================================================================================
PREFERRED STOCK AND WARRANT PURCHASE AGREEMENT
BY AND BETWEEN
ICG COMMUNICATIONS, INC.
AND
THE PURCHASERS LISTED ON SCHEDULE I HERETO
Dated as of
February 27, 2000
TABLE OF CONTENTS
Article I DEFINITIONS........................................................1
Article II SALE AND PURCHASE.................................................6
2.1 AGREEMENT TO SELL AND TO PURCHASE; PURCHASE PRICE.....................6
2.2 CLOSING...............................................................6
Article III REPRESENTATIONS AND WARRANTIES OF THE COMPANY....................7
3.1 ORGANIZATION AND STANDING.............................................7
3.2 CAPITAL STOCK.........................................................8
3.3 AUTHORIZATION; ENFORCEABILITY.........................................9
3.4 NO VIOLATION; CONSENTS................................................9
3.5 COMMISSION FILINGS; FINANCIAL STATEMENTS.............................10
3.6 PRIVATE OFFERING.....................................................10
3.7 PROVIDED INFORMATION.................................................11
3.8 MATERIAL ADVERSE CHANGE..............................................11
3.9 LITIGATION...........................................................11
3.10 PERMITS AND LICENSES.................................................11
3.11 INTELLECTUAL PROPERTY, ETC...........................................12
3.12 BOARD APPROVAL.......................................................12
3.13 BRITISH TELECOMMUNICATIONS...........................................12
3.14 SHARE EXCHANGE AGREEMENT.............................................12
Article IV REPRESENTATIONS AND WARRANTIES OF THE PURCHASERS.................13
4.1 ORGANIZATION; AUTHORIZATION; ENFORCEABILITY..........................13
4.2 PRIVATE PLACEMENT....................................................13
4.3 NO VIOLATION; CONSENTS...............................................14
4.4 NO LITIGATION........................................................15
4.5 NO GROUP STATUS......................................................15
Article V COVENANTS OF THE COMPANY..........................................15
5.1 OPERATION OF BUSINESS................................................15
5.2 HMTF AND LIBERTY DIRECTORS...........................................16
5.3 ACCESS TO BOOKS AND RECORDS..........................................18
5.4 AGREEMENT TO TAKE NECESSARY AND DESIRABLE ACTIONS....................18
5.5 COMPLIANCE WITH CONDITIONS; COMMERCIALLY REASONABLE EFFORTS..........18
5.6 HSR ACT NOTIFICATION.................................................19
5.7 CONSENTS AND APPROVALS...............................................19
5.8 RESERVATION OF SHARES................................................19
5.9 USE OF PROCEEDS......................................................20
5.10 FILING OF CERTIFICATE OF DESIGNATION.................................20
5.11 LISTING OF SHARES....................................................20
5.12 PERIODIC INFORMATION.................................................20
5.13 LEGENDS..............................................................20
5.14 PAYMENT; PAYING AGENT; CERTAIN INFORMATION...........................21
5.15 RIGHTS PLAN..........................................................21
5.16 PROPORTIONAL PURCHASE RIGHT..........................................21
5.17 MODIFICATION OF SHARE EXCHANGE AGREEMENT.............................22
Article VI COVENANTS OF THE PURCHASERS......................................22
6.1 AGREEMENT TO TAKE NECESSARY AND DESIRABLE ACTIONS....................22
6.2 COMPLIANCE WITH CONDITIONS; COMMERCIALLY REASONABLE EFFORTS..........22
6.3 HSR ACT NOTIFICATION.................................................22
6.4 CONSENTS AND APPROVALS...............................................23
6.5 RESTRICTIONS ON TRANSFER.............................................23
6.6 STANDSTILL...........................................................23
Article VII CONDITIONS PRECEDENT TO CLOSING.................................24
7.1 CONDITIONS TO THE COMPANY'S OBLIGATIONS..............................24
7.2 CONDITIONS TO EACH PURCHASER'S OBLIGATIONS...........................25
Article VIII MISCELLANEOUS..................................................26
8.1 SURVIVAL; INDEMNIFICATION............................................26
8.2 NOTICES..............................................................28
8.3 GOVERNING LAW........................................................31
8.4 TERMINATION..........................................................31
8.5 ENTIRE AGREEMENT.....................................................32
8.6 MODIFICATIONS AND AMENDMENTS.........................................32
8.7 WAIVERS AND EXTENSIONS...............................................32
8.8 TITLES AND HEADINGS..................................................32
8.9 EXHIBITS AND SCHEDULES...............................................32
8.10 EXPENSES.............................................................32
8.11 PRESS RELEASES AND PUBLIC ANNOUNCEMENTS..............................32
8.12 ASSIGNMENT; NO THIRD PARTY BENEFICIARIES.............................33
8.13 SEVERABILITY.........................................................33
8.14 COUNTERPARTS.........................................................33
8.15 FURTHER ASSURANCES...................................................33
8.16 REMEDIES CUMULATIVE..................................................33
8.17 SEVERAL LIABILITY OF THE PURCHASERS..................................34
8.18 NO DUTY TO OTHER PURCHASERS..........................................34
8.19 SPECIFIC PERFORMANCE.................................................34
8.20 NO PURCHASER AFFILIATE LIABILITY.....................................34
Exhibits
--------
Exhibit A - Form of Warrant
Exhibit B - Certificate of Designation
Exhibit C - Form of Registration Rights Agreement
Exhibit D - Form of Legal Opinion
Exhibit E - Form of Management Rights Agreement
Schedules
---------
Schedule 3.1(b) - Equity Interests
Schedule 3.2 - Company Capital Stock
Schedule 5.1(iv) - Dividends or Distributions on Capital Stock
This PREFERRED STOCK AND WARRANT
PURCHASE AGREEMENT is dated as of February
27, 2000 (this "Agreement"), by and between
ICG COMMUNICATIONS, INC. a Delaware
corporation (the "Company"), and each of the
purchasers listed on Schedule I hereto
(individually, a "Purchaser" and
collectively, the "Purchasers").
WHEREAS, the Company proposes, subject to the terms and conditions
set forth herein, to issue and sell to the Purchasers 750,000 shares of its 8%
Series A Convertible Preferred Stock, initial liquidation preference $1,000 per
share, par value $0.01 per share (the "Series A Preferred Stock");
WHEREAS, the Company proposes, subject to the terms and conditions
set forth herein, to issue and sell to the Purchasers warrants (each a "Warrant"
and together, the "Warrants") to purchase 10,000,000 shares of the Company's
Common Stock, par value $0.01 per share (the "Warrant Shares"), in substantially
the form of Exhibit A attached hereto;
WHEREAS, subject to the terms and conditions set forth herein, each
Purchaser desires to purchase such Series A Preferred Stock and Warrants from
the Company;
NOW, THEREFORE, the parties hereto, intending to be legally bound,
hereby agree as follows:
ARTICLE I
DEFINITIONS
(a) As used in this Agreement, the following terms shall have the
following meanings:
"Affiliate" means, with respect to any Person, any other Person
directly or indirectly controlling, controlled by, or under direct or indirect
common control with, such Person. For the purposes of this definition, "control"
when used with respect to any Person means the power to direct the management
and policies of such Person, directly or indirectly, whether through the
ownership of voting securities, by contract or otherwise; and the terms
"controlling" and "controlled" have meanings correlative to the foregoing;
provided that neither AT&T Corp. ("AT&T") nor any Subsidiary of AT&T which is
not included in AT&T's Liberty Media Group (as defined in AT&T's Certificate of
Incorporation) will be deemed to be an Affiliate of Liberty.
"Applicable Law" means (a) any United States Federal, state, local
or foreign law, statute, rule, regulation, order, writ, injunction, judgment,
decree or permit of any Governmental Authority and (b) any rule or listing
requirement of any applicable national stock exchange or listing requirement of
any national stock exchange or Commission recognized trading market on which
securities issued by the Company or any of the Subsidiaries are listed or
quoted.
"Business Day" means any day other than a Saturday, a Sunday, the
day after Thanksgiving or a day when banks in The City of New York are
authorized by Applicable Law to be closed.
"Capital Stock" means (i) with respect to any Person that is a
corporation, any and all shares, interests, participations, rights or other
equivalents (however designated) of corporate stock and (ii) with respect to any
other Person, any and all partnership or other equity interests of such Person.
"Certificate of Designation" means the Certificate of Designation of
the Powers, Preferences and Relative, Participating, Optional and Other Special
Rights and Qualifications, Limitations and Restrictions thereof relating to the
Series A Preferred Stock, in the form attached hereto as Exhibit B.
"Commission" means the United States Securities and Exchange
Commission.
"Commission Filings" means all reports, registration statements and
other filings filed by the Company with the Commission (and all notes and
schedules thereto and documents incorporated by reference therein).
"Common Stock" means the common stock, par value $0.01 per share, of
the Company.
"Contract" means any contract, lease, loan agreement, mortgage,
security agreement, trust indenture, note, bond, or other agreement (whether
written or oral) or instrument.
"Conversion Shares" means the shares of Common Stock issuable upon
the conversion of the Series A Preferred Stock in accordance with the terms of
the Certificate of Designation.
"Equity Documents" means this Agreement, the Registration Rights
Agreement, the Certificate of Designation, the Management Rights Agreements, the
Share Exchange Agreement and the Warrants.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended, and the rules and regulations of the Commission promulgated thereunder.
"filed," when used with respect to a Commission Filing, means filed
with the Commission and publicly available.
"GAAP" means United States generally accepted accounting principles,
consistently applied.
"Gleacher Group" means Gleacher/ICG Investors LLC and its
Affiliates.
"Gleacher Holders" means members of the Gleacher Group that are
holders of all or a portion of the Gleacher Shares.
2
"Gleacher Shares" means (i) the shares of Series A Preferred Stock
issued to Gleacher on the Closing Date under this Agreement held by members of
the Gleacher Group plus (ii) the shares of Common Stock issued to and held by
members of the Gleacher Group upon conversion of the shares referred to in
clause (i) above.
"Governmental Authority" means (i) any foreign, Federal, state or
local court or governmental or regulatory agency or authority, (ii) any
arbitration board, tribunal or mediator and (iii) any national stock exchange or
Commission recognized trading market on which securities issued by the Company
or any of the Subsidiaries are listed or quoted.
"HMTF" means Hicks, Muse, ▇▇▇▇ & ▇▇▇▇▇ Incorporated, a Texas
corporation.
"HMTF Funds" means the funds affiliated with the HMTF Purchaser
identified by the HMTF Purchaser on or prior to the Closing Date.
"HMTF Group" means HMTF and its Affiliates and their respective
officers, directors, partners, members, stockholders and employees (and members
of their respective families and trusts for the primary benefit of such family
members), and HMTF Purchaser and its Affiliates.
"HMTF Holders" means members of the HMTF Group that are holders of
all or a portion of the HMTF Shares.
"HMTF Purchaser" means HM4 ICG Qualified Fund, LLC; HM4 ICG Private
Fund, LLC; HM PG-IV ICG, LLC; HM 4-SBS ICG Coinvestors, LLC; HM 4-EQ ICG
Coinvestors, LLC and HMTF Bridge ICG, LLC.
"HMTF Shares" means the HMTF Issued Series A Preferred Shares held
by members of the HMTF Group plus the shares of Common Stock issued to and held
by members of the HMTF Group upon conversion of the HMTF Issued Series A
Preferred Shares or upon exercise of the Warrants held by members of the HMTF
Group.
"HSR Act" means the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Antitrust Improvements Act of
1976, as amended, and applicable rules and regulations.
"Liberty" means Liberty Media Corporation, a Delaware corporation,
provided that if substantially all of the assets of Liberty Media Corporation
are at any time hereafter contributed to Liberty Media Group LLC, a Delaware
limited liability company, then from and after such contribution, Liberty shall
mean Liberty Media Group LLC.
"Liberty Group" means Liberty and its Affiliates.
"Liberty Holders" means members of the Liberty Group that are
holders of all or a portion of the Liberty Shares.
"Liberty Shares" means the Liberty Issued Series A Preferred Shares
held by members of the Liberty Group plus the shares of Common Stock issued to
and held by members
3
of the Liberty Group upon conversion of the Liberty Issued Series A Preferred
Shares or upon exercise of the Warrants held by members of the Liberty Group.
"Lien" means any mortgage, pledge, lien, security interest, claim,
restriction, charge or encumbrance of any kind.
"Management Rights Agreements" means the Management Rights
Agreements to be dated as of the Closing Date, to be executed by the Company and
delivered to the HMTF Funds, a form of which is attached as Exhibit E.
"Material Adverse Effect" means a material adverse effect on the
condition (financial or otherwise), business, assets or results of operations of
the Company and its Subsidiaries, taken as a whole.
"Permitted Transferee" means, with respect to any Purchaser, or any
Permitted Transferee of any Purchaser, (i) any Purchaser Affiliate of such
Purchaser that is not a holder of Common Stock on the date hereof or an
Affiliate of such holder; (ii) any Person that is a member of the Liberty Group;
and (iii) any Person that is a member of the HMTF Group and any Person
investing, directly or indirectly, in or in parallel with any member of the HMTF
Group; provided, however, that each Permitted Transferee must agree in writing
pursuant to a Permitted Transferee Agreement, in accordance with the provisions
of Section 6.5, to be bound by the terms, and subject to the conditions, of this
Agreement to the same extent, and in the same manner, as the transferring
Purchaser prior to the transfer of any Securities to such Permitted Transferee;
and provided, further, that the transfer of Securities from such Purchaser to
such Permitted Transferee is in compliance with all applicable securities laws.
"Person" means any individual, partnership, corporation, limited
liability company, joint venture, association, joint-stock company, trust,
unincorporated organization, government or agency or political subdivision
thereof, or other entity.
"Purchaser Affiliate" means (a) any direct or indirect holder of any
equity interests or securities in any Purchaser (whether limited or general
partners, members, stockholders or otherwise), (b) any Affiliate of any
Purchaser or (c) any director, officer, employee, representative or agent of (i)
such Purchaser, (ii) any Affiliate of such Purchaser or (iii) any holder of
equity interests or securities referred to in clause (a) above.
"Registration Rights Agreement" means the Registration Rights
Agreement, to be dated as of the Closing Date, to be entered into by and among
the Company and the Purchasers, in the form attached hereto as Exhibit C.
"Securities" means the Shares and the Warrants.
"Securities Act" means the Securities Act of 1933, as amended, and
the rules and regulations of the Commission promulgated thereunder.
"Series A Preferred Stock" has the meaning set forth in the first
recital to this Agreement. The Series A Preferred Stock has the designation,
powers, preferences and rights, and qualifications, limitations and restrictions
thereof set forth in the Certificate of Designation.
4
"Share Exchange Agreement" means the Share Exchange Agreement
between Quadrangle Investments, Inc. and a Subsidiary of the Company to be
dated as of February 28, 2000.
"Shares" means the shares of Series A Preferred Stock to be issued
and sold by the Company to the Purchasers pursuant to Section 2.1 hereof.
"Subsidiary" means, with respect to any Person (i) a corporation a
majority of whose capital stock with voting power, under ordinary circumstances,
to elect directors is at the time, directly or indirectly, owned by such Person,
by a subsidiary of such Person, or by such Person and one or more subsidiaries
of such Person, (ii) a partnership in which such Person or a subsidiary of such
Person is, at the date of determination, a general partner of such partnership
and has the power to direct the policies and management of such partnership or
(iii) any other Person (other than a corporation) in which such Person, a
subsidiary of such Person or such Person and one or more subsidiaries of such
Person, directly or indirectly, at the date of determination thereof, has (A) at
least a majority ownership interest or (B) the power to elect or direct the
election of the directors or other governing body of such Person.
"Transactions" means the transactions contemplated by this Agreement
and the other Equity Documents.
(b) As used in this Agreement, the following terms shall have the
meanings given thereto in the Sections set forth opposite such terms:
Term Section
---- -------
Agreement Preamble
Closing 2.2
Closing Date 2.2
Company Preamble
Conversion Agent 5.14(b)(ii)
DGCL 3.2(b)
HMTF Director 5.2(a)
HMTF Issued Series A Preferred Shares 5.2(a)
Indemnified Party 8.1(c)
Indemnified Person 8.1(b)
Indemnifying Party 8.1(c)
Information 3.7
Issuance 2.1
Liberty Director 5.2(b)
Liberty Issued Series A Preferred Shares 5.2(b)(i)
Losses 8.1(b)
Notices 8.2
Paying Agent 5.14(b)(i)
Permitted Transferee Agreement 6.5
Projections 3.7
Purchaser; Purchasers Preamble
5
Term Section
---- -------
Purchase Price 2.1
Registrar 5.14(b)(iii)
Securities Transfer 6.5
Supplying Purchasers 8.18
Warrants Recitals
Warrant Shares Recitals
ARTICLE II
SALE AND PURCHASE
2.1 Agreement to Sell and to Purchase; Purchase Price.
On the Closing Date, and upon the terms and subject to the conditions set
forth in this Agreement, the Company shall issue and sell to each Purchaser, and
each Purchaser, severally and not jointly, shall purchase and accept from the
Company such number of Shares and Warrants as is set forth opposite such
Purchaser's name on Schedule 1 hereto (the "Issuance"), for a purchase price of
one thousand dollars ($1,000) per Share (the "Purchase Price"), payable by wire
transfer of immediately available funds to a bank account or bank accounts
designated by the Company described in Section 2.2(a)(i).
2.2 Closing.
The closing of the Issuance to each Purchaser (the "Closing") shall take
place on a date to be specified by the Company and such Purchaser, which shall
be no later than the later of (A) the 2nd Business Day after the date as of
which all of the conditions set forth in Article VII hereof shall have been
satisfied as to the purchase by such Purchaser (or, to the extent permitted,
waived by the party or parties entitled to the benefit thereof) and (B) 15
Business Days after the date hereof or at such other time and date as the
parties hereto shall agree in writing (such date and time, the "Closing Date"),
at the offices of ▇'▇▇▇▇▇▇▇▇ Graev & Karabell, LLP, ▇▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇
▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇ or at such other place as the parties hereto shall agree in
writing.
At the Closing:
(a) Each Purchaser shall deliver:
(i) against delivery of a certificate or certificates
representing the Shares and the Warrants being purchased by such Purchaser
pursuant to Section 2.1, an amount equal to the aggregate Purchase Price
of such Securities via wire transfer of immediately available funds to
such bank account as the Company shall designate not later than two
Business Days prior to the Closing Date;
(ii) a copy of the Registration Rights Agreement executed by
such Purchaser.
(b) The Company shall deliver to each Purchaser:
6
(i) against payment of the Purchase Price therefor, a
certificate or certificates representing the Shares and Warrants being
purchased by such Purchaser pursuant to Section 2.1, which shall be in
definitive form and registered in the name of such Purchaser or its
nominee or designee and in a single certificate or in such other
denominations as such Purchaser shall request not later than two Business
Days prior to the Closing Date;
(ii) an opinion of (A) H. ▇▇▇ ▇▇▇▇▇▇, General Counsel of the
Company and (B) ▇'▇▇▇▇▇▇▇▇ Graev & Karabell, LLP, special counsel to the
Company, in each case dated the Closing Date, covering the matters set
forth on Exhibit D, in form and substance reasonably acceptable to the
Purchasers;
(iii) an officer's certificate of the Company as contemplated
by Section 7.2(f);
(iv) a certificate of the secretary of the Company covering
such matters as are customarily covered by such certificates, in form and
substance reasonably acceptable to the Purchasers;
(v) a long-form good standing certificate of the Company
issued by the Secretary of State of the State of Delaware; and
(vi) a copy of the Registration Rights Agreement executed by
the Company.
(c) The Company shall deliver to each Purchaser (or its designee) a
transaction fee equal to 3% of the Purchase Price of the Shares purchased by
such Purchaser, in immediately available funds by wire transfer to an account
designated by Purchasers at least two Business Days prior to the Closing Date.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company hereby represents and warrants to each Purchaser on the date
hereof and on and as of the Closing Date as follows:
3.1 Organization and Standing.
(a) Each of the Company and its material Subsidiaries (the "ICG
Subsidiaries") is duly organized, validly existing and in good standing under
the laws of its state of organization and has all corporate, limited liability
company and partnership power and authority to own its properties and assets and
to carry on its business as it is now being conducted. Each of the Company and
the ICG Subsidiaries is duly qualified to transact business as a foreign entity
and is in good standing in each jurisdiction in which the character of the
properties owned or leased by it or the nature of its business makes such
qualification necessary, except for any such failures to so qualify or be in
good standing that would not, individually or in the aggregate, reasonably be
expected to have a Material Adverse Effect.
7
(b) All of the outstanding shares of Capital Stock of each ICG
Subsidiary have been validly issued and are fully paid and non-assessable and
are owned directly or indirectly by the Company, free and clear of all Liens.
The Company does not own any equity interest in any corporation, partnership,
limited liability company, joint venture, or other entity except as provided on
Schedule 3.1(b) hereof.
(c) The Company has delivered to each Purchaser true and complete
copies of the Company's Certificate of Incorporation, as amended to date, and
By-laws, as in effect on the date hereof.
3.2 Capital Stock.
(a) As of the date of this Agreement, the authorized Capital Stock of
the Company consists solely of (i) 100,000,000 shares of Common Stock, par value
$0.01 per share, of which 48,208,955 shares were issued and outstanding as of
the close of business on February 24, 2000 and (ii) 1,000,000 shares of
preferred stock, par value $0.01 per share, of which 12,650.25 shares are issued
and outstanding. Each share of Capital Stock of the Company that will be issued
and outstanding immediately following the Closing, including without limitation
the Shares, will be duly authorized and validly issued and fully paid and
nonassessable, and the issuance thereof will not have been subject to any
preemptive rights or made in violation of any Applicable Law.
(b) Except as set forth on Schedule 3.2, as of the date of this
Agreement, there are (i) no outstanding options, warrants, agreements,
conversion rights, exchange rights, preemptive rights or other rights (whether
contingent or not) to subscribe for, purchase or acquire any issued or unissued
shares of Capital Stock of the Company or any ICG Subsidiary, (ii) no authorized
or outstanding stock appreciation, phantom stock, profit participation, or
similar rights with respect to the Company or any Subsidiary, (iii) no rights,
contracts, commitments or arrangements (contingent or otherwise) obligating the
Company or any ICG Subsidiary to either (A) redeem, purchase or otherwise
acquire, or offer to purchase, redeem, or otherwise acquire, any outstanding
shares of, or any outstanding warrants or rights of any kind to acquire any
shares of, or any outstanding securities that are convertible into or
exchangeable for any shares of, Capital Stock of the Company, or (B) pay any
dividend or make any distribution in respect of any shares of, or any
outstanding securities that are convertible or exchangeable for any shares of,
Capital Stock of the Company, (iv) no agreements or arrangements under which the
Company or any ICG Subsidiary is obligated to register the sale of any of its
securities under the Securities Act (except as provided hereunder) and (v) no
restrictions upon, or Contracts or understandings of the Company or any
Subsidiary, or, to the knowledge of the Company, Contracts or understandings of
any other Person, with respect to, the voting or transfer of any shares of
Capital Stock of the Company or any Subsidiary. Except as set forth on Schedule
3.2, there are no securities or instruments containing antidilution or similar
provisions that will be triggered by the consummation of the Transactions.
Except as set forth on Schedule 3.2, no party has any right of first refusal,
right of first offer, right of co-sale or other similar right regarding the
Company's securities. Except as set forth on Schedule 3.2, there are no
provisions of the Certificate of Incorporation, as amended, or the By-laws of
the Company, no agreements to which the Company is a party and no agreements by
which the Company or any ICG Subsidiary are bound, that would (a) require the
vote of the holders of more than a majority of the shares of
8
the Company's issued and outstanding Common Stock, voting together as a single
class, to take or prevent any corporate action, other than those matters
requiring a class vote under General Corporation Law of the State of Delaware
(the "DGCL"), or (b) entitle any party to nominate or elect any director of the
Company or require any of the Company's stockholders to vote for any such
nominee or other person as a director of the Company.
(c) The Conversion Shares and Warrant Shares have been duly authorized
and adequately reserved in contemplation of the conversion of the Series A
Preferred Stock and the exercise of the Warrants, respectively, and, when issued
and delivered in accordance with the terms of the Certificate of Designation or
the Warrants, as the case may be, will have been validly issued and will be
fully paid and nonassessable, and the issuance thereof will not have been
subject to any preemptive rights or made in violation of any Applicable Law.
(d) The holders of the Series A Preferred Stock will, upon issuance
thereof, have the rights set forth in the Certificate of Designation (subject to
the limitations and qualifications set forth therein and under the DGCL).
3.3 Authorization; Enforceability.
The Company has the power and authority to execute, deliver and perform
its obligations under each of the Equity Documents to which it is a party, and
has taken all action necessary to authorize the execution, delivery and
performance by it of each of such Equity Documents and to consummate the
Transactions. No other corporate or stockholder proceeding on the part of the
Company or any ICG Subsidiary is necessary for such authorization, execution,
delivery and consummation. The Company has duly executed and delivered this
Agreement and, at the Closing, the Company will have duly executed and delivered
each of the other Equity Documents to which it is a party to be executed and
delivered at or prior to Closing. This Agreement constitutes, and each of the
other Equity Documents to which it is a party, when executed and delivered by
the Company, will constitute, a legal, valid and binding obligation of the
Company enforceable against the Company in accordance with its terms, except as
such enforceability may be limited by (a) applicable bankruptcy, insolvency,
reorganization, or other laws of general application affecting enforcement of
creditors' rights or (b) general principles of equity that restrict the
availability of equitable remedies.
3.4 No Violation; Consents.
(a) The execution, delivery and performance by the Company of each of
the Equity Documents and the consummation by the Company of the Transactions do
not and will not contravene any Applicable Law, except for any such
contravention that would not, individually or in the aggregate, reasonably be
expected to have a Material Adverse Effect. The execution, delivery and
performance by the Company of each of the Equity Documents and the consummation
of the Issuance (i) will not (A) violate, result in a breach of or constitute
(with or without due notice or lapse of time or both) a default (or give rise to
any right of termination, cancellation or acceleration) under any Contract to
which the Company is a party or by which the Company is bound or to which any of
its assets is subject, or (B) result in the creation or imposition of any Lien
upon any of the assets of the Company, except for any such violations, breaches,
defaults or Liens that would not, individually or in the aggregate, reasonably
be
9
expected to have a Material Adverse Effect and (ii) will not conflict with or
violate any provision of the certificate of incorporation or bylaws of the
Company currently in effect or in effect as of the Closing.
(b) Except for (i) the filings by the Company, if any, required by the
HSR Act, (ii) applicable filings, if any, required by applicable federal and
state securities laws, (iii) applicable filings, if any, required by the Federal
Communication Commission and state public utility commissions and (iv) filing of
the Certificate of Designation with the Secretary of State of the State of
Delaware, which, in each case referred to in clauses (i) - (iv), shall be made
(or are not required to be made) on or prior to the Closing Date, no consent,
authorization or order of, or filing or registration with, any Governmental
Authority or other Person is required to be obtained or made by the Company or
the ICG Subsidiaries for the execution and delivery of the Equity Documents or
the consummation by the Company of the Transactions except where the failure to
obtain such consents, authorizations or orders, or make such filings or
registrations, would not, individually or in the aggregate, reasonably be
expected to have a Material Adverse Effect or a material adverse effect on the
ability of the Company to consummate the Transactions.
3.5 Commission Filings; Financial Statements.
(a) The Company has filed all reports, registration statements and
other filings, together with any amendments or supplements required to be made
with respect thereto, that it has been required to file with the Commission
under the Securities Act and the Exchange Act. As of the respective dates of
their filing with the Commission, the Commission Filings complied in all
material respects with the applicable provisions of the Securities Act and the
Exchange Act and did not contain any untrue statement of a material fact or omit
to state a material fact required to be stated therein or necessary to make the
statements made therein, in the light of the circumstances under which they were
made, not misleading.
(b) Each of the historical consolidated financial statements of the
Company (including any related notes or schedules) included in the Commission
Filings was prepared in accordance with GAAP (except as may be disclosed
therein), and complied in all material respects with the rules and regulations
of the Commission. Such financial statements fairly present the consolidated
financial position of the Company and its consolidated Subsidiaries as of the
dates thereof and the consolidated results of operations, cash flows and changes
in stockholders' equity for the periods then ended (subject, in the case of the
unaudited interim financial statements, to normal, recurring year-end audit
adjustments). Except as reflected in the Commission Filings filed prior to the
date hereof, the Company does not have any liabilities or obligations of any
nature (whether accrued, absolute, contingent, unasserted or otherwise) that
individually or in the aggregate would be expected to have a Material Adverse
Effect.
3.6 Private Offering.
Based, in part, on the Purchasers' representations in Section 4.2, the
offer and sale of the Securities is exempt from the registration and prospectus
delivery requirements of the Securities Act. Neither the Company, nor anyone
acting on behalf of it, has offered or sold or will offer or sell any
securities, or has taken or will take any other action (including, without
limitation, any offering of any securities of the Company under circumstances
that would require, under the
10
Securities Act, the integration of such offering with the offering and sale of
the Securities), that would subject the Issuance to the registration provisions
of the Securities Act.
3.7 Provided Information.
To the knowledge of the Company, all written information (excluding
information of a general economic nature and financial projections) concerning
the Company and the Transactions (the "Information") that has been prepared by
or on behalf of the Company or any of the Company's authorized representatives
and that has been provided to the Purchasers or any of their authorized
representatives in connection with the Issuance, when taken as a whole, was, at
the time made available, correct in all material respects and did not, at the
time made available, contain any untrue statement of a material fact or omit to
state a material fact necessary in order to make the statements contained
therein not misleading in light of the circumstances under which such statements
are made. All financial projections concerning the Company and the Transactions
(the "Projections") that have been prepared by or on behalf of the Company or
any of the Company's authorized representatives and that have been delivered to
the Purchasers or any of their authorized representatives in connection with the
Transactions have been reasonably prepared on a basis reflecting the best
currently available estimates and judgments of the Company's management as to
the future financial performance of the Company and the individual business
segments thereof.
3.8 Material Adverse Change.
Except as disclosed in the Commission Filings filed prior to the date
hereof, since September 30, 1999, there has not been any event, occurrence or
development of a state of circumstances or facts that has had, or could have
reasonably been expected to have, (i) a Material Adverse Effect or (ii) a
material adverse effect on the ability of the Company to perform its obligations
under this Agreement or the other Equity Documents.
3.9 Litigation.
Except as disclosed in Commission Filings filed prior to the date hereof,
there are not any (a) outstanding judgments against or affecting the Company or
any of the ICG Subsidiaries, (b) proceedings pending or, to the knowledge of the
Company, threatened against or affecting the Company or any of the ICG
Subsidiaries or (c) investigations by any Governmental Authority that are, to
the knowledge of the Company, pending or threatened against or affecting the
Company or any of the ICG Subsidiaries that (i) in any manner challenge or seek
to prevent, enjoin, alter or materially delay the Transactions or (ii) if
resolved adversely to the Company or any ICG Subsidiary, would have,
individually or in the aggregate, a Material Adverse Effect.
3.10 Permits and Licenses.
The Company and the ICG Subsidiaries have obtained all governmental
permits, licenses, franchises and authorizations required for the Company and
its Subsidiaries to conduct their respective businesses as currently conducted,
except for those of which the failure to obtain would not have a Material
Adverse Effect.
11
3.11 Intellectual Property, etc.
The Company and the ICG Subsidiaries have all right, title and interest
in, or a valid and binding license to use, all Company Intellectual Property (as
defined below). The Company and the ICG Subsidiaries (i) have not defaulted in
any material respect under any license to use any Company Intellectual Property,
(ii) are not the subject of any proceeding or litigation for infringement of any
third party intellectual property, (iii) have no knowledge of circumstances that
would be reasonably expected to give rise to any such proceeding or litigation
and (iv) have no knowledge of circumstances that are causing or would be
reasonably expected to cause the loss or impairment of any Company Intellectual
Property, other than a default, proceeding, litigation, loss or impairment that
is not having or would not be reasonably expected to have, individually or in
the aggregate, a Material Adverse Effect. "ICG Communications, Inc." is a
registered trademark of the Company in the United States and such registration
has been duly maintained by the Company.
For purposes of this Agreement, "Company Intellectual Property" means
patents and patent rights, trademarks and trademark rights, tradenames and
tradename rights, service marks and service ▇▇▇▇ rights, copyrights and
copyright rights, trade secret and trade secret rights, and other intellectual
property rights, and all pending applications for and registrations of any of
the foregoing that are used in the conduct of the business of the Company and
the ICG Subsidiaries as presently conducted.
3.12 Board Approval.
Prior to the execution of this Agreement, the Board of Directors of the
Company has approved the Transactions, including without limitation the
acquisition of the Shares, the Warrants, the Conversion Shares and the Warrant
Shares by the Purchasers and their respective "affiliates" and "associates" (as
those terms are defined in Section 203 of the DGCL) for all purposes, including
without limitation Section 203 of the DGCL, and no Purchaser or affiliate or
associate (as so defined) of a Purchaser shall as a result of the execution of
this Agreement or consummation of the transactions contemplated by this
Agreement, be subject to any of the restrictions of Section 203 of the DGCL or
any similar provisions of Applicable Law.
3.13 British Telecommunications.
As of the date hereof, the Company and its Subsidiaries do not, directly
or indirectly, beneficially own (within the meaning of Rule 13d-3 promulgated
under the Exchange Act) any shares of any class of capital stock of British
Telecommunications plc, a company organized under the laws of England and Wales
("BT"), or any of its Subsidiaries, or any direct or indirect rights or options
to acquire (through purchase, exchange, conversion or otherwise) any shares of
any class of capital stock of BT or any of its Subsidiaries.
3.14 Share Exchange Agreement.
The representations and warranties of the Subsidiary of the Company that
will be a party to the Share Exchange Agreement to be set forth in the Share
Exchange Agreement will be true and correct when made.
12
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE PURCHASERS
Each Purchaser severally as to itself only, and not jointly, hereby
represents and warrants to the Company as of the date hereof and as of the
Closing Date as follows:
4.1 Organization; Authorization; Enforceability.
Such Purchaser is duly organized, validly existing and in good standing
under the laws of the jurisdiction of its organization and has all corporate or
limited liability company power and authority to own its properties and assets
and to carry on its business as it is now being conducted and as currently
proposed to be conducted. Such Purchaser has the power to execute, deliver and
perform its obligations under each of the Equity Documents to which it is a
party and has taken all action necessary to authorize the execution, delivery
and performance by it of such Equity Documents and to consummate the
Transactions. No other proceedings on the part of such Purchaser are necessary
for such authorization, execution, delivery and consummation. Such Purchaser has
duly executed and delivered this Agreement and, at the Closing, such Purchaser
will have duly executed and delivered each of the other Equity Documents to be
executed and delivered by it at or prior to Closing. This Agreement constitutes,
and each of the other Equity Documents to which such Purchaser is a party, when
executed and delivered by such Purchaser, will constitute, a legal, valid and
binding obligation of such Purchaser enforceable against such Purchaser in
accordance with its terms, except as such enforceability may be limited by (a)
applicable bankruptcy, insolvency, reorganization, or other laws of general
application affecting enforcement of creditors' rights or (b) general principles
of equity that restrict the availability of equitable remedies.
4.2 Private Placement.
(a) Such Purchaser understands that (i) the offering and sale of the
Securities, the Conversion Shares and the Warrant Shares in the Issuance by the
Company is intended to be exempt from registration under the Securities Act
pursuant to Section 4(2) thereof and (ii) there is no existing public or other
market for the Securities.
(b) Such Purchaser (either alone or together with its advisors) has
sufficient knowledge and experience in financial and business matters so as to
be capable of evaluating the merits and risks of its investment in the
Securities, the Conversion Shares and the Warrant Shares, and is capable of
bearing the economic risks of such investment.
(c) Such Purchaser is acquiring the Securities, the Conversion Shares
and the Warrant Shares to be acquired hereunder for its own account (or for
accounts over which it exercises investment authority or as otherwise provided
herein), for investment and not with a view to the public resale or distribution
thereof in violation of any securities law.
(d) Such Purchaser understands that the Securities, the Conversion
Shares and the Warrant Shares will be issued in a transaction exempt from the
registration or qualification requirements of the Securities Act and applicable
state securities laws, and that such securities must be held indefinitely unless
a subsequent disposition thereof is registered or qualified under
13
the Securities Act and such state securities laws or is exempt from such
registration or qualification.
(e) Such Purchaser (A) has been furnished with or has had full access
to all of the information that it considers necessary or appropriate to make an
informed investment decision with respect to the Securities, the Conversion
Shares and the Warrant Shares and that it has requested from the Company, (B)
has had an opportunity to discuss with management of the Company the intended
business and financial affairs of the Company and to obtain information (to the
extent the Company possessed such information or could acquire it without
unreasonable effort or expense) necessary to verify any information furnished to
it or to which it had access and (C) can bear the economic risk of (x) an
investment in the Securities, the Conversion Shares and the Warrant Shares
indefinitely and (y) a total loss in respect of such investment, and (D) has
such knowledge and experience in business and financial matters so as to enable
it to understand and evaluate the risks of and form an investment decision with
respect to its investment in the Securities, the Conversion Shares and the
Warrant Shares and to protect its own interest in connection with such
investment.
(f) The foregoing representations with respect to the Conversion Shares
and the Warrant Shares are made only if and to the extent the offering of the
Shares and the Warrants constitutes an offering of the Conversion Shares and the
Warrant Shares.
4.3 No Violation; Consents.
(a) Subject to making the filings and obtaining the consents and
approvals referred to in Section 4.3(b), the execution, delivery and performance
by such Purchaser of each of the Equity Documents to which it is a party and the
consummation of the Transactions, do not and will not contravene any Applicable
Law, except for such contraventions as would not, individually or in the
aggregate, reasonably be expected to have a material adverse effect on the
ability of such Purchaser to timely perform its obligations under this
Agreement. The execution, delivery and performance by such Purchaser of each of
the Equity Documents to which it is a party and the consummation of the
Transactions (i) will not (A) violate, result in a breach of or constitute (with
or without due notice or lapse of time or both) a default (or give rise to any
right of termination, cancellation or acceleration) under any Contract to which
such Purchaser is party or by which such Purchaser is bound or to which any of
its assets is subject, or (B) result in the creation or imposition of any Lien
upon any of the assets of such Purchaser, except for any such violations,
breaches, defaults or Liens that would not, individually or in the aggregate,
reasonably be expected to have a material adverse effect on the ability of such
Purchaser to timely perform its obligations under this Agreement, and (ii) will
not conflict with or violate any provision of the certificate of incorporation
or bylaws or other governing documents of such Purchaser.
(b) Except for (i) the filings by the Purchaser, if any, required by
the HSR Act, and (ii) applicable filings, if any, with the Commission pursuant
to the Exchange Act, which, in each case, shall be made (or are not required to
be made) on or prior to the Closing Date, no consent, authorization or order of,
or filing or registration with, any Governmental Authority or other Person is
required to be obtained or made by such Purchaser for the execution, delivery
and performance of any of the Equity Documents to which it is a party or the
consummation of the
14
Transactions, except where the failure to obtain such consents, authorizations
or orders, or make such filings or registrations, would not, individually or in
the aggregate, reasonably be expected to have a material adverse effect on the
ability of such Purchaser to timely perform its obligations under this
Agreement.
4.4 No Litigation.
There are not any (a) outstanding judgments against or affecting the
Purchaser or any of its Subsidiaries, (b) proceedings pending or, to the
knowledge of the Purchaser, threatened against or affecting the Purchaser or any
of its Subsidiaries or (c) investigations by any Governmental Authority that
are, to the knowledge of the Purchaser, pending or threatened against or
affecting the Purchaser or any of its Subsidiaries that, in any case,
individually or in the aggregate, would reasonably be expected to have a
material adverse effect on the ability of such Purchaser to timely perform its
obligations under this Agreement.
4.5 No Group Status.
Neither the Liberty Group, on the one hand, nor the HMTF Group, on the
other hand, is acting as a "group" (within the meaning of Rule 13d-5(b)(1) under
the Exchange Act) together with, in the case of the Liberty Group, the HMTF
Group, and in the case of the HTMF Group, the Liberty Group, in each case, with
respect to acquiring, holding, voting or disposing of the Securities.
ARTICLE V
COVENANTS OF THE COMPANY
5.1 Operation of Business.
(a) From the date hereof until the Closing Date, the Company shall, and
shall cause each of the ICG Subsidiaries to:
(i) operate its business in all material respects in the
ordinary course and in compliance with Applicable Laws;
(ii) not adopt any amendment to its charter or bylaws or
comparable organizational documents;
(iii) not split, combine or reclassify any shares of the
Company's Capital Stock;
(iv) except as set forth on Schedule 5.1(iv), not declare or
pay any dividend or distribution (whether in cash, stock or property) in
respect of its Capital Stock or increase the number of shares subject to
the Company's stock incentive and option plan;
(v) not take any action, or knowingly omit to take any action,
that would, or that would reasonably be expected to, result in (A) any of
the representations and warranties of the Company set forth in Article III
becoming untrue or (B) any of the
15
conditions to the obligations of the Purchasers set forth in Section 7.2
not being satisfied or (C) the triggering of any of the anti-dilution
adjustments contained in the Certificate of Designation (had such
Certificate been in effect); or
(vi) enter into any agreement or commitment to do any of the
foregoing.
(b) Without the consent of Liberty, neither the Company nor any of its
Subsidiaries will voluntarily acquire or agree to acquire (through purchase,
exchange, conversion or otherwise) beneficial ownership (within the meaning of
Rule 13d-3 promulgated under the Exchange Act) of any shares of any class of
capital stock of BT or its Subsidiaries or any direct or indirect rights or
options to so acquire any shares of any class of capital stock of BT or any of
its Subsidiaries.
5.2 HMTF and Liberty Directors.
(a) For so long as members of the HMTF Group own any combination of
shares of Common Stock and Series A Preferred Stock representing an amount of
Common Stock (on an as-converted basis) that, taken together, equals at least
the amount of Common Stock that would then have been issuable upon conversion of
50% or more of the shares of Series A Preferred Stock issued to members of the
HMTF Group on the Closing Date under this Agreement (the "HMTF Issued Series A
Preferred Shares"), the holders of a majority of the then outstanding HMTF
Shares shall have the right to designate one member of the Company's Board of
Directors or, if greater, such number of members of the Company's Board of
Directors (rounded up to the next whole number) equal to 10% of the then
authorized number of members of the Company's Board of Directors (each such
director an "HMTF Director"); provided, however, that the right to designate an
HMTF Director under this Section 5.2 shall be suspended at any time that the
HMTF Holders have the right to elect a person to the Board of Directors under
the terms of the Series A Preferred Stock set forth in the Certificate of
Designation. In the event the holders of a majority of the then outstanding HMTF
Shares are entitled under this Section 5.2 to designate an HMTF Director for
election to the Company's Board of Directors and elect to have the Board of
Directors appoint an HMTF Director, they shall so notify the Company in writing
and the Company shall (a) increase the size of the Board of Directors by one and
fill the vacancy created thereby by electing an HMTF Director and (b) in
connection with the meeting of stockholders of the Company next following such
election, nominate an HMTF Director for election as a director by the
stockholders and use its commercially reasonable efforts to cause the HMTF
Director to be so elected. If the holders of a majority of the then outstanding
HMTF Shares are entitled under this Section 5.2 to designate an HMTF Director
for election to the Company's Board of Directors and a vacancy shall exist in
the office of an HMTF Director, the holders of a majority of the then
outstanding HMTF Shares shall be entitled to designate a successor and the Board
of Directors shall elect such successor and, in connection with the meeting of
stockholders of the Company next following such election, nominate such
successor for election as director by the stockholders and use its commercially
reasonable efforts to cause the successor to be elected.
(b) (i) For so long as members of the Liberty Group in the aggregate
own any combination of shares of Common Stock and Series A Preferred Stock
representing an amount of Common Stock (on an as-converted basis) that, taken
together, equals at least the amount of Common Stock that would then have been
issuable upon conversion of 15% of the shares of
16
Series A Preferred Stock issued to members of the Liberty Group on the Closing
Date under this Agreement (the "Liberty Issued Series A Preferred Shares"), the
members of the Liberty Group voting together as a single class, by a plurality
of the votes cast or by the written consent of a majority in interest of such
members, shall have a right to designate one member of the Company's Board of
Directors or, if greater, such number of members of the Company's Board of
Directors (rounded up to the next whole number) equal to 10% of the then
authorized number of members of the Company's Board of Directors (each such
director a "Liberty Director"); provided, however, that the right to designate a
Liberty Director under this Section 5.2 shall be suspended at any time that the
Liberty Holders have the right to elect a person to the Board of Directors under
the terms of the Series A Preferred Stock set forth in the Certificate of
Designation. In the event the members of the Liberty Group are entitled under
this Section 5.2 to designate the Liberty Director for election to the Company's
Board of Directors and elect to have the Board of Directors appoint a Liberty
Director, they shall so notify the Company in writing and the Company shall (a)
increase the size of the Board of Directors by one and fill the vacancy created
thereby by electing a Liberty Director and (b) in connection with the meeting of
stockholders of the Company next following such election, nominate a Liberty
Director for election as director by the stockholders and use its commercially
reasonable efforts to cause the Liberty Director to be so elected. If the
members of the Liberty Group are entitled under this Section 5.2 to designate a
Liberty Director for election to the Company's Board of Directors and a vacancy
shall exist in the office of a Liberty Director, the members of the Liberty
Group voting together as a single class, by a plurality of the votes cast or by
the written consent of a majority in interest of such members, shall be entitled
to designate a successor and the Board of Directors shall elect such successor
and, in connection with the meeting of stockholders of the Company next
following such election, nominate such successor for election as director by the
stockholders and use its commercially reasonable efforts to cause the successor
to be elected.
(ii) For so long as members of the Liberty Group in the aggregate
own any combination of shares of Common Stock and Series A Preferred Stock
representing an amount of Common Stock (on an as-converted basis) that, taken
together, equals at least the amount of Common Stock that would then have been
issuable upon conversion of 50% of the Liberty Issued Series A Preferred Shares,
the members of the Liberty Group voting together as a single class, by a
plurality of the votes cast or by the written consent of a majority in interest
of such members, shall have a right, in addition to the rights set forth in
clause (i) above, to designate one additional member of the Company's Board of
Directors or, if greater, such number of additional members of the Company's
Board of Directors (rounded up to the next whole number) equal to 10% of the
then authorized number of members of the Company's Board of Directors (each such
director an "Additional Liberty Director"); provided, however, that the right to
designate an Additional Liberty Director under this Section 5.2 shall be
suspended at any time that the Liberty Holders have the right to elect a person
to the Board of Directors under the terms of the Series A Preferred Stock set
forth in the Certificate of Designation. In the event the members of the Liberty
Group are entitled under this Section 5.2 to designate an Additional Liberty
Director for election to the Company's Board of Directors and elect to have the
Board of Directors appoint an Additional Liberty Director, they shall so notify
the Company in writing and the Company shall (a) increase the size of the Board
of Directors by one and fill the vacancy created thereby by electing an
Additional Liberty Director and (b) in connection with the meeting of
stockholders of the Company next following such election, nominate an Additional
Liberty Director for election as director by the stockholders and use its
commercially reasonable
17
efforts to cause an Additional Liberty Director to be so elected. If the members
of the Liberty Group are entitled under this Section 5.2 to designate an
Additional Liberty Director for election to the Company's Board of Directors and
a vacancy shall exist in the office of an Additional Liberty Director, the
members of the Liberty Group voting together as a single class, by a plurality
of the votes cast or by the written consent of a majority in interest of such
members, shall be entitled to designate a successor and the Board of Directors
shall elect such successor and, in connection with the meeting of stockholders
of the Company next following such election, nominate such successor for
election as director by the stockholders and use its commercially reasonable
efforts to cause the successor to be elected.
5.3 Access to Books and Records.
(a) The Company shall afford to each of the Purchasers and the
Purchasers' accountants, counsel and representatives full access upon reasonable
notice during normal business hours throughout the period prior to the Closing
Date (or the earlier termination of this Agreement pursuant to Section 8.4) to
all its properties, books, Contracts, commitments and records (including, but
not limited to, tax returns) and, during such period, shall, upon request,
furnish promptly to each of the Purchasers (i) a copy of each report, schedule
and other document filed or received by any of them pursuant to the requirements
of Federal or state securities laws and (ii) all other information concerning
its business, properties and personnel as the Purchasers may reasonably request,
provided that no investigation or receipt of information pursuant to this
Section 5.3 shall affect any representation or warranty of the Company or the
conditions to the obligations of the Purchasers.
(b) The Company shall supplement the Information and the Projections
from time to time until the Closing Date if there is a material change in the
Information and the Projections previously provided, but no such supplement
shall be given effect for purposes of determining whether the Company has
breached any representations or warranties for purposes of Section 7.2 and
Section 8.1.
5.4 Agreement to Take Necessary and Desirable Actions.
The Company shall (a) subject to the satisfaction of the conditions set
forth in Section 7.1, execute and deliver the Equity Documents and such other
documents, certificates, agreements and other writings, and (b) take such other
actions, in each case, as may be reasonably necessary, desirable or requested by
the Purchasers in order to consummate or implement the Issuance in accordance
with the terms of this Agreement.
5.5 Compliance with Conditions; Commercially Reasonable Efforts.
The Company shall use all commercially reasonable efforts to cause all of
the obligations imposed upon it in this Agreement to be duly complied with, and
to cause the conditions precedent to the obligations of the Purchasers in
Sections 7.2(a) and (b) to be satisfied. Upon the terms and subject to the
conditions of this Agreement, the Company will use all commercially reasonable
efforts to take, or cause to be taken, all action, and to do, or cause to be
done, all things necessary, proper or advisable consistent with Applicable Law
to consummate and make
18
effective in the most expeditious manner practicable the Issuance in accordance
with the terms of this Agreement.
5.6 HSR Act Notification.
To the extent required by the HSR Act, the Company shall, to the extent it
has not already done so, (a) use all commercially reasonable efforts to file or
cause to be filed, as promptly as practicable after the execution and delivery
of this Agreement, with the United States Federal Trade Commission and the
Antitrust Division of the United States Department of Justice, all reports and
other documents required to be filed by it under the HSR Act concerning the
Transactions and (b) use all commercially reasonable efforts to promptly comply
with or cause to be complied with any requests by the United States Federal
Trade Commission or the Antitrust Division of the United States Department of
Justice for additional information concerning such Transactions, in each case so
that the waiting period applicable to this Agreement and the Transactions under
the HSR Act shall expire as soon as practicable after the execution and delivery
of this Agreement. The Company agrees to request, and to cooperate with the
Purchasers in requesting, early termination of any applicable waiting period
under the HSR Act.
5.7 Consents and Approvals.
The Company (a) shall use all commercially reasonable efforts to obtain
all necessary consents, waivers, authorizations and approvals of all
Governmental Authorities and of all other Persons required in connection with
the execution, delivery and performance by the Company of the Equity Documents
or the consummation of the Issuance and (b) shall diligently assist and
cooperate with the Purchasers in preparing and filing all documents required to
be submitted by the Purchasers to any Governmental Authority in connection with
the Issuance (which assistance and cooperation shall include, without
limitation, timely furnishing, upon written requests, to the Purchasers all
information concerning the Company and the Subsidiaries that counsel to the
Purchasers reasonably determines is required to be included in such documents or
would be helpful in obtaining any such required consent, waiver, authorization
or approval).
5.8 Reservation of Shares.
The Company shall:
(a) cause to be authorized and reserve and keep available at all times
during which any of the Shares and Warrants remain outstanding, free from
preemptive rights, out of its treasury stock or authorized but unissued shares
of Capital Stock, or both, solely for the purpose of effecting the conversion or
exercise of the Shares or Warrants pursuant to the terms of the Certificate of
Designation or the Warrants, sufficient shares of Common Stock to provide for
the issuance of the maximum number of shares issuable upon conversion and
exercise of outstanding Shares and Warrants;
(b) issue and cause the transfer agent to deliver such shares of Common
Stock as required upon conversion or exercise of the Shares and Warrants; and
19
(c) if any shares of Common Stock reserved for the purpose of issuance
upon conversion of the Shares and exercise of the Warrants require registration
with or approval of any Governmental Authority under any Applicable Law before
such shares may be validly issued or delivered, secure such registration or
approval, as the case may be, and maintain such registration or approval in
effect so long as so required.
5.9 Use of Proceeds.
The Company shall use the proceeds from the Issuance for building out its
network, payment of expenses incurred in connection with the Transactions and
for general corporate purposes.
5.10 Filing of Certificate of Designation.
Prior to the Issuance, the Company shall file the Certificate of
Designation with the Secretary of State of the State of Delaware pursuant to
Section 151(g) of the DGCL.
5.11 Listing of Shares.
The Company shall use all commercially reasonable efforts to cause the
Conversion Shares and the Warrant Shares to be listed or otherwise eligible for
trading on the NASDAQ National Market System or other national securities
exchange.
5.12 Periodic Information.
For so long as the Securities are outstanding the Company shall file all
reports required to be filed by the Company under Section 13 or 15(d) of the
Exchange Act and shall provide the holders of the Securities and prospective
purchasers of such shares with the information specified in Rule 144A(d) under
the Securities Act.
5.13 Legends.
So long as applicable, each certificate representing any portion of the
Securities, shall contain, be stamped or otherwise imprinted with a legend in
the following form (in addition to any legend required under applicable state
securities laws):
"THE SHARES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED
UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT")
OR THE SECURITIES LAWS OF ANY STATE OF THE UNITED STATES. SUCH
SHARES MAY NOT BE OFFERED, SOLD, TRANSFERRED, PLEDGED, HYPOTHECATED
OR OTHERWISE DISPOSED OF IN THE ABSENCE OF SUCH REGISTRATION OTHER
THAN PURSUANT TO AN EXEMPTION FROM SUCH REGISTRATION REQUIREMENTS."
After the above requirement for a legend is no longer applicable with respect to
all or any of the Securities because the applicable Securities are freely
transferable under the Securities Act, the
20
Company shall remove such legend upon request from a holder of the applicable
Securities, if outside counsel for such holder reasonably determines that the
transfer of such Securities is no longer restricted by the Securities Act and
outside counsel for the Company reasonably concurs in such determination.
5.14 Payment; Paying Agent; Certain Information.
The Company shall:
(a) make any required payments on the Securities;
(b) maintain (i) an office or agency where the Securities may be
presented for payment (the "Paying Agent"), (ii) an office or agency where the
Securities may be presented for conversion (the "Conversion Agent"), and (iii) a
Registrar, which shall be an office or an agency where the Securities may be
presented for transfer; and
(c) provide certain information to the Purchasers, including such
information and notices as may be necessary for the Purchasers to exercise their
rights under this Agreement and in connection with conversion or exercise of the
Securities.
5.15 Rights Plan.
The Company shall not adopt a "poison pill" shareholder rights plan unless
(a) the Company distributes to holders of the shares of Series A Preferred
Stock, and to the holders of the Warrant Shares upon exercise of the Warrants,
such number of rights as such holders would have received had they converted
their Shares immediately prior to the record date for such distribution and (b)
the terms of such rights plan exempt the ownership and acquisition of securities
of the Company (i) by the Liberty Group, or any member thereof, and (ii) by the
HMTF Group, or any member thereof, in each case subject to compliance with
Section 6.6.
5.16 Proportional Purchase Right.
The Liberty Holders, the HMTF Holders and the Gleacher Holders shall each
have the right, for a period beginning on the Closing Date and ending on the
second anniversary of the Closing Date, to purchase from the Company their pro
rata portion (based on the percentage of the outstanding shares of Common Stock
then held by the Liberty Holders, the HMTF Holders or the Gleacher Holders, as
the case may be, on an as-converted basis) of any securities issued by the
Company so that such Holders, after giving effect to such issuance and
corresponding purchase by such Holders, shall be able to maintain their
proportional ownership interest in the Company. The purchase price for such
purchases shall be equal to the price per share received by the Company in the
issuance giving rise to the purchase right. This proportional purchase right
shall not apply to shares issued pursuant to the Share Exchange Agreement, any
rights or obligations referenced on Schedule 3.2, any shares of capital stock
issued by the Company in lieu of any fees payable in connection with the
Transaction to the Company's financial advisors, or any shares issued pursuant
to any stock option plan or employee benefit plan existing as of the date hereof
or approved by the Board of Directors of the Company. In the event the shares
are issued in connection with an acquisition or other transaction not involving
a financing, the Company will permit the Liberty Holders, the HMTF Holders and
the Gleacher Holders to
21
purchase the appropriate number of shares in a separate transaction, with the
purchase price per share equal to the valuation per share of the Common Stock
established by the Board of Directors of the Company in the transaction giving
rise to the purchase right.
5.17 Modification of Share Exchange Agreement.
The Company shall not, and shall cause its Subsidiaries not to, amend,
modify or terminate the Share Exchange Agreement without the prior written
consent of the Liberty Holders and the HMTF Holders.
ARTICLE VI
COVENANTS OF THE PURCHASERS
Each Purchaser, severally as to itself only and not jointly with any other
Purchaser, hereby covenants as follows:
6.1 Agreement to Take Necessary and Desirable Actions.
Each Purchaser shall (a) subject to the satisfaction of the conditions set
forth in Section 7.2, execute and deliver each of the Equity Documents to which
it is a party and such other documents, certificates, agreements and other
writings and (b) take such other actions, in each case, as may be reasonably
necessary, desirable or requested by the Company in order to consummate or
implement the Transactions in accordance with the terms of this Agreement.
6.2 Compliance with Conditions; Commercially Reasonable Efforts.
Each Purchaser shall use all commercially reasonable efforts to cause all
of the obligations imposed upon it in this Agreement to be duly complied with,
and to cause the conditions precedent to the obligations of the Company in
Sections 7.1(a) and (b) (as they relate to such Purchaser) to be satisfied. Upon
the terms and subject to the conditions of this Agreement, each Purchaser will
use all commercially reasonable efforts to take, or cause to be taken, all
action, and to do, or cause to be done, all things necessary, proper or
advisable consistent with Applicable Law to consummate and make effective in the
most expeditious manner practicable the Transactions in accordance with the
terms of this Agreement. Nothing herein shall be construed to require a
Purchaser or any of its Affiliates to divest or otherwise rearrange the
composition of any assets or agree to any conditions or requirements which are,
or are reasonably likely to be, materially adverse or burdensome to such
Purchaser or its Affiliates, as applicable. Nothing set forth in this Section
6.2 shall impose any obligations with respect to any filing or approval under
the HSR Act, which requirements are the subject of Section 6.3.
6.3 HSR Act Notification.
To the extent required by the HSR Act, each Purchaser shall, if it has not
already done so, (a) use all commercially reasonable efforts to file or cause to
be filed, as promptly as practicable after the execution and delivery of this
Agreement, with the United States Federal Trade Commission and the Antitrust
Division of the United States Department of Justice, all reports and other
documents required to be filed by it under the HSR Act concerning the
transactions
22
contemplated hereby and (b) use all commercially reasonable efforts to promptly
comply with or cause to be complied with any requests by the United States
Federal Trade Commission or the Antitrust Division of the United States
Department of Justice for additional information concerning such transactions in
each case so that the waiting period applicable to this Agreement and the
transactions contemplated hereby under the HSR Act shall expire as soon as
practicable after the execution and delivery of this Agreement. Each Purchaser
agrees to request, and to cooperate with the Company in requesting, early
termination of any applicable waiting period under the HSR Act.
6.4 Consents and Approvals.
Each Purchaser (a) shall use all commercially reasonable efforts to obtain
all necessary consents, waivers, authorizations and approvals of all
Governmental Authorities other than as expressly set forth in Section 6.3
regarding the HSR Act, and of all other Persons required in connection with the
execution, delivery and performance by such Purchaser of this Agreement or the
consummation of the Transactions and (b) shall diligently assist and cooperate
with the Company in preparing and filing all documents required to be submitted
by the Company to any Governmental Authority in connection with such
Transactions (which assistance and cooperation shall include, without
limitation, timely furnishing to the Company all information concerning such
Purchaser that counsel to the Company reasonably determines is required to be
included in such documents or would be helpful in obtaining any such required
consent, waiver, authorization or approval). Nothing herein shall be construed
to require a Purchaser or any of its Affiliates to divest or otherwise rearrange
the composition of any assets or agree to any conditions or requirements which
are, or are reasonably likely to be, materially adverse or burdensome to such
Purchaser or its Affiliates, as applicable.
6.5 Restrictions on Transfer.
No Purchaser shall sell, assign, transfer, pledge, hypothecate, deposit in
a voting trust or otherwise dispose of any portion of the Securities (any such
disposition, a "Securities Transfer"), other than (a) to a Permitted Transferee
of such Purchaser that has agreed in writing (each, a "Permitted Transferee
Agreement") to be bound by the terms and provisions of this Section 6.5 to the
same extent that the transferring Purchaser would be bound if it beneficially
owned the Securities transferred to such Permitted Transferee or (b)(i) in any
transaction in compliance with Rule 144 under the Securities Act or any
successor rule or regulation, (ii) in a transaction exempt from the registration
requirements of the Securities Act or (iii) pursuant to a registration
statement. Each Purchaser shall promptly notify the Company of any Securities
Transfer to a Permitted Transferee of such Purchaser, which notification shall
include a Permitted Transferee Agreement executed by each Permitted Transferee
of such Purchaser to whom any Securities have been transferred.
6.6 Standstill.
(a) Prior to the fifth anniversary of the Closing Date, no Liberty
Holder shall purchase any shares of Common Stock (or securities convertible into
or exchangeable for shares of Common Stock), other than from the Company, if
after giving effect thereto and to the shares of Common Stock that the Liberty
Holders would have the right to acquire on or prior to the fifth
23
anniversary of the Closing Date upon conversion or exercise of securities
acquired by such Holders on the Closing Date, the Liberty Holders, taken as a
whole, would beneficially own more than 37% of the outstanding shares of Common
Stock (assuming that all shares of Common Stock that would be issuable upon the
conversion, on the fifth anniversary of the Closing Date, of all shares of
Series A Preferred Stock issued on the Closing Date are outstanding, but
otherwise calculated in accordance with Rule 13d-3(d)(1)(i) promulgated under
the Exchange Act). In no event will any Liberty Holder be deemed to be in
violation of the foregoing provision at any time that the aggregate voting power
of the outstanding voting securities of the Company owned by the Liberty
Holders, taken as a whole, does not exceed 25.1% of the aggregate voting power
of all outstanding voting securities of the Company.
(b) Prior to the fifth anniversary of the Closing Date, no HMTF Holder
shall purchase any shares of Common Stock (or securities convertible into or
exchangeable for shares of Common Stock), other than from the Company, if after
giving effect thereto and to the shares of Common Stock that the HMTF Holders
would have the right to acquire on or prior to the fifth anniversary of the
Closing Date upon conversion or exercise of securities acquired by such Holders
on the Closing Date, the HMTF Holders, taken as a whole, would beneficially own
more than 17.5% of the outstanding shares of Common Stock (assuming that all
shares of Common Stock that would be issuable upon the conversion, on the fifth
anniversary of the Closing Date, of all shares of Series A Preferred Stock
issued on the Closing Date are outstanding, but otherwise calculated in
accordance with Rule 13d-3(d)(1)(i) promulgated under the Exchange Act).
(c) Prior to the fifth anniversary of the Closing Date, no Gleacher
Holder shall purchase any shares of Common Stock (or securities convertible into
or exchangeable for shares of Common Stock), other than from the Company, if
after giving effect thereto and to the shares of Common Stock that the Gleacher
Holders would have the right to acquire on or prior to the fifth anniversary of
the Closing Date upon conversion or exercise of securities acquired by such
Holders on the Closing Date, the Gleacher Holders, taken as a whole, would
beneficially own more than 3% of the outstanding shares of Common Stock
(assuming that all shares of Common Stock that would be issuable upon the
conversion, on the fifth anniversary of the Closing Date, of all shares of
Series A Preferred Stock issued on the Closing Date are outstanding, but
otherwise calculated in accordance with Rule 13d-3(d)(1)(i) promulgated under
the Exchange Act).
ARTICLE VII
CONDITIONS PRECEDENT TO CLOSING
7.1 Conditions to the Company's Obligations.
The obligations of the Company with respect to a Purchaser hereunder
required to be performed on the Closing Date shall be subject to the
satisfaction or waiver, at or prior to the Closing, of the following conditions:
(a) The representations and warranties of such Purchaser contained in
this Agreement shall have been true and correct when made and, in addition,
shall be repeated and
24
true and correct in all material respects on and as of the Closing Date with the
same force and effect as though made on and as of the Closing Date.
(b) Such Purchaser shall have performed in all material respects all
obligations and agreements, and complied in all material respects with all
covenants contained in this Agreement to be performed and complied with by such
Purchaser at or prior to the Closing Date.
(c) Any applicable waiting period under the HSR Act with respect to the
purchase by such Purchaser shall have expired or been terminated.
(d) The Company shall have obtained all necessary consents, waivers,
authorizations and approvals of all Governmental Authorities and of all other
Persons required in connection with the execution, delivery and performance of
the Equity Documents or the consummation of the Issuance, such waivers to be
satisfactory in form and substance to the Company.
(e) Such Purchaser shall have entered into the Registration Rights
Agreement.
(f) The Shares to be purchased at the Closing shall be issued for an
aggregate amount of no less than $600,000,000.00.
7.2 Conditions to Each Purchaser's Obligations.
The obligations of a Purchaser hereunder required to be performed on the
Closing Date shall be subject to the satisfaction or waiver, at or prior to the
Closing, of the following conditions:
(a) The representations and warranties of the Company contained in this
Agreement (i) shall have been true and correct when made and (ii) shall be (A)
in the case of representations and warranties that are qualified as to
materiality or Material Adverse Effect, true and correct and (B) in all other
cases, true and correct in all material respects, in the case of clauses (A) and
(B), as of the Closing Date with the same force and effect as though made on and
as of the Closing Date.
(b) The Company shall have performed in all material respects all of
its obligations and agreements and complied in all material respects with all
covenants contained in this Agreement to be performed and complied with at or
prior to the Closing Date.
(c) The Company shall have entered into the Registration Rights
Agreement.
(d) The Company shall have filed the Certificate of Designation with
the Secretary of State of the State of Delaware.
(e) Any applicable waiting period under the HSR Act with respect to the
purchase by such Purchaser shall have expired or been terminated and no
litigation arising therefrom shall have been commenced and remain outstanding.
25
(f) The Company shall have delivered to such Purchaser a certificate
executed on its behalf by a duly authorized representative, dated the Closing
Date, to the effect that each of the conditions specified in paragraph (a)
through (e) of this Section 7.2 has been satisfied.
(g) No provision of any Applicable Law, injunction, order or decree of
any Governmental Entity shall be in effect which has the effect of making the
Transactions illegal or shall otherwise restrain or prohibit the consummation of
the Transactions.
(h) Such Purchaser shall have received an opinion of (i) H. ▇▇▇ ▇▇▇▇▇▇,
General Counsel of the Company and (ii) ▇'▇▇▇▇▇▇▇▇ Graev & Karabell, LLP,
special counsel to the Company, in each case dated the Closing Date, and
addressed to such Purchaser, covering the matters set forth in Exhibit D, in
form and substance reasonably acceptable to the Purchaser.
(i) Such Purchaser shall have received certificates representing the
Securities purchased by such Purchaser concurrently with the Company's receipt
of the Purchase Price for such Securities.
(j) There shall not have occurred (i) any event, circumstance,
condition, fact, effect or other matter which has had or could reasonably be
expected to have a material adverse effect (x) on the business, assets,
financial condition, prospects, or results of operations of the Company and its
Subsidiaries taken as a whole or (y) on the ability of the Company and its
Subsidiaries to perform on a timely basis any material obligation under this
Agreement or the other Equity Documents or to consummate the Issuance
contemplated hereby; or (ii) any material disruption of or material adverse
change in financial, banking or capital market conditions.
(k) The Share Exchange Agreement shall be in full force and effect and
there shall not have been any amendment or waiver of any of its material terms
or conditions.
(l) The Company shall have delivered duly executed copies of the
Management Rights Agreements to the HMTF Funds.
(m) The Company shall have made all filings with, given all notices to,
and received all approvals from, all Governmental Authorities (including,
without limitation, the Federal Communications Commission and state public
utility commissions) required in connection with the consummation of the
Transactions, unless the failure to make such filings, give such notices or
receive such approvals would not, individually or in the aggregate, have a
Material Adverse Effect or a material adverse effect on the ability of the
Company to consummate the Transactions.
ARTICLE VIII
MISCELLANEOUS
8.1 Survival; Indemnification.
(a) All representations, warranties, covenants and agreements contained
in this Agreement shall survive the Closing for 18 months (except (i) covenants
and agreements that are required to be performed after the Closing Date
(including without limitation the covenants and
26
agreements contained in Sections 5.1(b), 5.2, 5.8, 5.9, 5.11, 5.12, 5.13, 5.14,
5.15, 5.16, 5.17, 6.5 and 6.6) and (ii) Sections 3.12 and 3.13 and the last
sentence of Section 3.2(a), which shall survive indefinitely). Notwithstanding
the foregoing, with respect to claims asserted pursuant to this Section 8.1
before the expiration of the applicable representation, warranty, covenant or
agreement, such claims shall survive until the date they are finally adjudicated
or otherwise resolved.
(b) The Company agrees to indemnify and hold harmless each Purchaser
and each Purchaser Affiliate (each an "Indemnified Person"), from and against
(and to reimburse each indemnified person as the same are incurred) any and all
losses (including, but not limited to, impairment of the value of the Shares and
Warrants as of the date such loss first becomes known, but excluding
consequential damages), claims, damages, liabilities, costs and expenses
(collectively, "Losses") to which any Indemnified Person may become subject or
which any Indemnified Person may incur based upon, arising out of, or in
connection with (i) a breach of any representation, warranty or covenant of this
Agreement by the Company or (ii) any claim, litigation, investigation or
proceeding brought by or on behalf of any Person other than the Company relating
to the Issuance, and to reimburse each Indemnified Person upon demand for any
reasonable legal or other reasonable out of pocket expenses incurred in
connection with investigating or defending any of the foregoing, provided the
maximum amount indemnifiable to each Purchaser (and its successors or assigns)
under clause (i) shall not exceed the purchase price of the Securities purchased
by such Purchaser.
(c) If a Person entitled to indemnity hereunder (an "Indemnified
Party") asserts that the Company (the "Indemnifying Party") has become obligated
to the Indemnified Party pursuant to Section 8.1(b), or if any suit, action,
investigation, claim or proceeding is begun, made or instituted as a result of
which the Indemnifying Party may become obligated to the Indemnified Party
hereunder, the Indemnified Party shall notify the Indemnifying Party promptly
and shall cooperate with the Indemnifying Party, at the Indemnifying Party's
expense, to the extent reasonably necessary for the resolution of such claim or
in the defense of such suit, action or proceedings, including making available
any information, documents and things in the possession of the Indemnified
Party. Notwithstanding the foregoing notice requirement, the right to
indemnification hereunder shall not be affected by any failure to give, or delay
in giving, notice unless, and only to the extent that, the rights and remedies
of the Indemnifying Party shall have been materially prejudiced as a result of
such failure or delay.
(d) In fulfilling its obligations under this Section 8.1, after the
Indemnifying Party has provided each Indemnified Party with a written notice of
its acceptance of liability under this Section 8.1, as between such Indemnified
Party and the Indemnifying Party, the Indemnifying Party shall have the right to
investigate, defend, settle or otherwise handle, with the aforesaid cooperation,
any claim, suit, action or proceeding brought by a third party in such manner as
the Indemnifying Party may in its sole discretion reasonably deem appropriate;
provided, that (i) counsel retained by the Indemnifying Party is reasonably
satisfactory to the Indemnified Party and (ii) the Indemnifying Party will not
consent to any settlement or entry of judgment imposing any obligations on any
other party hereto other than financial obligations for which such party will be
indemnified hereunder, unless such party has consented in writing to such
settlement or judgment (which consent may be given or withheld in its sole
discretion) and (iii) the Indemnifying Party will not consent to any settlement
or entry of judgment unless, in connection
27
therewith, the Indemnifying Party obtains a full and unconditional release of
the Indemnified Party from all liability with respect to such suit, action,
investigation claim or proceeding. Notwithstanding the Indemnifying Party's
election to assume the defense or investigation of such claim, action or
proceeding, the Indemnified Party shall have the right to employ separate
counsel and to participate in the defense or investigation of such claim, action
or proceeding, which participation shall be at the expense of the Indemnifying
Party, if (i) on the advice of counsel to the Indemnified Party use of counsel
of the Indemnifying Party's choice could reasonably be expected to give rise to
a material conflict of interest, (ii) the Indemnifying Party shall not have
employed counsel reasonably satisfactory to the Indemnified Party to represent
the Indemnified Party within a reasonable time after notice of the assertion of
any such claim or institution of any such action or proceeding, (iii) if the
Indemnifying Party shall authorize the Indemnified Party to employ separate
counsel at the Indemnifying Party's expense or (iv) such action shall seek
relief other than monetary damages against the Indemnified Party.
(e) The Company and the Purchasers agree that any payment of Losses
made hereunder will be treated by the parties on their tax returns as an
adjustment to the Purchase Price. If, notwithstanding such treatment by the
parties, a final determination (which shall include the form 870-AD or successor
form) with respect to the Indemnified Party or any of its Affiliates causes any
such payment not to be treated as an adjustment to Purchase Price, then the
Indemnifying Party shall indemnify the Indemnified Party for any taxes payable
by the Indemnified Party or any subsidiary by reason of the receipt of such
payment (including any payments under this Section 8.1(e)), determined at an
assumed marginal tax rate equal to the highest marginal tax rate then in effect
for corporate taxpayers in the relevant jurisdiction.
8.2 Notices.
All notices, demands, requests, consents, approvals or other
communications (collectively, "Notices") required or permitted to be given
hereunder or which are given with respect to this Agreement shall be in writing
and shall be personally served, delivered by reputable air courier service with
charges prepaid, or transmitted by hand delivery, telegram, telex or facsimile,
addressed as set forth below, or to such other address as such party shall have
specified most recently by written notice. Notice shall be deemed given on the
date of service or transmission if personally served or transmitted by telegram,
telex or facsimile. Notice otherwise sent as provided herein shall be deemed
given on the next business day following delivery of such notice to a reputable
air courier service.
28
To the Company:
ICG Communications, Inc.
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇
▇.▇. ▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attn: H. ▇▇▇ ▇▇▇▇▇▇, Executive Vice President,
General Counsel and Secretary
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
▇'▇▇▇▇▇▇▇▇ Graev & Karabell, LLP
▇▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
To the Purchasers:
(as to matters relating to the HMTF Purchasers)
To the appropriate member of the HMTF Group
c/o Hicks, Muse, ▇▇▇▇ & ▇▇▇▇▇ Incorporated
1325 Avenue of the Americas
▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
29
with a copy to:
Hicks, Muse, ▇▇▇▇ & ▇▇▇▇▇ Incorporated
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
▇▇▇▇▇▇ & ▇▇▇▇▇▇ L.L.P.
1325 Avenue of the Americas (▇▇▇▇ ▇▇▇▇▇)
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇ ▇. ▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
(as to matters relating to Liberty)
To:
Liberty Media Corporation
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇ ▇. ▇▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
with copies to:
Liberty Media Corporation
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: Legal Department
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
and:
▇▇▇▇▇ ▇▇▇▇▇, L.L.P.
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
30
(as to matters relating to the Gleacher Purchaser)
To:
Gleacher & Co.
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
8.3 Governing Law.
This Agreement shall be governed by, interpreted under, and construed in
accordance with the laws of the State of New York, regardless of the laws that
might otherwise govern under applicable principles of conflicts of law thereof.
8.4 Termination.
(a) This Agreement may be terminated as between the Company and any
Purchaser (i) at any time prior to the Closing Date by mutual written agreement
of the Company and such Purchaser, (ii) if the Closing shall not have occurred
on or prior to May 31, 2000 either the Company or such Purchaser, at any time
after May 31, 2000, provided that the right to terminate this Agreement under
this Section 8.4(a)(ii) shall not be available to any party whose failure to
fulfill any obligation under this Agreement was the cause of or resulted in the
failure of the Closing to occur on or before such date, (iii) if any
Governmental Authority shall have issued a nonappealable final order, decree or
ruling or taken any other action having the effect of permanently restraining,
enjoining or otherwise prohibiting the Transactions, by either the Company or
such Purchaser, (iv) if either the Company or such Purchaser shall have breached
any of its material obligations under this Agreement, by the non-breaching
party, or (v) if an event described in Section 7.2(j) shall have occurred, by
such Purchaser. Any party desiring to terminate this Agreement pursuant to
clauses 8.4(a)(ii), (iii), (iv) or (v) shall promptly give notice of such
termination to the other party.
(b) If this Agreement is terminated as between the Company and a
Purchaser, as permitted by Section 8.4(a), such termination shall be without
liability of any party (or any stockholder, director, officer, partner,
employee, agent, consultant or representative of such party) to any other party
to this Agreement; provided that if such termination shall result from the
willful (a) failure of any party to fulfill a condition to the performance of
the obligations of the other party, (b) failure to perform a covenant of this
Agreement or (c) breach by any party hereto of any representation or warranty
contained herein, such failing or breaching party shall be fully liable for any
and all losses (excluding consequential damages) incurred or suffered by the
other party as a result of such failure or breach. The provisions of Sections
8.1(b)-(d), 8.2, 8.3, this Section 8.4, Sections 8.5, 8.8, 8.10, 8.11, 8.12,
8.13, 8.14, 8.16, 8.17, 8.18 and 8.20 shall survive any termination hereof
pursuant to Section 8.4(a).
31
8.5 Entire Agreement.
As between the Company and each Purchaser, this Agreement and the other
Equity Documents (including all agreements entered into pursuant hereto and
thereto and all certificates and instruments delivered pursuant hereto and
thereto) constitute the entire agreement of the parties with respect to the
subject matter hereof and supersede all prior and contemporaneous agreements,
representations, understandings, negotiations and discussions between the
parties, whether oral or written, with respect to the subject matter hereof.
8.6 Modifications and Amendments.
No amendment, modification or termination of this Agreement as between the
Company and a Purchaser shall be binding unless executed in writing by the
Company and such Purchaser intending to be bound thereby.
8.7 Waivers and Extensions.
Any party to this Agreement may waive any condition, right, breach or
default that such party has the right to waive, provided that such waiver will
not be effective against the waiving party unless it is in writing, is signed by
such party, and specifically refers to this Agreement. Waivers may be made in
advance or after the right waived has arisen or the breach or default waived has
occurred. Any waiver may be conditional. No waiver of any breach of any
agreement or provision herein contained shall be deemed a waiver of any
preceding or succeeding breach thereof nor of any other agreement or provision
herein contained. No waiver or extension of time for performance of any
obligations or acts shall be deemed a waiver or extension of the time for
performance of any other obligations or acts.
8.8 Titles and Headings.
Titles and headings of sections of this Agreement are for convenience only
and shall not affect the construction of any provision of this Agreement.
8.9 Exhibits and Schedules.
Each of the exhibits and schedules referred to herein and attached hereto
is an integral part of this Agreement and is incorporated herein by reference.
8.10 Expenses.
All costs and expenses incurred in connection with this Agreement shall be
paid by the party incurring such cost or expense; provided, however, that the
Company shall pay the filing fees in respect of any filings pursuant to the HSR
Act.
8.11 Press Releases and Public Announcements.
All public announcements or disclosures relating to the Issuance or this
Agreement shall be made only if mutually agreed upon by the Company and the
Purchasers, except to the extent such disclosure is, in the opinion of counsel,
required by law or by regulation of any applicable
32
national stock exchange or Commission recognized trading market; provided that
(a) any such required disclosure shall only be made, to the extent consistent
with law and regulation of any applicable national stock exchange or Commission
recognized trading market, after consultation with each Purchaser and the
Company and (b) no such announcement or disclosure (except as required by law or
by regulation of any applicable national stock exchange or Commission recognized
trading market) shall identify any Purchaser without such Purchaser's prior
consent.
8.12 Assignment; No Third Party Beneficiaries.
This Agreement and the rights, duties and obligations hereunder may not be
assigned or delegated by the Company without the prior written consent of the
Purchasers, and may not assigned or delegated by any Purchaser without the
Company's prior written consent except that each Purchaser may assign any or all
of its rights and obligations under this Agreement to any one or more of its
Affiliates. Any assignment or delegation of rights, duties or obligations
hereunder made by the Company without the prior written consent of the
Purchasers, shall be void and of no effect. This Agreement and the provisions
hereof shall be binding upon and shall inure to the benefit of each of the
parties and their respective successors and permitted assigns. This Agreement is
not intended to confer any rights or benefits on any Persons other than the
parties hereto, except as expressly set forth in Section 5.2, Section 8.1, this
Section 8.12 or Section 8.20.
8.13 Severability.
This Agreement shall be deemed severable, and the invalidity or
unenforceability of any term or provision hereof shall not affect the validity
or enforceability of this Agreement or of any other term or provision hereof.
Furthermore, in lieu of any such invalid or unenforceable term or provision, the
parties hereto intend that there shall be added as a part of this Agreement a
provision as similar in terms to such invalid or unenforceable provision as may
be possible and be valid and enforceable.
8.14 Counterparts.
This Agreement may be executed in counterparts, each of which shall be
deemed an original, but all of which taken together shall constitute one and the
same instrument.
8.15 Further Assurances.
As between the Company and a Purchaser, each party hereto, upon the
request of any other party hereto, shall do all such further acts and execute,
acknowledge and deliver all such further instruments and documents as may be
necessary or desirable to carry out the transactions contemplated by this
Agreement, including, in the case of the Company, such acts, instruments and
documents as may be necessary or desirable to convey and transfer to each
Purchaser the Shares and Warrants to be purchased by it hereunder.
8.16 Remedies Cumulative.
The remedies provided herein shall be cumulative and shall not preclude
the assertion by any party hereto of any other rights or the seeking of any
remedies against the other party hereto.
33
8.17 Several Liability of the Purchasers.
Nothing in this Agreement (including, without limitation, Article VI)
shall be construed to impose on any Purchaser any liability for any action or
failure to act of any other Purchaser, including any breach of this Agreement by
any such other Purchaser.
8.18 No Duty to Other Purchasers.
Each Purchaser confirms with each other Purchaser that such Purchaser has
conducted its own due diligence in connection with its investment in the
Securities and the other Purchasers may therefore have information different
from, or additional to, the information possessed by such Purchaser. In
addition, although certain of such other Purchasers (the "Supplying Purchasers")
may have shared information received by them (including information contained in
third party reports prepared for such other Purchasers) with such Purchaser, no
representation or warranty is being made with respect to such information by any
Supplying Purchaser or any such third party. Nothing in this Section 8.18 is
meant to limit any duty, obligation or liability the Company may have to any
Purchaser under this Agreement or otherwise.
8.19 Specific Performance.
The parties hereto agree that the remedy at law for any breach of this
Agreement may be inadequate, and that as between the Company and a Purchaser any
party by whom this Agreement is enforceable shall be entitled to specific
performance in addition to any other appropriate relief or remedy. Such party
may, in its sole discretion, apply to a court of competent jurisdiction for
specific performance or injunctive or such other relief as such court may deem
just and proper in order to enforce this Agreement as between the Company and a
Purchaser, or prevent any violation hereof, and, to the extent permitted by
applicable as between the Company and a Purchaser law, each party waives any
objection to the imposition of such relief.
8.20 No Purchaser Affiliate Liability.
No Purchaser Affiliate shall have any liability or obligation of any
nature whatsoever in connection with or under this Agreement or the transactions
contemplated hereby, and the Company hereby waives and releases all claims of
any such liability and obligation, it being understood that no such Person or
entity (other than Purchaser) shall be liable for or in respect of Purchaser's
obligations under this Agreement or with respect to the transactions
contemplated hereby.
34
IN WITNESS WHEREOF, the parties hereto have executed this Agreement
as of the date first above written.
ICG COMMUNICATIONS, INC.
By: /s/ H. ▇▇▇ ▇▇▇▇▇▇
-----------------------------
Name: H. ▇▇▇ ▇▇▇▇▇▇
Title: Executive Vice President,
General Counsel and Secretary
HMTF BRIDGE ICG, LLC
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
-----------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Vice President
LIBERTY MEDIA CORPORATION
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
-----------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Senior Vice President
GLEACHER/ICG INVESTORS, LLC
By: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
-----------------------------
Name: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
Title: Managing Director
SCHEDULE I
Number of Number of
Purchaser Shares Warrants Purchase Price
--------------------------- ----------- ---------------- -------------------
HMTF Bridge ICG, LLC 230,000 3,066,667 $230,000,000
Liberty Media Corporation 500,000 6,666,667 $500,000,000
Gleacher/ICG Investors LLC 20,000 266,666 $20,000,000
EXHIBIT A
---------
FORM OF WARRANT
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN REGISTERED UNDER
THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT") OR THE SECURITIES
LAWS OF ANY STATE OF THE UNITED STATES. SUCH SECURITIES MAY NOT BE OFFERED,
SOLD, TRANSFERRED, PLEDGED, HYPOTHECATED OR OTHERWISE DISPOSED OF IN THE ABSENCE
OF SUCH REGISTRATION OTHER THAN PURSUANT TO AN EXEMPTION FROM SUCH REGISTRATION
REQUIREMENTS.
[HOLDER NAME]
COMMON STOCK WARRANT
Void after ___________, 2005
Warrant No. [A]-[1]
This certifies that, for value received, ________________________ or
its permitted assigns is entitled, subject to the terms and conditions set forth
herein (including the exercise conditions of Section 2), to purchase from ICG
Communications, Inc., a Delaware corporation, up to _______________ fully paid
and nonassessable shares (the "Shares") of Common Stock (as defined herein) at
the exercise price of $34.00 per share (the "Exercise Price"). The Exercise
Price and number of Shares is subject to adjustment as provided in this Warrant.
The term "Warrant" as used herein shall include this Warrant and any warrants
delivered in substitution or exchange therefor as provided herein.
Section 1. Definitions
As used in this Warrant, the following terms, unless the context
otherwise requires, have the following meanings:
(a) "Business Day" means each Monday, Tuesday, Wednesday, Thursday and
Friday that is not a day on which banking institutions in the City of New York
are authorized or obligated by law or executive order to be closed.
(b) "Capital Stock" or "capital stock" means, with respect to any
Person, any and all shares, interests, participations, rights in, or other
equivalents (however designated and whether voting and/or non-voting) of such
Person's capital stock, whether outstanding on the date of the Warrant or issued
after the date of the Warrant, and any and all rights (other than any evidence
of indebtedness) or warrants exercisable or exchangeable for or convertible into
such capital stock.
(c) "Common Stock" means shares of the Company's common stock, par
value $0.01 per share, and capital stock of any other class or series into which
the Common Stock may hereafter be changed.
(d) "Company" means ICG Communications, Inc. and any Person that shall
succeed to or assume the obligations of the Company under this Warrant.
(e) "Person" means any individual, partnership, corporation, limited
liability company, joint venture, association, joint-stock company, trust,
unincorporated organization, government or agency or political subdivision
thereof, or other entity.
(f) "Warrantholder", "holder of Warrant", "holder", or similar terms
refers to the holder of this Warrant.
Section 2. Exercise Provisions.
(a) Exercisability.
The holder of this Warrant may exercise it in whole or in part to
the extent then exercisable by surrender of this Warrant, with the form of
subscription at the end of this Warrant duly executed by the holder, to the
Company at its principal office (or to the office of the Warrant Agent as
contemplated in Section 6(b), if applicable), accompanied by payment, in lawful
money of the United States, of the amount obtained by multiplying the Exercise
Price (as adjusted from time to time pursuant to the terms of this Warrant) by
the number of shares of Common Stock designated in such completed subscription
form. This Warrant shall be deemed to have been exercised immediately prior to
the close of business on the day of surrender of such Warrant, and the person or
persons entitled to receive shares of Common Stock issuable upon exercise of
this Warrant shall be treated for all purposes as the record holder or holders
of such shares of Common Stock at such time.
(b) Payment of Exercise Price.
Payment shall be made by check payable to the Company.
(c) Net Issue Exercise.
Notwithstanding any provisions herein to the contrary, if the fair
market value (as defined below) of one share of Common Stock is greater than the
Exercise Price (on the date of exercise of this Warrant), in lieu of exercising
this Warrant in exchange for cash, the holder may elect to exercise all or a
portion of this Warrant by canceling all or a portion of this Warrant and
receiving in exchange therefor shares of Common Stock (as determined below)
equal to the value of this Warrant, or the portion thereof being canceled, by
surrender of this Warrant at the principal office of the Company (or the office
of the Warrant Agent contemplated by Section 6(b), if applicable) together with
a duly executed form of subscription, in which event the Company shall issue to
the holder a number of shares of Common Stock computed using the following
formula:
X=Y(A-B)
------
A
Where X = the number of shares of Common
Stock to be issued to the holder
Y = the number of shares of Common
Stock purchasable under the
Warrant or, if only a portion of
the Warrant is being
-2-
exercised, under the portion of
the Warrant being exercised
(on the date of exercise)
A = the fair market value of one share
of the Common Stock (on the date
of exercise)
B = the Exercise Price (as adjusted to
the date of exercise)
For purposes of the above calculation, "fair market value" of one share of
Common Stock shall be determined by the Company's Board of Directors in good
faith; provided, however, where a public market exists for the Common Stock at
the time of such exercise, the "fair market value", per share shall be equal to
the average for the five (5) trading days prior to the date of such exercise of
the average of the closing bid and asked prices of the Common Stock quoted in
the Over-The-Counter Market Summary or the last reported sale price of the
Common Stock quoted on the Nasdaq National Market System or the principal
exchange on which the Common Stock is then listed, whichever is applicable, as
published in The Wall Street Journal.
(d) Restrictions on Exercise.
This Warrant is exercisable at any time and from time to time from
the date hereof, provided this Warrant has not terminated pursuant to Section
10.
Section 3. Delivery of Stock Certificates.
As soon as possible after full or partial exercise of this Warrant
in accordance with the terms hereof and in any event within ten (10) days after
such exercise, the Company, at its expense, will cause to be issued in the name
of and delivered to the holder of this Warrant, a certificate or certificates
for the number of fully paid and nonassessable shares of Common Stock to which
that holder shall be entitled upon such exercise. In the event that this Warrant
is exercised in part, the Company at its expense will also execute and deliver a
new Warrant of like tenor exercisable for the number of Shares for which this
Warrant may then be exercised. No fractional shares or scrip representing
fractional shares will be issued upon exercise of this Warrant. If upon any
exercise of this Warrant a fraction of a share would otherwise be issuable, the
Company will, in lieu of issuing such fraction of a share, round down to the
nearest whole share if such fraction is an amount less than 0.5 and round up to
the nearest whole share if such fraction is an amount equal to or greater than
0.5 and shall issue the appropriate number of full shares of Common Stock that
shall be issuable upon exercise of this Warrant.
Section 4. Adjustment Provisions
The Exercise Price shall be adjusted from time to time by the
Company as follows:
(a) If the Company shall hereafter pay a dividend or make a
distribution to all holders of the outstanding shares of Common Stock in shares
of Common Stock, the Exercise Price in effect at the opening of business on the
date following the date fixed for the
-3-
determination of shareholders entitled to receive such dividend or other
distribution shall be reduced by multiplying such Exercise Price by a fraction
the numerator of which shall be the number of shares of Common Stock outstanding
at the close of business on the Common Stock Record Date (as defined in Section
4(f)) fixed for such determination and the denominator of which shall be the sum
of such number of 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 Common Stock Record Date.
If any dividend or distribution of the type described in this Section 4(a) is
declared but not so paid or made, the Exercise Price shall again be adjusted to
the Exercise Price which would then be in effect if such dividend or
distribution had not been declared.
(b)
(i) In case the Company shall issue or sell any Common Stock,
or securities convertible into or exercisable or exchangeable for shares
of Common Stock (other than pursuant to employee stock options or pursuant
to other rights and warrants outstanding on the date hereof), for a
consideration per share (or, in the case of convertible or exchangeable
securities having a conversion or exercise price per share of Common
Stock) less than the Current Market Price of the Common Stock on the date
of such issuance, the Exercise Price in effect immediately prior to such
issuance or sale shall be reduced effective as of immediately following
such issuance or sale by multiplying such Exercise Price by a fraction,
(1) the numerator of which shall be the sum of (x) the number of shares of
Common Stock outstanding immediately prior to such issuance or sale and
(y) the number of shares of Common Stock which the aggregate consideration
receivable by the Company for the total number of additional shares of
Common Stock so issued or sold (or issuable on conversion, exercise or
exchange) would purchase at the Current Market Price in effect immediately
prior to such issuance or sale and (2) the denominator of which shall be
the sum of the number of shares of Common Stock outstanding immediately
prior to such issuance or sale and the number of additional shares of
Common Stock to be issued or sold (or, in the case of convertible or
exchangeable securities, issuable on conversion, exercise or exchange).
(ii) If the Company shall offer or issue rights or warrants to
all holders of its outstanding shares of Common Stock entitling them to
subscribe for or purchase shares of Common Stock at a price per share less
than the Current Market Price (as defined in Section 4(f)) on the Common
Stock Record Date fixed for the determination of shareholders entitled to
receive such rights or warrants, the Exercise Price shall be adjusted so
that the same shall equal the price determined by multiplying the Exercise
Price in effect at the opening of business on the date after such Common
Stock 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
Common Stock 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 Common Stock 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
-4-
immediately after the opening of business on the day following the Common
Stock 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 Exercise
Price shall again be adjusted to be the Exercise 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 Exercise Price shall again be adjusted to be the Exercise
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 shares of 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
(x) any consideration received for such rights or warrants, with the value
of such consideration and the amount of such exercise or subscription
price, if other than cash, to be determined by the Board of Directors and
(y) the amount of any exercise price or subscription price required to be
paid upon exercise of such warrants or rights.
(c) If the outstanding shares of Common Stock shall be subdivided into
a greater number of shares of Common Stock, the Exercise 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 Exercise 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, 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.
(d)
(i) If the Company shall, by dividend or otherwise, distribute
to all holders of its shares of Common Stock any class of capital stock of
the Company (other than any dividends or distributions to which Section
4(a) applies) or evidences of its indebtedness, cash or other assets
(including securities, but excluding any rights or warrants of a type
referred to in Section 4(b)(ii) and 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 Section 4(k) applies) (the foregoing hereinafter in this Section
4(d) called the "Distributed Securities"), then, in each such case, the
Exercise Price shall be reduced so that the same shall be equal to the
price determined by multiplying the Exercise Price in effect immediately
prior to the close of business on the Common Stock Record Date (as defined
in Section 4(f)) with respect to such distribution by a fraction of which
the numerator shall be the Current Market Price (determined as provided in
Section 4(f)) on such date less the fair market value (as determined by
the Board of Directors, whose good faith 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
-5-
to the opening of business on the day following the Common Stock 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 Common Stock Record Date, in lieu of the
foregoing adjustment, adequate provision shall be made so that a
Warrantholder shall have the right to receive upon exercise of this
Warrant (or any portion thereof) the amount of Distributed Securities such
holder would have received had such holder exercised this Warrant (or
portion thereof) immediately prior to such Common Stock Record Date. If
such dividend or distribution is not so paid or made, the Exercise Price
shall again be adjusted to be the Exercise 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 Section 4(d) by reference to the actual or when
issued trading market for any securities constituting 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
Section 4(f)) to the extent possible.
(ii) Rights or warrants distributed by the Company to all
holders of shares 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"):
(A) are deemed to be transferred with such shares of Common Stock; (B) are
not exercisable; and (C) are also issued in respect of future issuances of
shares of Common Stock, shall be deemed not to have been distributed for
purposes of this Section 4(d) (and no adjustment to the Exercise Price
under this Section 4(d) 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 appropriate adjustment to the
Exercise Price under this Section 4(d) shall be made. If any such rights
or warrants, including any such existing rights or warrants distributed
prior to the first issuance of the Warrants, are subject to subsequent
events, upon the occurrence of each of which such rights or warrants shall
become exercisable to purchase 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 Exercise Price under this Section 4(d) 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 Exercise 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 to which this Section 4(d) were
applicable, equal to the per share redemption or repurchase price received
by a holder or holders of shares of Common Stock with respect to such
rights or warrants (assuming such holder had retained such rights or
warrants), made to all holders of shares 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
-6-
expired or been terminated without exercise by any holders thereof, the
Exercise Price shall be readjusted as if such rights and warrants had not
been issued.
(iii) Notwithstanding any other provision of this Section 4(d)
to the contrary, 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 Section 4(d) if
the Company makes proper provision so that a Warrantholder who exercises
this Warrant (or any portion thereof) after the date fixed for
determination of shareholders entitled to receive such distribution shall
be entitled to receive upon such exercise, in addition to the shares of
Common Stock issuable upon such exercise, the amount and kind of such
distributions that such Warrantholder would have been entitled to receive
if such holder had immediately prior to such determination date, exercised
this Warrant.
(iv) For purposes of this Section 4(d) and Sections 4(a) and
4(b), any dividend or distribution to which this Section 4(d) is
applicable that also includes shares of Common Stock, or rights or
warrants to subscribe for or purchase shares of Common Stock to which 4(b)
applies (or both), shall be deemed instead to be (A) a dividend or
distribution of the evidences of indebtedness, assets, shares of capital
stock, rights or warrants other than such shares of Common Stock or rights
or warrants to which Section 4(b) applies (and any Exercise Price
reduction required by this Section 4(d) with respect to such dividend or
distribution shall then be made) immediately followed by (B) a dividend or
distribution of such shares of Common Stock or such rights or warrants
(and any further Exercise Price reduction required by Sections 4(a) or
4(b) with respect to such dividend or distribution shall then be made),
except that (1) the Common Stock Record Date of such dividend or
distribution shall be substituted as "the date fixed for the determination
of shareholders entitled to receive such dividend or other distribution",
"the Common Stock Record Date fixed for such determination" and "the
Common Stock Record Date" within the meaning of Section 4(a) and as "the
date fixed for the determination of shareholders entitled to receive such
rights or warrants", "the Common Stock Record Date fixed for the
determination of the shareholders entitled to receive such rights or
warrants" and "such Common Stock Record Date" for purposes of Section
4(b), and (2) any shares 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" for the purposes of Section 4(a).
(e) If a tender offer made by the Company or any of its subsidiaries
for all or any portion of the Common Stock expires and such tender offer (as
amended upon the expiration thereof) requires the payment to shareholders (based
on the acceptance (up to any maximum specified in the terms of the tender offer)
of Purchased Shares) of an aggregate consideration having a fair market value
(as determined by the Board of Directors, whose good faith determination shall
be conclusive and described in a resolution of the Board of Directors) that,
combined together with the aggregate of the cash plus the fair market value (as
determined by the Board of Directors, whose good faith 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 shares of Common Stock expiring within the 12 months preceding
the
-7-
expiration of such tender offer and in respect of which no adjustment pursuant
to this Section 4(e) has been made, exceeds 5% of the net income of the Company
reported for the 12 month period ending with the fiscal quarter next preceding
such payment (the "12 Month Net Income") (determined as of the last time (the
"Expiration Time") tenders could have been made pursuant to such tender offer
(as it may be amended)), then, and in each such case, immediately prior to the
opening of business on the day after the date of the Expiration Time, the
Exercise Price shall be adjusted so that the same shall equal the price
determined by multiplying the Exercise 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 a share of 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 shares of 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
Exercise Price shall again be adjusted to be the Exercise Price which would then
be in effect if such tender offer had not been made. If the application of this
Section 4(e) to any tender offer would result in an increase in the Exercise
Price, no adjustment shall be made for such tender offer under this Section
4(e).
(f) For purposes of this Section 4, the following terms shall have the
meaning indicated:
"Closing Price" with respect to any securities on any day
means the closing sale price as of 4:00 p.m. Eastern Time on such day or
any earlier final closing on such day or, if no such sale takes place on
such day, the average of the reported high and low bid prices on such day,
in each case on the Nasdaq National Market, or the New York Stock
Exchange, as applicable, or, if such security is not listed or admitted to
trading on such national market or exchange, on the national stock
exchange or Commission recognized trading market in the United States 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 stock exchange or
Commission recognized trading market in the United States, the average of
the high and low bid 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 in the
United States, 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.
-8-
"Common Stock Record Date" means, 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).
"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 Exercise Price pursuant to Section 4(a), 4(b), 4(c),
4(d) or 4(e) 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 Exercise 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 Exercise Price pursuant to Section 4(a), 4(b), 4(c),
4(d) or 4(e) 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 Exercise 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 good faith
determination of such value for purposes of Section 4(d), whose good faith
determination shall be conclusive and described in a resolution of the
Board of Directors) of the evidences of indebtedness, shares of capital
stock or assets being distributed applicable to one share of Common Stock
as of the close of business on the day before such "ex" date. For purposes
of any computation under Section 4(e), 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 Exercise Price pursuant to Section 4(a), 4(b), 4(c), 4(d) or 4(e)
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 Exercise Price is so required to be adjusted as
a result of such other event. For purposes of this paragraph, the term
"ex" date (1) when used with respect to any issuance or distribution,
means the first date on which the shares of Common Stock trade 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, (2) when used with respect to any subdivision or combination
of shares of Common Stock, means the first date on
-9-
which the shares of Common Stock trade regular way on such exchange or in
such market after the time at which such subdivision or combination
becomes effective and (3) when used with respect to any tender or exchange
offer means the first date on which the shares of Common Stock trade
regular way on such exchange or in such market after the Expiration Time
of such offer. Notwithstanding the foregoing, whenever successive
adjustments to the Exercise Price are called for pursuant to this Section
4, such adjustments shall be made to the Current Market Price as may be
necessary or appropriate to effectuate the intent of this Section 4 and to
avoid unjust or inequitable results, as determined in good faith by the
Board of Directors.
"Fair Market Value" means the amount which a willing buyer
would pay a willing seller in an arm's-length transaction.
(g) No adjustment in the Exercise 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 Section 4(g) are
not required to be made shall be carried forward and taken into account in any
subsequent adjustment. All calculations under this Section 4 shall be made by
the Company and shall be made to the nearest cent. No adjustment need be made
for a change in the par value or no par value of the Common Stock.
(h) Whenever the Exercise Price is adjusted as herein provided, the
Company shall promptly file with the Warrant Agent an Officer's Certificate
setting forth the Exercise Price after such adjustment and the number of shares
of Common Stock for which this Warrant will be exercisable after such adjustment
pursuant to Section 4(l) 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 Exercise Price setting
forth the adjusted Exercise Price and the date on which each adjustment becomes
effective and shall mail such notice of such adjustment of the Exercise Price to
each Warrantholder 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.
(i) In any case in which this Section 4 provides that an adjustment
shall become effective immediately after a Common Stock Record Date for an
event, the Company may defer until the occurrence of such event issuing to the
holder of any Warrant exercised after such Common Stock Record Date and before
the occurrence of such event the additional shares of Common Stock issuable upon
such exercise by reason of the adjustment required by such event over and above
the shares of Common Stock issuable upon such exercise before giving effect to
such adjustment.
(j) For purposes of this Section 4, the number of shares of Common
Stock at any time outstanding shall not include shares held in the treasury of
the Company or by any of its subsidiaries. The Company shall not pay any
dividend or make any distribution on shares of Common Stock held in the treasury
of the Company or by any of its subsidiaries.
(k) In case of any consolidation of the Company with, or merger of the
Company into, any other Person, or in case of any merger of another Person into
the Company (other than a
-10-
merger that does not result in any reclassification, conversion, exchange or
cancellation of outstanding shares of Common Stock of the Company), or in case
of any sale, conveyance or transfer of all or substantially all the assets of
the Company, the Warrantholders shall have the right thereafter, during the
period such Warrant shall be exercisable as specified in Section 2(d), to
convert such Warrants 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 for which the
Warrants might have been exercised immediately prior to such consolidation,
merger, conveyance or transfer, assuming such holder of shares 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
Section 4(k) 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 Section 4(k). The above provisions of this
Section 4(k) shall similarly apply to successive consolidations, mergers,
conveyances or transfers.
(l) Upon each adjustment of the Exercise Price as a result of the
operation of this Section 4, this Warrant shall thereafter evidence the right to
purchase, at the adjusted Exercise Price, that number of shares of Common Stock
obtained by multiplying the number of shares covered by this Warrant immediately
prior to this adjustment by the Exercise Price in effect immediately prior to
such adjustment and dividing the product so obtained by the Exercise Price in
effect immediately after such adjustment of the Exercise Price.
(m) In the event that a Warrantholder would be entitled to receive upon
exercise hereof any Redeemable Capital Stock and the Company redeems, exchanges
or otherwise acquires all of the outstanding shares or other units of such
Redeemable Capital Stock (such event being a "Redemption Event"), then, from and
after the effective date of such Redemption Event, the Warrantholder shall be
entitled to receive upon exercise, in lieu of shares or units of such Redeemable
Capital Stock, the kind and amount of shares of stock and other securities and
property receivable upon the Redemption Event by a holder of the number of
shares or units of such Redeemable Capital Stock for which this Warrant could
have been exercised immediately prior to the effective date of such Redemption
Event (assuming, to the extent applicable, that such holder failed to exercise
any rights of election with respect thereto and received per share or unit of
such Redeemable Capital Stock the kind and amount of stock and other securities
and property received per share or unit by a plurality of the non-electing
shares or units of such Redeemable Capital Stock), and (from and after the
effective date of such Redemption Event) the Warrantholder shall have no other
purchase rights under this Warrant with respect to such Redeemable Capital
Stock. For purposes of this Section 4(m) "Redeemable Capital Stock" means a
class or series of capital stock of the Company that provides by its terms a
right in favor of the Company to call, redeem, exchange or otherwise acquire all
of the outstanding shares or units of such class or series.
-11-
Section 5. Notice of Certain Events.
In case:
(a) 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
(b) the Company shall authorize the granting to all holders of its
shares of 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
(c) of any reclassification of the Common Stock (other than a
subdivision or combination of the Company's outstanding shares of 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, conveyance
or transfer of all or substantially all the assets of the Company;
(d) of the voluntary or involuntary dissolution, liquidation or
winding-up of the Company; or
(e) of the taking of any other action referred to in Section 4;
then the Company shall cause to be mailed to all Warrantholders at their last
addresses as they shall appear on the books of the Company, at least 20 Business
Days (or 10 Business Days in any case specified in clause (a) or (b) 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 shares 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 shares of Common Stock of record
shall be entitled to exchange their shares of 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 required by this Section 5 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.
Section 6. Transfer of Warrants.
(a) Warrant Register.
The Company shall maintain a register (the "Warrant Register")
containing the names, addresses and facsimile numbers of the holder(s). Any
holder of this Warrant or any portion thereof may change its address as shown on
the Warrant Register by written notice to the Company requesting such a change.
Until this Warrant is transferred on the Warrant Register, the Company may treat
the holder as shown on the Warrant Register as the absolute owner of this
Warrant for all purposes, notwithstanding any notice to the contrary.
-12-
(b) Warrant Agent.
The Company may, by written notice to the holder, appoint an agent
for the purpose of maintaining the Warrant Register referred to in Section 6(a)
above, issuing any other securities then issuable upon the exercise of this
Warrant, exchanging this Warrant, replacing this Warrant or any or all of the
foregoing. Thereafter, any such registration, issuance or replacement, as the
case may be, shall be made at the office of such agent.
(c) Transferability and Negotiability of Warrant.
Title to this Warrant may be transferred by endorsement (by the
holder executing the Assignment Form attached hereto) and delivery in the same
manner as negotiable instruments transferable by endorsement and delivery.
(d) Exchange of Warrant Upon a Transfer.
On surrender of this Warrant for exchange, properly endorsed on the
Assignment Form and subject to the provisions of this Warrant with respect to
compliance with the Securities Act, the Company at its expense shall issue to or
on the order of the holder a new warrant or warrants of like tenor, in the name
of the holder or as the holders (on payment by the holder of any applicable
transfer taxes) may direct, exercisable for the number of Shares issuable upon
the exercise hereof.
Section 7. Registration Rights.
If the holder of this Warrant is a party to, or an assignee of
rights under, that certain Registration Rights Agreement, dated ___________ __,
2000 (the "Registration Rights Agreement"), such holder shall be entitled to
include any shares of Common Stock or other securities received upon exercise of
the Warrant with such holder's Registrable Securities (as such term is defined
in the Registration Rights Agreement), on the terms and conditions as set forth
in the Registration Rights Agreement.
Section 8. Amendment and Waivers.
No amendment, modification or termination of this Warrant shall be
binding unless executed in writing by the Company and the Warrantholder
intending to be bound thereby.
Section 9. Waivers and Extensions.
Any provision of this Warrant may be amended, waived or modified
only if such amendment, waiver or modification is in writing, is signed by the
party intending to be bound, and specifically refers to this Warrant. Waivers
may be made in advance or after the right waived has arisen or the breach or
default waived has occurred. Any waiver may be conditional. No waiver of any
breach of any agreement or provision herein contained shall be deemed a waiver
of any preceding or succeeding breach thereof nor of any other agreement or
provision herein contained. No waiver or extension of time for performance of
any obligations or acts
-13-
shall be deemed a waiver or extension of the time for performance of any other
obligations or acts.
Section 10. Termination.
The right to exercise this Warrant shall expire and shall be void at
5:00 p.m., New York City time on __________ __, 2005.
Section 11. Reservation of Stock.
The Company covenants that it will at all times reserve and keep
available, solely for issuance upon exercise of this Warrant, all shares of
Common Stock or other securities from time to time issuable upon exercise of
this Warrant and, subject to any existing contractual limitations, from time to
time, will take all steps necessary to amend its Certificate of Incorporation to
provide sufficient reserves of shares of Common Stock or other securities
issuable upon exercise of this Warrant. The Company further covenants that all
shares that may be issued upon the exercise of rights represented by this
Warrant and payment of the Exercise Price, as set forth herein, will be fully
paid and non-assessable and free from all taxes, liens and charges in respect of
the issue thereof. The Company also agrees that its issuance of this Warrant
shall constitute full authority to its officers who are charged with the duty of
executing stock certificates to execute and issue the necessary certificates for
shares of Common Stock upon exercise of this Warrant.
Section 12. Replacement.
On receipt of evidence reasonably satisfactory to the Company of the
loss, theft, destruction, or mutilation of this Warrant and, in the case of
loss, theft, or destruction, on delivery of any indemnity agreement or bond
reasonably satisfactory in form and amount to the Company or, in the case of
mutilation, on surrender and cancellation of this Warrant, the Company at its
expense will execute and deliver, in lieu of this Warrant, a new Warrant of like
tenor.
Section 13. No Rights as Stockholder.
Except as provided in Section 2 or Section 4, no holder of this
Warrant, as such, shall be entitled to vote or receive dividends or be
considered a stockholder of the Company for any purpose, nor shall anything in
this Warrant be construed to confer on any holder of this Warrant as such, any
rights of a stockholder of the Company or any right to vote, give or withhold
consent to any corporate action, to receive notice of meeting of stockholders,
to receive dividends or subscription rights or otherwise.
Section 14. Miscellaneous Provisions.
(a) Governing Law.
This Warrant shall be governed by, interpreted under, and construed
in accordance with the laws of the State of New York, regardless of the laws
that might otherwise govern under applicable principles of conflicts of laws
thereof.
-14-
(b) Notices.
All notices, demands, requests, consents, approvals or other
communications (collectively, "Notices") required or permitted to be given
hereunder or which are given with respect to this Warrant shall be in writing
and shall be personally served, delivered by reputable air courier service with
charges prepaid, or transmitted by hand delivery, telegram, telex or facsimile,
to such address as such party shall have specified most recently by written
notice. Notice shall be deemed given on the date of service or transmission if
personally served or transmitted by telegram, telex or facsimile. Notice
otherwise sent as provided herein shall be deemed given on the next business day
following delivery of such notice to a reputable air courier service.
(c) Binding Effect.
The provisions of this Warrant shall be binding upon the Company and
its successors and assigns.
(d) Remedies.
In the event of a breach of this Warrant, the holder shall be
entitled to injunctive relief and specific performance of its rights under this
Warrant, in addition to all of its rights granted by law, including, without
limitation, recovery of damages. The Company agrees that monetary damages would
not be adequate compensation for any loss incurred by reason of a breach of this
Warrant by the Company and hereby waives any defense in any action for
injunctive relief or specific performance that a remedy at law would be
adequate.
(e) Headings.
Titles and headings of sections of this Warrant are for convenience
only and shall not affect the construction of any provision of this Warrant.
ICG COMMUNICATIONS, INC.
By:_____________________________
Name:
Title:
-15-
SUBSCRIPTION FORM
(To be signed only upon exercise of Warrant)
To: ICG Communications, Inc.
Attention: Secretary
1. The undersigned, the holder of the attached Warrant, hereby irrevocably
elects to [exercise the purchase right represented by that Warrant for, and to
purchase under that Warrant, ___________1 shares of Common Stock of and herewith
tenders any necessary payment of the purchase price in such number of shares in
full.] [to exercise [all][a portion] of the purchase right represented by that
Warrant by canceling the Warrant with respect to ___________ shares of Common
Stock of . in exchange for a number of shares of Common Stock equal to the value
[as determined pursuant to the Warrant] as the [portion of the] Warrant [being
canceled].
2. In exercising the Warrant, the undersigned hereby confirms and
acknowledges that the shares of Common Stock or other securities to be issued
upon exercise thereof are being acquired solely for the account of the
undersigned and not as a nominee for any other party, and that the undersigned
will not sell, offer for sale, pledge, hypothecate or otherwise dispose of any
shares of Common Stock, except under circumstances that will not result in a
violation of the Securities Act of 1933, as amended, or any applicable state
securities laws.
3. Please issue a certificate(s) representing said shares of Common Stock
in the name of the undersigned or in the name of the transferee specified below.
4. Please issue a new Warrant for the unexercised portion in the name of
the undersigned or in the name of the permitted transferee specified below.
5. Please deliver any certificate(s) or Warrant to the following address.
Name:___________________________
Address:________________________
Attention:______________________
Dated:
By: _______________________________
Name
--------
1 Insert here the number of shares called for on the face of the Warrant (or, in
the case of partial exercise, the portion as to which the Warrant is being
exercised), without making any adjustment for additional shares of Common Stock
or any other securities or property which, under the adjustment provisions of
the Warrant, may be deliverable upon exercise.
ASSIGNMENT FORM
FOR VALUE RECEIVED the undersigned registered owner of this Warrant
hereby sells, assigns and transfers unto the assignee named below all of the
rights of the undersigned under this Warrant, with respect to the number of
shares of Common Stock set forth below:
Name and Address of Assignee No. of Shares of
---------------------------- ----------------
Common Stock
------------
and does hereby irrevocably constitute and appoint _______________________
attorney-in-fact to register such transfer onto the books of ICG Communications,
Inc. maintained for the purpose, with full power of substitution in the
premises.
Date: Print Name:
Signature:
Witness:
NOTICE: The signature on this assignment must correspond with the name as
written upon the face of the within Warrant in every particular, without
alteration or enlargement or any change whatsoever.
EXHIBIT B
CERTIFICATE OF DESIGNATION
ICG COMMUNICATIONS, INC.
CERTIFICATE OF DESIGNATION OF THE POWERS,
PREFERENCES AND RELATIVE, PARTICIPATING, OPTIONAL
AND OTHER SPECIAL RIGHTS OF 8% SERIES A
CONVERTIBLE PREFERRED STOCK AND
QUALIFICATIONS, LIMITATIONS
AND RESTRICTIONS THEREOF
8% Series A Convertible
Preferred Stock due 2015
ICG COMMUNICATIONS, INC., a company organized and existing under the
General Corporation Law of the State of Delaware (the "Company"), certifies that
pursuant to the authority contained in its Certificate of Incorporation (the
"Certificate of Incorporation") and its By-laws (the "By-laws"), and in
accordance with Section 151 of the General Corporation Law of the State of
Delaware (the "DGCL"), the board of directors of the Company (the "Board of
Directors") at a meeting duly called and held on March __, 2000 duly approved
and adopted the following resolution, which resolution remains in full force and
effect on the date hereof:
RESOLVED, that pursuant to the authority vested in the Board of
Directors by the Certificate of Incorporation and By-laws, the Board of
Directors does hereby create, authorize and provide for the issue of a series of
the Company's preferred stock, par value $0.01 per share ("Preferred Stock"),
having the following designation, voting powers, preferences and relative,
participating, optional and other special rights:
Certain capitalized terms used herein are defined in Section 17.
1. Number and Designation.
The Company shall have a series of Preferred Stock, which shall be
designated as its 8% Series A Convertible Preferred Stock due 2015 (the "Series
A Preferred Stock"). The number of shares constituting the Series A Preferred
Stock shall be 750,000. Unless otherwise specified, references herein to any
"Section" refer to the Section number specified in this Certificate of
Designation.
2. Issuance.
The Company may issue up to 750,000 shares of Series A Preferred
Stock in accordance with the Purchase Agreement.
3. Registered Form; Liquidation Preference; Registrar.
Certificates for shares of Series A Preferred Stock shall be
issuable only in registered form. The initial liquidation preference per share
of Series A Preferred Stock shall be $1,000 per share plus accrued and unpaid
dividends. The Company shall serve as initial Registrar and Transfer Agent (the
"Registrar") for the Series A Preferred Stock.
1
4. Registration; Transfer.
Shares of the Series A Preferred Stock have not been registered
under the Securities Act of 1933, as amended (the "Securities Act"), and may not
be resold, pledged or otherwise transferred prior to the date when they may be
resold pursuant to Rule 144 under the Securities Act other than (i) to the
Company, (ii) pursuant to an exemption from registration under the Securities
Act or (iii) pursuant to an effective registration statement under the
Securities Act, in each case in accordance with any applicable securities laws
of any state of the United States. Until such time as it is no longer required
pursuant to the Securities Act, certificates evidencing the Series A Preferred
Stock shall contain a legend (the "Restricted Shares Legend") evidencing the
foregoing restrictions in substantially the form set forth on the form of Series
A Preferred Stock attached hereto as Exhibit A.
5. Paying Agent and Conversion Agent.
(a) The Company shall maintain (i) an office or agency where shares of
Series A Preferred Stock may be presented for payment (the "Paying Agent"), (ii)
an office or agency where shares of Series A Preferred Stock may be presented
for conversion (the "Conversion Agent"), and (iii) a Registrar, which shall be
an office or an agency where shares of Series A Preferred Stock may be presented
for transfer. The Company may appoint the Registrar, the Paying Agent and the
Conversion Agent and may appoint one or more additional paying agents and one or
more additional conversion agents in such other locations as it shall determine.
The term "Paying Agent" includes any additional paying agent, and the term
"Conversion Agent" includes any additional conversion agent. The Company may
change any Paying Agent or Conversion Agent without prior notice to any holder.
The Company shall notify the Registrar of the name and address of any Paying
Agent or Conversion Agent appointed by the Company. If the Company fails to
appoint or maintain another entity as Paying Agent or Conversion Agent, the
Registrar shall act as such. Notwithstanding the foregoing, the Company or any
of its Affiliates may act as Paying Agent, Registrar, coregistrar or Conversion
Agent.
(b) Neither the Company nor the Registrar shall be required (A) to
issue, countersign or register the transfer of or exchange any share of Series A
Preferred Stock during a period beginning at the opening of business 15 days
before any Redemption Date (as defined under Section 10(d)) and ending at the
close of business on such Redemption Date or (B) to register the transfer of or
exchange any share of Series A Preferred Stock so selected for redemption.
(c) If shares of Series A Preferred Stock are issued upon the transfer,
exchange or replacement of shares of Series A Preferred Stock bearing the
Restricted Shares Legend, or if a request is made to remove such Restricted
Shares Legend on shares of Series A Preferred Stock, the shares of Series A
Preferred Stock so issued shall bear the Restricted Shares Legend, or the
Restricted Shares Legend shall not be removed, as the case may be, unless the
holders of such shares shall request such Legend be removed, and outside counsel
for such holders reasonably determines that the transfer of such shares is no
longer restricted by the Securities Act and outside counsel for the Company
reasonably concurs in such determination.
2
(d) Each holder of a share of Series A Preferred Stock agrees to
indemnify the Company and the Registrar against any liability that directly
results from the transfer, exchange or assignment by such holder of such
holder's share of Series A Preferred Stock in violation of any provision of this
Certificate of Designation and/or applicable Federal or state securities law;
provided, however, that such indemnity shall not apply to acts of willful
misconduct or gross negligence on the part of the Company or the Registrar, as
the case may be.
(e) Payments due on the shares of Series A Preferred Stock shall be
payable at the office or agency of the Paying Agent maintained for such purpose
in The City of New York and at any other office or agency maintained by the
Paying Agent for such purpose. If any such payment is in cash, it shall be
payable in United States dollars by check drawn on, or wire transfer (provided
that appropriate wire instructions have been received by the Paying Agent at
least 15 days prior to the applicable date of payment) to a United States dollar
account maintained by the holder with, a bank located in New York City; provided
that at the option of the Company payment of dividends in cash may be made by
check mailed to the address of the person entitled thereto as such address shall
appear in the Series A Preferred Share Register; and provided further that any
payment to a holder in excess of $100,000 shall be made by wire transfer at the
request of such holder.
6. Dividend Rights.
(a) The holders of Series A Preferred Stock shall be entitled to
participating cumulative dividends, in preference to dividends on any Junior
Shares, which shall accrue as provided herein. Dividends on each share of Series
A Preferred Stock will accrue on a daily basis at the rate of 8.00% per annum of
the then effective Liquidation Preference of such share from and including the
Closing Date to the first to occur of (i) the date on which such share is
redeemed in accordance with Section 10, (ii) the date on which such share is
converted in accordance with Section 12 or (iii) the date the Company is
liquidated, dissolved or wound up in accordance with Section 9(c). Dividends
shall accrue as provided herein whether or not such dividends have been
declared, whether or not there are any unrestricted funds of the Company legally
available for the payment of dividends and whether or not such dividends are
then payable in cash as provided in Section 11. The Company will take all
actions required or permitted under the DGCL to permit the payment or accrual of
dividends on the Series A Preferred Stock. On each Dividend Payment Date,
commencing _____, 2000, to and including the _______, 2005 Dividend Payment
Date, accrued dividends on a share of the Series A Preferred Stock for the
preceding Dividend Period shall be added cumulatively to and thereafter remain a
part of the Liquidation Preference of such share. Thereafter, accrued dividends
shall be payable quarterly on each Dividend Payment Date, commencing on
___________, 2005, to the holders of record of the Series A Preferred Stock as
of the close of business on the applicable Dividend Record Date. Accrued
dividends that are not paid in full in cash on any such Dividend Payment Date
(whether or not declared and whether or not there are sufficient funds legally
available for the payment thereof) shall be added cumulatively to the
Liquidation Preference on the applicable Dividend Payment Date and thereafter
remain a part thereof. Accrued dividends added to the Liquidation Preference of
a share of Series A Preferred Stock in accordance with the foregoing provisions
of this Section 6(a) are sometimes referred to in this Certificate as
"Accumulated Dividends". For purposes of determining the amount of dividends
"accrued" (i) as of the first Dividend Payment Date and as of any date that is
not a Dividend Payment Date,
3
such amount shall be calculated on the basis of the rate per annum specified
above in this paragraph for the actual number of days elapsed from and including
the Closing Date (in case of the first Dividend Payment Date and any date prior
to the first Dividend Payment Date) or the last preceding Dividend Payment Date
(in case of any other date) to the date as of which such determination is to be
made, based on a 360-day year, and (ii) as of any Dividend Payment Date after
the first Dividend Payment Date, such amount shall be calculated on the basis of
such rate per annum based on a 360-day year of twelve 30-day months.
(b) If a Change of Control occurs prior to _________ __, 2005 (the time
and date such Change of Control occurs being the "Change of Control Date"), an
amount equal to the Special Dividend shall be added to the Liquidation
Preference of each share of the Series A Preferred Stock as of the Change of
Control Date and thereafter remain a part thereof. The Special Dividend shall be
added to the Liquidation Preference without regard to whether or not the Company
has made or intends to make a Change of Control Offer or Purchase Offer.
(c) In addition to all dividends provided for above, whenever the
Company shall declare or pay any dividend in cash on any Common Stock, the
holders of Series A Preferred Stock shall be entitled to receive such dividend
on an as converted basis. Dividends payable pursuant to this Section 6(c) shall
not reduce any dividends otherwise payable pursuant to Section 6(a) or 6(b).
7. Payment of Dividend; Mechanics of Payment; Dividend Rights Preserved.
(a) Subject to Sections 6 and 11, dividends on any share of Series A
Preferred Stock that are payable, and are punctually paid or duly provided for,
on any Dividend Payment Date shall be paid in cash to the person in whose name
such share of Series A Preferred Stock (or one or more predecessor shares of
Series A Preferred Stock) is registered at the close of business on the next
preceding _________ 15, _________ 15, _________ 15 and _________ 15 (each, a
"Dividend Record Date").
(b) Unless full cumulative dividends on all outstanding shares of
Series A Preferred Stock for all past Dividend Periods shall have been declared
and paid, or declared and a sufficient sum for the payment thereof set apart,
then:
(i) no dividend (other than (A) with respect to Junior Shares,
a dividend payable solely in Junior Shares, (B) with respect to Parity
Shares, a dividend payable solely in Junior Shares or Parity Shares or (C)
with respect to Parity Shares, a partial dividend paid pro rata on such
Parity Shares and the shares of Series A Preferred Stock) shall be
declared or paid upon, or any sum set apart for the payment of dividends
upon, any Junior Shares or Parity Shares, respectively;
(ii) no other distribution shall be declared or made upon, or
any sum set apart for the payment of any distribution upon, any Junior
Shares or Parity Shares;
(iii) no Junior Shares or Parity Shares or any warrants,
rights, calls or options (other than any cashless exercises of options or
buybacks of options or restricted stock from present or former employees,
directors or consultants) exercisable for or convertible into any Parity
Share or Junior Share shall be purchased, redeemed or
4
otherwise acquired (other than in exchange for other Junior Shares or
Parity Shares, respectively) by the Company or any of its subsidiaries;
(iv) no monies shall be paid into or set apart or made
available for a sinking or other like fund for the purchase, redemption or
other acquisition of any Junior Shares or Parity Shares or any warrants,
rights, calls or options exercisable for or convertible into any Parity
Shares or Junior Shares by the Company or any of its subsidiaries (other
than any cashless exercises of options or option buybacks); and
(v) other than in accordance with Section 13 or 14 of this
Certificate of Designation, no Series A Preferred Stock shall be
purchased, redeemed or otherwise acquired by the Company or any of its
subsidiaries and no monies shall be paid into, or set apart or made
available for a sinking or other like fund for any such purpose, unless
all outstanding shares of Series A Preferred Stock shall be purchased,
redeemed or otherwise acquired by the Company.
Except as provided in Sections 6, 12 or 13, holders of Series A
Preferred Stock will not be entitled to any dividends, whether payable in cash,
property or stock, in excess of the full cumulative dividends as herein
described.
(c) The Company will notify the Registrar and make a public
announcement no later than the close of business on the tenth Business Day prior
to the Record Date for each dividend as to whether it will pay such dividend.
(d) Subject to the foregoing provisions of this Section 7, each share
of Series A Preferred Stock delivered under this Certificate of Designation upon
registration of transfer of or in exchange for or in lieu of any other share of
Series A Preferred Stock shall carry the rights to dividends accumulated and
unpaid, and to accrue, that were carried by such other shares of Series A
Preferred Stock.
(e) The holder of record of a share of Series A Preferred Stock at the
close of business on a Dividend Record Date with respect to the payment of
dividends on the shares of Series A Preferred Stock will be entitled to receive
such dividends with respect to such share of Series A Preferred Stock on the
corresponding Dividend Payment Date, notwithstanding the conversion of such
share after such Dividend Record Date and prior to such Dividend Payment Date.
8. Voting Rights.
(a) The holders of record of shares of Series A Preferred Stock shall
not be entitled to any voting rights except as hereinafter provided in this
Section 8 or as otherwise provided by law.
(b) The holders of record of shares of Series A Preferred Stock shall
be entitled to vote on all matters that the holders of the Company's Common
Stock are entitled to vote upon.
(c) In addition to the voting rights set forth above, the approval of
the holders of at least the Applicable Percentage of the then Outstanding shares
of Series A Preferred Stock
5
voting or consenting, as the case may be, as a separate class, will be required
for the Company to:
(i) amend the Certificate of Incorporation, this Certificate
of Designation or the By-Laws so as to (A) affect adversely the rights,
preferences (including, without limitation, liquidation preferences,
conversion price, dividend rate and Optional Redemption provisions),
privileges or voting rights of holders of the shares of Series A Preferred
Stock, or (B) increase or decrease the number of authorized shares of
Series A Preferred Stock;
(ii) in a single transaction or series of related
transactions, consolidate or merge with or into, or sell, assign,
transfer, lease, convey or otherwise dispose of all or substantially all
of its assets to, any person or adopt a plan of liquidation or
dissolution;
(iii) enter into, or permit any of its subsidiaries to enter
into, any agreement or transaction that would impose material restrictions
on the Company's ability to honor the exercise of any rights of the
holders of the Series A Preferred Stock or on the ability of a holder of
shares of Series A Preferred Stock to exercise full rights of ownership
thereof;
(iv) other than as contemplated by Section 12(d)(vi) and
Section 12(d)(vii) or as otherwise required by instruments governing
securities of the Company in existence on the date of the Purchase
Agreement in accordance with their terms on such date, authorize, create,
modify the terms of, increase the authorized amount of or issue any shares
of any class or series of equity of the Company that would be deemed to be
Parity Shares or Senior Shares with respect to rights relating to (a)
payments of dividends or distributions, (b) rights to redemption, or (c)
distribution of assets upon liquidation, dissolution or winding-up; or
(v) commence or effect any tender or exchange offer for all or
any portion of the Common Stock or permit any subsidiary to do so.
As used in this Section 8(c), the "Applicable Percentage" shall mean
(A) in the case of clauses (i) and (iii), 75%; (B) in the case of clause (ii) in
the case of a transaction that constitutes a "Qualifying Transaction", a
majority, and in the case of a transaction that does not constitute a Qualifying
Transaction, 69%; (C) in the case of clause (iv) with respect to Senior Shares,
75%, and with respect to Parity Shares, 69%; and (D) in the case of clause (v),
a majority. As used herein, a "Qualifying Transaction" shall mean a transaction
in which the Company consolidates or merges with or into, or sells, assigns,
transfers, leases, conveys or otherwise disposes of all or substantially all of
its assets to, a person (i) if the Company is the surviving or continuing person
and the Series A Preferred Stock shall remain outstanding without any amendment
that would adversely affect the preferences, rights or powers of the Series A
Preferred Stock, or (ii) if the Company is not the surviving or continuing
person, (a) the entity formed by such consolidation or merger or to which such
sale, assignment, transfer, lease, conveyance or other disposition shall have
been made (in any such case, the "resulting entity") is a corporation or limited
liability company organized and existing under the laws of Bermuda, the United
States or any State thereof or the District of Columbia; and (b) the shares of
Series A Preferred Stock are converted into or exchanged for and become shares
of such resulting entity, having in respect of such resulting entity the same
(or more favorable) powers, preferences and relative, participating, optional or
other special rights that the shares of Series A
6
Preferred Stock had immediately prior to such transaction; and, in either case,
the Company shall have delivered to the Registrar an Officers' Certificate and
an opinion of counsel, reasonably satisfactory in form and content, each stating
that such consolidation, merger, conveyance or transfer complies with this
Section 8 and that all conditions precedent herein provided for relating to such
transaction have been complied with.
(d) (i) For so long as the members of the HMTF Group in the aggregate
own any combination of shares of Common Stock and Series A Preferred Stock
representing an amount of Common Stock (on an as-converted basis) that, taken
together, equals at least the amount of Common Stock that would then have been
issuable upon conversion of 50% or more of the shares of Series A Preferred
Stock issued to members of the HMTF Group on the Closing Date under the Purchase
Agreement (the "HMTF Issued Series A Preferred Shares"), the HMTF Holders,
voting as a single class by a plurality of the votes cast, shall be entitled to
elect, at any annual meeting of stockholders or special meeting held in place
thereof, or at a special meeting of the HMTF Holders called as hereinafter
provided, one director, or if greater, such number (rounded up to the next whole
number) equal to 10% of the then authorized number of members of the Company's
Board of Directors, to serve on the Board of Directors. At any time after voting
power to elect such director(s) shall have become vested and be continuing in
the HMTF Holders pursuant to this paragraph, or if a vacancy shall exist in the
office of a director elected by the HMTF Holders at a time when the HMTF Holders
are entitled to elect a director pursuant to this paragraph, a proper officer of
the Company may, and upon the written request of the holders of record of at
least twenty-five percent (25%) of the HMTF Issued Series A Preferred Shares
then outstanding held by the HMTF Holders addressed to the Secretary of the
Company shall, call a special meeting of the HMTF Holders for the sole purpose
of electing the director that such holders are entitled to elect. If such
meeting shall not be called by a proper officer of the Company within twenty
(20) days after personal service of said written request upon the Secretary of
the Company, or within twenty (20) days after mailing the same within the United
States by certified mail, addressed to the Secretary of the Company at its
principal executive offices, then the holders of at least twenty-five percent
(25%) of the HMTF Issued Series A Preferred Shares then outstanding held by the
HMTF Holders may designate in writing one of their number 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 meeting of stockholders of
the Company and shall be held at the place for holding the annual meetings of
stockholders. As used herein, (i) "HMTF Group" means Hicks, Muse, ▇▇▇▇ & ▇▇▇▇▇
Incorporated, a Texas corporation, and its Affiliates and their respective
officers, directors, partners, members, stockholders and employees (and members
of their respective families and trusts for the primary benefit of such family
members) and HM4 ICG Qualified Fund, LLC; HM4 ICG Private Fund, LLC; HM PG-IV
ICG, LLC; HM 4-SBS ICG Coinvestors, LLC; HM4-EQ ICG Coinvestors, LLC and HMTF
Bridge ICG, LLC; and their respective Affiliates, and (ii) "HMTF Holders" means
members of the HMTF Group that are holders of all or a portion of the HMTF
Issued Series A Preferred Shares or the Common Stock into which such HMTF Issued
Series A Preferred Shares are converted. The action permitted or required to be
taken by the HMTF Holders pursuant to this Section 8(d)(i) may be taken (1) at
any annual or special meeting of stockholders or at a special meeting of the
HMTF Holders, or (2) without a meeting, without
7
prior notice, and without a vote if a consent or consents in writing, setting
forth the action so taken, shall be signed by the HMTF Holders having not less
than the minimum number of votes that would be necessary to authorize or take
such action at a meeting at which all shares held by the HMTF Holders entitled
to vote thereon were present and voted and shall be delivered to the Company by
delivery to its address listed in Section 8.2 of the Purchase Agreement.
(ii) For so long as the members of the Liberty Group in the
aggregate own any combination of shares of Common Stock and Series A
Preferred Stock representing an amount of Common Stock (on an as-converted
basis) that, taken together, equals at least the amount of Common Stock
that would then have been issuable upon conversion of 15% of the shares of
Series A Preferred Stock issued to members of the Liberty Group on the
Closing Date under the Purchase Agreement (the "Liberty Issued Series A
Preferred Shares"), the Liberty Holders, voting as a single class by a
plurality of the votes cast or by written consent of a majority in
interest of the Liberty Holders, shall be entitled to elect one director,
or if greater, such number (rounded up to the next whole number) equal to
10% of the then authorized number of members of the Company's Board of
Directors, to serve on the Board of Directors, at any annual meeting of
stockholders or special meeting held in place thereof, or at a special
meeting of the Liberty Holders called as hereinafter provided. At any time
after voting power to elect such director(s) shall have become vested and
be continuing in the Liberty Holders pursuant to this paragraph, or if a
vacancy shall exist in the office of a director elected by the Liberty
Holders at a time when the Liberty Holders are entitled to elect a
director pursuant to this paragraph, a proper officer of the Company may,
and upon the written request of the holders of record of at least
twenty-five percent (25%) of the Liberty Issued Series A Preferred Shares
then outstanding held by the Liberty Holders addressed to the Secretary of
the Company shall, call a special meeting of the Liberty Holders for the
sole purpose of electing the director that such holders are entitled to
elect. If such meeting shall not be called by a proper officer of the
Company within twenty (20) days after personal service of said written
request upon the Secretary of the Company, or within twenty (20) days
after mailing the same within the United States by certified mail,
addressed to the Secretary of the Company at its principal executive
offices, then the holders of at least twenty-five percent (25%) of the
Liberty Issued Series A Preferred Shares then outstanding held by the
Liberty Holders may designate in writing one of their number 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 meeting
of stockholders of the Company and shall be held at the place for holding
the annual meetings of stockholders. As used herein, (i) "Liberty Group"
means Liberty and its Affiliates, (ii) "Liberty Holders" means members of
the Liberty Group that are holders of all or a portion of the Liberty
Issued Series A Preferred Shares or the Common Stock into which such
Liberty Issued Series A Preferred Shares are converted and (iii) "Liberty"
means Liberty Media Corporation, a Delaware corporation, provided that if
substantially all of the assets of Liberty Media Corporation are at any
time thereafter contributed to Liberty Media Group LLC, a Delaware limited
liability company, then from and after such contribution, Liberty shall
mean Liberty Media Group LLC. The action permitted or required to be taken
by the Liberty Holders pursuant to this Section 8(d)(ii) may be taken (1)
at any annual or special meeting of stockholders or at a special meeting
of the Liberty Holders, or (2) without a meeting, without prior notice,
and without a vote if a consent or consents in writing, setting forth
8
the action so taken, shall be signed by the Liberty Holders having not
less than the minimum number of votes that would be necessary to authorize
or take such action at a meeting at which all shares held by the Liberty
Holders entitled to vote thereon were present and voted and shall be
delivered to the Company by delivery to its address listed in Section 8.2
of the Purchase Agreement.
(iii) For so long as the members of the Liberty Group own any
combination of shares of Common Stock and Series A Preferred Shares
representing an amount of Common Stock (on an as-converted basis) that,
taken together, equals at least the amount of Common Stock that would have
been issuable upon conversion of 50% of the Liberty Issued Series A
Preferred Shares, the Liberty Holders, voting as a single class by
plurality of the votes cast or by written consent of a majority in
interest of the Liberty Holders, shall be entitled to elect one additional
director, or if greater, such number (rounded up to the next whole number)
of additional directors equal to 10% of the then authorized number of
members of the Company's Board of Directors, to serve on the Board of
Directors, at any annual meeting of stockholders or special meeting held
in place thereof, or at a special meeting of the Liberty Holders called as
hereinafter provided. At any time after voting power to elect such
director(s) shall have become vested and be continuing in the Liberty
Holders pursuant to this paragraph, or if a vacancy shall exist in the
office of a director elected by the Liberty Holders at a time when the
Liberty Holders are entitled to elect a director pursuant to this
paragraph, a proper officer of the Company may, and upon the written
request of the holders of record of at least twenty-five percent (25%) of
the Liberty Issued Series A Preferred Shares then outstanding held by the
Liberty Holders addressed to the Secretary of the Company shall, call a
special meeting of the Liberty Holders for the sole purpose of electing
the director that such holders are entitled to elect. If such meeting
shall not be called by a proper officer of the Company within twenty (20)
days after personal service of said written request upon the Secretary of
the Company, or within twenty (20) days after mailing the same within the
United States by certified mail, addressed to the Secretary of the Company
at its principal executive offices, then the holders of at least
twenty-five percent (25%) of the Liberty Issued Series A Preferred Shares
then outstanding held by the Liberty Holders may designate in writing one
of their number 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 meeting of stockholders of the Company and shall
be held at the place for holding the annual meetings of stockholders. The
action permitted or required to be taken by the Liberty Holders pursuant
to this Section 8(d)(iii) may be taken (1) at any annual or special
meeting of stockholders or at a special meeting of the Liberty Holders, or
(2) without a meeting, without prior notice, and without a vote if a
consent or consents in writing, setting forth the action so taken, shall
be signed by the Liberty Holders having not less than the minimum number
of votes that would be necessary to authorize or take such action at a
meeting at which all shares held by the Liberty Holders entitled to vote
thereon were present and voted and shall be delivered to the Company by
delivery to its address listed in Section 8.2 of the Purchase Agreement.
(e) In exercising the voting rights set forth in Section 8(b), each
share of Series A Preferred Stock shall be entitled to vote on an as-converted
basis with the holders of the Company's Common Stock. Except as set forth in the
preceding sentence and in Section 8(d),
9
each share of Series A Preferred Stock entitled to vote shall have one vote per
share, except that when any other series of preferred stock shall have the right
to vote with the Series A Preferred Stock as a single class on any matter not
specified in this Section 8, then the Series A Preferred Stock and such other
series of preferred stock shall have with respect to such matters one vote per
$1,000 of the aggregate liquidation preference of all shares of Series A
Preferred Stock and all shares of such other series of preferred stock. Except
as otherwise required by applicable law or as set forth herein, the shares of
Series A Preferred Stock shall not have any relative, participating, optional or
other special voting rights and powers and the consent of the holders thereof
shall not be required for the taking of any corporate action.
9. Ranking; Liquidation.
(a) The shares of Series A Preferred Stock will, with respect to
dividend rights and rights on liquidation, winding-up and dissolution, rank (i)
senior to all shares of Common Stock (whether issued in one or more classes) and
to each other class of capital stock or series of Preferred Stock of the Company
(other than the Preferred Stock Mandatorily Redeemable 2009 of the Company) the
terms of which do not expressly provide that it ranks senior to or on a parity
with the shares of Series A Preferred Stock as to dividend rights and rights on
liquidation, winding-up and dissolution of the Company (collectively referred
to, together with all shares of Common Stock (whether issued in one or more
classes) of the Company, as "Junior Shares"); (ii) on a parity with the
Preferred Stock Mandatorily Redeemable 2009 of the Company and with each other
class of capital stock or series of Preferred Stock of the Company issued by the
Company in compliance with Section 8, the terms of which expressly provide that
such class or series will rank on a parity with the shares of Series A Preferred
Stock as to dividend rights and rights on liquidation, winding-up and
dissolution of the Company (collectively referred to as "Parity Shares"); and
(iii) junior to each class of capital stock or series of Preferred Stock of the
Company issued by the Company in compliance with Section 8, the terms of which
expressly provide that such class or series will rank senior to the shares of
Series A Preferred Stock as to dividend rights and rights upon liquidation,
winding-up and dissolution of the Company (collectively referred to as "Senior
Shares").
(b) No dividend whatsoever shall be declared or paid upon, or any sum
set apart for the payment of dividends upon, any outstanding shares of Series A
Preferred Stock with respect to any dividend period unless all dividends for all
preceding dividend periods have been declared and paid, or declared and a
sufficient sum set apart for the payment of such dividends, upon all outstanding
Senior Shares.
(c) In the event of any liquidation, dissolution or winding-up of the
Company, whether voluntary or involuntary, the holders of the shares of Series A
Preferred Stock then Outstanding shall be entitled to receive, prior and in
preference to any distribution of any of the assets of the Company to the
holders of shares of Common Stock or Junior Shares by reason of their ownership
thereof, an amount equal to the greater of (i) the then effective Liquidation
Preference of their shares of Series A Preferred Stock, plus an amount equal to
all dividends accrued and unpaid thereon from the last Dividend Payment Date to
the date fixed for liquidation, dissolution or winding-up or (ii) the amount
such holders would receive if such holders converted their shares of Series A
Preferred Stock into Common Stock immediately prior to such liquidation,
dissolution or winding up. If upon the occurrence of such event the assets of
the Company shall be insufficient to permit the payment to such holders of the
full preferential amount and all liquidating payments on all Parity Securities,
the entire assets of
10
the Company legally available for distribution shall be distributed among the
holders of the shares of Series A Preferred Stock and the holders of all Parity
Shares ratably in accordance with the respective amounts that would be payable
on such shares of Series A Preferred Stock and any such Parity Securities if all
amounts payable thereon were paid in full. After payment of the full
preferential amount (and, if applicable, an amount equal to a pro rata dividend
to the holders of Outstanding shares of Series A Preferred Stock), such holders
shall not be entitled to any additional distribution of assets of the Company.
10. Redemption.
(a) The shares of Series A Preferred Stock may be redeemed by the
Company at any time commencing on or after __________ __, 2005, in whole or from
time to time in part, at the election of the Company (an "Optional Redemption"),
at a redemption price (the "Redemption Price") payable in cash equal to 100% of
the then effective Liquidation Preference (after giving effect to the Special
Dividend, if applicable), plus accrued and unpaid dividends thereon from the
last Dividend Payment Date to the date of redemption (the "Optional Redemption
Date").
(b) Shares of Series A Preferred Stock (if not earlier redeemed or
converted) shall be mandatorily redeemed by the Company on __________ __, 2015
(the "Mandatory Redemption Date"); provided, however, that if such date is not a
Business Day, then the Mandatory Redemption Date shall be the next Business Day,
at a Redemption Price per share in cash equal to the then effective Liquidation
Preference (after giving effect to the Special Dividend, if applicable), plus
accrued and unpaid dividends thereon from the last Dividend Payment Date to the
Mandatory Redemption Date.
(c) In the event of a redemption of fewer than all the shares of Series
A Preferred Stock, the shares of Series A Preferred Stock will be chosen for
redemption by the Registrar from the Outstanding shares of Series A Preferred
Stock not previously called for redemption, pro rata or by lot or by such other
method as the Registrar shall deem fair and appropriate; provided, that the
Company may redeem (an "Odd-lot Redemption") all shares held by holders of fewer
than 100 shares of Series A Preferred Stock (or by holders that would hold fewer
than 100 shares of Series A Preferred Stock following such redemption) prior to
its redemption of other shares of Series A Preferred Stock; provided, further,
that the Company may not redeem a portion of any share without redeeming the
entire share. Notwithstanding the foregoing, the Company may not effect an
Odd-lot Redemption with respect to any shares of Series A Preferred Stock held
by the members of the Liberty Group or the HMTF Group. If fewer than all the
shares of Series A Preferred Stock represented by any share certificate are so
to be redeemed, (i) the Company shall issue a new certificate for the shares not
redeemed and (ii) if any shares represented thereby are converted before
termination of the conversion right with respect to such shares, such converted
shares shall be deemed (so far as may be) to be the shares represented by such
share certificate that was selected for redemption. Shares of Series A Preferred
Stock that have been converted during a selection of shares of Series A
Preferred Stock to be redeemed shall be treated by the Registrar as outstanding
for the purpose of such selection but not for the purpose of the payment of the
Redemption Price.
11
(d) In the event the Company elects to effect an Optional Redemption,
the Company shall (i) make a public announcement of the redemption and (ii) give
a redemption notice (the "Redemption Notice") to the holders not fewer than 30
days nor more than 60 days before the redemption date (the "Redemption Date").
Whenever a Redemption Notice is required to be delivered to the holders, such
notice shall provide the information set forth below and be given by first class
mail, postage prepaid to each holder of shares of Series A Preferred Stock to be
redeemed, at such holder's address appearing in the Series A Preferred Share
Register. All Redemption Notices shall identify the shares of Series A Preferred
Stock to be redeemed (including CUSIP number) and shall state:
(i) the Redemption Date;
(ii) the applicable Redemption Price;
(iii) if fewer than all the outstanding shares of Series A
Preferred Stock are to be redeemed, the identification (and, in the case
of partial redemption, the certificate number, the total number of shares
represented thereby and the number of such shares being redeemed on the
Redemption Date) of the particular shares of Series A Preferred Stock to
be redeemed;
(iv) that on the Redemption Date the Redemption Price,
together with all accrued and unpaid dividends from the last Dividend
Payment Date to the Redemption Date, will become due and payable upon each
such share of Series A Preferred Stock to be redeemed and that dividends
thereon will cease to accrue on and after said date;
(v) the conversion price, the date on which the right to
convert shares of Series A Preferred Stock to be redeemed will terminate
and the place or places where such shares of Series A Preferred Stock may
be surrendered for conversion; and
(vi) the place or places where such shares of Series A
Preferred Stock are to be surrendered for payment of the Redemption Price
and the other amounts which are then payable.
The Redemption Notice shall be given by the Company or, at the
Company's request, by the Registrar in the name and at the expense of the
Company; provided that if the Company so requests, it shall provide the
Registrar adequate time, as reasonably determined by the Registrar, to deliver
such notices in a timely fashion.
(e) Prior to any Redemption Date, the Company shall deposit with the
Registrar or with a Paying Agent (or, if the Company is acting as its own Paying
Agent, segregate and hold in trust) an amount of consideration sufficient to pay
the Redemption Price of all the shares of Series A Preferred Stock that are to
be redeemed on that date plus all accrued and unpaid dividends thereon from the
last Dividend Payment Date to the Redemption Date. If any share of Series A
Preferred Stock called for redemption is converted, any consideration deposited
with the Registrar or with any Paying Agent or so segregated and held in trust
for the redemption of such share of Series A Preferred Stock shall be paid or
delivered to the Company upon Company Order or, if then held by the Company,
shall be discharged from such trust.
12
(f) Notice of redemption having been given as aforesaid, the shares of
Series A Preferred Stock so to be redeemed shall, on the Redemption Date, become
due and payable at the Redemption Price therein specified plus all accrued and
unpaid dividends thereon from the last Dividend Payment Date to the Redemption
Date, and from and after such date (unless the Company shall default in the
payment of the Redemption Price and accrued but unpaid dividends) dividends on
such shares of Series A Preferred Stock shall cease to accrue and such shares
shall cease to be convertible into shares of Common Stock. Upon surrender of any
such shares of Series A Preferred Stock for redemption in accordance with said
notice, such shares of Series A Preferred Stock shall be redeemed by the Company
at the applicable Redemption Price, together with all accrued and unpaid
dividends thereon from the last Dividend Payment Date to the Redemption Date. If
any share of Series A Preferred Stock called for redemption shall not be so paid
upon surrender thereof for redemption, the Redemption Price thereof, and all
accrued and unpaid dividends thereon from the last Dividend Payment Date to the
Redemption Date, shall, until paid, bear interest from the Redemption Date at
the dividend rate payable on the shares of Series A Preferred Stock and such
shares shall remain convertible.
(g) Any certificate that represents more than one share of Series A
Preferred Stock and is to be redeemed only in part shall be surrendered at any
office or agency of the Company designated for that purpose (with, if the
Company or the Registrar so requires, due endorsement by, or a written
instrument of transfer in form satisfactory to the Company and the Registrar
duly executed by, the holder thereof or his attorney duly authorized in
writing), and the Company shall execute, and the Registrar shall countersign and
deliver to the holder of such share of Series A Preferred Stock without service
charge, a new Series A Preferred Stock certificate or certificates, representing
any number of shares of Series A Preferred Stock as requested by such holder, in
aggregate amount equal to and in exchange for the number of shares not redeemed
and represented by the Series A Preferred Stock certificate so surrendered.
(h) If a share of Series A Preferred Stock is redeemed subsequent to a
Dividend Record Date with respect to any Dividend Payment Date and on or prior
to such Dividend Payment Date, then the accrued dividends payable on such
Dividend Payment Date will be paid to the person in whose name such share of
Series A Preferred Stock is registered at the close of business on such Dividend
Record Date.
11. Method of Payments.
The Company may make any dividend payments in cash with respect to
any dividend period beginning after __________, 2005. Any dividends not paid in
cash on a current basis on the applicable Dividend Payment Date with respect to
all periods after __________, 2005, and all dividends with respect to periods
prior to __________, 2005, shall not be paid in cash but rather shall constitute
Accumulated Dividends. No payment may be made in respect of Accumulated
Dividends as dividends. Rather, Accumulated Dividends shall be added to the
Liquidation Preference. Dividends may not be paid by delivery of shares of
Series A Preferred Stock.
12. Conversion.
13
(a) Subject to and upon compliance with the provisions of this
Certificate of Designation, at the option of the holder thereof, any share of
Series A Preferred Stock may be converted at any time into a number of fully
paid and nonassessable shares of Common Stock (calculated as to each conversion
to the nearest 1/100 of a share) equal to (i) the then effective Liquidation
Preference thereof plus accrued and unpaid dividends to the date of conversion
divided by (ii) the Conversion Price in effect at the time of conversion. Such
conversion right shall expire at the close of business on the Business Day next
preceding the Mandatory Redemption Date. In case a share of Series A Preferred
Stock is called for redemption, such conversion right in respect of the share so
called shall expire at the close of business on the Business Day next preceding
the Redemption Date, unless the Company defaults in making the payment due upon
redemption.
The Conversion Price shall initially be $28.00 per share of Common
Stock. The Conversion Price shall be adjusted in certain instances as provided
in Section 12(d) and Section 12(e).
(b) In order to exercise the conversion privilege, the holder of any
share of Series A Preferred Stock to be converted shall surrender the
certificate for such share, duly endorsed or assigned to the Company or in
blank, at any office or agency of the Company maintained for that purpose,
accompanied by written notice to the Company at such office or agency that the
holder elects to convert such share or, if fewer than all the shares of Series A
Preferred Stock represented by a single share certificate are to be converted,
the number of shares represented thereby to be converted.
Shares of Series A Preferred Stock shall be deemed to have been
converted immediately prior to the close of business on the day of surrender of
such shares for conversion in accordance with the foregoing provisions, and at
such time the rights of the holders of such shares as holders shall cease, and
the person or persons entitled to receive the shares of Common Stock issuable
upon conversion shall be treated for all purposes as the record holder or
holders of such shares of Common Stock at such time. As promptly as practicable
on or after the conversion date, the Company shall issue and shall deliver at
such office or agency a certificate or certificates for the number of full
shares of Common Stock issuable upon conversion.
In the case of any conversion of fewer than all the shares of Series
A Preferred Stock evidenced by a certificate, upon such conversion the Company
shall execute and the Registrar shall countersign and deliver to the holder
thereof, at the expense of the Company, a new certificate or certificates
representing the number of unconverted shares of Series A Preferred Stock.
(c) No fractional shares of Common Stock shall be issued upon the
conversion of a share of Series A Preferred Stock. If more than one share of
Series A 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 number
of shares of Series A Preferred Stock so surrendered. Instead of any fractional
shares of Common Stock which would otherwise be issuable upon conversion of any
share of Series A Preferred Stock, the Company shall round down to the nearest
whole share if such fraction is an amount less than 0.5 and round up to the
nearest whole share if such fraction is an
14
amount equal to or greater than 0.5 and shall issue the appropriate number of
full shares of Common Stock which shall be issuable upon conversion in
accordance with the foregoing.
(d) The Conversion Price shall be adjusted from time to time by the
Company as follows:
(i) If the Company shall hereafter pay a dividend or make a
distribution to all holders of the outstanding shares of Common Stock in
shares of Common Stock, 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 business on the Common Stock Record Date (as defined in Section
12(d)(vi)) fixed for such determination and the denominator shall be the
sum of such number of 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 Common
Stock Record Date. If any dividend or distribution of the type described
in this Section 12(d)(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.
(ii) (a) In case the Company shall issue or sell any Common
Stock, or securities convertible into or exercisable or exchangeable for
shares of Common Stock (other than pursuant to employee stock options or
pursuant to other rights and warrants outstanding on the date hereof), for
a consideration per share (or, in the case of convertible or exchangeable
securities having a conversion or exchange price per share of Common
Stock) less than the Current Market Price of the Common Stock on the date
of such issuance the Conversion Price in effect immediately prior to such
issuance or sale shall be reduced effective as of immediately following
such issuance or sale by multiplying such Conversion Price by a fraction,
(1) the numerator of which shall be the sum of (x) the number of shares of
Common Stock outstanding immediately prior to such issuance or sale and
(y) the number of shares of Common Stock which the aggregate consideration
receivable by the Company for the total number of additional shares of
Common Stock so issued or sold (or issuable on conversion, exercise or
exchange) would purchase at the Current Market Price in effect immediately
prior to such issuance or sale and (2) the denominator of which shall be
the sum of the number of shares of Common Stock outstanding immediately
prior to such issuance or sale and the number of additional shares of
Common Stock to be issued or sold (or, in the case of convertible or
exchangeable securities, issuable on conversion, exercise or exchange);
(b) If the Company shall offer or issue rights or warrants to all holders
of its outstanding shares of Common Stock entitling them to subscribe for
or purchase shares of Common Stock at a price per share less than the
Current Market Price (as defined in Section 12(d)(viii)) on the Common
Stock 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 Common Stock Record Date by a fraction of which the numerator shall
be the number of shares of Common Stock outstanding at the
15
close of business on the Common Stock 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 Common Stock 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 Common
Stock 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 shares of 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
(x) any consideration received for such rights or warrants, with the value
of such consideration and the amount of such exercise or subscription
price, if other than cash, to be determined by the Board of Directors and
(y) the amount of any exercise price or subscription price required to be
paid upon exercise of such warrants or rights.
(iii) 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, 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.
(iv) If the Company shall, by dividend or otherwise,
distribute to all holders of its shares of Common Stock any class of
capital stock of the Company (other than any dividends or distributions to
which Section 12(d)(i) applies) or evidences of its indebtedness, cash or
other assets (including securities, but excluding any rights or warrants
of a type referred to in Section 12(d)(ii)(b) and Spinoff Securities and
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 Section 12(e) applies) (the foregoing
hereinafter in this Section 12(d)(iv) 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 Common Stock Record Date (as defined
16
in Section 12(d)(viii) with respect to such distribution by a fraction of
which the numerator shall be the Current Market Price (determined as
provided in Section 12(d)(viii)) on such date less the fair market value
(as determined by the Board of Directors, whose good faith 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
Common Stock 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 Common Stock Record
Date, in lieu of the foregoing adjustment, adequate provision shall be
made so that each holder of shares of Series A Preferred Stock shall have
the right to receive upon conversion of a share of Series A Preferred
Stock(or any portion thereof) the amount of Distributed Securities such
holder would have received had such holder converted such share of Series
A Preferred Stock(or portion thereof) immediately prior to such Common
Stock 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 Section 12(d)(iv) by
reference to the actual or when issued trading market for any securities
constituting 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 Section 12(d)(vi) to the extent
possible.
Rights or warrants distributed by the Company to all holders of
shares 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"): (A) are deemed to be
transferred with such shares of Common Stock; (B) are not exercisable; and (C)
are also issued in respect of future issuances of shares of Common Stock, shall
be deemed not to have been distributed for purposes of this Section 12(d)(iv)
(and no adjustment to the Conversion Price under this Section 12(d)(iv) shall be
required) until the occurrence of the earliest Dilution Trigger Event, whereupon
such rights or warrants shall be deemed to have been distributed and an
appropriate adjustment to the Conversion Price under this Section 12(d)(iv)
shall be made. If any such rights or warrants, including any such existing
rights or warrants distributed prior to the first issuance of shares of Series A
Preferred Stock, are subject to subsequent events, upon the occurrence of each
of which such rights or warrants shall become exercisable to purchase
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 Section 12(d)(iv) 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
17
Dilution Trigger Event, as the case may be, as though it were a cash
distribution to which this Section 12(d)(iv) were applicable, equal to the per
share redemption or repurchase price received by a holder or holders of shares
of Common Stock with respect to such rights or warrants (assuming such holder
had retained such rights or warrants), made to all holders of shares 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 Section 12(d)(iv) to the
contrary, 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 Section 12(d)(iv) if the Company makes proper provision so that
each holder of shares of Series A Preferred Stock on the date fixed for
determination of shareholders entitled to receive such distribution shall
receive upon such distribution, 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 Series A Preferred
Stock into a share of Common Stock.
For purposes of this Section 12(d)(iv) and Sections 12(d)(i) and
(ii), any dividend or distribution to which this Section 12(d)(iv) is applicable
that also includes shares of Common Stock, or rights or warrants to subscribe
for or purchase shares of Common Stock to which Section 12(d)(ii) applies (or
both), shall be deemed instead to be (A) a dividend or distribution of the
evidences of indebtedness, assets, shares of capital stock, rights or warrants
other than such shares of Common Stock or rights or warrants to which Section
12(d)(ii) applies (and any Conversion Price reduction required by this Section
12(d)(iv) with respect to such dividend or distribution shall then be made)
immediately followed by (B) a dividend or distribution of such shares of Common
Stock or such rights or warrants (and any further Conversion Price reduction
required by Sections 12(d)(i) or 12(d)(ii) with respect to such dividend or
distribution shall then be made), except that (1) the Common Stock Record Date
of such dividend or distribution shall be substituted as "the date fixed for the
determination of stockholders entitled to receive such dividend or other
distribution", "the Common Stock Record Date fixed for such determination" and
"the Common Stock Record Date" within the meaning of Section 12(d)(i) and as
"the date fixed for the determination of shareholders entitled to receive such
rights or warrants", "the Common Stock Record Date fixed for the determination
of the share holders entitled to receive such rights or warrants" and "such
Common Stock Record Date" for purposes of Section 12(d)(ii), and (2) any shares
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"
for the purposes of Section 12(d)(i).
(v) If a tender offer made by the Company or any of its
subsidiaries for all or any portion of the Common Stock expires and such
tender offer (as amended upon the expiration thereof) requires the payment
to shareholders (based on the acceptance (up to any maximum specified in
the terms of the tender offer) of Purchased Shares) of an aggregate
consideration having a fair market value (as determined by the Board of
Directors, whose good
18
faith determination shall be conclusive and described in a resolution of
the Board of Directors) that, combined together with the aggregate of the
cash plus the fair market value (as determined by the Board of Directors,
whose good faith 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
shares of Common Stock expiring within the 12 months preceding the
expiration of such tender offer and in respect of which no adjustment
pursuant to this Section 12(d)(v) has been made, exceeds 5% of the net
income of the Company reported for the 12 month period ending with the
fiscal quarter next preceding such payment (the "12 Month Net Income")
(determined as of the last time (the "Expiration Time") tenders could have
been made pursuant to such tender offer (as it may be amended)), 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 a share of 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 shares of 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 Section 12(d)(v) to any
tender offer would result in an increase in the Conversion Price, no
adjustment shall be made for such tender offer under this Section
12(d)(v).
(vi) If the Company effects a Spinoff, the Company shall make
appropriate provision so that the holders of Series A Preferred Stock have
the right to exchange their shares of Series A Preferred Stock on the
effective date of the Spinoff for (a) shares of Exchange Preferred Stock
of the Company and (b) shares of Mirror Preferred Stock of the issuer of
the Spinoff Securities. The sum of the initial liquidation preference of
the shares of Exchange Preferred Stock and Mirror Preferred Stock
delivered in exchange for a share of Series A Preferred Stock will equal
the Liquidation Preference of, plus accrued and unpaid dividends on, a
share of Series A Preferred Stock on the effective date of the Spinoff.
The Mirror Preferred Stock will have an aggregate initial liquidation
preference equal to the product of the aggregate Liquidation Preference
of, plus accrued and unpaid dividends on, the shares of Series A Preferred
Stock exchanged therefor and the quotient of (x) the product of the number
(or fraction) of Spinoff Securities that would have been receivable upon
such Spinoff by a holder of the number of shares of Common Stock issuable
upon conversion of a share of Series A Preferred Stock immediately prior
to the
19
record date for the Spinoff and the average of the daily Closing Prices of
the Spinoff Securities for the period of ten consecutive trading days
commencing on the tenth trading day following the effective date of the
Spinoff, divided by (y) the sum of the amount determined pursuant to
clause (x), plus the fair value of the shares of Common Stock and other
securities or property (other than Spinoff Securities) that would have
been receivable by a holder of a share of Series A Preferred Stock upon
conversion thereof immediately prior to the record date for the Spinoff
(such fair value to be determined in the case of Common Stock or other
securities with a Closing Price in the same manner as provided in clause
(x) and otherwise by the Board of Directors in the exercise of its
judgment). The shares of Exchange Preferred Stock will have an aggregate
initial liquidation preference equal to the difference between the
aggregate Liquidation Preference of plus accrued and unpaid dividends on
the shares of Series A Preferred Stock exchanged therefor and the
aggregate initial liquidation preference of the Mirror Preferred Stock.
From and after the effective date of such Spinoff, the holders of any
shares of Series A Preferred Stock that have not been exchanged for Mirror
Preferred Stock and Exchange Preferred Stock as provided above shall have
no conversion rights under these provisions with respect to such Spinoff
Securities.
(vii) If the Company or a subsidiary of the Company (the
applicable of the foregoing being the "Offeror") makes an Exchange Offer,
the Offeror shall concurrently therewith make an equivalent offer to the
holders of Series A Preferred Stock pursuant to which such holders may
tender Series A Preferred Stock, based upon the number of shares of Common
Stock into which such tendered shares of Series A Preferred Stock are then
convertible (and in lieu of tendering outstanding shares of Common Stock),
together with any other consideration that may be required to be tendered
pursuant to the Exchange Offer, and receive in exchange therefor, in lieu
of Exchange Securities (and other property, if applicable), Mirror
Preferred Stock with an aggregate liquidation preference equal to the
aggregate Liquidation Preference of plus accrued and unpaid dividends on
the shares of Series A Preferred Stock exchanged therefor. Whether or not
a holder of Series A Preferred Stock elects to accept the offer and tender
Series A Preferred Stock, no adjustment to the Conversion Price will be
made in connection with the Exchange Offer. If an Exchange Offer is made
as discussed above, the Offeror shall, concurrently with the distribution
of the offering circular or prospectus and related documents to holders of
Common Stock, provide each holder of Series A Preferred Stock with a
notice setting forth the offer described herein and describing the
Exchange Offer, the Exchange Securities and the Mirror Preferred Stock.
Such notice shall be accompanied by the offering circular, prospectus or
similar document provided to holders of Common Stock in respect of the
Exchange Offer and a copy of the certificate of designations (or similar
document) proposed to be filed by the Offeror in order to establish the
Mirror Preferred Stock. No failure to mail the notice contemplated herein
or any defect therein or in the mailing thereof shall affect the validity
of the applicable Exchange Offer.
(viii) For purposes of this Section 12(d), the following terms
shall have the meaning indicated:
20
"Closing Price" with respect to any securities on any day means the
closing sale price as of 4:00 p.m. Eastern Time on such day or any earlier final
closing on such day or, if no such sale takes place on such day, the average of
the reported high and low bid prices on such day, in each case on the Nasdaq
National Market, or the New York Stock Exchange, as applicable, or, if such
security is not listed or admitted to trading on such national market or
exchange, on the national stock exchange or Commission recognized trading market
in the United States 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
stock exchange or Commission recognized trading market in the United States, the
average of the high and low bid 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 in the United
States, 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.
"Common Stock Record Date" means, 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).
"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 Section 12(d)(i), (ii), (iii), (iv), (v) or (vi) 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 Section 12(d)(i),
(ii), (iii), (iv),(v) or (vi) 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
good faith determination of such value for purposes of Section 12(d)(iv), whose
good faith determination shall be conclusive and described in a resolution of
the Board of Directors) of the evidences of indebtedness, shares of capital
stock or assets being distributed applicable to one share of Common Stock as of
the close of business on the day before such "ex" date. For purposes of any
computation under Section 12(d)(v), the Current Market Price on any date shall
be deemed to be the average of the daily
21
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 Section 12(d)(i), (ii), (iii),
(iv), (v) or (vi) 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
(1) when used with respect to any issuance or distribution, means the first date
on which the shares of Common Stock trade 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, (2) when used with respect to
any subdivision or combination of shares of Common Stock, means the first date
on which the shares of Common Stock trade regular way on such exchange or in
such market after the time at which such subdivision or combination becomes
effective and (3) when used with respect to any tender or exchange offer means
the first date on which the shares of Common Stock trade 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 Section 12(d), such adjustments shall be
made to the Current Market Price as may be necessary or appropriate to
effectuate the intent of this Section 12(d) and to avoid unjust or inequitable
results, as determined in good faith by the Board of Directors.
"Exchange Offer" means an issuer tender offer (within the meaning of
Rule 13e-4(a)(2) of the rules and regulations promulgated by the Securities and
Exchange Commission under the Securities Exchange Act of 1934, as amended, as
such Rule is in effect on the date hereof), including, without limitation, one
that is effected through the distribution of rights or warrants, made to holders
of Common Stock (or to holders of other stock of the Company receivable by a
holder of Series A Preferred Stock upon conversion thereof), to issue stock of
the Company or of a subsidiary of the Company and/or other property to a
tendering stockholder in exchange for shares of Common Stock (or such other
stock) validly tendered pursuant to such issuer tender offer.
"Exchange Preferred Stock" means a series of convertible preferred
stock of the Company, having terms, conditions, designations, dividend rights,
voting powers, rights on liquidation and other preferences and relative,
participating, optional or other special rights, and qualifications, limitations
or restrictions thereof that are identical, or as nearly so as is practicable in
the judgment of the Company's Board of Directors, to those of the Series A
Preferred Stock for which such Exchange Preferred Stock is exchanged, except
that (a) the liquidation preference will be determined as provided in Section
12(d)(vi), (b) the running of any time periods pursuant to the terms of the
Series A Preferred Stock shall be tacked to the corresponding time periods in
the Exchange Preferred Stock and (c) the Exchange Preferred Stock will not be
convertible into, and the holders will have no conversion rights thereunder with
respect to the Spinoff Securities.
"Exchange Securities" means stock of the Company or of a subsidiary
of the Company that is issued in exchange for shares of Common Stock (or other
stock of the Company receivable by a holder of Series A Preferred Stock upon
conversion thereof) pursuant to an Exchange Offer.
22
"Fair Market Value" means the amount which a willing buyer would pay
a willing seller in an arm's-length transaction.
"Mirror Preferred Stock" means convertible preferred stock issued by
(a) in the case of a Spinoff, the issuer of the applicable Spinoff Securities,
and (b) in the case of an Exchange Offer, the issuer of the applicable Exchange
Securities, and having terms, conditions, designations, dividend rights, voting
powers, rights on liquidation and other preferences and relative, participating,
optional or other special rights, and qualifications, limitations or
restrictions thereof that are identical, or as nearly so as practicable in the
judgment of the Company's Board of Directors, to those of the Series A Preferred
Stock for which such Mirror Preferred Stock is exchanged, except that (i) the
liquidation preference will be determined as provided in Sections 12(d)(vi) or
12(d)(vii), as applicable, (ii) the running of any time periods pursuant to the
terms of the Series A Preferred Stock shall be tacked to the corresponding time
periods in the Mirror Preferred Stock, and (iii) the Mirror Preferred Stock
shall be convertible into the kind and amount of Spinoff Securities or Exchange
Securities, as applicable, and other securities and property that the holder of
Series A Preferred Stock in respect of which such Mirror Preferred Stock is
issued pursuant to the terms hereof would have received (x) in the case of a
Spinoff, in such Spinoff had such Series A Preferred Stock been converted
immediately prior to the record date for such Spinoff and (y) in the case of an
Exchange Offer, upon consummation thereof had such Series A Preferred Stock that
such holder elects to tender been converted and the shares of Common Stock
received upon such conversion been tendered in full pursuant to such Exchange
Offer prior to the expiration thereof and the same percentage of such tendered
shares had been accepted for exchange as the percentage of validly tendered
shares of Common Stock were accepted for exchange pursuant to such Exchange
Offer, as the case may be.
"Spinoff" means the distribution in a transaction that is generally
not taxable to the recipients under the Internal Revenue Code of 1986 (as
amended or any equivalent successor statute) of stock of a subsidiary of the
Company as a dividend to all holders of Common Stock.
"Spinoff Securities" means stock of a subsidiary of the Company that
is distributed to holders of Common Stock in a Spinoff.
(ix) 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 Section 12(d)(ix) are not required to be made shall be carried
forward and taken into account in any subsequent adjustment. All
calculations under this Section 12 shall be made by the Company and shall
be made to the nearest cent. No adjustment need be made for a change in
the par value or no par value of the Common Stock.
(x) Whenever the Conversion Price is adjusted as herein
provided, the Company shall promptly file with the Registrar an Officer's
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
23
mail such notice of such adjustment of the Conversion Price to each holder
of shares of Series A 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.
(xi) In any case in which this Section 12(d) provides that an
adjustment shall become effective immediately after a Common Stock Record
Date for an event, the Company may defer until the occurrence of such
event issuing to the holder of any share of Series A Preferred Stock
converted after such Common Stock Record Date and before the occurrence of
such event the additional shares of Common Stock issuable upon such
conversion by reason of the adjustment required by such event over and
above the shares of Common Stock issuable upon such conversion before
giving effect to such adjustment.
(xii) For purposes of this Section 12(d), the number of shares
of Common Stock at any time outstanding shall not include shares held in
the treasury of the Company or by any of its Subsidiaries. The Company
shall not pay any dividend or make any distribution on shares of Common
Stock held in the treasury of the Company or by any of its Subsidiaries.
(xiii)In the event that a holder of Series A Preferred Stock
would be entitled to receive upon conversion thereof any Redeemable
Capital Stock and the Company redeems, exchanges or otherwise acquires all
of the outstanding shares or other units of such Redeemable Capital Stock
(such event being a "Redemption Event"), then, from and after the
effective date of such Redemption Event, the holders of shares of Series A
Preferred Stock then outstanding shall be entitled to receive upon
conversion of such shares, in lieu of shares or units of such Redeemable
Capital Stock, the kind and amount of shares of stock and other securities
and property receivable upon the Redemption Event by a holder of the
number of shares or units of such Redeemable Capital Stock into which such
shares of Series A Preferred Stock could have been converted immediately
prior to the effective date of such Redemption Event (assuming, to the
extent applicable, that such holder failed to exercise any rights of
election with respect thereto and received per share or unit of such
Redeemable Capital Stock the kind and amount of stock and other securities
and property received per share or unit by a plurality of the non-electing
shares or units of such Redeemable Capital Stock), and (from and after the
effective date of such Redemption Event) the holders of the Series A
Preferred Stock shall have no other conversion rights under these
provisions with respect to such Redeemable Capital Stock. For purposes of
this Section 12(d)(xiii) "Redeemable Capital Stock" means a class or
series of capital stock of the Company that provides by its terms a right
in favor of the Company to call, redeem, exchange or otherwise acquire all
of the outstanding shares or units of such class or series.
(e) In case of any consolidation of the Company with, or merger of the
Company into, any other Person, or in case of any merger of another Person into
the Company (other than a merger that does not result in any reclassification,
conversion, exchange or cancellation of outstanding shares of Common Stock of
the Company), or in case of any sale, conveyance or transfer of all or
substantially all the assets of the Company, the holder of each share of Series
A
24
Preferred Stock shall have the right thereafter, during the period such share
of Series A Preferred Stock shall be convertible as specified in Section 12(a),
to convert such share of Series A Preferred Stock 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 Series A Preferred Stock might have been
converted immediately prior to such consolidation, merger, conveyance or
transfer, assuming such holder of shares 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 Section 12 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
Section 12. The above provisions of this Section 12 shall similarly apply to
successive consolidations, mergers, conveyances or transfers.
(f) In case:
(i) 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
(ii) the Company shall authorize the granting to all holders
of its shares of 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
(iii) of any reclassification of the Common Stock (other than
a subdivision or combination of the Company's outstanding shares of 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, conveyance or transfer of all or substantially all the assets of
the Company; or
(iv) of the voluntary or involuntary dissolution, liquidation
or winding-up of the Company; or
(v) the Company shall take any other action referred to in
this Section 12;
then the Company shall cause to be filed with the Registrar and at
each office or agency maintained for the purpose of conversion of shares
of Series A Preferred Stock, and shall cause to be mailed to all holders
at their last addresses as they shall appear in the shares of Series A
Preferred Stock Register, at least 20 Business Days (or 10 Business Days
in any case specified in clause (i) or (ii) 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
25
taken, the date as of which the holders of shares 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 shares of Common Stock of record shall be
entitled to exchange their shares of 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 required by this Section 12(f) 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.
(g) The Company shall at all times reserve and keep available, free
from preemptive rights, out of its authorized but unissued shares of Common
Stock, for the purpose of effecting the conversion of shares of Series A
Preferred Stock, the full number of shares of Common Stock then issuable upon
the conversion of all outstanding shares of Series A Preferred Stock.
(h) The Company will pay any and all taxes that may be payable in
respect of the issue or delivery of shares of Common Stock on conversion of
shares of Series A 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 Series A Preferred Stock or shares
of Series A 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 or is not payable.
13. Change of Control.
(a) Upon the occurrence of a Change of Control, the Company shall have
the right, but not the obligation, to offer (the "Change of Control Offer") to
repurchase all, but not less than all, of the shares of Series A Preferred Stock
at a purchase price per share in cash equal to 101% of the Liquidation
Preference of each share of Series A Preferred Stock repurchased (after giving
effect to the Special Dividend, if applicable), plus an amount equal to 101% of
all dividends accrued and unpaid thereon to the date fixed for repurchase (the
"Change of Control Purchase Amount"). Within 20 days following the Change of
Control Date, the Company shall mail a notice to each holder of shares of Series
A Preferred Stock (with a copy to the Registrar) describing the transaction or
transactions that constitute the Change of Control and, if the Company so
elects, offering to repurchase shares of Series A Preferred Stock on a date
specified in such notice (the "Change of Control Purchase Date"), which date
shall be no earlier than 90 days and no later than 120 days from the date such
notice is mailed, pursuant to the procedures required by Section 10 and
described in such notice. The failure of the Company to make such Change of
Control Offer within such 20-day period shall constitute an irrevocable waiver
of the Company's right to make such Change of Control Offer solely with the
respect to the relevant Change of Control and shall result in the dividend rate
on the Series A Preferred Stock referred to in Section 6 hereof being increased
to 16% effective as of the Change of Control Date. The Company shall comply with
the requirements of Rule 14e-1 under the Exchange Act and any
26
other securities laws and regulations to the extent such laws and regulations
are applicable in connection with the repurchase of the Series A Preferred Stock
as a result of a Change of Control.
(b) On the Change of Control Purchase Date, the Company shall, to the
extent lawful:
(i) accept for payment all shares of Series A Preferred Stock
properly tendered pursuant to the Change of Control Offer;
(ii) deposit with the paying agent an amount equal to the
Change of Control Purchase Amount in respect of all shares of Series A
Preferred Stock so tendered; and
(iii) deliver or cause to be delivered to the Registrar all
certificates for shares of Series A Preferred Stock so accepted together
with an officer's certificate stating the aggregate number of shares being
purchased by the Company.
(c) The paying agent shall promptly mail to each holder of shares of
Series A Preferred Stock so tendered the Change of Control Purchase Amount for
such shares of Series A Preferred Stock, and the Registrar shall promptly
authenticate and mail (or cause to be transferred by book entry) to each holder
a new certificate for any shares of Series A Preferred Stock not tendered that
are represented by the surrendered certificate. The Company shall notify each
holder of Series A Preferred Stock the results of the Change of Control Offer on
or as soon as practicable after the Change of Control Purchase Date.
(d) The provisions of this paragraph that permit the Company to make a
Change of Control Offer shall be applicable regardless of whether any other
provisions of this certificate are applicable. Except as set forth in this
paragraph, no holder of shares of Series A Preferred Stock shall have any right
to require the Company to repurchase or redeem the shares of Series A Preferred
Stock in the event of a takeover, recapitalization or other similar transaction.
14. Purchase Offer.
(a) If the Company shall elect not to make, or shall fail to make, the
Change of Control Offer following the occurrence of a Change of Control pursuant
to Section 13 hereof within the 20-day period specified therein, then in
addition to the redemption rights that the Company may exercise pursuant to
Section 10 hereof after _____, 2005, the Company shall also have the right (but
not the obligation), (i) at any time and from time to time prior to ______,
2005, to offer (the "Purchase Offer") to repurchase all, but not less than all,
of the outstanding shares of Series A Preferred Stock at a purchase price per
share in cash equal to 101% of the Liquidation Preference of each share of
Series A Preferred Stock repurchased (after giving effect to the Special
Dividend, if any), plus an amount equal to 101% of all dividends accrued and
unpaid thereon from the last Dividend Payment Date to the date fixed for
repurchase (the "Purchase Payment") and (ii) at any time and from time to time
following _______, 2005, to make a Purchase Offer to repurchase all, but not
less than all, of the outstanding shares of Series A Preferred Stock at a
purchase price per share in cash equal to 100% of the Liquidation Preference of
each share of Series A Preferred Stock repurchased (after giving effect to the
27
Special Dividend, if any), plus an amount equal to 100% of all dividends accrued
and unpaid thereon from the last Dividend Payment Date to the date fixed for
repurchase (the "Par Purchase Payment"). If the Company elects to make a
Purchase Offer, the Company shall mail a notice to each holder of shares of
Series A Preferred Stock (with a copy to the Registrar) offering to repurchase
shares of Series A Preferred Stock on a date specified in such notice (the
"Purchase Payment Date"), which date shall be no earlier than 90 days and no
later than 120 days from the date such notice is mailed, pursuant to the
procedures required by Section 6 and described in such notice. The Company shall
comply with the requirements of Rule 14e-1 under the Exchange Act and any other
securities laws and regulations to the extent such laws and regulations are
applicable in connection with the repurchase of the Series A Preferred Stock
hereunder.
(b) On the Purchase Payment Date, the Company shall, to the extent
lawful:
(i) accept for payment all shares of Series A Preferred Stock
properly tendered pursuant to the Purchase Offer;
(ii) deposit with the paying agent an amount equal to the
Purchase Payment or the Par Purchase Payment, as applicable, in respect of
all shares of Series A Preferred Stock so tendered; and
(iii) deliver or cause to be delivered to the Registrar all
certificates for shares of Series A Preferred Stock so accepted together
with an officer's certificate stating the aggregate number of shares being
purchased by the Company.
(c) The paying agent shall promptly mail or transmit by wire transfer
to each holder of shares of Series A Preferred Stock so tendered the Purchase
Payment or the Par Purchase Payment, as applicable, for such shares of Series A
Preferred Stock, and the Registrar shall promptly authenticate and mail (or
cause to be transferred by book entry) to each such holder a new certificate for
any shares of Series A Preferred Stock not tendered that are represented by the
surrendered certificate. The Company shall notify the holders of Series A
Preferred Stock the results of the Purchase Offer on or as soon as practicable
after the Purchase Payment Date.
(d) If a holder of shares of Series A Preferred Stock elects not to, or
otherwise fails to, properly tender shares of Series A Preferred Stock into the
Purchase Offer, then with respect to each share of Series A Preferred Stock that
such holder fails to tender, any dividends applicable to periods following the
expiration of the Purchase Offer with respect to each such share shall be
computed at a rate of eight percent (8%) per annum.
15. Special Covenant.
Without the vote of consent of the holders of a majority of the then
Outstanding shares of Series A Preferred Stock, the Company shall not make, or
permit any of its subsidiaries to make, any material capital expenditures,
acquisitions or divestitures outside the ordinary course of business unless such
expenditures, acquisitions or divestitures were otherwise approved by the Board
of Directors (including the affirmative vote of at least one director elected by
either the HMTF Holders or the Liberty Holders).
28
16. SEC Reports; Reports by Company.
So long as any shares of Series A Preferred Stock are outstanding,
the Company shall file with the SEC and, within 15 days after it files them with
the SEC, with the Registrar and, if requested, furnish to each holder of shares
of Series A Preferred Stock all annual and quarterly reports and the
information, documents, and other reports that the Company is required to file
with the SEC pursuant to Section 13(a) or 15(d) of the Exchange Act ("SEC
Reports"). In the event the Company is not required or shall cease to be
required to file SEC Reports, pursuant to the Exchange Act, the Company will
nevertheless file such reports with the SEC (unless the SEC will not accept such
a filing). Whether or not required by the Exchange Act to file SEC Reports with
the SEC, so long as any shares of Series A Preferred Stock are Outstanding, the
Company will furnish or cause to be furnished reports equivalent to the SEC
Reports to the holders of shares of Series A Preferred Stock.
17. Definitions.
For purposes of this Certificate of Designation, the following terms
shall have the meaning set forth below:
"Accumulated Dividends" has the meaning set forth in Section 6.
"Affiliate" means, with respect to any Person, any other Person
directly or indirectly controlling, controlled by, or under direct or indirect
common control with, such Person. For the purposes of this definition, "control"
when used with respect to any Person means the power to direct the management
and policies of such Person, directly or indirectly, whether through the
ownership of voting securities, by contract or otherwise; and the terms
"controlling" and "controlled" have meanings correlative to the foregoing;
provided that neither AT&T Corp. ("AT&T") nor any subsidiary of AT&T which is
not included in AT&T's Liberty Media Group (as defined in AT&T's Certificate of
Incorporation) will be deemed to be an Affiliate of Liberty.
"Board of Directors" has the meaning set forth in the Recitals.
"Business Day" means each Monday, Tuesday, Wednesday, Thursday and
Friday which is not a day on which banking institutions in The City of New York
are authorized or obligated by law or executive order to be closed.
"By-laws" has the meaning set forth in the Recitals.
"Capital Stock" means, with respect to any person, any and all
shares, interests, participations, rights in, or other equivalents (however
designated and whether voting and/or non-voting) of such person's capital stock,
whether outstanding on the Closing Date or issued after the Closing Date, and
any and all rights (other than any evidence of indebtedness) or warrants
exercisable or exchangeable for or convertible into such capital stock.
"Certificate of Incorporation" has the meaning set forth in the
recitals.
29
"Change of Control" means the occurrence of any of the following
events: (a) any "person" or "group" (as such terms are used in Sections 13(d)
and 14(d) of the Exchange Act) is or becomes the "beneficial owner" (as defined
in Rule 13d-3 and 13d-5 under the Exchange Act, except that a person shall be
deemed to have "beneficial ownership" of all securities that such person has the
right to acquire, whether such right is exercisable immediately or only after
the passage of time), directly or indirectly, of more than 50% of the total
Voting Capital Stock of the Company or (b) the Company consolidates with, or
merges with or into, another person or sells, assigns, conveys, transfers,
leases or otherwise disposes of all or substantially all of its assets to any
person, or any person consolidates with, or merges with or into the Company, in
any such event pursuant to a transaction in which the holders of the outstanding
Voting Capital Stock of the Company immediately prior to such transaction hold
less than 50% of the outstanding Voting Capital Stock of the surviving or
transferee company or its parent company immediately after such transaction or
immediately after such transaction any "person" or "group" (as such terms are
used in Sections 13(d) and 14(d) of the Exchange Act), is the "beneficial owner"
(as defined in Rules 13d-3 and 13d-5 under the Exchange Act, except that a
person shall be deemed to have "beneficial ownership" of all securities that
such person has the right to acquire, whether such right is exercisable
immediately or only after the passage of time), directly or indirectly, of more
than 50% of the total Voting Capital Stock of the surviving or transferee
company or its parent company or (c) during any consecutive two-year period,
individuals who at the beginning of such period constituted the Board of
Directors (together with any new directors whose election by the Board of
Directors or whose nomination for election by the stockholders of the Company
was approved by a vote of a majority of the directors then still in office who
were either directors at the beginning of such period or whose election or
nomination for election was previously so approved) cease for any reason to
constitute a majority of the Board of Directors then in office or (d) any
transaction subject to Rule 13e-3 under the Exchange Act if following such Rule
13e-3 transaction a person or group (as such terms are used in Section 13(d) and
14(d) of the Exchange Act) owns more than 50% of the total Voting Capital Stock
of the Company. Notwithstanding the foregoing, any form of business combination
between the Company and Teligent, Inc. within the 24 month period following the
Closing Date shall not be deemed to be a Change of Control, unless after the
date hereof and prior to such business combination, there shall have occurred a
"Teligent Change of Control." For the purposes hereof, a Teligent Change of
Control shall have the same meaning as a Change of Control, substituting
Teligent, Inc. for the Company in such definition; provided, however, that a
Teligent Change of Control shall not occur with respect to any event or
circumstance that involves an acquiror, 25% or more of the Voting Capital Stock
of which is beneficially owned by any member of the HMTF Group or Liberty.
"Change of Control Date" has the meaning set forth in Section 6(b).
"Closing Date" means the Closing Date under the Purchase
Agreement.
"Closing Price" has the meaning set forth in Section 12(d)(viii).
"Common Stock Record Date" has the meaning set forth in Section
12(d)(viii).
30
"Common Stock" means the common stock of the Company, par value $.01
per share and capital stock of any other class or series into which the Common
Stock may hereafter be changed.
"Company" has the meaning set forth in the Recitals and includes any
successor to the Company hereunder.
"Company Order" means a written request or order signed in the name
of the Company by its Chairman of the Board, its President or a Vice President
and by its Treasurer, an Assistant Treasurer, its Secretary or an Assistant
Secretary.
"Conversion Agent" has the meaning set forth in Section 5(a).
"Conversion Price" means the price at which shares of Common Stock
shall be delivered upon conversion.
"Current Market Price" has the meaning set forth in Section
12(d)(viii).
"Dilution Trigger Event" has the meaning set forth in Section
12(d)(iv).
"Distributed Securities" has the meaning set forth in Section
12(d)(iv).
"Dividend Payment Date" shall mean the last day of ______, _______,
__________ and _______ of each year, commencing __________, 2000, or the next
succeeding Business Day if any such day is not a Business Day.
"Dividend Period" shall mean the period from and including the
Closing Date to but excluding the first Dividend Payment Date and thereafter
each quarterly period from and including a Dividend Payment Date to but
excluding the next Dividend Payment Date.
"Dividend Record Date" has the meaning set forth in Section 7(a).
"Exchange Offer" has the meaning set forth in Section 12(d)(vi).
"Exchange Preferred Stock" has the meaning set forth in Section
12(d)(viii).
"Exchange Securities" has the meaning set forth in Section
12(d)(viii).
"Expiration Time" has the meaning set forth in Section 12(d)(v).
"Fair Market Value" has the meaning set forth in Section
12(d)(viii).
"Junior Shares" has the meaning set forth in Section 9(a).
"Liquidation Preference" means an amount initially equal to $1,000
per share of Series A Preferred Stock, subject to increase in accordance with
Section 6, Section 7 and Section 11 hereof, including, without limitation, by
the addition of Accumulated Dividends and, if applicable, the Special Dividend.
31
"Mandatory Redemption Date" has the meaning set forth in Section
10(b); provided, however, that if such date shall not be a Business Day, then
such date shall be the next Business Day.
"Mirror Preferred Stock" has the meaning set forth in Section
12(d)(viii).
"Nonelecting Share" has the meaning set forth in Section 12(e).
"Odd-lot Redemption" has the meaning set forth in Section 10(c).
"Officers' Certificate" means a certificate of the Company signed in
the name of the Company by its Chairman of the Board, its President or a Vice
President and by its Treasurer, an Assistant Treasurer, its Secretary or an
Assistant Secretary.
"Optional Redemption" has the meaning set forth in Section 10(a).
"Optional Redemption Date" has the meaning set forth in Section
10(a).
"Outstanding" means when used with respect to shares of Series A
Preferred Stock, as of the date of determination, all shares of Series A
Preferred Stock theretofore authenticated and delivered under this Certificate
of Designation, except (a) shares of Series A Preferred Stock theretofore
converted into shares of Common Stock in accordance with Section 12 and shares
of Series A Preferred Stock theretofore canceled by the Registrar or delivered
to the Registrar for cancellation; (b) shares of Series A Preferred Stock for
whose payment or redemption money in the necessary amount has been theretofore
deposited with the Registrar or any Paying Agent (other than the Company) in
trust or set aside and segregated in trust by the Company (if the Company shall
act as its own Paying Agent) for the holders of such shares of Series A
Preferred Stock; provided that, if such shares of Series A Preferred Stock are
to be redeemed, notice of such redemption has been duly given pursuant to this
Certificate of Designation or provision therefor satisfactory to the Registrar
has been made; and (c) shares of Series A Preferred Stock in exchange for or in
lieu of which other shares of Series A Preferred Stock have been authenticated
and delivered pursuant to this Certificate of Designation; provided, however,
that, in determining whether the holders of the shares of Series A Preferred
Stock have given any request, demand, authorization, direction, notice, consent
or waiver or taken any other action hereunder, shares of Series A Preferred
Stock owned by the Company or any other obligor upon the shares of Series A
Preferred Stock or any subsidiary of the Company or of such other obligor shall
be disregarded and deemed not to be Outstanding, except that, in determining
whether the Registrar shall be protected in relying upon any such request,
demand, authorization, direction, notice, consent, waiver or other action, only
shares of Series A Preferred Stock which the Registrar has actual knowledge of
being so owned shall be so disregarded.
"Parity Shares" has the meaning set forth in Section 9(a).
"Paying Agent" has the meaning set forth in Section 5(a).
"Person" means an individual, partnership, corporation, limited
liability company, business trust, joint stock company, trust, unincorporated
association, joint venture, governmental authority or other entity of whatever
nature.
32
"Preferred Stock" means, with respect to any person, any and all
shares, interests, participations or other equivalents (however designated,
whether voting or non-voting) of such person's preferred or preference stock,
whether now outstanding or issued after the date hereof, including all series
and classes of such preferred or preference stock.
"Purchase Agreement" means the Preferred Stock and Warrant Purchase
Agreement dated as of February 27, 2000, among the Company and the Purchasers
named therein, as it may be amended from time to time.
"Purchased Shares" has the meaning set forth in Section 12(d)(v).
"Redemption Date" has the meaning set forth in Section 10(d).
"Redemption Notice" has the meaning set forth in Section 10(d).
"Redemption Price" has the meaning set forth in Section 10(a).
"Registrar" has the meaning set forth in Section 3.
"Registration Rights Agreement" means the Registration Rights
Agreement dated as of [ ] __, 2000, among the Company and the Purchasers.
"Restricted Shares Legend" has the meaning set forth in Section
4(a).
"SEC" means the Securities and Exchange Commission, as from time to
time constituted, created under the Securities Exchange Act of 1934, or, if at
any time after the adoption of this Certificate of Designation such commission
is not existing and performing the duties now assigned to it, then the body
performing such duties at such time.
"SEC Reports" has the meaning set forth in Section 16.
"Securities Act" has the meaning set forth in Section 4(a).
"Senior Shares" has the meaning set forth in Section 9(a).
"Series A Preferred Stock" has the meaning set forth in Section 1.
"Special Dividend" means, with respect to each share of Series A
Preferred Stock, the difference between (i) $1,485.95 (as such number shall be
appropriately adjusted for stock splits, stock dividends or similar events
affecting the Series A Preferred Stock) and (ii) the amount of the actual
Liquidation Preference of such share immediately prior to the Change of Control
Date.
"Voting Capital Stock" means with respect to any Person, securities
of any class or classes of Capital Stock in such Person ordinarily entitling the
holders thereof (whether at all times or at the times that such class of Capital
Stock has voting power by reason of the happening of any contingency) to vote in
the election of members of the board of directors or comparable governing body
of such Person.
33
18. No Reissuances.
Any share of Series A Preferred Stock that is purchased, redeemed or
otherwise acquired by the Company or any subsidiary shall be cancelled and
restored to the status of authorized but unissued Preferred Stock but shall not
be reissued as Series A Preferred Stock.
34
IN WITNESS WHEREOF, the Company has caused this Certificate of
Designation to be duly executed by H. ▇▇▇ ▇▇▇▇▇▇, Executive Vice President of
the Company, this __ day of __________, 2000.
ICG COMMUNICATIONS, INC.
By:
-----------------------------------
Name: H. ▇▇▇ ▇▇▇▇▇▇
Title: Executive Vice President
EXHIBIT A
FACE OF SECURITY
THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933 OR
THE SECURITIES LAWS OF ANY STATE OR OTHER JURISDICTION, AND, UNLESS SO
REGISTERED, THEY MAY NOT BE SOLD, OFFERED FOR SALE, TRANSFERRED, ASSIGNED,
PLEDGED OR HYPOTHECATED EXCEPT PURSUANT TO AN EXEMPTION FROM, OR IN A
TRANSACTION NOT SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE ACT AND
APPLICABLE SECURITIES LAWS OF ANY STATE OR OTHER JURISDICTION.
Number: ____ Number of Shares
____ Shares
CUSIP NO.: { }
8% SERIES A CONVERTIBLE PREFERRED STOCK
DUE 2015
OF
ICG COMMUNICATIONS, INC.
ICG COMMUNICATIONS, INC., a company organized under the laws of
Delaware (the "Company"), hereby certifies that {HOLDER} (the "Holder") is the
registered owner of fully paid and non-assessable preference securities of the
Company designated the 8% Series A Convertible Preferred Stock due 2015, par
value U.S.$0.01 and initial liquidation preference U.S. $1,000 per share (the
"Preferred Stock"). The shares of Preferred Stock are transferable on the books
and records of the Registrar, in person or by a duly authorized attorney, upon
surrender of this certificate duly endorsed and in proper form for transfer. The
designation, rights, privileges, restrictions, preferences and other terms and
provisions of the Preferred Stock represented hereby are issued and shall in all
respects be subject to the provisions of the Certificate of Designation of the
Company dated __________ __, 2000, as the same may be amended from time to time
in accordance with its terms (the "Preferred Stock Certificate of Designation").
Capitalized terms used herein but not defined shall have the meaning given them
in the Preferred Stock Certificate of Designation. The Company will provide a
copy of the Preferred Stock 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 Preferred Stock
set forth on the reverse hereof, and to the Preferred Stock Certificate of
Designation, which select provisions and the Preferred Stock Certificate of
Designation shall for all purposes have the same effect as if set forth at this
place.
A-1
Upon receipt of this certificate, the Holder is bound by the
Preferred Stock Certificate of Designation and is entitled to the benefits
thereunder.
Unless the Transfer Agent's valid counter-signature appears hereon,
the shares of Preferred Stock evidenced hereby shall not be entitled to any
benefit under the Preferred Stock Certificate of Designation or be valid or
obligatory for any purpose.
IN WITNESS WHEREOF, the Company has executed this certificate as of
the date set forth below.
ICG COMMUNICATIONS, INC.
By:
---------------------------------
Name:
Title:
{Seal}
By:
---------------------------------
Name:
Title:
Dated:
A-2
REVERSE OF SECURITY
ICG COMMUNICATIONS, INC.
8% Series A Convertible Preferred Stock
due 2015
Dividends on each share of Preferred Stock shall be payable at a
rate per annum set forth on the face hereof or as provided in the Preferred
Stock Certificate of Designation. Subject to the limitations set forth in
Section 11 of the Preferred Stock Certificate of Designation, dividends may be
paid, at the option of the Company, in cash.
The shares of Preferred Stock shall be redeemable as provided in the
Preferred Stock Certificate of Designation. The shares of Preferred Stock shall
be convertible into the Company's Common Stock in the manner and according to
the terms set forth in the Preferred Stock Certification of Designation.
The Company shall furnish to any Holder upon request and without
charge, a copy of the 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 or series of shares of the Company.
ASSIGNMENT
FOR VALUE RECEIVED, the undersigned assigns and transfers the shares
of Preferred Stock evidenced hereby to:
(Insert assignee's social security or tax identification number)
(Insert address and zip code of assignee)
and irrevocably appoints:
agent to transfer the shares of Preferred Stock evidenced hereby on the books of
the Transfer Agent and Registrar. The agent may substitute another to act for
him or her.
Date: Signature:
------------------------------ --------------------------------
(Sign exactly as your name appears on the other side of this Convertible
Preferred Stock Certificate)
Signature Guarantee:*
------------------------------------
R-1
*Signature must be guaranteed by an "eligible guarantor institution"
(i.e., a bank, stockbroker, savings and loan association or credit union)
meeting the requirements of the Registrar, which requirements include membership
or participation in the Securities Transfer Agents Medallion Program ("STAMP")
or such other "signature guarantee program" as may be determined by the
Registrar in addition to, or in substitution for, STAMP, all in accordance with
the Securities Exchange Act of 1934.
R-2
NOTICE OF CONVERSION
(To be Executed by the Registered Holder
in order to Convert the Preferred Stock)
The undersigned hereby irrevocably elects to convert (the "Conversion")
_________ shares of 8% Series A Convertible Preferred Stock due 2015 (the
"Preferred Stock"), represented by stock certificate No(s). ______________ (the
"Preferred Stock Certificates") into shares of common stock, par value U.S. $.01
per share ("Common Stock"), of ICG Communications, Inc. (the "Company")
according to the conditions of the Certificate of Designation establishing the
terms of the Preferred Stock (the "Preferred Stock 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 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 Preferred Stock shall be made pursuant to registration of the
Common Stock under the Securities Act of 1933 (the "Act"), or pursuant to an
exemption from registration under the Act.
Capitalized terms used but not defined herein shall have the meanings ascribed
thereto in or pursuant to the Preferred Stock Certificate of Designation.
Date of Conversion:
-----------------------------------------------
Applicable Conversion Price:
--------------------------------------
Number of shares of Preferred Stock to be Converted:
--------------------------
Number of shares of Common Stock to be Issued:
--------------------------
Signature:
------------------------------------------------------
Name:
------------------------------------------------------
Address:
------------------------------------------------------
Fax No.:
------------------------------------------------------
*The Company is not required to issue shares of Common Stock until
the original 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 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.
N-1
EXHIBIT C
FORM OF REGISTRATION RIGHTS AGREEMENT
================================================================================
REGISTRATION RIGHTS AGREEMENT
between
ICG COMMUNICATIONS, INC.
AND
THE PURCHASERS LISTED ON SCHEDULE I
dated ________ __, 2000
================================================================================
TABLE OF CONTENTS
Article I Definitions........................................................1
1.1 Definitions...........................................................1
1.2 Internal References...................................................3
Article II Registration Rights...............................................3
2.1 Demand Registration...................................................3
2.2 Piggyback Registration................................................6
2.3 Shelf Registration....................................................7
Article III Registration Procedures..........................................9
3.1 Filings; Information..................................................9
3.2 Registration Expenses................................................13
Article IV Indemnification and Contribution.................................14
4.1 Indemnification by the Company.......................................14
4.2 Indemnification by Selling Holders...................................14
4.3 Conduct of Indemnification Proceedings...............................15
4.4 Contribution.........................................................15
Article V Miscellaneous.....................................................16
5.1 Participation in Underwritten Registrations..........................16
5.2 Rule 144.............................................................17
5.3 Holdback Agreements..................................................17
5.4 Termination..........................................................17
5.5 Amendments, Waivers, Etc.............................................18
5.6 Counterparts.........................................................18
5.7 Entire Agreement.....................................................18
5.8 Governing Law........................................................18
5.9 Assignment of Registration Rights....................................18
This REGISTRATION RIGHTS AGREEMENT
(the "Agreement"), is made as of
_____________, 2000, by and between ICG
Communications, Inc., a Delaware corporation
(the "Company") and the entities listed on
Schedule I to this Agreement.
WHEREAS, the Company, Liberty Media Corporation, the Initial HMTF
Holders (as defined below) and Gleacher/ICG Investors LLC entered into a
Preferred Stock and Warrant Purchase Agreement dated as of February 27, 2000
(the "Stock Purchase Agreement");
WHEREAS, it is a condition precedent to the closing of the
transactions contemplated in the Stock Purchase Agreement that the parties
hereto execute and deliver this Agreement;
NOW THEREFORE, in consideration of the premises, mutual promises and
covenants contained in this Agreement and intending to be legally bound, the
parties hereto hereby agree as follows:
ARTICLE I
Definitions
1.1 Definitions.
Terms defined in the Stock Purchase Agreement are used herein as therein
defined except as otherwise indicated below. In addition, the following terms,
as used herein, have the following meanings:
"Commission" means the Securities and Exchange Commission.
"Demand Registration" means a registration under the Securities Act
requested in accordance with Section 2.1.
"Gleacher Holder" means Gleacher/ICG Investors LLC.
"HMTF Holders" means the Initial HMTF Holders and any direct or
indirect transferee of any Registrable Securities initially held by the Initial
HMTF Holders.
"Holders" means, collectively, the HMTF Holders, the Liberty Holders
and the Gleacher Holder (including their respective Affiliates) and any direct
or indirect transferee of any Registrable Securities held by any of such
Persons.
"Initial Amount," on any particular date and with respect to the
Liberty Holders or the HMTF Holders, as applicable, means the number of shares
of Common Stock that would have been issuable on such date upon conversion of
all of the shares of Series A Preferred Stock issued to the Liberty Holders or
the HMTF Holders, respectively, on the Closing Date (as
adjusted for stock splits, stock dividends and similar events affecting the
Series A Preferred Stock).
"Initial HMTF Holders" means HM4 ICG Qualified Fund, LLC, HM4 ICG
Private Fund, LLC, HM PG-IV ICG, LLC, HM 4-SBS ICG Coinvestors, LLC, HM 4-EQ ICG
Coinvestors, LLC, and HMTF Bridge ICG, LLC.
"Liberty Holders" means Liberty and each of its Affiliates.
"Piggyback Registration" has the meaning set forth in Section 2.2.
"Registrable Common Stock" means (a) shares of Common Stock issued
or issuable upon conversion of the Series A Preferred Stock purchased pursuant
to the Stock Purchase Agreement, plus any additional shares of Series A
Preferred Stock issued in respect thereof in connection with any stock split,
stock dividend or similar event with respect to the Series A Preferred Stock,
plus any additional shares of Common Stock issued with respect to such issued
shares of Common Stock in connection with any stock splits, stock dividends, or
similar events with respect to the Common Stock, (b) shares of Common Stock
issued or issuable upon exercise of the Warrants, plus any additional shares of
Common Stock issued in respect of such issued shares of Common Stock in
connection with any stock split, stock dividend or similar event with respect to
the Common Stock and (c) any shares of Common Stock owned by a Holder that are
restricted securities within the meaning of Rule 144 or all such shares if such
Holder reasonably believes at such time that it may be deemed to be an
"affiliate" (as that term is defined in Rule 144) of the Company.
"Registrable Securities" means (a) the Registrable Common Stock and
(b) any securities of the Company or any successor entity into which Registrable
Common Stock may hereafter be converted or changed. As to any particular
Registrable Securities, such securities shall cease to be Registrable Securities
when (i) a registration statement with respect to the sale of such securities
shall have become effective under the Securities Act and such securities shall
have been disposed of under such registration statement, (ii) such securities
shall have been transferred pursuant to Rule 144, (iii) such securities shall
have been otherwise transferred or disposed of, and new certificates therefor
not bearing a legend restricting further transfer shall have been delivered by
the Company, and subsequent transfer or disposition of them shall not require
their registration or qualification under the Securities Act or any similar
state law then in force, or (iv) such securities shall have ceased to be
outstanding.
"Requesting Holders" means the Holders requesting a Demand
Registration, and shall include parties deemed "Requesting Holders" pursuant to
Section 2.1(a)(iv).
"Rule 144" means Rule 144 (or any successor rule of similar effect)
promulgated under the Securities Act.
"Selling Holder" means any Holder who is selling Registrable
Securities pursuant to a public offering registered hereunder.
"Series A Preferred Stock" means the Company's 8% Series A
Convertible Preferred Stock, par value $0.01 per share.
-2-
"Shelf Registration" has the meaning set forth in Section 2.3(b).
"Underwriter" means a securities dealer who purchases any
Registrable Securities as principal and not as part of such dealer's
market-making activities.
"Warrants" means the Warrants (as defined in the Stock Purchase
Agreement) to purchase Common Stock.
1.2 Internal References
Unless the context indicates otherwise, references to Articles, Sections
and paragraphs shall refer to the corresponding articles, sections and
paragraphs in this Agreement, and references to the parties shall mean the
parties to the Stock Purchase Agreement.
Article II
Registration Rights
2.1 Demand Registration
(a)
(i) Holders of a majority of the Registrable Securities held
by the HMTF Holders may make up to three (3) written requests for a Demand
Registration of all or any part of the Registrable Securities held by the
HMTF Holders and their direct or indirect transferees; provided, that (A)
each such Demand Registration by the HMTF Holders must be in respect of
Registrable Securities with a fair market value of at least $50,000,000 or
all of the Registrable Securities held by the requesting HMTF Holders if
the aggregate fair market value of all of such Registrable Securities is
less than $50,000,000 and (B) the HMTF Holders shall not be entitled to a
Demand Registration if, during the 120 days preceding such request, the
HMTF Holders had requested a Demand Registration unless the Company
preempted such Demand Registration in accordance with Section 2.1(e) or
the Company postponed the filing thereof in accordance with Section 3.1(a)
and the requesting HMTF Holders withdrew the request for such Demand
Registration. Upon exercise of all or any portion of the Warrants held by
the HMTF Holders, the Holders of a majority of the Registrable Securities
held by the HMTF Holders may make one (1) additional written request for a
Demand Registration, subject to the proviso set forth in the foregoing
sentence.
(ii) Holders of a majority of the Registrable Securities held
by the Liberty Holders may make up to six (6) written requests for a
Demand Registration of all or any part of the Registrable Securities held
by the Liberty Holders and their direct or indirect transferees; provided,
that (A) each such Demand Registration by the Liberty Holders must be in
respect of Registrable Securities with a fair market value of at least
$50,000,000 or all of the Registrable Securities held by the requesting
Liberty Holders if the aggregate fair market value of all of such
Registrable Securities is less than $50,000,000, and (B) the Liberty
Holders shall not be entitled to a Demand Registration if, during the 120
days preceding such request, the Liberty Holders had requested a
-3-
Demand Registration unless the Company preempted such Demand Registration
in accordance with Section 2.1(e) or the Company postponed the filing
thereof in accordance with Section 3.1(a) and the requesting Liberty
Holders withdrew the request for such Demand Registration. Upon exercise
of all or any portion of the Warrants held by the Liberty Holders, the
Holders of a majority of the Registrable Securities held by the Liberty
Holders may make up to two (2) additional written requests for a Demand
Registration, subject to the proviso set forth in the foregoing sentence.
(iii) Any request for a Demand Registration will specify the
aggregate number of shares of Registrable Securities proposed to be sold
by the Requesting Holders and will also specify the intended method of
disposition thereof. A registration will not count as a Demand
Registration until it has become effective. Should a Demand Registration
not become effective due to the failure of a Holder to perform its
obligations under this Agreement or the inability of the Requesting
Holders to reach agreement with the Underwriters for the proposed sale on
price or other customary terms for such transaction, or in the event the
Requesting Holders withdraw or do not pursue the request for the Demand
Registration (in each of the foregoing cases, provided that at such time
the Company is in compliance in all material respects with its obligations
under this Agreement), then, subject to Section 2.1(b), such Demand
Registration shall be deemed to have been effected (provided that (i) if,
the Demand Registration does not become effective because a material
adverse change has occurred, or is reasonably likely to occur, in the
condition (financial or otherwise), business, assets or results of
operations of the Company and its subsidiaries taken as a whole subsequent
to the date of the written request made by the Requesting Holders (ii) if
the Company withdraws the Demand Registration for any reason or preempts
the request for the Demand Registration or (iii) if, after the Demand
Registration has become effective, an offering of Registrable Securities
pursuant to a registration is interfered with by any stop order,
injunction, or other order or requirement of the Commission or other
governmental agency or court or (iv) if the Demand Registration is
withdrawn at the request of the Requesting Holders pursuant to Section
2.1(f) or Section 3.1(a), then the Demand Registration shall not be deemed
to have been effected and will not count as a Demand Registration).
(iv) Upon receipt of any request for a Demand Registration by
holders of a majority of the Registrable Securities held by the HMTF
Holders or the Liberty Holders, as the case may be, the Company shall
promptly (but in any event within ten (10) days) give written notice of
such proposed Demand Registration to the HMTF Holders, in the case of a
request by an HMTF Holder, and to the Liberty Holders, in the case of a
request by a Liberty Holder, and all such HMTF Holders or Liberty Holders,
as the case may be (including their respective direct or indirect
transferees) shall have the right, exercisable by written notice to the
Company within twenty (20) days of their receipt of the Company's notice,
to elect to include in such Demand Registration such portion of their
Registrable Securities as they may request. All such Holders requesting to
have their Registrable Securities included in a Demand Registration in
accordance with the preceding sentence shall be deemed to be "Requesting
Holders" for purposes of this Section 2.1.
-4-
(b) In the event that the Requesting Holders withdraw or do not pursue
a request for a Demand Registration and, pursuant to Section 2.1(a) hereof, such
Demand Registration is deemed to have been effected, the Holders may reacquire
such Demand Registration (such that the withdrawal or failure to pursue a
request will not count as a Demand Registration hereunder) if the Selling
Holders reimburse the Company for any and all Registration Expenses incurred by
the Company in connection with such request for a Demand Registration that was
withdrawn or not pursued.
(c) If the Requesting Holders so elect, the offering of such
Registrable Securities pursuant to such Demand Registration shall be in the form
of a "firm commitment" underwritten offering. A majority in interest of the
Requesting Holders shall have the right to select the managing Underwriters and
any additional investment bankers and managers to be used in connection with any
offering under this Section 2.1, subject to the Company's approval, which
approval shall not be unreasonably withheld.
(d) The Requesting Holders will inform the Company of the time and
manner of any disposition of Registrable Common Stock, and agree to reasonably
cooperate with the Company in effecting the disposition of the Registrable
Common Stock in a manner that does not unreasonably disrupt the public trading
market for the Common Stock; provided, however, that the Holders' only right to
a shelf registration statement shall be pursuant to Section 2.3.
(e) The Company will have the right to preempt any Demand Registration
with a primary registration by delivering written notice (within seven business
days after the Company has received a request for such Demand Registration) of
such intention to the Requesting Holders indicating that the Company has
identified a specific business need and use for the proceeds of the sale of such
securities and had contemplated such sale of securities prior to receiving the
Requesting Holders' notice, and the Company shall use commercially reasonable
efforts to effect a primary registration within 90 days of such notice. In the
ensuing primary registration, the Holders will have such piggyback registration
rights as are set forth in Section 2.2 hereof. Upon the Company's preemption of
a requested Demand Registration, such requested registration will not count as
the Holders' Demand Registration. If the Company thereafter decides to abandon
its intention to pursue such sale of securities, it shall give notice thereof to
any preempted Holders within two business days following the Company's decision.
The Company may exercise the right to preempt a Demand Registration only once in
any 360-day period; provided, that during any 360-day period the Company shall
use its reasonable best efforts to permit a period of at least 180 consecutive
days during which the Selling Holders may effect a Demand Registration.
(f) Securities to be sold for the account of any Person (including the
Company) other than a Requesting Holder shall not be included in a Demand
Registration if the managing Underwriter or Underwriters shall advise the
Company and the Requesting Holders in writing that the inclusion of such
securities will materially and adversely affect the price of the offering (a
"Material Adverse Effect"). Furthermore, in the event the managing Underwriter
or Underwriters shall advise the Company or the Requesting Holders that even
after exclusion of all securities of other Persons (including the Company)
pursuant to the immediately preceding sentence, the amount of Registrable
Securities proposed to be included in such Demand Registration by Requesting
Holders is sufficiently large to cause a Material Adverse Effect, the
-5-
Registrable Securities of the Requesting Holders to be included in such Demand
Registration shall equal the number of shares which the Company and the
Requesting Holders are so advised can be sold in such offering without a
Material Adverse Effect and such shares shall be allocated pro rata among the
Requesting Holders on the basis of the number of Registrable Securities
requested to be included in such registration by each such Requesting Holder;
provided, however, that if any Registrable Securities requested to be registered
pursuant to a Demand Registration under Section 2.1 are excluded from
registration hereunder, then the Holder(s) having shares excluded ("Excluded
Holders") shall have the right to withdraw all, or any part, of their shares
from such registration and if withdrawn in full such Demand Registration shall
not be deemed to have been effected and will not count as a Demand Registration.
2.2 Piggyback Registration
(a) If the Company proposes to file a registration statement under the
Securities Act with respect to an offering of Common Stock for its own account
or for the account of another Person (other than a registration statement on
Form S-4 or S-8, or, except as provided for in Section 2.3, pursuant to Rule 415
(or any substitute form or rule, respectively, that may be adopted by the
Commission)), the Company shall give written notice of such proposed filing to
the Holders at the address set forth in the share register of the Company as
soon as reasonably practicable (but in no event less than 15 days before the
anticipated filing date), undertaking to provide each Holder the opportunity to
register on the same terms and conditions such number of shares of Registrable
Securities as such Holder may request (a "Piggyback Registration"). Each Holder
will have seven business days after receipt of any such notice to notify the
Company as to whether it wishes to participate in a Piggyback Registration
(which notice shall not be deemed to be a request for a Demand Registration);
provided that should a Holder fail to provide timely notice to the Company, such
Holder will forfeit any rights to participate in the Piggyback Registration with
respect to such proposed offering other than as described in Section 2.1(a)(iv).
In the event that the registration statement is filed on behalf of a Person
other than the Company, the Company will use its best efforts to have the shares
of Registrable Securities that the Holders wish to sell included in the
registration statement. If the Company or the Person for whose account such
offering is being made shall determine in its sole discretion not to register or
to delay the proposed offering, the Company may, at its election, provide
written notice of such determination to the Holders and (i) in the case of a
determination not to effect the proposed offering, shall thereupon be relieved
of the obligation to register such Registrable Securities in connection
therewith, and (ii) in the case of a determination to delay a proposed offering,
shall thereupon be permitted to delay registering such Registrable Securities
for the same period as the delay in respect of the proposed offering. As between
the Company and the Selling Holders, the Company shall be entitled to select the
Underwriters in connection with any Piggyback Registration.
(b) If the Registrable Securities requested to be included in the
Piggyback Registration by any Holder differ from the type of securities proposed
to be registered by the Company and the managing Underwriter advises the Company
that due to such differences the inclusion of such Registrable Securities would
cause a Material Adverse Effect, then (i) the number of such Holders'
Registrable Securities to be included in the Piggyback Registration shall be
reduced to an amount which, in the opinion of the managing Underwriter, would
eliminate such Material Adverse Effect or (ii) if no such reduction would, in
the opinion of the
-6-
managing Underwriter, eliminate such Material Adverse Effect, then the Company
shall have the right to exclude all such Registrable Securities from such
Piggyback Registration, provided, that no other securities of such type are
included and offered for the account of any other Person in such Piggyback
Registration. Any partial reduction in number of Registrable Securities of any
Holder to be included in the Piggyback Registration pursuant to clause (i) of
the immediately preceding sentence shall be effected pro rata based on the ratio
which such Holder's requested shares bears to the total number of shares
requested to be included in such Piggyback Registration by all Persons other
than the Company who have the contractual right to request that their shares be
included in such registration statement and who have requested that their shares
be included. If the Registrable Securities requested to be included in the
registration statement are of the same type as the securities being registered
by the Company and the managing Underwriter advises the Company that the
inclusion of such Registrable Securities would cause a Material Adverse Effect,
the Company will be obligated to include in such registration statement, as to
each Holder only a portion of the shares such Holder has requested be registered
equal to the ratio which such Holder's requested shares bears to the total
number of shares requested to be included in such registration statement by all
Persons (other than the Person or Persons initiating such registration request)
who have the contractual right to request that their shares be included in such
registration statement and who have requested their shares be included. If the
Company initiated the registration, then the Company may include all of its
securities in such registration statement before any such Holder's requested
shares are included. If another security holder initiated the registration, then
the Company may not include any of its securities in such registration statement
unless all Registrable Securities requested to be included in the registration
statement by all Holders are included in such registration statement. If as a
result of the provisions of this Section 2.2(b) any Holder shall not be entitled
to include all Registrable Securities in a registration that such Holder has
requested to be so included, such Holder may withdraw such Holder's request to
include Registrable Securities in such registration statement prior to its
effectiveness.
2.3 Shelf Registration
(a) Holders of a majority of the Registrable Securities held by the
Liberty Holders ("Majority Liberty Holders") may, at any time after the first
anniversary of the Closing Date, make a written request that the Company effect
a shelf registration of a portion of the Registrable Securities held by the
Liberty Holders and their direct or indirect transferees (the "Liberty Shelf
Registration") pursuant to Rule 415; provided, that the aggregate amount of
Registrable Securities that may be included in such Liberty Shelf Registration
may not exceed 25% of the Liberty Holders' Initial Amount. Upon receipt of a
request for the Liberty Shelf Registration, the Company shall promptly (but in
any event within 10 business days) give written notice of the proposed Liberty
Shelf Registration to all other Liberty Holders, and all such Holders (including
their direct and indirect transferees) shall have the right to include
Registrable Securities in the Liberty Shelf Registration subject to the
foregoing limitation. From and after the second anniversary of the Closing Date,
the Majority Liberty Holders may make a written request that the Company amend
the Liberty Shelf Registration to include in the Liberty Shelf Registration no
more than 50% of the Liberty Holders' Initial Amount. Upon receipt of such
request, the Company shall promptly (but in any event within 10 business days)
give written notice of the proposed amendment to all other Liberty Holders, and
all such Holders (including their direct and indirect transferees) shall have
the right to include Registrable Securities in the amended
-7-
Liberty Shelf Registration subject to the foregoing limitation. From and after
the third anniversary of the Closing Date, the Majority Liberty Holders' may
make a written request that the Company amend the Liberty Shelf Registration to
include in the Liberty Shelf Registration no more than 75% of the Liberty
Holders' Initial Amount. Upon receipt of such request, the Company shall
promptly (but in any event within 10 business days) give written notice of the
proposed amendment to all other Liberty Holders, and all such Holders (including
their direct and indirect transferees) shall have the right to include
Registrable Securities in the amended Liberty Shelf Registration subject to the
foregoing limitation. From and after the fourth anniversary of the Closing Date,
the Majority Liberty Holders may make a written request that the Company amend
the Liberty Shelf Registration to include in the Liberty Shelf Registration up
to 100% of the Liberty Holders' Initial Amount. Upon receipt of such request,
the Company shall promptly (but in any event within 10 business days) give
written notice of the proposed amendment to all other Liberty Holders, and all
such Holders (including their direct and indirect transferees) shall have the
right to include Registrable Securities in the amended Liberty Shelf
Registration up to 100% of the Liberty Holders' Initial Amount.
(b) Holders of a majority of the Registrable Securities held by the
HMTF Holders ("Majority HMTF Holders") may, at any time after the first
anniversary of the Closing Date, make a written request that the Company effect
a shelf registration of a portion of the Registrable Securities held by the HMTF
Holders and their direct or indirect transferees (the "HMTF Shelf Registration")
pursuant to Rule 415; provided, that the aggregate amount of Registrable
Securities that may be included in such HMTF Shelf Registration may not exceed
25% of the HMTF Holders' Initial Amount. Upon receipt of a request for the HMTF
Shelf Registration, the Company shall promptly (but in any event within 10
business days) give written notice of the proposed HMTF Shelf Registration to
all other HMTF Holders, and all such Holders (including their direct and
indirect transferees) shall have the right to include Registrable Securities in
the HMTF Shelf Registration subject to the foregoing limitation. From and after
the second anniversary of the Closing Date, the Majority HMTF Holders may make a
written request that the Company amend the HMTF Shelf Registration to include in
the HMTF Shelf Registration no more than 50% of the HMTF Holders' Initial
Amount. Upon receipt of such request, the Company shall promptly (but in any
event within 10 business days) give written notice of the proposed amendment to
all other HMTF Holders, and all such Holders (including their direct and
indirect transferees) shall have the right to include Registrable Securities in
the amended HMTF Shelf Registration subject to the foregoing limitation. From
and after the third anniversary of the Closing Date, the Majority HMTF Holders'
may make a written request that the Company amend the HMTF Shelf Registration to
include in the HMTF Shelf Registration no more than 75% of the HMTF Holders'
Initial Amount. Upon receipt of such request, the Company shall promptly (but in
any event within 10 business days) give written notice of the proposed amendment
to all other HMTF Holders, and all such Holders (including their direct and
indirect transferees) shall have the right to include Registrable Securities in
the amended HMTF Shelf Registration subject to the foregoing limitation. From
and after the fourth anniversary of the Closing Date, the Majority HMTF Holders
may make a written request that the Company amend the HMTF Shelf Registration to
include in the HMTF Shelf Registration up to 100% of the HMTF Holders' Initial
Amount. Upon receipt of such request, the Company shall promptly (but in any
event within 10 business days) give written notice of the proposed amendment to
all other HMTF Holders, and all such Holders (including their direct and
indirect transferees) shall have the right to include
-8-
Registrable Securities in the amended HMTF Shelf Registration up to 100% of the
HMTF Holders' Initial Amount.
(c) If the Company's ability to amend the registration statement for
the Liberty Shelf Registration or the HMTF Shelf Registration (each, a "Shelf
Registration") to increase the number of Registrable Securities included therein
(or to file a new shelf registration statement in respect thereof) in accordance
with this Section 2.3 is subject to any contractual limitations that could delay
the Company's ability to file or cause to become effective such registration
statement, then, if requested by the Majority Liberty Holders (in the case of
Section 2.3(a)) or the Majority HMTF Holders (in the case of Section 2.3(b)) the
Company shall, in lieu of following the procedure set forth in Section 2.3(a) or
Section 2.3(b), as the case may be, file a single registration statement for the
Shelf Registration referred to in the applicable provisions of such Sections
(and cause such registration statement to become and remain effective for the
period set forth in Section 3.1) that would permit the offering of such portion
of the Registrable Securities (up to 100%) as may be requested by the Majority
Liberty Holders (in the case of Section 2.3(a)) or the Majority HMTF Holders (in
the case of Section 2.3(b)), (it being understood and agreed that the Holders of
the Registrable Securities would not have the right to offer and sell from such
Shelf Registration Registrable Securities other than in accordance with the
schedule and amounts set forth in Section 2.3(a) or Section 2.3(b), as
applicable).
Article III
Registration Procedures
3.1 Filings; Information
In connection with the registration of Registrable Securities pursuant to
Section 2.1, Section 2.2 and Section 2.3 hereof, the Company will use its
reasonable best efforts to effect the registration of such Registrable
Securities as promptly as is reasonably practicable, and in connection with any
such request:
(a) The Company will expeditiously prepare and file with the Commission
a registration statement on any form for which the Company then qualifies and
which counsel for the Company shall deem appropriate and available for the sale
of the Registrable Securities to be registered thereunder in accordance with the
intended method of distribution thereof, and use its reasonable best efforts to
cause such filed registration statement to become and remain effective (i) with
respect to any Demand Registration or Piggyback Registration, for such period,
not to exceed 60 days, as may be reasonably necessary to effect the sale of such
securities, (ii) with respect to a Shelf Registration, until the earlier of the
sale of all Registrable Securities thereunder and the fifth anniversary of the
Closing Date (or if such Shelf Registration is filed or amended on or after the
fourth anniversary of the Closing Date, then the earlier of the sale of all
Registrable Securities thereunder and the second anniversary of the effective
date of such Shelf Registration) (it being understood that if at any time all
the Registrable Securities then permitted to be sold under such Shelf
Registration pursuant to Section 2.3 have been sold but the Holders have the
right to request the addition of additional Registrable Securities to the Shelf
Registration in the future pursuant to Section 2.3, the Company may (at its
option) either cause the registration statement to remain effective
(notwithstanding the fact that all securities then registrable on such
-9-
shelf registration statement shall have been sold) and file post-effective
amendments when required to permit the sale of the additional Registrable
Securities or prepare and file, and cause to become and remain effective, a new
shelf registration statement to effect the registration of the additional
Registrable Securities when required pursuant to Section 2.3); provided that if
the Company shall furnish to the Selling Holder a certificate signed by the
Company's Chairman, President or any Executive Vice-President or Vice-President
stating that the Company's Board of Directors has determined in good faith that
it would be detrimental or otherwise disadvantageous to the Company or its
stockholders for such a registration statement to be filed as expeditiously as
possible because the sale of Registrable Securities covered by such Registration
Statement or the disclosure of information in any related prospectus or
prospectus supplement would materially interfere with any acquisition, financing
or other material event or transaction which is then intended or the public
disclosure of which at the time would be materially prejudicial to the Company,
the Company may postpone the filing or effectiveness of a registration statement
for a period of not more than 120 days; provided that during any 360-day period
the Company shall use its reasonable best efforts to permit a period of at least
180 consecutive days during which the Company will make a registration statement
available under this Agreement; and provided further that if (i) the effective
date of any registration statement filed pursuant to a Demand Registration would
otherwise be at least 45 calendar days, but fewer than 90 calendar days, after
the end of the Company's fiscal year, and (ii) the Securities Act requires the
Company to include audited financials as of the end of such fiscal year, the
Company may delay the effectiveness of such registration statement for such
period as is reasonably necessary to include therein its audited financial
statements for such fiscal year. If the Company exercises its right to postpone
the filing or effectiveness of a registration statement, the applicable
Requesting Holders shall be entitled to withdraw their request for such Demand
Registration and it shall not count as a Demand Registration.
(b) Anything in this Agreement to the contrary notwithstanding, it is
understood and agreed that the Company shall not be required to keep any shelf
registration effective or useable for offers and sales of the Registrable
Securities, file a post effective amendment to a shelf registration statement or
prospectus supplement or to supplement or amend any registration statement, if
the Company is then involved in discussions concerning, or otherwise engaged in,
any material financing or investment, acquisition or divestiture transaction or
other material business purpose if the Company determines in good faith that the
making of such a filing, supplement or amendment at such time would interfere
with such transaction or purpose. The Company shall promptly give the Holders of
Registrable Securities written notice of such postponement containing a general
statement of the reasons for such postponement and an approximation of the
anticipated delay. Upon receipt by a Holder of Registrable Securities of notice
of an event of the kind described in this Section 3.1(b), such Holder shall
forthwith discontinue such Holder's disposition of Registrable Securities until
such Holder's receipt of notice from the Company that such disposition may
continue and of any supplemented or amended prospectus indicated in such notice.
The Company shall use its reasonable best efforts to permit sales of Registrable
Securities on such shelf registration statement for at least 180 days during any
360-day period. In the event the Company shall give notice of an event of the
kind described in this Section 3.1(b), the Company shall extend the period
during which the applicable registration statement shall be maintained effective
as provided in Section 3.1(a) hereof by the number of days during the period
from and including the date of the giving of such notice to the date when the
Company shall give notice to the Selling Holders that such
-10-
dispositions of such Registrable Securities may continue and shall have made
available to the Selling Holders any such supplemented or amended prospectus.
(c) The Company will, if requested, prior to filing such registration
statement or any amendment or supplement thereto, furnish to the Selling
Holders, and each applicable managing Underwriter, if any, copies thereof, and
thereafter furnish to the Selling Holders and each such Underwriter, if any,
such number of copies of such registration statement, amendment and supplement
thereto (in each case including all exhibits thereto and documents incorporated
by reference therein) and the prospectus included in such registration statement
(including each preliminary prospectus) as the Selling Holders or each such
Underwriter may reasonably request in order to facilitate the sale of the
Registrable Securities by the Selling Holders.
(d) After the filing of the registration statement, the Company will
promptly notify the Selling Holders of any stop order issued or, to the
Company's knowledge, threatened to be issued by the Commission and take all
reasonable actions required to prevent the entry of such stop order or to remove
it if entered.
(e) The Company will use its commercially reasonable efforts to qualify
the Registrable Securities for offer and sale under such other securities or
blue sky laws of such jurisdictions in the United States as the Selling Holders
reasonably request; keep each such registration or qualification (or exemption
therefrom) effective during the period in which such registration statement is
required to be kept effective; and do any and all other acts and things which
may be reasonably necessary or advisable to enable each Selling Holder to
consummate the disposition of the Registrable Securities owned by such Selling
Holder in such jurisdictions; provided that the Company will not be required to
(i) qualify generally to do business in any jurisdiction where it would not
otherwise be required to qualify but for this paragraph 3.1(e), (ii) subject
itself to taxation in any such jurisdiction or (iii) consent to general service
of process in any such jurisdiction.
(f) The Company will as promptly as is practicable notify the Selling
Holders, at any time when a prospectus relating to the sale of the Registrable
Securities is required by law to be delivered in connection with sales by an
Underwriter or dealer, of the occurrence of any event requiring the preparation
of a supplement or amendment to such prospectus so that, as thereafter delivered
to the purchasers of such Registrable Securities, such 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 the light of the circumstances under which they were made, not misleading and
promptly make available to the Selling Holders and to the Underwriters any such
supplement or amendment. Upon receipt of any notice of the occurrence of any
event of the kind described in the preceding sentence, Selling Holders will
forthwith discontinue the offer and sale of Registrable Securities pursuant to
the registration statement covering such Registrable Securities until receipt by
the Selling Holders and the Underwriters of the copies of such supplemented or
amended prospectus and, if so directed by the Company, the Selling Holders will
deliver to the Company all copies, other than permanent file copies then in the
possession of Selling Holders, of the most recent prospectus covering such
Registrable Securities at the time of receipt of such notice. In the event the
Company shall give such notice, the Company shall extend the period during which
such registration statement shall be maintained effective as provided in Section
3.1(a) hereof by the number of days during the
-11-
period from and including the date of the giving of such notice to the date when
the Company shall make available to the Selling Holders such supplemented or
amended prospectus.
(g) The Company will enter into customary agreements (including an
underwriting agreement in customary form) and take such other actions
(including, without limitation, participation in road shows and investor
conference calls) as are required in order to expedite or facilitate the sale of
such Registrable Securities.
(h) At the request of any Underwriter in connection with an
underwritten offering the Company will furnish (i) an opinion of counsel,
addressed to the Underwriters, covering such customary matters as the managing
Underwriter may reasonably request and (ii) a comfort letter or comfort letters
from the Company's independent public accountants covering such customary
matters as the managing Underwriter may reasonably request.
(i) If requested by the managing Underwriter or any Selling Holder, the
Company shall promptly incorporate in a prospectus supplement or post effective
amendment such information as the managing Underwriter or any Selling Holder
reasonably requests to be included therein, including without limitation, with
respect to the Registrable Securities being sold by such Selling Holder, the
purchase price being paid therefor by the Underwriters and with respect to any
other terms of the underwritten offering of the Registrable Securities to be
sold in such offering, and promptly make all required filings of such prospectus
supplement or post effective amendment.
(j) The Company shall promptly make available for inspection by any
Selling Holder or Underwriter participating in any disposition pursuant to any
registration statement, and any attorney, accountant or other agent or
representative retained by any such Selling Holder or Underwriter (collectively,
the "Inspectors"), all financial and other records, pertinent corporate
documents and properties of the Company (collectively, the "Records"), as shall
be reasonably necessary to enable them to exercise their due diligence
responsibility, and cause the Company's officers, directors and employees to
supply all information requested by any such Inspector in connection with such
registration statement; provided, however, that unless the disclosure of such
Records is necessary to avoid or correct a misstatement or omission in the
registration statement or the release of such Records is ordered pursuant to a
subpoena or other order from a court of competent jurisdiction, the Company
shall not be required to provide any information under this subparagraph (j) if
(A) the Company believes, after consultation with counsel for the Company, that
to do so would cause the Company to forfeit an attorney-client privilege that
was applicable to such information or (B) if either (1) the Company has
requested and been granted from the Commission confidential treatment of such
information contained in any filing with the Commission or documents provided
supplementally or otherwise or (2) the Company reasonably determines in good
faith that such Records are confidential and so notifies the Inspectors in
writing unless prior to furnishing any such information with respect to (A) or
(B) such Holder of Registrable Securities requesting such information agrees to
enter into a confidentiality agreement in customary form and subject to
customary exceptions; provided further, however, that each Holder of Registrable
Securities agrees that it will, upon learning that disclosure of such Records is
sought in a court of competent jurisdiction, give notice to the Company and
allow the Company, at its expense, to undertake appropriate action and to
prevent disclosure of the Records deemed confidential.
-12-
(k) The Company shall cause the Registrable Securities included in any
registration statement to be (A) listed on each securities exchange, if any, on
which similar securities issued by the Company are then listed, or (B)
authorized to be quoted and/or listed (to the extent applicable) on the Nasdaq
National Market if the Registrable Securities so qualify.
(l) The Company shall provide a CUSIP number for the Registrable
Securities included in any registration statement not later than the effective
date of such registration statement.
(m) The Company shall cooperate with each Selling Holder and each
Underwriter participating in the disposition of such Registrable Securities and
their respective counsel in connection with any filings required to be made with
the National Association of Securities Dealers, Inc.
(n) The Company shall during the period when the prospectus is required
to be delivered under the Securities Act, promptly file all documents required
to be filed with the Commission pursuant to Sections 13(a), 13(c), 14 or 15(d)
of the Exchange Act.
(o) The Company will make generally available to its security holders,
as soon as reasonably practicable, an earnings statement covering a period of 12
months, beginning within three months after the effective date of the
registration statement, which earnings statement shall satisfy the provisions of
Section 11(a) of the Securities Act and the rules and regulations of the
Commission thereunder.
The Company may require Selling Holders promptly to furnish in writing to
the Company such information regarding such Selling Holders, the plan of
distribution of the Registrable Securities and other information as the Company
may from time to time reasonably request or as may be legally required in
connection with such registration.
3.2 Registration Expenses
In connection with any Registration effected hereunder, the Company shall
pay the following expenses incurred in connection with such registration (the
"Registration Expenses"): (i) registration and filing fees with the Commission
and the National Association of Securities Dealers, Inc., (ii) fees and expenses
of compliance with securities or blue sky laws (including reasonable fees and
disbursements of counsel in connection with blue sky qualifications of the
Registrable Securities), (iii) printing expenses, (iv) fees and expenses
incurred in connection with the listing or quotation of the Registrable
Securities, (v) fees and expenses of counsel to the Company and the reasonable
fees and expenses of independent certified public accountants for the Company
(including fees and expenses associated with the special audits or the delivery
of comfort letters), (vi) the reasonable fees and expenses of any additional
experts retained by the Company in connection with such registration, (vii) all
roadshow costs and expenses not paid by the Underwriters and (viii) the
reasonable fees and expenses of one counsel for the Selling Holders.
-13-
Article IV
Indemnification and Contribution
4.1 Indemnification by the Company
The Company agrees to indemnify and hold harmless each Selling Holder and
its Affiliates and their respective officers, directors, partners, stockholders,
members, employees, agents and representatives and each Person (if any) which
controls a Selling Holder within the meaning of either Section 15 of the
Securities Act or Section 20 of the Exchange Act, from and against any and all
losses, claims, damages, liabilities, costs and expenses (including reasonable
attorneys' fees) caused by, arising out of, resulting from or related to any
untrue statement or alleged untrue statement of a material fact contained or
incorporated by reference in any registration statement or prospectus relating
to the Registrable Securities (as amended or supplemented if the Company shall
have furnished any amendments or supplements thereto) or any preliminary
prospectus, or caused by any omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the statements
therein not misleading, except insofar as such losses, claims, damages or
liabilities are caused by or based upon any information furnished in writing to
the Company by or on behalf of such Selling Holder expressly for use therein or
by the Selling Holder's failure to deliver a copy of the registration statement
or prospectus or any amendments or supplements thereto after the Company has
furnished the Selling Holder with copies of the same; provided, however, that
the Company shall have no obligation to indemnify under this sentence to the
extent any such losses, claims, damages or liabilities have been finally and
non-appealably determined by a court to have resulted from such Selling Holder's
willful misconduct or gross negligence. The Company also agrees to indemnify any
Underwriters of the Registrable Securities, their officers and directors and
each person who controls such Underwriters on substantially the same basis as
that of the indemnification of the Selling Holders provided in this Section 4.1,
except insofar as such losses, claims, damages or liabilities are caused by or
based upon any information furnished in writing to the Company by or on behalf
of such Underwriter expressly for use therein or by the Underwriter's failure to
deliver a copy of the registration statement or prospectus or any amendments or
supplements thereto after the Company has furnished the Underwriter with copies
of the same; provided, however, that the Company shall have no obligation to
indemnify under this sentence to the extent any such losses, claims, damages or
liabilities have been finally and non-appealably determined by a court to have
resulted from any such Underwriter's willful misconduct or gross negligence.
4.2 Indemnification by Selling Holders
Each Selling Holder agrees to indemnify and hold harmless the Company, its
officers and directors, and each Person, if any, which controls the Company
within the meaning of either Section 15 of the Securities Act or Section 20 of
the Exchange Act to the same extent as the foregoing indemnity from the Company
to each Selling Holder, but only with reference to information furnished in
writing by or on behalf of such Selling Holder expressly for use in any
registration statement or prospectus relating to the Registrable Securities, or
any amendment or supplement thereto, or any preliminary prospectus. Each Selling
Holder also agrees to indemnify and hold harmless any Underwriters of the
Registrable Securities, their officers and
-14-
directors and each person who controls such Underwriters on substantially the
same basis as that of the indemnification of the Company provided in this
Section 4.2, but only with reference to information furnished in writing by or
on behalf of such Selling Holder expressly for use in any registration statement
or prospectus relating to the Registrable Securities, or any amendment or
supplement thereto, or any preliminary prospectus. Each such Selling Holder's
liability under this Section 4.2 shall be limited to an amount equal to the net
proceeds (after deducting the underwriting discount and expenses) received by
such Selling Holder from the sale of such Registrable Securities by such Selling
Holder. The obligation of each Selling Holder shall be several and not joint.
4.3 Conduct of Indemnification Proceedings
In case any proceeding (including any governmental investigation) shall be
instituted involving any Person in respect of which indemnity may be sought
pursuant to Section 4.1 or Section 4.2, such Person (the "Indemnified Party")
shall promptly notify the Person against whom such indemnity may be sought (the
"Indemnifying Party") in writing and the Indemnifying Party, upon the request of
the Indemnified Party, shall retain counsel reasonably satisfactory to such
Indemnified Party to represent such Indemnified Party and any others the
Indemnifying Party may designate in such proceeding and shall pay the fees and
disbursements of such counsel related to such proceeding. In any such
proceeding, any Indemnified Party shall have the right to retain its own
counsel, but the fees and expenses of such counsel shall be at the expense of
such Indemnified Party unless (i) the Indemnifying Party and the Indemnified
Party shall have mutually agreed to the retention of such counsel or (ii) the
named parties to any such proceeding (including any impleaded parties) include
both the Indemnified Party and the Indemnifying Party and, in the written
opinion of counsel for the Indemnified Party, representation of both parties by
the same counsel would be inappropriate due to actual or potential differing
interests between them. It is understood that the Indemnifying Party shall not,
in connection with any proceeding or related proceedings in the same
jurisdiction, be liable for the fees and expenses of more than one separate firm
of attorneys (in addition to any local counsel) at any time for all such
Indemnified Parties, and that all such fees and expenses shall be reimbursed as
they are incurred. In the case of any such separate firm for the Indemnified
Parties, such firm shall be designated in writing by the Indemnified Parties.
The Indemnifying Party shall not be liable for any settlement of any proceeding
effected without its written consent, but if settled with such consent (not to
be unreasonably withheld), or if there be a final judgment for the plaintiff,
the Indemnifying Party shall indemnify and hold harmless such Indemnified
Parties from and against any loss or liability (to the extent stated above) by
reason of such settlement or judgment.
4.4 Contribution
If the indemnification provided for in this Article IV is unavailable to
an Indemnified Party in respect of any losses, claims, damages or liabilities in
respect of which indemnity is to be provided hereunder, then each such
Indemnifying Party, in lieu of indemnifying such Indemnified Party, shall to the
fullest extent permitted by law contribute to the amount paid or payable by such
Indemnified Party as a result of such losses, claims, damages or liabilities in
such proportion as is appropriate to reflect the relative fault of such party in
connection with the statements or omissions that resulted in such losses,
claims, damages or liabilities, as well as any
-15-
other relevant equitable considerations. The relative fault of the Company, a
Selling Holder and the Underwriters 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 such party and the parties' relative intent, knowledge,
access to information and opportunity to correct or prevent such statement or
omission.
The Company and each Selling Holder agrees that it would not be just and
equitable if contribution pursuant to this Section 4.4 were determined by pro
rata allocation (even if the Underwriters were treated as one entity for such
purpose) or by any other method of allocation that does not take account of the
equitable considerations referred to in the immediately preceding paragraph. The
amount paid or payable by an Indemnified Party as a result of the losses,
claims, damages or liabilities referred to in the immediately preceding
paragraph shall be deemed to include, subject to the limitations set forth
above, any legal or other expenses reasonably incurred by such Indemnified Party
in connection with investigating or defending any such action or claim.
Notwithstanding the provisions of this Article IV, no Underwriter shall be
required to contribute any amount in excess of the amount by which the total
price at which the securities underwritten by it and distributed to the public
were offered to the public exceeds the amount of any damages which such
Underwriter has otherwise been required to pay by reason of such untrue or
alleged untrue statement or omission or alleged omission, and each Selling
Holder shall not be required to contribute any amount in excess of the amount by
which the net proceeds of the offering (before deducting expenses) received by
such Selling Holder exceeds the amount of any damages which such Selling Holder
has 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.
Article V
Miscellaneous
5.1 Participation in Underwritten Registrations
No Person may participate in any underwritten registered offering
contemplated hereunder unless such Person (a) agrees to sell its securities on
the basis provided in any underwriting arrangements approved by the Persons
entitled hereunder to approve such arrangements, (b) completes and executes all
questionnaires, powers of attorney, custody arrangements, indemnities,
underwriting agreements and other documents reasonably required under the terms
of such underwriting arrangements and this Agreement and (c) furnishes in
writing to the Company such information regarding such Person, the plan of
distribution of the Registrable Securities and other information as the Company
may from time to time request or as may be legally required in connection with
such registration; provided, however, that no such Person shall be required to
make any representations or warranties in connection with any such registration
other than representations and warranties as to (i) such Person's ownership of
his or its Registrable Securities to be sold or transferred free and clear of
all liens, claims and encumbrances, (ii) such Person's power and authority to
effect such transfer and (iii) such matters pertaining to compliance with
securities laws as may be reasonably requested; provided
-16-
further, however, that the obligation of such Person to indemnify pursuant to
any such underwriting agreements shall be several, not joint and several, among
such Persons selling Registrable Securities, and the liability of each such
Person will be in proportion to, and provided further that such liability will
be limited to, the net amount received by such Person from the sale of such
Person's Registrable Securities pursuant to such registration.
5.2 Rule 144
The Company covenants that it will file any reports required to be filed
by it under the Securities Act and the Exchange Act and that it will take such
further action as the Holders may reasonably request to the extent required from
time to time to enable the Holders to sell Registrable Securities without
registration under the Securities Act within the limitation of the exemptions
provided by Rule 144 under the Securities Act, as such Rule may be amended from
time to time, or any similar rule or regulation hereafter adopted by the
Commission. Upon the request of any Holder, the Company will deliver to such
Holder a written statement as to whether it has complied with such reporting
requirements.
5.3 Holdback Agreements
The Liberty Holders, for so long as they collectively own Registrable
Securities representing 10% or more of the voting power of the outstanding
voting securities of the Company, and the HMTF Holders, for so long as they
collectively own Registrable Securities representing 10% or more of the voting
power of the outstanding voting securities of the Company, severally agree, in
the event of an underwritten offering by the Company (whether for the account of
the Company or otherwise) not to offer, sell, contract to sell or otherwise
dispose of any Registrable Securities, or any securities convertible into or
exchangeable or exercisable for such securities, including any sale pursuant to
Rule 144 under the Securities Act (except as part of such underwritten
offering), during the 14 days prior to, and during the 90-day period (or such
lesser period as the lead or managing underwriters may require) beginning on,
the effective date of the registration statement for such underwritten offering
(or, in the case of an offering pursuant to an effective shelf registration
statement pursuant to Rule 415, the pricing date for such underwritten
offering), provided that in connection with such underwritten offering each
officer and director of the Company and holder of 10% or more of the Common
Stock is subject to restrictions substantially equivalent to those imposed on
the Liberty Holders and the HMTF Holders.
5.4 Termination
The registration rights granted under this Agreement will terminate on
_________, 2015, or such earlier time as there shall no longer be any
Registrable Securities; provided, however, that if all shares of Series A
Preferred Stock outstanding on such date shall not have been redeemed in full in
accordance with Section 10 of the Certificate of Designations, this Agreement
shall remain in full force and effect with respect to the Registrable Securities
until such time as the shares of Series A Preferred Stock have been so redeemed
in full.
-17-
5.5 Amendments, Waivers, Etc.
This Agreement may not be amended, waived or otherwise modified or
terminated except by an instrument in writing signed by the Company and the
Holders of at least 50% of the Registrable Securities then held by all the
Holders, if the amendment is to be effective against the Holders.
5.6 Counterparts
This Agreement may be executed in one or more counterparts, all of which
shall be considered one and the same agreement. Each party need not sign the
same counterpart.
5.7 Entire Agreement
This Agreement (i) constitutes the entire agreement and supersedes all
prior agreements and understandings, both written and oral, among the parties
with respect to the subject matter hereof.
5.8 Governing Law
This Agreement shall be governed by, and construed in accordance with, the
laws of the State of New York regardless of the laws that might otherwise govern
under applicable principles of conflicts of law thereof.
5.9 Assignment of Registration Rights
Each Holder of the Registrable Securities may assign all or any part of
its rights under this Agreement to any person to whom such Holder sells,
transfers, assigns or pledges such Registrable Securities. In the event that the
Holder shall assign its rights pursuant to this Agreement in connection with the
transfer of less than all its Registrable Securities, the Holder shall also
retain its rights with respect to its remaining Registrable Securities.
18
IN WITNESS WHEREOF, the Company and each Holder has caused this
Agreement to be signed on its behalf by its officer thereunto duly authorized as
of the date first written above.
ICG COMMUNICATIONS, INC.
By:
--------------------------------
Name:
Title:
[HMTF ENTITIES]
By:
--------------------------------
Name:
Title:
LIBERTY MEDIA CORPORATION
By:
--------------------------------
Name:
Title:
GLEACHER/ICG INVESTORS LLC
By:
--------------------------------
Name:
Title:
SCHEDULE I
Purchasers Number Number of Purchase Price
of Series A Warrants of the Shares
Preferred
Stock
Liberty Media Corporation 500,000 6,666,667 $500,000,000
[HMTF Entities] 230,000 3,066,667 $230,000,000
Gleacher/ICG Investors LLC 20,000 266,666 $20,000,000
EXHIBIT D
Form of Legal opinion
EXHIBIT D
1. The Company is a corporation duly incorporated, validly existing and in
good standing under the laws of the State of Delaware and has all
corporate powers required to carry on its business as now conducted.
2. The execution, delivery and performance by the Company of the Agreement
and the other Equity Documents are within the corporate power of the
Company and have been duly authorized by all necessary corporate and
shareholder action on the part of the Company.
3. The execution, delivery and performance by the Company of the Agreement
and and the other Equity Documents and the consummation of the
transactions contemplated therein do not and will not (i) violate the
certificate of incorporation or bylaws of the Company, (ii) violate any
Applicable Law, other than violations that would be immaterial to the
Company and Purchasers, (iii) except as to matters which would be
immaterial to the Company and Purchasers, constitute a default under, or
give rise to any rights of termination, cancellation or acceleration of
any right or obligation of the Company or its Subsidiaries or to a loss of
any benefit to which the Company or its Subsidiaries is entitled under any
provision of any agreement or other instrument binding upon the Company or
its Subsidiaries or (iv) result in the creation or imposition of any Lien
on any asset of the Company or its Subsidiaries except where such Lien
would not have a Material Adverse Effect.
4. The Agreement and the other Equity Documents constitute valid and binding
agreements of the Company, enforceable in accordance with their terms,
subject to the effects of applicable bankruptcy, insolvency and similar
laws affecting creditors' rights generally and equitable principles of
general applicability.
5. The authorized capital stock of the Company conforms as to legal matters
to the description thereof set forth in Section 3.2 of the Agreement. All
outstanding capital stock of the Company is duly authorized, validly
issued and fully paid and non-assessable. The issuance, sale and delivery
of the Shares and the Warrants have been duly authorized by all requisite
corporate and shareholder action of the Company. The Shares issued to
Purchasers on the Closing Date are, and any additional Shares when issued
to the Purchasers in accordance with the terms of the Certificate of
Designation will be, validly issued, fully paid and non-assessable, free
and clear of any Liens and not subject to preemptive or other similar
rights of the stockholders of the Company.
6. The shares of common stock into which the Series A Preferred Stock is
convertible have been duly and validly authorized and, when issued and
delivered upon conversion of the Series A Preferred Stock, as contemplated
in the Certificate of Designation, will be validly issued, fully paid, and
non-assessable.
7. The shares of common stock issuable upon exercise of the Warrants have
been duly and validly authorized and, when issued and delivered upon
exercise of the Warrants, will be validly issued, fully paid, and
non-assessable.
8. The Certificate of Designation has been duly authorized and executed by
the Company, and based upon advice from Corporation Trust Company, has
been filed with the Secretary of State of the State of Delaware.
EXHIBIT E
Form of Management Rights Agreement
EXHIBIT E
MANAGEMENT RIGHTS AGREEMENT
ICG Communications, Inc. (the "Company") hereby acknowledges and agrees the
▇▇▇▇▇ Muse, ▇▇▇▇ & ▇▇▇▇▇ [ ] Fund, L.P., the indirect owner of an equity
interest in the Company, or, in the event that any other affiliate of Hicks,
Muse, ▇▇▇▇ & ▇▇▇▇▇, Incorporated becomes the indirect owner of such equity
interest in the Company (collectively, the "Fund"), directly has the right to
exercise on its behalf the management rights associated with such equity
interest so long as it is the indirect owner of such equity interest in the
Company. The Company also agrees that the Fund has the following additional
management rights so long as it is the indirect owner of such equity interest in
the Company:
(a) the right to receive the same information as provided to members of the
board of directors of the Company; provided, however, that the Company
reserves the right to exclude any information that a majority of the board
of directors determine in good faith could adversely affect the
attorney-client privilege between the Company and its counsel, or
otherwise have a detrimental effect on the Company.
(b) upon a reasonable request of the Fund and at reasonable times during
normal business hours, to receive income statements, balance sheets,
budgets, business plans and other financial information and to inspect
books and records of the Company; and
(c) upon a reasonable request and at reasonable times during normal business
hours, to meet and consult with management with respect to the business of
the Company.
The above-mentioned rights are intended to satisfy the requirement of management
rights for purposes of qualifying the Fund's indirect ownership of an interest
in the Company as a venture capital investment for purposes of the Department of
Labor "plan asset" regulations, 29 C.F.R. ss. 2510.3-101, and in the event such
rights are not satisfactory for such purpose, the Company and the Fund shall
reasonably cooperate in good faith to agree upon mutually satisfactory
management rights which satisfy such regulations. The Company hereby
acknowledges and agrees that the foregoing management rights have been and are
effective as of the date of the Fund's indirect investment in the Company.
DATED: , 2000
------------
ICG COMMUNICATIONS, INC.
By:
------------------------------------
Name:
Title: