such purpose) of such holder's acceptance,
together with certificates evidencing the shares of
PAGE 42 OF 86 PAGES
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Convertible Preferred Stock with respect to which the Change of Control Offer is
being accepted, duly endorsed for transfer.
(i) REISSUANCE OF CONVERTIBLE PREFERRED STOCK. Shares of
Convertible Preferred Stock that have been issued and reacquired in any manner,
including shares purchased or redeemed or exchanged, shall not be reissued as
shares of Convertible Preferred Stock and shall (upon compliance with any
applicable provisions of the laws of Delaware) have the status of authorized and
unissued shares of Preferred Stock undesignated as to series and may be
redesignated and reissued as part of any series of Preferred Stock; PROVIDED,
HOWEVER, that so long as any shares of Convertible Preferred Stock are
outstanding, any issuance of such shares must be in compliance with the terms
hereof.
(j) BUSINESS DAY. If any payment, redemption or exchange shall be
required by the terms hereof to be made on a day that is not a Business Day,
such payment, redemption or exchange shall be made on the immediately succeeding
Business Day.
(k) LIMITATION ON MERGERS AND ASSET SALES. The Company may not
consolidate with or merge with or into, or convey, transfer or lease all or
substantially all its assets to, any person unless: (1) the successor,
transferee or lessee (if not the Company) is organized and existing under the
laws of the United States of America or any State thereof or the District of
Columbia and the Convertible Preferred Stock shall be converted into or
exchanged for and shall become shares of such successor, transferee or lessee,
having in respect of such successor, transferee or lessee substantially the same
powers, preference and relative participating, optional or other special rights
and the qualifications, limitations or restrictions thereon, that the
Convertible Preferred Stock had immediately prior to such transaction; and (2)
the Company delivers to the Transfer Agent an Officers' Certificate and an
Opinion of Counsel stating that such consolidation, merger or transfer complies
with this Certificate of Designation. The successor, transferee or lessee will
be the successor company.
(l) CERTIFICATES. (i) FORM AND DATING. The Convertible Preferred
Stock and the Transfer Agent's certificate of authentication shall be
substantially in the form of Exhibit A, which is hereby incorporated in and
expressly made a part of this Certificate of Designation. The Convertible
Preferred Stock certificate may have notations, legends or endorsements required
by law, stock exchange rule, agreements to which the Company is subject, if any,
or usage (provided that any such notation, legend or endorsement is in a form
acceptable to the Company). Each Convertible Preferred Stock certificate shall
be dated the date of its authentication. The terms of the Convertible Preferred
Stock certificate set forth in Exhibit A are part of the terms of this
Certificate of Designation.
(A) GLOBAL CONVERTIBLE PREFERRED STOCK. The Convertible Preferred
Stock sold in reliance on Rule 144A shall be issued initially in the form of one
or more fully registered global certificates with the global securities legend
and restricted securities legend set forth in Exhibit A hereto (the "Global
Convertible Preferred Stock"), which shall be deposited on behalf of the
purchasers represented thereby with the Transfer Agent, at its New York office,
as custodian for DTC (or with such other custodian as DTC may direct), and
registered in the name of DTC or a nominee of DTC, duly executed by the Company
and authenticated by the
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Transfer Agent as hereinafter provided. The number of shares of Convertible
Preferred Stock represented by Global Convertible Preferred Stock may from time
to time be increased or decreased by adjustments made on the records of the
Transfer Agent and DTC or its nominee as hereinafter provided.
(B) BOOK-ENTRY PROVISIONS. In the event Global Convertible
Preferred Stock is deposited with or on behalf of DTC, the Company shall execute
and the Transfer Agent shall authenticate and deliver initially one or more
Global Convertible Preferred Stock certificates that (a) shall be registered in
the name of DTC for such Global Convertible Preferred Stock or the nominee of
DTC and (b) shall be delivered by the Transfer Agent to DTC or pursuant to DTC's
instructions or held by the Transfer Agent as custodian for DTC.
Members of, or participants in, DTC ("Agent Members") shall have
no rights under this Certificate of Designation with respect to any Global
Convertible Preferred Stock held on their behalf by DTC or by the Transfer Agent
as the custodian of DTC or under such Global Convertible Preferred Stock, and
DTC may be treated by the Company, the Transfer Agent and any agent of the
Company or the Transfer Agent as the absolute owner of such Global Convertible
Preferred Stock for all purposes whatsoever. Notwithstanding the foregoing,
nothing herein shall prevent the Company, the Transfer Agent or any agent of the
Company or the Transfer Agent from giving effect to any written certification,
proxy or other authorization furnished by DTC or impair, as between DTC and its
Agent Members, the operation of customary practices of DTC governing the
exercise of the rights of a holder of a beneficial interest in any Global
Convertible Preferred Stock.
(C) CERTIFICATED CONVERTIBLE PREFERRED STOCK. Convertible
Preferred Stock initially sold to certain "accredited investors" (as defined in
Rule 501(a)(1), (2), (3), (4), (5), (6) or (7) under the Securities Act) or sold
in offshore transactions pursuant to Regulation S under the Securities Act will
be issued in fully registered certificated form ("Certificated Convertible
Preferred Stock").
Except as provided in this paragraph (l)(i) or in paragraph
(l)(iii), owners of beneficial interests in Global Convertible Preferred Stock
will not be entitled to receive physical delivery of Certificated Convertible
Preferred Stock.
After a transfer of any Convertible Preferred Stock during the
period of the effectiveness of a Shelf Registration Statement with respect to
such Convertible Preferred Stock, all requirements pertaining to legends on such
Convertible Preferred Stock will cease to apply, the requirements requiring that
any such Convertible Preferred Stock issued to Holders be issued in global form
will cease to apply, and Certificated Convertible Preferred Stock without
legends will be available to the transferee of the Holder of such Convertible
Preferred Stock upon exchange of such transferring Holder's Convertible
Preferred Stock or directions to transfer such Holder's interest in the Global
Convertible Preferred Stock, as applicable.
(ii) EXECUTION AND AUTHENTICATION. Two Officers shall sign the
Convertible Preferred Stock for the Company by manual or facsimile signature.
The Company's seal shall
PAGE 44 OF 86 PAGES
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be impressed, affixed, imprinted or reproduced on the Convertible Preferred
Stock and may be in facsimile form.
If an Officer whose signature is on Convertible Preferred Stock
no longer holds that office at the time the Transfer Agent authenticates the
Convertible Preferred Stock, the Convertible Preferred Stock shall be valid
nevertheless.
A Convertible Preferred Stock shall not be valid until an
authorized signatory of the Transfer Agent manually signs the certificate of
authentication on the Convertible Preferred Stock. The signature shall be
conclusive evidence that the Convertible Preferred Stock has been authenticated
under this Certificate of Designation.
The Transfer Agent shall authenticate and deliver 1,000,000
shares of Convertible Preferred Stock for original issue upon a written order of
the Company signed by two Officers or by an Officer and either an Assistant
Treasurer or an Assistant Secretary of the Company. In addition, the Transfer
Agent shall authenticate and deliver, from time to time, Additional Shares for
original issue upon order of the Company signed by two Officers or by an Officer
or either an Assistant Treasurer or Assistant Secretary of the Company. Such
orders shall specify the number of shares of Convertible Preferred Stock to be
authenticated and the date on which the original issue of Convertible Preferred
Stock is to be authenticated.
The Transfer Agent may appoint an authenticating agent reasonably
acceptable to the Company to authenticate the Convertible Preferred Stock.
Unless limited by the terms of such appointment, an authenticating agent may
authenticate Convertible Preferred Stock whenever the Transfer Agent may do so.
Each reference in this Certificate of Designation to authentication by the
Transfer Agent includes authentication by such agent. An authenticating agent
has the same rights as the Transfer Agent or agent for service of notices and
demands.
(iii) TRANSFER AND EXCHANGE. (A) TRANSFER AND EXCHANGE OF
CERTIFICATED CONVERTIBLE PREFERRED STOCK. When Certificated Convertible
Preferred Stock is presented to the Transfer Agent with a request to register
the transfer of such Certificated Convertible Preferred Stock or to exchange
such Certificated Convertible Preferred Stock for an equal number of shares of
Certificated Convertible Preferred Stock of other authorized denominations, the
Transfer Agent shall register the transfer or make the exchange as requested if
its reasonable requirements for such transaction are met; PROVIDED, HOWEVER,
that the Certificated Convertible Preferred Stock surrendered for transfer or
exchange:
(1) shall be duly endorsed or accompanied by a written instrument
of transfer in form reasonably satisfactory to the Company and the Transfer
Agent, duly executed by the Holder thereof or its attorney duly authorized in
writing; and
(2) in the case of Transfer Restricted Securities that are
Certificated Convertible Preferred Stock, are being transferred or exchanged
pursuant to an effective registration
PAGE 45 OF 86 PAGES
<PAGE>
statement under the Securities Act or pursuant to clause (I), (II) or (III)
below, and are accompanied by the following additional information and
documents, as applicable:
(I) if such Transfer Restricted Securities
are being delivered to the Transfer Agent by a Holder for registration
in the name of such Holder, without transfer, a certification from
such Holder to that effect in substantially the form of Exhibit C
hereto; or
(II) if such Transfer Restricted
Securities are being transferred to the Company or to a "qualified
institutional buyer" ("QIB") in accordance with Rule 144A under the
Securities Act or pursuant to an exemption from registration in
accordance with Rule 144 or Regulation S under the Securities Act, a
certification to that effect (in substantially the form of Exhibit C
hereto); or
(III) if such Transfer Restricted
Securities are being transferred to an "accredited investor" as
described in Rule 501(a)(1), (2), (3), (4), (5), (6) or (7) under the
Securities Act that is acquiring the Securities for its own account,
or for the account of such an accredited investor, in each case in a
minimum principal amount of $100,000 for investment purposes and not
with a view to, or for offer or sale in connection with, any
distribution in violation of the Securities Act, or in reliance on
another exemption from the registration requirements of the Securities
Act: a certification to that effect in substantially the form of
Exhibit C hereto, and if the Company or the Transfer Agent so
requests, evidence reasonably satisfactory to them as to the
compliance with the restrictions set forth in the legend set forth in
paragraph (l)(iii)(G)(1) below.
(B) RESTRICTIONS ON TRANSFER OF CERTIFICATED CONVERTIBLE
PREFERRED STOCK FOR A BENEFICIAL INTEREST IN GLOBAL CONVERTIBLE PREFERRED STOCK.
Certificated Convertible Preferred Stock may not be exchanged for a beneficial
interest in Global Convertible Preferred Stock except upon satisfaction of the
requirements set forth below. Upon receipt by the Transfer Agent of Certificated
Convertible Preferred Stock, duly endorsed or accompanied by appropriate
instruments of transfer, in form satisfactory to the Transfer Agent, together
with:
(1) if such Certificated Convertible Preferred Stock is a
Transfer Restricted Security, certification that such Certificated Convertible
Preferred Stock is being transferred to a QIB in accordance with Rule 144A under
the Securities Act; and
(2) whether or not such Certificated Convertible Preferred Stock
is a Transfer Restricted Security, written instructions directing the Transfer
Agent to make, or to direct DTC to make, an adjustment on its books and records
with respect to such Global Convertible Preferred Stock to reflect an increase
in the number of shares of Convertible Preferred Stock represented by the Global
Convertible Preferred Stock,
then the Transfer Agent shall cancel such Certificated Convertible Preferred
Stock and cause, or direct DTC to cause, in accordance with the standing
instructions and procedures existing
PAGE 46 OF 86 PAGES
<PAGE>
between DTC and the Transfer Agent, the number of shares of Convertible
Preferred Stock represented by the Global Convertible Preferred Stock to be
increased accordingly. If no Global Convertible Preferred Stock is then
outstanding, the Company shall issue and the Transfer Agent shall authenticate,
upon written order of the Company in the form of an Officers' Certificate, a new
Global Convertible Preferred Stock representing the appropriate number of
shares.
(C) TRANSFER AND EXCHANGE OF GLOBAL CONVERTIBLE PREFERRED STOCK.
The transfer and exchange of Global Convertible Preferred Stock or beneficial
interests therein shall be effected through DTC, in accordance with this
Certificate of Designation (including applicable restrictions on transfer set
forth herein, if any) and the procedures of DTC therefor.
(D) TRANSFER OF A BENEFICIAL INTEREST IN GLOBAL CONVERTIBLE
PREFERRED STOCK FOR A CERTIFICATED CONVERTIBLE PREFERRED STOCK.
(1) Any person having a beneficial interest in Convertible
Preferred Stock that is being transferred or exchanged pursuant to an effective
registration statement under the Securities Act or pursuant to clause (I), (II)
or (III) below may upon request, and if accompanied by the information specified
below, exchange such beneficial interest for Certificated Convertible Preferred
Stock representing the same number of shares of Convertible Preferred Stock.
Upon receipt by the Transfer Agent of written instructions or such other form of
instructions as is customary for DTC from DTC or its nominee on behalf of any
person having a beneficial interest in Global Convertible Preferred Stock and
upon receipt by the Transfer Agent of a written order or such other form of
instructions as is customary for DTC or the person designated by DTC as having
such a beneficial interest in a Transfer Restricted Security only, and upon the
following additional information and documents (all of which may be submitted by
facsimile):
(I) if such beneficial interest is being
transferred to the person designated by DTC as being the owner of a
beneficial interest in Global Convertible Preferred Stock, a
certification from such person to that effect (in substantially the
form of Exhibit C hereto);
(II) if such beneficial interest is being
transferred to a QIB in accordance with Rule 144A under the Securities
Act or pursuant to an exemption from registration in accordance with
Rule 144 or Regulation S under the Securities Act, a certification to
that effect (in substantially the form of Exhibit C hereto); or
(III) if such beneficial interest is being
transferred to an "accredited investor" as described in Rule
501(a)(1), (2), (3), (4), (5), (6) or (7) under the Securities Act
that is acquiring the security for its own account, or for the account
of such an accredited investor, in each case in a minimum principal
amount of $100,000 for investment purposes and not with a view to, or
for offer or sale in connection with, any distribution in violation of
the Securities Act, or in reliance on another exemption from the
registration requirements of
PAGE 47 OF 86 PAGES
<PAGE>
the Securities Act, a certification to
that effect from the transferor (in substantially the form of Exhibit
C hereto), and if the Company or the Transfer Agent so requests,
evidence reasonably satisfactory to them as to the compliance with the
restrictions set forth in the legend set forth in paragraph
(l)(iii)(G)(1) below;
then, the Transfer Agent or DTC, at the direction of the Transfer Agent, will
cause, in accordance with the standing instructions and procedures existing
between DTC and the Transfer Agent, the number of shares of Convertible
Preferred Stock represented by Global Convertible Preferred Stock to be reduced
on its books and records and, following such reduction, the Company will execute
and the Transfer Agent will authenticate and deliver to the transferee
Certificated Convertible Preferred Stock.
(2) Certificated Convertible Preferred Stock issued in exchange
for a beneficial interest in a Global Convertible Preferred Stock pursuant to
this paragraph (l)(iii)(D) shall be registered in such names and in such
authorized denominations as DTC, pursuant to instructions from its direct or
indirect participants or otherwise, shall instruct the Transfer Agent. The
Transfer Agent shall deliver such Certificated Convertible Preferred Stock to
the persons in whose names such Convertible Preferred Stock are so registered in
accordance with the instructions of DTC.
(E) RESTRICTIONS ON TRANSFER AND EXCHANGE OF GLOBAL CONVERTIBLE
PREFERRED STOCK. Notwithstanding any other provisions of this Certificate of
Designation (other than the provisions set forth in paragraph (l)(iii)(F)),
Global Convertible Preferred Stock may not be transferred as a whole except by
DTC to a nominee of DTC or by a nominee of DTC to DTC or another nominee of DTC
or by DTC or any such nominee to a successor depository or a nominee of such
successor depository.
(F) AUTHENTICATION OF CERTIFICATED CONVERTIBLE PREFERRED STOCK.
If at any time:
(1) DTC notifies the Company that DTC is unwilling or unable to
continue as depository for the Global Convertible Preferred Stock and a
successor depository for the Global Convertible Preferred Stock is not appointed
by the Company within 90 days after delivery of such notice;
(2) DTC ceases to be a clearing agency registered under the
Exchange Act;
(3) there shall have occurred and be continuing a Voting Rights
Triggering Event; or
(4) the Company, in its sole discretion, notifies the Transfer
Agent in writing that it elects to cause the issuance of Certificated
Convertible Preferred Stock under this Certificate of Designation,
then the Company will execute, and the Transfer Agent, upon receipt of a written
order of the Company signed by two Officers or by an Officer and either an
Assistant Treasurer or an
PAGE 48 OF 86 PAGES
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Assistant Secretary of the Company requesting the authentication and delivery of
Certificated Convertible Preferred Stock to the persons designated by the
Company, will authenticate and deliver Certificated Convertible Preferred Stock
equal to the number of shares of Convertible Preferred Stock represented by the
Global Convertible Preferred Stock, in exchange for such Global Convertible
Preferred Stock.
(G) LEGEND. (1) Except as permitted by the following paragraph
(2), each certificate evidencing the Global Convertible Preferred Stock and the
Certificated Convertible Preferred Stock (and all Convertible Preferred Stock
issued in exchange therefor or substitution thereof) shall bear a legend in
substantially the following form:
"THE SECURITY EVIDENCED HEREBY (OR ITS PREDECESSOR) (AND THE COMMON STOCK INTO
WHICH THIS SECURITY IS CONVERTIBLE) WAS ORIGINALLY ISSUED IN A TRANSACTION
EXEMPT FROM REGISTRATION UNDER SECTION 5 OF THE UNITED STATES SECURITIES ACT OF
1933 (THE "SECURITIES ACT") AND MAY NOT BE OFFERED, SOLD, PLEDGED OR OTHERWISE
TRANSFERRED IN ABSENCE OF SUCH REGISTRATION OR AN APPLICABLE EXEMPTION
THEREFROM. EACH PURCHASER OF THE SECURITY EVIDENCED HEREBY (OR THE COMMON STOCK
INTO WHICH THIS SECURITY IS CONVERTIBLE) IS HEREBY NOTIFIED THAT THE SELLER MAY
BE RELYING ON THE EXEMPTION FROM THE PROVISIONS OF SECTION 5 OF THE SECURITIES
ACT PROVIDED BY RULE 144A THEREUNDER. THE HOLDER OF THE SECURITY EVIDENCED
HEREBY (AND OF THE COMMON STOCK INTO WHICH THIS SECURITY IN CONVERTIBLE) AGREES
FOR THE BENEFIT OF THE COMPANY THAT (A) SUCH SECURITY (AND THE COMMON STOCK INTO
WHICH THIS SECURITY IS CONVERTIBLE) MAY BE RESOLD, PLEDGED OR OTHERWISE
TRANSFERRED, ONLY (1) TO A PERSON WHO THE SELLER REASONABLY BELIEVES IS A
QUALIFIED INSTITUTIONAL BUYER WITHIN THE MEANING OF RULE 144A UNDER THE
SECURITIES ACT PURCHASING FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF A QUALIFIED
INSTITUTIONAL BUYER IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE 144A, (2)
IN AN OFFSHORE TRANSACTION COMPLYING WITH RULE 904 OF REGULATION S UNDER THE
SECURITIES ACT, (3) PURSUANT TO AN EXEMPTION FROM REGISTRATION UNDER THE
SECURITIES ACT PROVIDED BY RULE 144 THEREUNDER (IF AVAILABLE), (4) TO THE
COMPANY OR (5) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE
SECURITIES ACT AND (B) IN ACCORDANCE WITH ALL APPLICABLE SECURITIES LAWS OF THE
STATES OF THE UNITED STATES."
(2) Upon any sale or transfer of a Transfer Restricted Security
(including any Transfer Restricted Security represented by Global Convertible
Preferred Stock) pursuant to Rule 144 under the Securities Act or an effective
registration statement under the Securities Act:
(I) in the case of any Transfer Restricted Security that is a
Certificated Convertible Preferred Stock, the Transfer Agent shall permit
the Holder thereof
PAGE 49 OF 86 PAGES
<PAGE>
to exchange such Transfer Restricted Security for a Certificated
Convertible Preferred Stock that does not bear the legend set forth above
and rescind any restriction on the transfer of such Transfer Restricted
Security; and
(II) in the case of any Transfer Restricted Security that is
represented by a Global Convertible Preferred Stock, the Transfer Agent
shall permit the Holder thereof to exchange such Transfer Restricted
Security for a Certificated Convertible Preferred Stock Security that does
not bear the legend set forth above and rescind any restriction on the
transfer of such Transfer Restricted Security, if the Holder's request for
such exchange was made in reliance on Rule 144 and the Holder certifies to
that effect in writing to the Transfer Agent (such certification to be in
the form set forth on the reverse of the Transfer Restricted Security).
(H) CANCELLATION OR ADJUSTMENT OF GLOBAL CONVERTIBLE PREFERRED STOCK.
At such time as all beneficial interests in Global Convertible Preferred
Stock have either been exchanged for Certificated Convertible Preferred Stock,
redeemed, repurchased or canceled, such Global Convertible Preferred Stock shall
be returned to DTC for cancellation or retained and canceled by the Transfer
Agent. At any time prior to such cancellation, if any beneficial interest in
Global Convertible Preferred Stock is exchanged for Certificated Convertible
Preferred Stock, redeemed, repurchased or canceled, the number of shares of
Convertible Preferred Stock represented by such Global Convertible Preferred
Stock shall be reduced and an adjustment shall be made on the books and records
of the Transfer Agent with respect to such Global Convertible Preferred Stock,
by the Transfer Agent or DTC, to reflect such reduction.
(I) OBLIGATIONS WITH RESPECT TO TRANSFERS AND EXCHANGES OF
CONVERTIBLE PREFERRED STOCK. (1) To permit registrations of transfers and
exchanges, the Company shall execute and the Transfer Agent shall authenticate
Certificated Convertible Preferred Stock and Global Convertible Preferred Stock
as required pursuant to the provisions of this paragraph (iii).
(2) All Certificated Convertible Preferred Stock and Global Convertible
Preferred Stock issued upon any registration of transfer or exchange of
Certificated Convertible Preferred Stock or Global Convertible Preferred Stock
shall be the valid obligations of the Company, entitled to the same benefits
under this Certificate of Designation as the Certificated Convertible Preferred
Stock or Global Convertible Preferred Stock surrendered upon such registration
of transfer or exchange.
(3) Prior to due presentment for registration of transfer of any
shares of Convertible Preferred Stock, the Transfer Agent and the Company may
deem and treat the person in whose name such shares of Convertible Preferred
Stock are registered as the absolute owner of such Convertible Preferred Stock
and neither the Transfer Agent nor the Company shall be affected by notice to
the contrary.
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(4) No service charge shall be made to a Holder for any
registration of transfer or exchange upon surrender of any Convertible
Preferred Stock Certificate at the office of the Transfer Agent
maintained for that purpose. However, the Company may require payment
of a sum sufficient to cover any tax or other governmental charge that
may be imposed in connection with any registration of transfer or
exchange of Convertible Preferred Stock Certificates.
(5) Upon any sale or transfer of shares of Convertible Preferred
Stock (including any Convertible Preferred Stock represented by a
Global Convertible Preferred Stock Certificate) pursuant to an
effective registration statement under the Securities Act, pursuant to
Rule 144 under the Securities Act or pursuant to an opinion of counsel
reasonably satisfactory to the Company that no legend is required:
(A) in the case of any Certificated Convertible Preferred Stock,
the Transfer Agent shall permit the holder thereof to
exchange such Convertible Preferred Stock for Certificated
Convertible Preferred Stock that does not bear the legend
set forth in paragraph (iii)(G) above and rescind any
restriction on the transfer of such Convertible Preferred
Stock; and
(B) in the case of any Global Convertible Preferred Stock, such
Convertible Preferred Stock shall not be required to bear
the legend set forth in paragraph (iii)(G) above but shall
continue to be subject to the provisions of paragraph
(iii)(D) hereof; PROVIDED, HOWEVER, that with respect to any
request for an -------- ------- exchange of Convertible
Preferred Stock that is represented by Global Convertible
Preferred Stock for Certificated Convertible Preferred Stock
that does not bear the legend set forth in paragraph
(iii)(G) above in connection with a sale or transfer thereof
pursuant to Rule 144 (and based upon an opinion of counsel
if the Company so requests), the Holder thereof shall
certify in writing to the Transfer Agent that such request
is being made pursuant to Rule 144 (such certification to be
substantially in the form of Exhibit C hereto).
(iv) REPLACEMENT CERTIFICATES. If a mutilated Convertible
Preferred Stock certificate is surrendered to the Transfer Agent or if the
Holder of a Convertible Preferred Stock certificate claims that the Convertible
Preferred Stock certificate has been lost, destroyed or wrongfully taken, the
Company shall issue and the Transfer Agent shall countersign a replacement
Convertible Preferred Stock certificate if the reasonable requirements of the
Transfer Agent and of Section 8-405 of the Uniform Commercial Code as in effect
in the State of New York are met. If required by the Transfer Agent or the
Company, such Holder shall furnish an indemnity bond sufficient in the judgment
of the Company and the Transfer Agent to protect the Company and the Transfer
Agent from any loss which either of them may suffer if a Convertible Preferred
Stock certificate is replaced. The Company and the Transfer Agent may charge the
Holder for their expenses in replacing a Convertible Preferred Stock
certificate.
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(v) TEMPORARY CERTIFICATES. Until definitive Convertible
Preferred Stock certificates are ready for delivery, the Company may prepare and
the Transfer Agent shall countersign temporary Convertible Preferred Stock
certificates. Temporary Convertible Preferred Stock certificates shall be
substantially in the form of definitive Convertible Preferred Stock certificates
but may have variations that the Company considers appropriate for temporary
Convertible Preferred Stock certificates. Without unreasonable delay, the
Company shall prepare and the Transfer Agent shall countersign definitive
Convertible Preferred Stock certificates and deliver them in exchange for
temporary Convertible Preferred Stock certificates.
(vi) CANCELLATION. (A) In the event the Company shall purchase or
otherwise acquire Certificated Convertible Preferred Stock, the same shall
thereupon be delivered to the Transfer Agent for cancellation.
(B) At such time as all beneficial interests in Global
Convertible Preferred Stock have either been exchanged for Certificated
Convertible Preferred Stock, redeemed, repurchased or canceled, such Global
Convertible Preferred Stock shall thereupon be delivered to the Transfer Agent
for cancellation.
(C) The Transfer Agent and no one else shall cancel and destroy
all Convertible Preferred Stock certificates surrendered for transfer, exchange,
replacement or cancellation and deliver a certificate of such destruction to the
Company unless the Company directs the Transfer Agent to deliver canceled
Convertible Preferred Stock certificates to the Company. The Company may not
issue new Convertible Preferred Stock certificates to replace Convertible
Preferred Stock certificates to the extent they evidence Convertible Preferred
Stock which the Company has purchased or otherwise acquired.
(m) ADDITIONAL RIGHTS OF HOLDERS. In addition to the rights
provided to Holders under this Certificate of Designation, Holders shall have
the rights set forth in the Registration Rights Agreement.
(o) CERTAIN DEFINITIONS. As used in this Certificate of
Designation, the following terms shall have the following meanings (and (1)
terms defined in the singular have comparable meanings when used in the plural
and vice versa, (2) "including" means including without limitation, (3) "or" is
not exclusive and (4) an accounting term not otherwise defined has the meaning
assigned to it in accordance with United States generally accepted accounting
principles as in effect on the Issue Date and all accounting calculations will
be determined in accordance with such principles), unless the content otherwise
requires:
"BUSINESS DAY" means each day which is not a Legal Holiday.
"CAPITAL STOCK" of any person means any and all shares,
interests, rights to purchase, warrants, options, participation or other
equivalents of or interests in (however designated) equity of such person,
including any Preferred Stock, but excluding any debt securities convertible
into or exchangeable for such equity.
PAGE 52 OF 86 PAGES
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"CHANGE IN CONTROL" or "CHANGE OF CONTROL" means: (i) the sale,
lease, transfer, conveyance other disposition (other than by way of merger or
consolidation), 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" (as such term is used in Section 13(d)(3) of the Exchange
Act), (ii) the adoption of a plan relating to the liquidation or dissolution of
the Company, (iii) the consummation of any transaction (including, without
limitation, any merger or consolidation) the result of which is that any
"person" (as defined above), (other than officers, directors and stockholders of
the Company and their affiliates on the date of this Certificate of
Designation), becomes the beneficial owner (as determined in accordance with
Rules 13d-3 and 13d-5 under the Exchange Act), directly or indirectly, of more
than 50% of the voting stock of the Company or (iv) the first day on which a
majority of the members of the board of directors (excluding the directors
elected pursuant to paragraph (f) are not Continuing Directors.
"CLOSING BID PRICE" means on any day the last reported bid price
on such day, or in case no bid takes place on such day, the average of the
reported closing bid and asked prices, in each case on the Nasdaq National
Market or, if the Common Stock is not quoted on such system, on the principal
national securities exchange on which such stock is listed or admitted to
trading, or if not listed or admitted to trading on any national securities
exchange, the average of the closing bid and asked prices as furnished by any
independent registered broker-dealer firm, selected by the Company for that
purpose.
"CONTINUING DIRECTORS" means, as of any date of determination,
any member of the Board of Directors who (i) was a member of such Board of
Directors on the date of this Certificate of Designation or (ii) was nominated
for election or elected to such Board of Directors with the approval of a
majority of the Continuing Directors who were members of such Board of Directors
at the time of such nomination or election.
"DEFAULT" means any event which is, or after notice or passage of
time or both would be, a Voting Rights Triggering Event.
"DTC" means The Depository Trust Company.
"EXCHANGE ACT" means the Securities Exchange Act of 1934, as
amended.
"HOLDERS" means the registered holders from time to time of the
Convertible Preferred Stock.
"INDENTURE" means the Indenture dated as of October 5, 1995
between the Company and IBJ Schroder Bank & Trust Company.
"ISSUE DATE" means the date on which the Convertible Preferred
Stock is initially issued.
"LEGAL HOLIDAY" means a Saturday, a Sunday or a day on which
banking institutions are not required to be open in the State of New York.
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"LIQUIDATED DAMAGES" means, with respect to any share of
Convertible Preferred Stock, the Additional Dividends then accrued, if any, on
such share pursuant to paragraph (c).
"OFFICER" means the Chairman of the Board of Directors, the
President, any Vice President, the Treasurer, the Secretary or any Assistant
Secretary of the Company.
"OFFICERS' CERTIFICATE" means a certificate signed by two
Officers.
"OPINION OF COUNSEL" means a written opinion from legal counsel
who is acceptable to the Transfer Agent. The counsel may be an employee of or
counsel to the Company or the Transfer Agent.
"PERSON" means any individual, corporation, partnership, joint
venture, limited liability company, 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
corporation, means Capital Stock of any class or classes (however designated)
which is preferred as to the payment of dividends, or as to the distribution of
assets upon any voluntary or involuntary liquidation or dissolution of such
corporation, over shares of Capital Stock of any other class of such
corporation.
"REGISTRATION RIGHTS AGREEMENT" means the Registration Rights
Agreement dated March 25, 1997 among the Company, Credit Suisse First Boston
Corporation and Dillon, Read &
Co. Inc. with respect to the Convertible Preferred Stock.
"SEC" or "COMMISSION" means the Securities and Exchange
Commission.
"SECURITIES ACT" means the Securities Act of 1933.
"SERIES 3 PREFERRED STOCK" means the 10% Junior Series 3
Preferred Stock of the Company.
"SHELF REGISTRATION STATEMENT" means a shelf registration
statement filed with the SEC to cover resales of Transfer Restricted Securities
by holders thereof, as required by the Registration Rights Agreement.
"SUBSIDIARY" means any corporation, association, partnership,
limited liability company or other business entity of which more than 50% of the
total voting power of shares of capital stock or other interests 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 the Company, the Company and one or more Subsidiaries
or one or more Subsidiaries and any partnership the sole general partner or the
managing partner of which the Company or any Subsidiary or the only general
partners of which are the Company and one or more Subsidiaries or one or more
Subsidiaries.
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"TRADING DAY" means, in respect of any securities exchange or
securities market, each Monday, Tuesday, Wednesday, Thursday and Friday, other
than any day on which securities are not traded on the applicable securities
exchange or in the applicable securities market.
"TRANSFER AGENT" means the transfer agent for the Convertible
Preferred Stock appointed by the Company, which initially shall be ChaseMellon
Shareholder Services, L.L.C.
"TRANSFER RESTRICTED SECURITIES" means each share of Convertible
Preferred Stock (or the shares of Common Stock into which such share of
Convertible Preferred Stock is convertible) (including additional shares of
Convertible Preferred Stock issued in payment of dividends on the Convertible
Preferred Stock, if any, as permitted in accordance with the terms hereof) until
(i) the date on which such security has been effectively registered under the
Securities Act and disposed of in accordance with the Shelf Registration
Statement or (ii) the date on which such security is distributed to the public
pursuant to Rule 144 under the Securities Act or is saleable pursuant to Rule
144(k) under the Securities Act (or any successor rule thereof) or would be
saleable pursuant to Rule 144(k) under the Securities Act had it not been held
by, or had it never been held by, an affiliate of the Company.
"VOTING STOCK" of a corporation means all classes of Capital
Stock of such corporation then outstanding and normally entitled to vote in the
election of directors.
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IN WITNESS WHEREOF, said IXC Communications, Inc., has caused this
Certificate of Designation to be signed by John J. Willingham, its Senior Vice
President and Chief Financial Officer, this 31st day of March, 1997.
IXC COMMUNICATIONS, INC.,
by /s/ John J. Willingham
--------------------------------
Name: John J. Willingham
Title: Senior Vice President
and Chief Financial Officer
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EXHIBIT A
FORM OF CONVERTIBLE PREFERRED STOCK
FACE OF SECURITY
[THE SECURITY EVIDENCED HEREBY (OR ITS PREDECESSOR) (AND THE COMMON STOCK INTO
WHICH THIS SECURITY IS CONVERTIBLE) WAS ORIGINALLY ISSUED IN A TRANSACTION
EXEMPT FROM REGISTRATION UNDER SECTION 5 OF THE UNITED STATES SECURITIES ACT OF
1933 (THE "SECURITIES ACT") AND MAY NOT BE OFFERED, SOLD, PLEDGED OR OTHERWISE
TRANSFERRED IN ABSENCE OF SUCH REGISTRATION OR AN APPLICABLE EXEMPTION
THEREFROM. EACH PURCHASER OF THE SECURITY EVIDENCED HEREBY (OR THE COMMON STOCK
INTO WHICH THIS SECURITY IS CONVERTIBLE) IS HEREBY NOTIFIED THAT THE SELLER MAY
BE RELYING ON THE EXEMPTION FROM THE PROVISIONS OF SECTION 5 OF THE SECURITIES
ACT PROVIDED BY RULE 144A THEREUNDER. THE HOLDER OF THE SECURITY EVIDENCED
HEREBY (AND OF THE COMMON STOCK INTO WHICH THIS SECURITY IS CONVERTIBLE) AGREES
FOR THE BENEFIT OF THE COMPANY THAT (A) SUCH SECURITY (AND THE COMMON STOCK INTO
WHICH THIS SECURITY IS CONVERTIBLE) MAY BE RESOLD, PLEDGED OR OTHERWISE
TRANSFERRED, ONLY (1) TO A PERSON WHO THE SELLER REASONABLY BELIEVES IS A
QUALIFIED INSTITUTIONAL BUYER WITHIN THE MEANING OF RULE 144A UNDER THE
SECURITIES ACT PURCHASING FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF A QUALIFIED
INSTITUTIONAL BUYER IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE 144A, (2)
IN AN OFFSHORE TRANSACTION COMPLYING WITH RULE 904 OF REGULATION S UNDER THE
SECURITIES ACT, (3) PURSUANT TO AN EXEMPTION FROM REGISTRATION UNDER THE
SECURITIES ACT PROVIDED BY RULE 144 THEREUNDER (IF AVAILABLE), (4) TO THE
COMPANY OR (5) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE
SECURITIES ACT AND (B) IN ACCORDANCE WITH ALL APPLICABLE SECURITIES LAWS OF THE
STATES OF THE UNITED STATES.]*
[UNLESS THIS CERTIFICATE IS PRESENTED BY AN AUTHORIZED
REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"),
NEW YORK, NEW YORK, TO THE COMPANY OR ITS AGENT FOR REGISTRATION OF TRANSFER,
EXCHANGE OF PAYMENT, AND ANY CERTIFICATE ISSUED IS REGISTERED IN THE NAME OF
CEDE & CO. OR SUCH
- -------------------------
*Subject to removal upon registration under the Securities Act of 1933 or
otherwise when the security shall no longer be a restricted security.
PAGE 57 OF 86 PAGES
<PAGE>
OTHER NAME AS IS REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY
PAYMENT IS MADE TO CEDE & CO., OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN
AUTHORIZED REPRESENTATIVE OF DTC) ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR
VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL INASMUCH AS THE REGISTERED
OWNER HEREOF, CEDE & CO. HAS AN INTEREST HEREIN.]**
[TRANSFERS OF THIS GLOBAL SECURITY SHALL BE LIMITED TO TRANSFERS
IN WHOLE, BUT NOT IN PART, TO NOMINEES OF DTC OR TO A SUCCESSOR THEREOF OR SUCH
SUCCESSOR'S NOMINEE AND TRANSFERS OF PORTIONS OF THIS GLOBAL SECURITY SHALL BE
LIMITED TO TRANSFERS MADE IN ACCORDANCE WITH THE RESTRICTIONS SET FORTH IN THE
CERTIFICATE OF DESIGNATION REFERRED TO BELOW.]**
IN CONNECTION WITH ANY TRANSFER, THE HOLDER WILL DELIVER TO THE REGISTRAR AND
TRANSFER AGENT SUCH CERTIFICATES AND OTHER INFORMATION AS SUCH REGISTRAR AND
TRANSFER AGENT MAY REASONABLY REQUIRE TO CONFIRM THAT THE TRANSFER COMPLIES WITH
THE FOREGOING RESTRICTIONS.
Certificate Number Number of Shares of Convertible
Preferred Stock
[ ] [ ]
CUSIP NO.: [ ]
7 1/4% Junior Convertible Preferred Stock Due 2007
(par value $0.01) (liquidation preference $100
per share of Convertible Preferred Stock)
of
IXC Communications, Inc.
IXC Communications, Inc., a Delaware corporation (the "Company"),
hereby certifies that [ ] (the "Holder") is the registered owner of fully paid
and non-assessable preferred securities of the Company designated the 7 1/4%
Junior Convertible Preferred Stock Due 2007 (par value $0.01) (liquidation
preference $100 per share of Convertible Preferred Stock) (the "Convertible
Preferred Stock"). The shares of Convertible Preferred Stock are transferable on
the books and records of the Registrar, in person or by a duly authorized
attorney, upon surrender of this certificate duly endorsed and in proper form
for transfer. The
- -----------------------
**Subject to removal if not a global security.
PAGE 58 OF 86 PAGES
<PAGE>
designation, rights, privileges, restrictions, preferences and other terms and
provisions of the Convertible Preferred Stock represented hereby are issued and
shall in all respects be subject to the provisions of the Certificate of
Designation dated March [ ], 1997, as the same may be amended from time to time
(the "Certificate of Designation"). Capitalized terms used herein but not
defined shall have the meaning given them in the Certificate of Designation. The
Company will provide a copy of the Certificate of Designation to a Holder
without charge upon written request to the Company at its principal place of
business.
Reference is hereby made to select provisions of the Convertible
Preferred Stock set forth on the reverse hereof, and to the Certificate of
Designation, which select provisions and the Certificate of Designation shall
for all purposes have the same effect as if set forth at this place.
Upon receipt of this certificate, the Holder is bound by the
Certificate of Designation and is entitled to the benefits thereunder.
Unless the Transfer Agent's Certificate of Authentication hereon
has been properly executed, these shares of Convertible Preferred Stock shall
not be entitled to any benefit under the Certificate of Designation or be valid
or obligatory for any purpose.
IN WITNESS WHEREOF, the Company has executed this certificate
this [ ] day of [ ], [ ].
IXC COMMUNICATIONS, INC.,
By:
Name:
Title:
[Seal]
By:
Name:
Title:
PAGE 59 OF 86 PAGES
<PAGE>
TRANSFER AGENT'S CERTIFICATE OF AUTHENTICATION
This is one of the Convertible Preferred Stock referred to in the
within mentioned Certificate of Designation.
Dated: [ ], [ ]
CHASEMELLON SHAREHOLDER
SERVICES, L.L.C.
as Transfer Agent,
By:
Authorized Signatory
PAGE 60 OF 86 PAGES
<PAGE>
REVERSE OF SECURITY
Dividends on each share of Convertible Preferred Stock shall be
payable at a rate per annum set forth in the face hereof or as provided in the
Certificate of Designation (including Additional Dividends).
The shares of Convertible Preferred Stock shall be redeemable as
provided in the Certificate of Designation. The shares of Convertible Preferred
Stock shall be convertible into the Company's Common Stock in the manner and
according to the terms set forth in the Certificate of Designation.
As required under Delaware law, the Company shall furnish to any
Holder upon request and without charge, a full summary statement of the
designations, voting rights preferences, limitations and special rights of the
shares of each class or series authorized to be issued by the Company so far as
they have been fixed and determined and the authority of the Board of Directors
to fix and determine the designations, voting rights, preferences, limitations
and special rights of the class and series of shares of the Company.
PAGE 61 OF 86 PAGES
<PAGE>
ASSIGNMENT
FOR VALUE RECEIVED, the undersigned assigns and transfers the
shares of Convertible Preferred Stock evidenced hereby to:
______________________________
______________________________
______________________________
(Insert assignee's social security or tax identification number)
______________________________
______________________________
______________________________
______________________________
______________________________
(Insert address and zip code of assignee)
and irrevocably appoints:
______________________________
______________________________
______________________________
agent to transfer the shares of Convertible Preferred Stock evidenced hereby on
the books of the Transfer Agent and Registrar. The agent may substitute another
to act for him or her.
Date:______________________________
Signature:_________________________
(Sign exactly as your name appears on the other side of this Convertible
Preferred Stock Certificate)
Signature Guarantee:***
- ----------------------------
*** (Signature must be guaranteed by an "eligible guarantor institution" that
is, a bank, stockbroker, savings and loan association or credit union meeting
the requirements of the Registrar, which requirements include membership or
participation in the Securities Transfer Agents Medallion Program ("STAMP") or
such other "signature guarantee program" as may be determined by the Registrar
in addition to, or in substitution for, STAMP, all in accordance with the
Securities Exchange Act of 1934, as amended.)
PAGE 62 OF 86 PAGES
<PAGE>
EXHIBIT B
NOTICE OF CONVERSION
(To be Executed by the Registered Holder
in order to Convert the Convertible, Preferred Stock)
The undersigned hereby irrevocably elects to convert (the "Conversion") shares
of 7 1/4% Junior Convertible Preferred Stock (the "Convertible Preferred
Stock"), represented by stock certificate No(s). (the "Convertible Preferred
Stock Certificates") into shares of common stock ("Common Stock") of IXC
Communications, Inc. (the "Company") according to the conditions of the
Certificate of Designations, Preferences and Rights of the Convertible Preferred
Stock (the "Certificate of Designation"), as of the date written below. If
shares are to be issued in the name of a person other than the undersigned, the
undersigned will pay all transfer taxes payable with respect thereto and is
delivering herewith such certificates. No fee will be charged to the holder for
any conversion, except for transfer taxes, if any. A copy of each Convertible
Preferred Stock Certificate is attached hereto (or evidence of loss, theft or
destruction thereof).
The undersigned represents and warrants that all offers and sales by the
undersigned of the shares of Common Stock issuable to the undersigned upon
conversion of the Convertible Preferred Stock shall be made pursuant to
registration of the Common Stock under the Securities Act of 1933 (the "Act"),
or pursuant to any exemption from registration under the Act.
Any holder, upon the exercise of its conversion rights in accordance with the
terms of the Certificate of Designation and the Convertible Preferred Stock,
agrees to be bound by the terms of the Registration Rights Agreement.
Capitalized terms used but not defined herein shall have the meanings ascribed
thereto in or pursuant to the Certificate of Designation.
Date of Conversion:_________________
Applicable Conversion Price:________
Number of shares of Convertible
Preferred Stock to be Converted:____
Number of shares of
Common Stock to be Issued:__________
PAGE 63 OF 86 PAGES
<PAGE>
Signature:__________________________
Name:_______________________________
Address:**__________________________
Fax No.:____________________________
*The Company is not required to issue shares of Common Stock until the original
Convertible Preferred Stock Certificate(s) (or evidence of loss, theft or
destruction thereof) to be converted are received by the Company or its Transfer
Agent. The Company shall issue and deliver shares of Common Stock to an
overnight courier not later than three business days following receipt of the
original Convertible Preferred Stock Certificate(s) to be converted.
**Address where shares of Common Stock and any other payments or certificates
shall be sent by the Company.
PAGE 64 OF 86 PAGES
<PAGE>
EXHIBIT C
CERTIFICATE TO BE DELIVERED UPON EXCHANGE OR
REGISTRATION OF TRANSFER OF CONVERTIBLE PREFERRED STOCK
Re: 7 1/4% Junior Convertible Preferred Stock Due 2007 (the "Convertible
Preferred Stock") of IXC Communications, Inc. (the "Company")
This Certificate relates to ____ shares of Convertible Preferred
Stock held in */ book-entry or */ definitive form by _______________ (the
"Transferor").
The Transferor*:
/ / has requested the Transfer Agent by written order to deliver in
exchange for its beneficial interest in the Convertible Preferred Stock held by
the depository shares of Convertible Preferred Stock in definitive, registered
form equal to its beneficial interest in such Convertible Preferred Stock (or
the portion thereof indicated above); or
/ / has requested the Transfer Agent by written order to exchange or
register the transfer of Convertible Preferred Stock.
In connection with such request and in respect of such
Convertible Preferred Stock, the Transferor does hereby certify that the
Transferor is familiar with the Certificate of Designation relating to the above
captioned Convertible Preferred Stock and that the transfer of this Convertible
Preferred Stock does not require registration under the Securities Act of 1933
(the "Securities Act") because */:
/ / Such Convertible Preferred Stock is being acquired for the
Transferor's own account without transfer.
/ / Such Convertible Preferred Stock is being transferred to the
Company.
/ / Such Convertible Preferred Stock is being transferred (i) to a
qualified institutional buyer (as defined in Rule 144A under the Securities
Act), in reliance on Rule 144A or (ii) pursuant to an exemption from
registration in accordance with Rule 904 under the Securities Act (and, in the
case of clause (ii), based on an opinion of counsel if the Company so requests
and together with a certification in substantially the form of Exhibit E to the
Certificate of Designation).
- -------------------
* /Please check applicable box.
PAGE 65 OF 86 PAGES
<PAGE>
/ / Such Convertible Preferred Stock is being transferred to an
accredited investor within the meaning of Rule 501(a)(1), (2), (3), (4), (5),
(6) or (7) under the Securities Act pursuant to a private placement exemption
from the registration requirements of the Securities Act (together with a
certification in substantially the form of Exhibit D to the Certificate of
Designation).
/ / Such Convertible Preferred Stock is being transferred in reliance
on and in compliance with another exemption from the registration requirements
of the Securities Act (and based on an opinion of counsel if the Company so
requests).
[INSERT NAME OF TRANSFEROR]
by Date:______________________
PAGE 66 OF 86 PAGES
<PAGE>
EXHIBIT D
FORM OF CERTIFICATE
TO BE DELIVERED BY ACCREDITED INVESTORS
-------------, -----
ChaseMellon Shareholder Services, L.L.C.
Attention: [ ]
Ladies and Gentlemen:
In connection with our proposed purchase of certain 7 1/4% Junior
Convertible Preferred Stock Due 2007 (the "Convertible Preferred Stock"), of IXC
Communications, Inc., a Delaware corporation (the "Company"), we represent that:
(i) we are an "accredited investor" within the meaning of
Rule 501(a)(1),(2),(3),(4),(5),(6) or (7) under the Securities Act of 1933 (the
"Securities Act") (an "Accredited Investor"), or an entity in which all of the
equity owners are Accredited Investors;
(ii) any purchase of Convertible Preferred Stock will be for our
own account or for the account of one or more other Accredited Investors as to
which we exercise sole investment discretion;
(iii) we have such knowledge and experience in financial and
business matters that we are capable of evaluating the merits and risks of
purchasing Convertible Preferred Stock and we and any accounts for which we are
acting are able to bear the economic risks of our or their investment;
(iv) we are not acquiring Convertible Preferred Stock with a view
to any distribution thereof in a transaction that would violate the Securities
Act or the securities laws of any State of the United States or any other
applicable jurisdiction; provided that the disposition of our property and the
property of any accounts for which we are acting as fiduciary shall remain at
all times without our control; and
(v) we acknowledge that we have had access to such financial and
other information, and have been afforded the opportunity to ask such questions
of representatives of the Company and receive answers thereto, as we deem
necessary in connection with our decision to purchase Convertible Preferred
Stock.
We understand that the Convertible Preferred Stock has not been
registered under the Securities Act, and we agree, on our own behalf and on
behalf of
PAGE 67 OF 86 PAGES
<PAGE>
each account for which we acquire any Convertible Preferred Stock,
that such Convertible Preferred Stock may be offered, resold, pledged or
otherwise transferred only (i) to a person whom we reasonably believe to be a
qualified institutional buyer (as defined in Rule 144A under the Securities Act)
in a transaction meeting the requirements of Rule 144A, in a transaction meeting
the requirements of Rule 144 under the Securities Act, outside the United States
to a foreign person in a transaction meeting the requirements of Rule 904 under
the Securities Act (and, unless such transfer occurs in a transaction meeting
the requirements of Rule 144A, based upon an opinion of counsel, if the Company
so requests), (ii) to the Company or (iii) pursuant to an effective registration
statement, and, in each case, in accordance with any applicable securities laws
of any State of the United States or any other applicable jurisdiction. We
understand that the registrar will not be required to accept for registration of
transfer any shares of Convertible Preferred Stock, except upon presentation of
evidence satisfactory to the Company that the foregoing restrictions on transfer
have been complied with. We further understand that the Convertible Preferred
Stock purchased by us will bear a legend reflecting the substance of this
paragraph. We further agree to provide to any person acquiring any of the
Convertible Preferred Stock from us a notice advising such person that resales
of the Convertible Preferred Stock are restricted as stated herein.
We acknowledge that you, the Company and others will rely upon
our confirmations, acknowledgements and agreements set forth herein, and we
agree to notify you promptly in writing if any of our representations or
warranties herein ceases to be accurate and complete.
PAGE 68 OF 86 PAGES
<PAGE>
THIS LETTER SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE
WITH, THE LAWS OF THE STATE OF NEW YORK.
Very truly yours,
-----------------------------
(Name of Transferee)
by __________________________
Name:
Title:
Address:
PAGE 69 OF 86 PAGES
<PAGE>
EXHIBIT E
FORM OF CERTIFICATE TO BE DELIVERED IN
CONNECTION WITH TRANSFERS PURSUANT TO REGULATION S
----------, ----
ChaseMellon Shareholder Services, L.L.C.
Attention: [ ]
Ladies and Gentlemen:
In connection with our proposed sale of certain 7 1/4% Junior
Convertible Preferred Stock Due 2007 (the "Convertible Preferred Stock") of IXC
Communications, Inc., a Delaware corporation ("the "Company"), we represent
that:
(i) the offer of the Convertible Preferred Stock was not made to
a person in the United States;
(ii) at the time the buy order was originated, the transferee was
outside the United States or we and any person acting on our behalf reasonably
believed that the transferee was outside the United States;
(iii) no directed selling efforts have been made by us in the
United States in contravention of the requirements of Rule 903(b) or Rule 904(b)
of Regulation S under the Securities Act of 1933 (the "Securities Act"), as
applicable; and
(iv) the transaction is not part of a plan or scheme by us to
evade the registration requirements of the Securities Act.
You and the Company are entitled to rely upon this letter and you
are irrevocably authorized to produce this letter or a copy hereof to any
interested party in
PAGE 70 OF 86 PAGES
<PAGE>
any administrative or legal proceedings or official inquiry
with respect to the matters covered hereby. Terms used in this certificate have
the meanings set forth in Regulation S.
Very truly yours,
----------------------------------
(Name of Transferor)
by _______________________________
Name:
Title:
Address:
PAGE 71 OF 86 PAGES
<PAGE>
Exhibit 2
CONFORMED COPY
IXC COMMUNICATIONS, INC.
7 1/4% JUNIOR CONVERTIBLE PREFERRED STOCK DUE 2007
(LIQUIDATION PREFERENCE $100 PER SHARE)
REGISTRATION RIGHTS AGREEMENT
March 25, 1997
Credit Suisse First Boston Corporation
Eleven Madison Avenue
New York, NY 10010
Dillon, Read & Co. Inc.
535 Madison Avenue
New York, NY 10022
Ladies and Gentlemen:
IXC Communications, Inc., a Delaware corporation (the "Company"),
proposes to issue and sell to Credit Suisse First Boston Corporation and Dillon,
Read & Co. Inc. (the "Initial Purchasers"), upon the terms set forth in a
purchase agreement of even date herewith (the "Purchase Agreement"), 1,000,000
shares of its 7 1/4% Junior Convertible Preferred Stock Due 2007 (liquidation
preference $100 per share) (the "Convertible Preferred Stock"). The Convertible
Preferred Stock will be convertible into shares of Common Stock, par value $0.01
per share, of the Company (the "Common Stock") at the conversion price set forth
in the Offering Circular dated March 25, 1997, subject to adjustment in
accordance with the Certificate of Designation of the Convertible Preferred
Stock (the "Certificate of Designation"). The Convertible Preferred Stock and
the Common Stock issuable upon conversion of the Convertible Preferred Stock are
collectively herein referred to as the "Securities" and each of them as held
singularly is herein referred to as a "Security". As an inducement to the
Initial Purchasers to enter into the Purchase Agreement and in satisfaction of a
condition to the Initial Purchasers' obligations thereunder, the Company agrees
with the Initial Purchasers, (i) for the benefit of the Initial Purchasers and
(ii) for the benefit of the holders of the Securities from time to time (each of
the foregoing a "Holder" and together the "Holders"), as follows:
PAGE 72 OF 86 PAGES
<PAGE>
1. SHELF REGISTRATION. So long as any Transfer Restricted
Security exists, the Company shall take the following actions:
(a) The Company shall, at its cost, prepare and, as promptly as
practicable, file with the Securities and Exchange Commission (the "Commission")
and thereafter shall use its best efforts to cause to be declared effective as
soon as practicable a registration statement on the appropriate form (the "Shelf
Registration Statement") covering the offer and sale of the Transfer Restricted
Securities (as defined in Section 5 hereof) by the Holders thereof from time to
time in accordance with the methods of distribution set forth in the Shelf
Registration Statement and Rule 415 under the Securities Act of 1933 (the
"Securities Act") (hereinafter, the "Shelf Registration").
(b) The Company shall use its best efforts to keep the Shelf
Registration Statement continuously effective, in order to permit the prospectus
included therein to be lawfully delivered by the Holders of the relevant
Securities, until such time as all the Securities covered by the Shelf
Registration Statement have been sold pursuant thereto or may be sold pursuant
to Rule 144(k) under the Securities Act (or any successor rule thereof),
assuming for this purpose that the Holders thereof are not affiliates of the
Company (in any such case, such period being called the "Shelf Registration
Period"). The Company shall be deemed not to have used its best efforts to keep
the Shelf Registration Statement effective during the requisite period if it
voluntarily takes any action that would result in Holders of Securities covered
thereby not being able to offer and sell such Securities during that period,
unless (i) such action is required by applicable law or (ii) upon the occurrence
of any event contemplated by paragraph 2(b)(v) below, such action is taken by
the Company in good faith and for valid business reasons and the Company
thereafter promptly complies with the requirements of paragraph 2(h) below if
the Company has determined in good faith that there are no material legal or
commercial impediments in so doing.
(c) Notwithstanding any other provisions of this Agreement to the
contrary, the Company shall cause (other than information required to be
supplied by the selling Holders pursuant to this Agreement) (i) the Shelf
Registration Statement and the related prospectus and any amendment or
supplement thereto to comply in all material respects with the applicable
requirements of the Securities Act and the rules and regulations of the
Commission thereunder, (ii) the Shelf Registration Statement and any amendment
thereto not to contain, when it becomes effective, an untrue statement of a
material fact or omit to state a material fact required to be stated therein or
necessary to make the statements therein not misleading and (iii) any prospectus
forming a part of the Shelf Registration Statement, and any amendment or
supplement to such prospectus, not to contain, as of the date of such prospectus
or amendment or supplement, any untrue statement of a material fact or omit to
state a material fact required to be stated therein or necessary in order to
make the statements therein, in light of the circumstances under which they were
made, not misleading.
PAGE 73 OF 86 PAGES
<PAGE>
(d) The Company shall, from time to time, cause the Shelf
Registration Statement to be amended to cover additional shares of Convertible
Preferred Stock issued in payment of dividends, if any, as permitted in
accordance with the terms of the Convertible Preferred Stock.
2. REGISTRATION PROCEDURES. In connection with the Shelf
Registration contemplated by Section 1 hereof the following provisions shall
apply so long as any Transfer Restricted Security exists:
(a) The Company shall (i) furnish, without charge, to the Initial
Purchasers, prior to the filing thereof with the Commission, a copy of the Shelf
Registration Statement and each amendment thereof and each amendment or
supplement, if any, to the prospectus included therein and, in the event that
the Initial Purchasers (with respect to any portion of an unsold allotment from
the original offering) are participating in the Shelf Registration Statement,
shall use its best efforts to reflect in each such document, when so filed with
the Commission, such comments as such Initial Purchasers reasonably may propose,
(ii) include in each such document the names of the Holders who propose to sell
Transfer Restricted Securities pursuant to the Shelf Registration Statement as
selling security holders and (iii) file pursuant to Rule 424(b) under the
Securities Act an amendment to the Shelf Registration Statement or amend the
prospectus to cover new Holders of Securities upon written notice by such new
Holders to the effect.
(b) The Company shall give written notice to the Initial
Purchasers and the Holders (which notice pursuant to clauses (ii)-(v) hereof
shall be accompanied by an instruction, if applicable, to suspend the use of the
prospectus until the requisite changes have been made):
(i) when the Shelf Registration Statement or any amendment
thereto has been filed with the Commission and when the Shelf Registration
Statement or any post-effective amendment thereto has become effective;
(ii) of any request by the Commission for amendments or
supplements to the Shelf Registration Statement or the prospectus included
therein or for additional information;
(iii) of the issuance by the Commission of any stop order
suspending the effectiveness of the Shelf Registration Statement or the
initiation of any proceedings for that purpose;
(iv) of the receipt by the Company or its legal counsel of any
notification with respect to the suspension of the qualification of the
Securities for sale in any jurisdiction or the initiation or threatening of any
proceeding for such purpose; and
(v) of the happening of any event that requires the Company to
make changes in the Shelf Registration Statement or the prospectus in order that
the Shelf
PAGE 74 OF 86 PAGES
<PAGE>
Registration Statement and the prospectus do not contain an untrue
statement of a material fact and do not omit to state a material fact required
to be stated therein or necessary to make the statements therein (in the case of
the prospectus, in light of the circumstances under which they were made) not
misleading, which written notice need not provide any detail as to the nature of
such event.
(c) The Company shall use reasonable commercial efforts to obtain
the withdrawal at the earliest possible time, of any order suspending the
effectiveness of the Shelf Registration Statement.
(d) The Company shall furnish to each Holder of Transfer
Restricted Securities included within the coverage of the Shelf Registration,
without charge, one copy of the Shelf Registration Statement and any
post-effective amendment thereto, including financial statements and schedules,
and, if the Holder so requests in writing, all exhibits thereto (other than
those, if any, incorporated by reference).
(e) The Company shall, during the Shelf Registration Period,
deliver to each Holder of Transfer Restricted Securities included within the
coverage of the Shelf Registration Statement, without charge, as many copies of
the prospectus (including each preliminary prospectus) included in the Shelf
Registration Statement and any amendment or supplement thereto as such person
may reasonably request. The Company consents, subject to the provisions of this
Agreement, to the use of the then current prospectus or any amendment thereto,
together with any supplement thereto, by each of the selling Holders in
connection with the offering and sale of the Transfer Restricted Securities
covered by the prospectus, or any amendment or supplement thereto, included in
the Shelf Registration Statement.
(f) Prior to any public offering of the Securities pursuant to
the Shelf Registration Statement, the Company shall register or qualify or
cooperate with the Holders of the Transfer Restricted Securities included
therein and their respective counsel in connection with the registration or
qualification of such Securities for offer and sale under the securities or
"blue sky" laws of such states of the United States as any such Holder
reasonably requests in writing and do any and all other acts or things necessary
or advisable to enable the offer and sale in such jurisdictions of the
Securities covered by the Shelf Registration Statement; PROVIDED, HOWEVER, that
the Company shall not be required to (i) qualify generally to do business in any
jurisdiction where it is not then otherwise required to be so qualified or (ii)
take any action which would subject it to general service of process or to
taxation in any jurisdiction where it is not then so subject.
(g) The Company shall cooperate with the Holders of the Transfer
Restricted Securities to facilitate the timely preparation and delivery of
certificates representing the Securities to be sold pursuant to the Shelf
Registration Statement free of any restrictive legends and in such denominations
and registered in such names as the Holders may request a reasonable period of
time prior to sales of the Securities pursuant to the Shelf Registration
Statement.
PAGE 75 OF 86 PAGES
<PAGE>
(h) Upon the occurrence of any event contemplated by paragraphs
(ii) through (v) of Section 2(b) above during the period for which the Company
is required to maintain an effective Shelf Registration Statement, the Company
shall promptly prepare and file a post-effective amendment to the Shelf
Registration Statement or an amendment or supplement to the related prospectus
and any other required document so that, as thereafter delivered to Holders or
purchasers of Securities, the prospectus will not contain an untrue statement of
a material fact or omit to state any material fact required to be stated therein
or necessary to make the statements therein, in light of the circumstances under
which they were made, not misleading. If the Company notifies the Initial
Purchasers or the Holders, in accordance with paragraphs (ii) through (v) of
Section 2(b) above, to suspend the use of the prospectus until the requisite
changes to the prospectus have been made, then the Initial Purchasers and the
Holders shall suspend use of such prospectus.
(i) Not later than the effective date of the Shelf Registration
Statement, the Company will provide CUSIP numbers for the Convertible Preferred
Stock and the Common Stock issuable upon conversion thereof registered under the
Shelf Registration Statement, and provide printed certificates for such
Convertible Preferred Stock or Common Stock, in form eligible for deposit with
The Depository Trust Company.
(j) The Company will comply with all rules and regulations of the
Commission to the extent and so long as they are applicable to the Shelf
Registration and will make generally available to its security holders (or
otherwise provide in accordance with Section 11(a) of the Securities Act) an
earnings statement satisfying the provisions of Section 11(a) of the Securities
Act, no later than 45 days after the end of a 12-month period (or 90 days, if
such period is a fiscal year) beginning with the first month of the Company's
first fiscal quarter commencing after the effective date of the Shelf
Registration Statement, which statement shall cover such 12-month period.
(k) The Company may require each Holder of Securities to be sold
pursuant to the Shelf Registration Statement to furnish to the Company such
information regarding the Holder and the distribution of the Securities by such
Holder as the Company may from time to time reasonably require for inclusion in
the Shelf Registration Statement, and the Company may exclude from such
registration the Securities of any Holder that fails to furnish such information
within a reasonable time after receiving such request.
(l) The Company shall (i) make reasonably available for
inspection by the Holders of the Transfer Restricted Securities and any
attorney, accountant or other agent retained by the Holders of the Securities
all relevant financial and other records, pertinent corporate documents and
properties of the Company and (ii) cause the Company's officers, directors,
employees, accountants and auditors to supply all relevant information
reasonably requested by the Holders of the Securities or any such attorney,
accountant or agent in connection with the Shelf Registration Statement, in
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each case, as shall be reasonably necessary to enable such persons to conduct a
reasonable investigation within the meaning of Section 11 of the Securities Act;
PROVIDED, HOWEVER, that the foregoing inspection and information gathering (i)
shall be coordinated by you and, on behalf of the other parties, by one counsel
(the "Designated Counsel") designated by the Holders of a majority in principal
amount of the Securities covered by the Shelf Registration Statement (PROVIDED
that Holders of Common Stock issued upon the conversion of the Convertible
Preferred Stock shall be deemed to be Holders of the aggregate number of
Convertible Preferred Stock from which such Common Stock was converted) and (ii)
shall not be available for any such Holder that is a competitor of the Company,
and PROVIDED FURTHER that such Holders shall keep the information so received
confidential.
(m) The Company, if requested by the Designated Counsel, shall
cause (i) its counsel to deliver an opinion and updates thereof relating to the
Transfer Restricted Securities in customary form, with customary limitations,
qualifications and exceptions, addressed to such Holders, and dated, in the case
of the initial opinion, the effective date of such Shelf Registration Statement
(it being agreed that the matters to be covered by such opinion shall include
the due incorporation and good standing of the Company and its subsidiaries; the
qualification of the Company and its subsidiaries to transact business as
foreign corporations; the due authorization, execution and issuance, and the
validity and enforceability, of the applicable Securities; other than as
disclosed, the absence of material legal or governmental proceedings involving
the Company and its subsidiaries; other than as disclosed, the absence of
governmental approvals required to be obtained in connection with the Shelf
Registration Statement, or the offering and sale of the applicable Securities;
the compliance as to form of such Shelf Registration Statement and any documents
incorporated by reference therein; and, as of the date of the opinion and as of
the effective date of the Shelf Registration Statement or most recent
post-effective amendment thereto, as the case may be, the absence from such
Shelf Registration Statement and the prospectus included therein, as then
amended or supplemented, and from any documents incorporated by reference
therein, of an untrue statement of a material fact or the omission to state
therein a material fact required to be stated therein or necessary to make the
statements therein not misleading (in the case of any such documents, in the
light of the circumstances existing at the time that such documents were filed
with the Commission under the Securities Exchange Act of 1934, as amended (the
"Exchange Act"))), (ii) its officers to execute and deliver all customary
documents and certificates and updates thereof requested by the Designated
Counsel and (iii) its independent public accountants and the independent public
accountants with respect to any other entity for which financial information is
provided in the Shelf Registration Statement to provide to the selling Holders
of the applicable Securities a comfort letter in customary form and covering
matters of the type customarily covered in comfort letters in connection with
primary underwritten offerings, subject to receipt of appropriate documentation
as contemplated, and only if permitted, by Statement of Auditing Standards No.
72.
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(n) The Company will use its best efforts to cause the Common
Stock relating to such Shelf Registration Statement to be listed on each
securities exchange, if any, on which any shares of Common Stock are then
listed.
(o) The Company shall use reasonable commercial efforts to take
all other steps necessary to effect the registration of the Transfer Restricted
Securities covered by the Shelf Registration Statement contemplated hereby.
3. REGISTRATION EXPENSES. The Company shall bear all fees and
expenses incurred in connection with the performance of its obligations under
Sections 1 through 2 hereof, whether or not the Shelf Registration Statement is
filed or becomes effective, and shall bear or reimburse the Holders of the
Securities covered by the Shelf Registration for the reasonable fees and
disbursements of the Designated Counsel (PROVIDED that Holders of Common Stock
issued upon the conversion of the Convertible Preferred Stock shall be deemed to
be Holders of the aggregate number of Convertible Preferred Stock from which
such Common Stock was converted) to act as counsel for the Holders in connection
therewith.
4. INDEMNIFICATION. (a) The Company agrees to indemnify and hold
harmless each Holder and each person, if any, who controls such Holder within
the meaning of the Securities Act or the Exchange Act (each Holder and such
controlling persons are referred to collectively as the "Indemnified Parties")
from and against any losses, claims, damages or liabilities, joint or several,
or any actions in respect thereof (including any losses, claims, damages,
liabilities or actions relating to purchases and sales of the Securities) to
which each Indemnified Party becomes subject under the Securities Act, the
Exchange Act or otherwise, insofar as such losses, claims, damages, liabilities
or actions arise out of or are based upon, any untrue statement or alleged
untrue statement of a material fact contained in the Shelf Registration
Statement or prospectus or in any amendment or supplement thereto or in any
preliminary prospectus relating to the Shelf Registration, or arise out of, or
are based upon, the omission or alleged omission to state therein a material
fact required to be stated therein or necessary to make the statements therein
not misleading, and subject to subsection (c) below, shall reimburse, as
incurred, the Indemnified Parties for any legal or other expenses reasonably
incurred by them in connection with investigating or defending any such loss,
claim, damage, liability or action in respect thereof; PROVIDED, HOWEVER, that
the Company shall not be liable in any such case to the extent that such loss,
claim, damage, liability, or action in respect thereof arises out of or is based
upon (x) the use of any prospectus in violation of the last sentence of Section
2(h), or (y) any untrue statement or alleged untrue statement or omission or
alleged omission made in the Shelf Registration Statement or prospectus or in
any amendment or supplement thereto or in any preliminary prospectus relating to
the Shelf Registration in reliance upon, and in conformity with, written
information pertaining to such Holder and furnished to the Company by or on
behalf of such Holder specifically for inclusion therein; PROVIDED FURTHER,
HOWEVER, that this indemnity agreement will be separate from any liability which
the Company may otherwise have to such Indemnified Party; PROVIDED FURTHER,
HOWEVER, that with respect to any untrue statement
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or alleged untrue statement in or omission or alleged omission from any
prospectus, the indemnity agreement contained in this subsection (a) shall not
inure to the benefit of any Holder that sold the Securities concerned to the
person asserting any such losses, claims, damages or liabilities, to the extent
that any such loss, claim, damage or liability of such Holder results from the
fact that there was not sent or given to such person, at or prior to the written
confirmation of the sale of such Securities to such person, a copy of the
prospectus if the Company had previously furnished copies thereof to such Holder
and such prospectus corrected such untrue statement or omission or alleged
untrue statement or omission.
(b) Each Holder, severally and not jointly, will indemnify and
hold harmless the Company and each person, if any, who controls the Company
within the meaning of the Securities Act or the Exchange Act from and against
any losses, claims, damages or liabilities or any actions in respect thereof, to
which the Company or any such controlling person becomes subject under the
Securities Act, the Exchange Act or otherwise, insofar as such losses, claims,
damages, liabilities or actions arise out of or are based upon any untrue
statement or alleged untrue statement of a material fact contained in a Shelf
Registration Statement or prospectus or in any amendment or supplement thereto
or in any preliminary prospectus relating to a Shelf Registration, or arise out
of, or are based upon the omission or alleged omission to state therein a
material fact necessary to make the statements therein not misleading, but in
each case only to the extent that the untrue statement or omission or alleged
untrue statement or omission was made in reliance upon and in conformity with
written information pertaining to such Holder and furnished to the Company by or
on behalf of such Holder specifically for inclusion therein; and, subject to the
limitation set forth immediately preceding this clause, and to subsection (c)
below, shall reimburse, as incurred, the Company for any legal or other expenses
reasonably incurred by the Company or any such controlling person in connection
with investigating or defending any loss, claim, damage, liability or action in
respect thereof; PROVIDED, however, that such Holder shall not have any
liability under this clause (b) in excess of the aggregate purchase price paid
by such Holder for the shares of Convertible Preferred Stock purchased by such
Holder. This indemnity agreement will be separate from any liability which such
Holder may otherwise have to the Company or any of its controlling persons.
(c) Promptly after receipt by an indemnified party under this
Section 4 of notice of the commencement of any action or proceeding (including a
governmental investigation), such indemnified party will, if a claim in respect
thereof is to be made against the indemnifying party under this Section 4,
notify the indemnifying party of the commencement thereof; but the omission so
to notify the indemnifying party will not, in any event, relieve the
indemnifying party from any obligations to any indemnified party other than the
indemnification obligation provided in subsections (a) or (b) above. In case any
such action is brought against any indemnified party, and it notifies the
indemnifying party of the commencement thereof, the indemnifying party will be
entitled to participate therein and, to the extent that it may wish, jointly
with any other indemnifying party similarly notified, to assume the defense
thereof, with
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counsel reasonably satisfactory to such indemnified party (who shall not, except
with the consent of the indemnified party, be counsel to the indemnifying
party), and after notice from the indemnifying party to such indemnified party
of its election so to assume the defense thereof the indemnifying party will not
be liable to such indemnified party under this Section 4 for any legal or other
expenses, other than reasonable costs of investigation, subsequently incurred by
such indemnified party in connection with the defense thereof. No indemnifying
party shall, without the prior written consent of the indemnified party, effect
any settlement of any pending or threatened action in respect of which any
indemnified party is or could have been a party and indemnity could have been
sought hereunder by such indemnified party unless such settlement includes an
unconditional release of such indemnified party from all liability on any claims
that are the subject matter of such action.
(d) If the indemnification provided for in this Section 4 is
unavailable or insufficient to hold harmless an indemnified party under
subsections (a) or (b) above, then each indemnifying party shall contribute to
the amount paid or payable by such indemnified party as a result of the losses,
claims, damages or liabilities (or actions in respect thereof) referred to in
subsections (a) or (b) above (i) in such proportion as is appropriate to reflect
the relative benefits received by the indemnifying party or parties on the one
hand and the indemnified party on the other from the registration of the
Securities, pursuant to the Shelf Registration, or (ii) if the allocation
provided by the foregoing clause (i) is not permitted by applicable law, in such
proportion as is appropriate to reflect not only the relative benefits referred
to in clause (i) above but also the relative fault of the indemnifying party or
parties on the one hand and the indemnified party on the other, in connection
with the statements or omissions that resulted in such losses, claims, damages
or liabilities (or actions in respect thereof), as well as any other relevant
equitable considerations. The relative fault of the parties shall be determined
by reference to, among other things, whether the untrue or alleged untrue
statement of a material fact or the omission or alleged omission to state a
material fact relates to information supplied by the Company on the one hand or
such Holder or such other indemnified party, as the case may be, on the other,
and the parties' relative intent, knowledge, access to information and
opportunity to correct or prevent such statement or omission. The amount paid by
an indemnified party as a result of the losses, claims, damages or liabilities
referred to in the first sentence of this subsection (d) shall be deemed to
include any legal or other expenses reasonably incurred by such indemnified
party in connection with investigating or defending any action or claim which is
the subject of this subsection (d). Notwithstanding any other provision of this
subsection (d), the Holders shall not be required to contribute any amount in
excess of the amount by which the net proceeds received by such Holders from the
sale of the Securities pursuant to the Shelf Registration Statement exceeds the
amount of damages which such Holders have otherwise been required to pay by
reason of such untrue or alleged untrue statement or omission or alleged
omission. No person guilty of fraudulent misrepresentation (within the meaning
of Section 11(f) of the Securities Act) shall be entitled to contribution from
any person who was not guilty of such fraudulent misrepresentation. For purposes
of this paragraph (d), each person, if any, who controls such indemnified
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<PAGE>
party within the meaning of the Securities Act or the Exchange Act shall have
the same rights to contribution as such indemnified party and each person, if
any, who controls the Company within the meaning of the Securities Act or the
Exchange Act shall have the same rights to contribution as the Company.
(e) The agreements contained in this Section 4 shall survive the
sale of the Securities pursuant to the Shelf Registration Statement and shall
remain in full force and effect, regardless of any termination or cancellation
of this Agreement or any investigation made by or on behalf of any indemnified
party.
5. ADDITIONAL DIVIDENDS UNDER CERTAIN CIRCUMSTANCES. (a)
Additional dividends (the "Additional Dividends") with respect to the shares of
Convertible Preferred Stock which are Transfer Restricted Securities shall
accrue as follows if any of the following events occur (each such event in
clauses (i) and (ii) below being herein called a "Registration Default"):
(i) if by August 31, 1997, the Shelf Registration Statement has
not been declared effective by the Commission; or
(ii) if after the Shelf Registration Statement is declared
effective (A) the Shelf Registration Statement thereafter ceases to be
effective; or (B) the Shelf Registration Statement or the related prospectus
ceases to be usable (in each case except as permitted in paragraph (b) below) in
connection with resales of Transfer Restricted Securities in accordance with and
during the periods specified herein because either (1) any event occurs as a
result of which the related prospectus forming part of such Shelf Registration
Statement would include any untrue statement of a material fact or omit to state
any material fact necessary to make the statements therein in the light of the
circumstances under which they were made not misleading, or (2) it shall be
necessary to amend such Shelf Registration Statement or supplement the related
prospectus, to comply with the Securities Act or the Exchange Act or the
respective rules thereunder.
Additional Dividends shall accrue on the shares of Convertible
Preferred Stock which are Transfer Restricted Securities from and including the
date on which any such Registration Default shall occur, to but excluding the
date on which all such Registration Defaults have been cured, at a rate of 7
3/4% per annum.
(b) A Registration Default referred to in Section 5(a)(ii) shall
be deemed not to have occurred and be continuing in relation to the Shelf
Registration Statement or the related prospectus if (i) such Registration
Default has occurred solely as a result of (x) the filing of a post-effective
amendment to the Shelf Registration Statement to incorporate annual audited
financial information with respect to the Company where such post-effective
amendment is not yet effective and needs to be declared effective to permit
Holders to use the related prospectus or (y) other material events, with respect
to the Company that would need to be described in the Shelf Registration
Statement or the related prospectus and (ii) in the case of clause (y), the
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Company proceeds promptly and in good faith to amend or supplement the Shelf
Registration Statement and related prospectus to describe such events if the
Company has determined in good faith that there are no material legal or
commercial impediments in so doing; PROVIDED, HOWEVER, that in any case if such
Registration Default occurs for a continuous period in excess of 45 days,
Additional Dividends shall be payable in accordance with the above paragraph
from the day such Registration Default initially occurs until such Registration
Default is cured.
(c) Any amounts of Additional Dividends due pursuant to clause
(a)(i) or (a)(ii) of this Section 5 or pursuant to the proviso contained in
Section 5(b) will be payable on the regular dividend payment dates with respect
to the Convertible Preferred Stock on the same terms and conditions and subject
to the same limitations as pertain at such time for the payment of regular
dividends. The amount of Additional Dividends will be determined by multiplying
the applicable Additional Dividends rate by the aggregate liquidation preference
of the outstanding shares of Convertible Preferred Stock, multiplied by a
fraction, the numerator of which is the number of days such Additional Dividend
rate was applicable during such period (determined on the basis of a 360-day
year comprised of twelve 30-day months), and the denominator of which is 360.
(d) "Transfer Restricted Securities" means each Security
(including additional shares of Convertible Preferred Stock issued in payment of
dividends on the Convertible Preferred Securities, if any, as permitted in
accordance with the terms of the Convertible Preferred Stock) until (i) the date
on which such Security has been effectively registered under the Securities Act
and disposed of in accordance with the Shelf Registration Statement or (ii) the
date on which such Security is distributed to the public pursuant to Rule 144
under the Securities Act or is saleable pursuant to Rule 144(k) under the
Securities Act (or any successor rule thereof) or would be saleable pursuant to
Rule 144(k) under the Securities Act had it not been held by, or had never been
held by, an affiliate of the Company.
6. RULES 144 AND 144A. So long as any Transfer Restricted
Security exists, the Company shall use its best efforts to file the reports
required to be filed by it under the Securities Act and the Exchange Act in a
timely manner and, if at any time the Company is not required to file such
reports, it will, upon the request of any Holder of Transfer Restricted
Securities, make publicly available other information so long as necessary to
permit sales of its securities pursuant to Rules 144 and 144A. The Company
covenants that, if in the event the Company is no longer subject to Sections 13
or 15(d) of the Exchange Act, it will take such further action as any Holder of
Transfer Restricted Securities may reasonably request, all to the extent
required from time to time to enable such Holder to sell Transfer Restricted
Securities without registration under the Securities Act within the limitation
of the exemptions provided by Rules 144 and 144A (including the requirements of
Rule 144A(d)(4)). The Company will provide a copy of this Agreement to
prospective purchasers of Securities identified to the Company by the Initial
Purchasers upon request.
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Notwithstanding the foregoing, nothing in this Section 6 shall be deemed to
require the Company to register any of its securities pursuant to the Exchange
Act.
7. MISCELLANEOUS. (a) AMENDMENTS AND WAIVERS. The provisions of
this Agreement may not be amended, modified or supplemented, and waivers or
consents to departures from the provisions hereof may not be given, except by
the Company and the written consent of the Holders of a majority of the Transfer
Restricted Securities (provided that Holders of Common Stock issued upon
conversion of Convertible Preferred Stock shall be deemed to be Holders of the
aggregate number of Convertible Preferred Stock from which such Common Stock was
converted) affected by such amendment, modification, supplement, waiver or
consents.
(b) NOTICES. All notices and other communications provided for or
permitted hereunder shall be made in writing by hand delivery, first-class mail,
facsimile transmission, or air courier which guarantees overnight delivery:
(1) if to the Holders, at the most current address given by the
Holders of record to the Company in accordance with the provisions of this
Section 7(b), which address initially is, with respect to each Holder, the
address of such Holder to which confirmation of the sale of the Convertible
Preferred Stock to such Holder was first sent by the Initial Purchasers, with a
copy in like manner to you as follows:
Credit Suisse First Boston Corporation
Dillon, Read & Co. Inc.
c/o Credit Suisse First Boston Corporation
Eleven Madison Avenue
New York, NY 10010-3629
Fax No.: (212) 325-8728
Attention: Transactions Advisory Group
with a copy to:
Cravath, Swaine & Moore
Worldwide Plaza
825 Eighth Avenue
New York, NY 10019
Fax No.: (212) 474-3700
Attention: Kris F. Heinzelman, Esq.
(2) if to the Company, at its address as follows:
IXC Communications, Inc.
5000 Plaza on the Lake, Suite 200
Austin, TX 78746
Fax No.: (512) 329-4717
Attention: Chief Financial Officer
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with a copy to:
Riordan & McKinzie
695 Town Center Drive, Suite 1500
Costa Mesa, CA 92626
Fax No.: (714) 549-3244
Attention: Michael P. Whalen, Esq.
All such notices and communications shall be deemed to have been
duly given: at the time delivered by hand, if personally delivered; three
business days after being deposited in the mail, postage prepaid, if mailed;
when receipt is acknowledged by recipient's facsimile machine operator, if sent
by facsimile transmission; and on the day delivered, if sent by overnight air
courier guaranteeing next day delivery.
(c) NO INCONSISTENT AGREEMENTS; DAMAGES. The Company has not, as
of the date hereof, entered into, nor shall it, on or after the date hereof,
enter into, any agreement with respect to its securities that is inconsistent
with the rights granted to the Holders herein or otherwise conflicts with the
provisions hereof. Notwithstanding anything to the contrary contained in this
Agreement, it is hereby acknowledged and agreed that the Company shall have no
liability for monetary damages to the Initial Purchasers or any Holder for any
breaches, failures to comply or violations by it of Section 1 or 2 of this
Agreement except as expressly provided in Section 4 or 5 hereof; PROVIDED,
HOWEVER, in the event that the Company breaches, fails to comply or violates the
provisions of Section 1 or 2 hereof, the Holders shall be entitled to, and the
Company shall not oppose the granting of, equitable relief, including injunction
and specific performance.
(d) SUCCESSORS AND ASSIGNS. This Agreement shall inure to the
benefit of and be binding upon the successors and assigns of each of the
parties, including, without the need for an express assignment or any consent by
the Company thereto, subsequent Holders of Transfer Restricted Securities. The
Company hereby agrees to extend the benefits of this Agreement to any Holder of
Transfer Restricted Securities and any such Holder may specifically enforce the
provisions of this Agreement as if an original party hereto.
(e) COUNTERPARTS. This Agreement may be executed in any number of
counterparts and by the parties hereto in separate counterparts, each of which
when so executed shall be deemed to be an original and all of which taken
together shall constitute one and the same agreement.
(f) HEADINGS. The headings in this Agreement are for convenience
of reference only and shall not limit or otherwise affect the meaning hereof.
(g) GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE
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OF NEW YORK WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF LAWS.
By the execution and delivery of this Agreement, the Company
submits to the nonexclusive jurisdiction of any federal or state court in the
State of New York.
(h) SEVERABILITY. If any one or more of the provisions contained
herein, or the application thereof in any circumstance, is held invalid, illegal
or unenforceable, the validity, legality and enforceability of any such
provision in every other respect and of the remaining provisions contained
herein shall not be affected or impaired thereby.
(i) SECURITIES HELD BY THE COMPANY. Whenever the consent or
approval of Holders of a specified percentage of Transfer Restricted Securities
is required hereunder, Securities held by the Company or its affiliates (other
than subsequent Holders of Transfer Restricted Securities if such subsequent
Holders are deemed to be affiliates solely by reason of their holdings of such
Securities and other than the Trustees of General Electric Pension Trust and
other than certain individuals that purchased in the aggregate 24,000 shares of
Convertible Preferred Stock directly from the Initial Purchasers) shall not be
counted in determining whether such consent or approval was given by the Holders
of such required percentage.
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If the foregoing is in accordance with your understanding of our
agreement, lease sign and return to the Company a counterpart hereof, whereupon
this instrument, along with all counterparts, will become a binding agreement
among the Initial Purchasers and the Company in accordance with its terms.
Very truly yours,
IXC COMMUNICATIONS, INC.
By: /s/ John J. Willingham
----------------------------
Name: John J. Wllingham
Title: Senior Vice
President and
Chief Financial
Officer
The foregoing Registration
Rights Agreement is hereby confirmed
and accepted as f the date first
above written.
CREDIT SUISSE FIRST BOSTON CORPORATION
By: /s/ J. Peter Beckett
-----------------------------
Name: J. Peter Beckett
Title: Director
DILLON, READ & CO. INC.
By: /s/ John Frederick Stechel
-----------------------------
Name: John Frederick Stechel
Title: Vice President
PAGE 86 OF 86 PAGES
