-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, JTjBC592hl//jQajyAapJ5l/nCkHrUCedpjdkhLGl5IwsCU5s6sFp2vb4w0SL+KV M+xWkYfLJfUyBZtZso2EDg== 0000909518-99-000252.txt : 19990420 0000909518-99-000252.hdr.sgml : 19990420 ACCESSION NUMBER: 0000909518-99-000252 CONFORMED SUBMISSION TYPE: SC 13D PUBLIC DOCUMENT COUNT: 5 FILED AS OF DATE: 19990419 GROUP MEMBERS: HICKS THOMAS O GROUP MEMBERS: HICKS, MUSE FUND IV LLC GROUP MEMBERS: HICKS, MUSE GP PARTNERS IV, L.P. GROUP MEMBERS: HM4 RCN COINVESTORS, L.P. GROUP MEMBERS: HM4 RCN PARTNERS GROUP MEMBERS: HM4 RCN PRIVATE FUND, L.P. GROUP MEMBERS: HM4 RCN QUALIFIED FUND, L.P. SUBJECT COMPANY: COMPANY DATA: COMPANY CONFORMED NAME: RCN CORP /DE/ CENTRAL INDEX KEY: 0001041858 STANDARD INDUSTRIAL CLASSIFICATION: TELEPHONE COMMUNICATIONS (NO RADIO TELEPHONE) [4813] IRS NUMBER: 223498533 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: SC 13D SEC ACT: SEC FILE NUMBER: 005-51715 FILM NUMBER: 99596804 BUSINESS ADDRESS: STREET 1: 105 CARNEGIE CENTER CITY: PRINCETON STATE: NJ ZIP: 08540 BUSINESS PHONE: 6097343700 MAIL ADDRESS: STREET 1: 105 CARNEGIE CENTER CITY: PRINCETON STATE: NJ ZIP: 08540 FILED BY: COMPANY DATA: COMPANY CONFORMED NAME: HICKS THOMAS O CENTRAL INDEX KEY: 0000938201 STANDARD INDUSTRIAL CLASSIFICATION: [] IRS NUMBER: 459720171 FILING VALUES: FORM TYPE: SC 13D BUSINESS ADDRESS: STREET 1: 200 CRESCENT COURT STREET 2: SUITE 1600 CITY: DALLAS STATE: TX ZIP: 75201 BUSINESS PHONE: 2147407300 MAIL ADDRESS: STREET 1: 200 CRESCENT COURT STREET 2: SUITE 1600 CITY: DALLAS STATE: TX ZIP: 75201 SC 13D 1 SECURITIES AND EXCHANGE COMMISSION WASHINGTON, D.C. 20549 - -------------------------------------------------------------------------------- SCHEDULE 13D (RULE 13D-101) Under the Securities Exchange Act of 1934 (AMENDMENT NO. __) RCN CORPORATION - -------------------------------------------------------------------------------- (Name of Issuer) COMMON STOCK, $1.00 PAR VALUE - -------------------------------------------------------------------------------- (Title of Class of Securities) 7493 6101 - -------------------------------------------------------------------------------- (CUSIP Number) c/o Hicks, Muse, Tate & Furst Incorporated 200 Crescent Court, Suite 1600 Dallas, Texas 75201 (214) 740-7300 - -------------------------------------------------------------------------------- (Name, address and telephone number of person authorized to receive notices and communications) April 7, 1999 - -------------------------------------------------------------------------------- (Date of event which requires filing of this Statement) If the filing person has previously filed a statement on Schedule 13G to report the acquisition that is the subject of this Schedule 13D, and is filing this schedule because of Rule 13d-1(e), (f) or (g), check the following box [ ]. (Continued on following pages) Page 1 E:\DATA\26\52626\0591\2205\8SCHRCN1.DOC
- ------------------------------------------------- ------------------------------------------------- CUSIP No. 7493 6101 13D Page 2 of 24 - ------------------------------------------------- ------------------------------------------------- - --------- ------------------------------------------------------------------------------------------------------------- 1 NAME OF REPORTING PERSON I.R.S. IDENTIFICATION NO. OF ABOVE PERSON (entities only) MR. THOMAS O. HICKS - --------- ------------------------------------------------------------------------------------------------------------- 2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) [ ] (b) [X] - --------- ------------------------------------------------------------------------------------------------------------- 3 SEC USE ONLY - --------- ------------------------------------------------------------------------------------------------------------- 4 SOURCE OF FUNDS N/A - --------- ------------------------------------------------------------------------------------------------------------- 5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEM 2(d) or 2(e) [ ] - --------- ------------------------------------------------------------------------------------------------------------- 6 CITIZENSHIP OR PLACE OF ORGANIZATION UNITED STATES - --------- ------------------------------------------------------------------------------------------------------------- 7 SOLE VOTING POWER NUMBER OF SHARES BENEFICIALLY OWNED BY EACH REPORTING PERSON WITH ------- ------------------------------------------------------------------ 8 SHARED VOTING POWER 6,410,256** ------- ------------------------------------------------------------------ 9 SOLE DISPOSITIVE POWER ------- ------------------------------------------------------------------ 10 SHARED DISPOSITIVE POWER 6,410,256** - --------- ------------------------------------------------------------------------------------------------------------- 11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 6,410,256** - --------- ------------------------------------------------------------------------------------------------------------- 12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW 11 EXCLUDES CERTAIN SHARES [ ] - --------- ------------------------------------------------------------------------------------------------------------- 13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW 11 8.7%** - --------- ------------------------------------------------------------------------------------------------------------- 14 TYPE OF REPORTING PERSON IN - --------- ------------------------------------------------------------------------------------------------------------- * THE REPORTING PERSON EXPRESSLY DISCLAIMS (I) THE EXISTENCE OF ANY GROUP AND (II) BENEFICIAL OWNERSHIP WITH RESPECT TO ANY SHARES OTHER THAN THE SHARES OWNED OF RECORD BY SUCH REPORTING PERSON. SEE ITEM 5. ** ASSUMING CONVERSION OF ALL SERIES A 7% SENIOR CONVERTIBLE PREFERRED STOCK BENEFICIALLY OWNED BY SUCH REPORTING PERSON. SEE ITEM 6. - ------------------------------------------------- ------------------------------------------------- CUSIP No. 7493 6101 13D Page 3 of 24 - ------------------------------------------------- ------------------------------------------------- - --------- ------------------------------------------------------------------------------------------------------------- 1 NAME OF REPORTING PERSON I.R.S. IDENTIFICATION NO. OF ABOVE PERSON (entities only) HM4 RCN PARTNERS - --------- ------------------------------------------------------------------------------------------------------------- 2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) [ ] (b) [X] - --------- ------------------------------------------------------------------------------------------------------------- 3 SEC USE ONLY - --------- ------------------------------------------------------------------------------------------------------------- 4 SOURCE OF FUNDS OO - --------- ------------------------------------------------------------------------------------------------------------- 5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEM 2(d) or 2(e) [ ] - --------- ------------------------------------------------------------------------------------------------------------- 6 CITIZENSHIP OR PLACE OF ORGANIZATION TEXAS - --------- ------------------------------------------------------------------------------------------------------------- 7 SOLE VOTING POWER NUMBER OF SHARES BENEFICIALLY OWNED BY EACH REPORTING PERSON WITH ------- ------------------------------------------------------------------ 8 SHARED VOTING POWER 6,410,256** ------- ------------------------------------------------------------------ 9 SOLE DISPOSITIVE POWER ------- ------------------------------------------------------------------ 10 SHARED DISPOSITIVE POWER 6,410,256** - --------- ------------------------------------------------------------------------------------------------------------- 11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 6,410,256** - --------- ------------------------------------------------------------------------------------------------------------- 12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW 11 EXCLUDES CERTAIN SHARES [ ] - --------- ------------------------------------------------------------------------------------------------------------- 13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW 11 8.7%** - --------- ------------------------------------------------------------------------------------------------------------- 14 TYPE OF REPORTING PERSON PN - --------- ------------------------------------------------------------------------------------------------------------- * THE REPORTING PERSON EXPRESSLY DISCLAIMS (I) THE EXISTENCE OF ANY GROUP AND (II) BENEFICIAL OWNERSHIP WITH RESPECT TO ANY SHARES OTHER THAN THE SHARES OWNED OF RECORD BY SUCH REPORTING PERSON. SEE ITEM 5. ** ASSUMING CONVERSION OF ALL SERIES A 7% SENIOR CONVERTIBLE PREFERRED STOCK BENEFICIALLY OWNED BY SUCH REPORTING PERSON. SEE ITEM 6. - ------------------------------------------------- ------------------------------------------------- CUSIP No. 7493 6101 13D Page 4 of 24 - ------------------------------------------------- ------------------------------------------------- - --------- ------------------------------------------------------------------------------------------------------------- 1 NAME OF REPORTING PERSON I.R.S. IDENTIFICATION NO. OF ABOVE PERSON (entities only) HM4 RCN QUALIFIED FUND, L.P. - --------- ------------------------------------------------------------------------------------------------------------- 2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) [ ] (b) [X] - --------- ------------------------------------------------------------------------------------------------------------- 3 SEC USE ONLY - --------- ------------------------------------------------------------------------------------------------------------- 4 SOURCE OF FUNDS OO - --------- ------------------------------------------------------------------------------------------------------------- 5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEM 2(d) or 2(e) [ ] - --------- ------------------------------------------------------------------------------------------------------------- 6 CITIZENSHIP OR PLACE OF ORGANIZATION TEXAS - --------- ------------------------------------------------------------------------------------------------------------- 7 SOLE VOTING POWER NUMBER OF SHARES BENEFICIALLY OWNED BY EACH REPORTING PERSON WITH ------- ------------------------------------------------------------------ 8 SHARED VOTING POWER 6,410,256** ------- ------------------------------------------------------------------ 9 SOLE DISPOSITIVE POWER ------- ------------------------------------------------------------------ 10 SHARED DISPOSITIVE POWER 6,410,256** - --------- ------------------------------------------------------------------------------------------------------------- 11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 6,410,256** - --------- ------------------------------------------------------------------------------------------------------------- 12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW 11 EXCLUDES CERTAIN SHARES [ ] - --------- ------------------------------------------------------------------------------------------------------------- 13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW 11 8.7%** - --------- ------------------------------------------------------------------------------------------------------------- 14 TYPE OF REPORTING PERSON PN - --------- ------------------------------------------------------------------------------------------------------------- * THE REPORTING PERSON EXPRESSLY DISCLAIMS (I) THE EXISTENCE OF ANY GROUP AND (II) BENEFICIAL OWNERSHIP WITH RESPECT TO ANY SHARES OTHER THAN THE SHARES OWNED OF RECORD BY SUCH REPORTING PERSON. SEE ITEM 5. ** ASSUMING CONVERSION OF ALL SERIES A 7% SENIOR CONVERTIBLE PREFERRED STOCK BENEFICIALLY OWNED BY SUCH REPORTING PERSON. SEE ITEM 6. - ------------------------------------------------- ------------------------------------------------- CUSIP No. 7493 6101 13D Page 5 of 24 - ------------------------------------------------- ------------------------------------------------- - --------- ------------------------------------------------------------------------------------------------------------- 1 NAME OF REPORTING PERSON I.R.S. IDENTIFICATION NO. OF ABOVE PERSON (entities only) HM4 RCN PRIVATE FUND, L.P. - --------- ------------------------------------------------------------------------------------------------------------- 2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) [ ] (b) [X] - --------- ------------------------------------------------------------------------------------------------------------- 3 SEC USE ONLY - --------- ------------------------------------------------------------------------------------------------------------- 4 SOURCE OF FUNDS OO - --------- ------------------------------------------------------------------------------------------------------------- 5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEM 2(d) or 2(e) [ ] - --------- ------------------------------------------------------------------------------------------------------------- 6 CITIZENSHIP OR PLACE OF ORGANIZATION TEXAS - --------- ------------------------------------------------------------------------------------------------------------- 7 SOLE VOTING POWER NUMBER OF SHARES BENEFICIALLY OWNED BY EACH REPORTING PERSON WITH ------- ------------------------------------------------------------------ 8 SHARED VOTING POWER 6,410,256** ------- ------------------------------------------------------------------ 9 SOLE DISPOSITIVE POWER ------- ------------------------------------------------------------------ 10 SHARED DISPOSITIVE POWER 6,410,256** - --------- ------------------------------------------------------------------------------------------------------------- 11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 6,410,256** - --------- ------------------------------------------------------------------------------------------------------------- 12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW 11 EXCLUDES CERTAIN SHARES [ ] - --------- ------------------------------------------------------------------------------------------------------------- 13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW 11 8.7%** - --------- ------------------------------------------------------------------------------------------------------------- 14 TYPE OF REPORTING PERSON PN - --------- ------------------------------------------------------------------------------------------------------------- * THE REPORTING PERSON EXPRESSLY DISCLAIMS (I) THE EXISTENCE OF ANY GROUP AND (II) BENEFICIAL OWNERSHIP WITH RESPECT TO ANY SHARES OTHER THAN THE SHARES OWNED OF RECORD BY SUCH REPORTING PERSON. SEE ITEM 5. ** ASSUMING CONVERSION OF ALL SERIES A 7% SENIOR CONVERTIBLE PREFERRED STOCK BENEFICIALLY OWNED BY SUCH REPORTING PERSON. SEE ITEM 6. - ------------------------------------------------- ------------------------------------------------- CUSIP No. 7493 6101 13D Page 6 of 24 - ------------------------------------------------- ------------------------------------------------- - --------- ------------------------------------------------------------------------------------------------------------- 1 NAME OF REPORTING PERSON I.R.S. IDENTIFICATION NO. OF ABOVE PERSON (entities only) HM4 RCN COINVESTORS, L.P. - --------- ------------------------------------------------------------------------------------------------------------- 2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) [ ] (b) [X] - --------- ------------------------------------------------------------------------------------------------------------- 3 SEC USE ONLY - --------- ------------------------------------------------------------------------------------------------------------- 4 SOURCE OF FUNDS OO - --------- ------------------------------------------------------------------------------------------------------------- 5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEM 2(d) or 2(e) [ ] - --------- ------------------------------------------------------------------------------------------------------------- 6 CITIZENSHIP OR PLACE OF ORGANIZATION TEXAS - --------- ------------------------------------------------------------------------------------------------------------- 7 SOLE VOTING POWER NUMBER OF SHARES BENEFICIALLY OWNED BY EACH REPORTING PERSON WITH ------- ------------------------------------------------------------------ 8 SHARED VOTING POWER 6,410,256** ------- ------------------------------------------------------------------ 9 SOLE DISPOSITIVE POWER ------- ------------------------------------------------------------------ 10 SHARED DISPOSITIVE POWER 6,410,256** - --------- ------------------------------------------------------------------------------------------------------------- 11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 6,410,256** - --------- ------------------------------------------------------------------------------------------------------------- 12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW 11 EXCLUDES CERTAIN SHARES [ ] - --------- ------------------------------------------------------------------------------------------------------------- 13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW 11 8.7** - --------- ------------------------------------------------------------------------------------------------------------- 14 TYPE OF REPORTING PERSON PN - --------- ------------------------------------------------------------------------------------------------------------- * THE REPORTING PERSON EXPRESSLY DISCLAIMS (I) THE EXISTENCE OF ANY GROUP AND (II BENEFICIAL OWNERSHIP WITH RESPECT TO ANY SHARES OTHER THAN THE SHARES OWNED OF RECORD BY SUCH REPORTING PERSON. SEE ITEM 5. ** ASSUMING CONVERSION OF ALL SERIES A 7% SENIOR CONVERTIBLE PREFERRED STOCK BENEFICIALLY OWNED BY SUCH REPORTING PERSON. SEE ITEM 6. - ------------------------------------------------- ------------------------------------------------- CUSIP No. 7493 6101 13D Page 7 of 24 - ------------------------------------------------- ------------------------------------------------- - --------- ------------------------------------------------------------------------------------------------------------- 1 NAME OF REPORTING PERSON I.R.S. IDENTIFICATION NO. OF ABOVE PERSON (entities only) HICKS, MUSE GP PARTNERS IV, L.P. - --------- ------------------------------------------------------------------------------------------------------------- 2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) [ ] (b) [X] - --------- ------------------------------------------------------------------------------------------------------------- 3 SEC USE ONLY - --------- ------------------------------------------------------------------------------------------------------------- 4 SOURCE OF FUNDS OO - --------- ------------------------------------------------------------------------------------------------------------- 5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEM 2(d) or 2(e) [ ] - --------- ------------------------------------------------------------------------------------------------------------- 6 CITIZENSHIP OR PLACE OF ORGANIZATION TEXAS - --------- ------------------------------------------------------------------------------------------------------------- 7 SOLE VOTING POWER NUMBER OF SHARES BENEFICIALLY OWNED BY EACH REPORTING PERSON WITH ------- ------------------------------------------------------------------ 8 SHARED VOTING POWER 6,410,256** ------- ------------------------------------------------------------------ 9 SOLE DISPOSITIVE POWER ------- ------------------------------------------------------------------ 10 SHARED DISPOSITIVE POWER 6,410,256** - --------- ------------------------------------------------------------------------------------------------------------- 11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 6,410,256** - --------- ------------------------------------------------------------------------------------------------------------- 12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW 11 EXCLUDES CERTAIN SHARES [ ] - --------- ------------------------------------------------------------------------------------------------------------- 13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW 11 8.7%** - --------- ------------------------------------------------------------------------------------------------------------- 14 TYPE OF REPORTING PERSON PN - --------- ------------------------------------------------------------------------------------------------------------- * THE REPORTING PERSON EXPRESSLY DISCLAIMS (I) THE EXISTENCE OF ANY GROUP AND (II) BENEFICIAL OWNERSHIP WITH RESPECT TO ANY SHARES OTHER THAN THE SHARES OWNED OF RECORD BY SUCH REPORTING PERSON. SEE ITEM 5. ** ASSUMING CONVERSION OF ALL SERIES A 7% SENIOR CONVERTIBLE PREFERRED STOCK BENEFICIALLY OWNED BY SUCH REPORTING PERSON. SEE ITEM 6. - ------------------------------------------------- ------------------------------------------------- CUSIP No. 7493 6101 13D Page 8 of 24 - ------------------------------------------------- ------------------------------------------------- - --------- ------------------------------------------------------------------------------------------------------------- 1 NAME OF REPORTING PERSON I.R.S. IDENTIFICATION NO. OF ABOVE PERSON (entities only) HICKS, MUSE FUND IV LLC - --------- ------------------------------------------------------------------------------------------------------------- 2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) [ ] (b) [X] - --------- ------------------------------------------------------------------------------------------------------------- 3 SEC USE ONLY - --------- ------------------------------------------------------------------------------------------------------------- 4 SOURCE OF FUNDS OO - --------- ------------------------------------------------------------------------------------------------------------- 5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED PURSUANT TO ITEM 2(d) or 2(e) [ ] - --------- ------------------------------------------------------------------------------------------------------------- 6 CITIZENSHIP OR PLACE OF ORGANIZATION TEXAS - --------- ------------------------------------------------------------------------------------------------------------- 7 SOLE VOTING POWER NUMBER OF SHARES BENEFICIALLY OWNED BY EACH REPORTING PERSON WITH ------- ------------------------------------------------------------------ 8 SHARED VOTING POWER 6,410,256** ------- ------------------------------------------------------------------ 9 SOLE DISPOSITIVE POWER ------- ------------------------------------------------------------------ 10 SHARED DISPOSITIVE POWER 6,410,256** - --------- ------------------------------------------------------------------------------------------------------------- 11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON 6,410,256** - --------- ------------------------------------------------------------------------------------------------------------- 12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW 11 EXCLUDES CERTAIN SHARES [ ] - --------- ------------------------------------------------------------------------------------------------------------- 13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW 11 8.7%** - --------- ------------------------------------------------------------------------------------------------------------- 14 TYPE OF REPORTING PERSON OO - --------- -------------------------------------------------------------------------------------------------------------
* THE REPORTING PERSON EXPRESSLY DISCLAIMS (I) THE EXISTENCE OF ANY GROUP AND (II) BENEFICIAL OWNERSHIP WITH RESPECT TO ANY SHARES OTHER THAN THE SHARES OWNED OF RECORD BY SUCH REPORTING PERSON. SEE ITEM 5. ** ASSUMING CONVERSION OF ALL SERIES A 7% SENIOR CONVERTIBLE PREFERRED STOCK BENEFICIALLY OWNED BY SUCH REPORTING PERSON. SEE ITEM 6. ITEM 1. SECURITY AND ISSUER The title of the class of equity securities of RCN Corporation, a Delaware corporation (the "Company"), to which this Statement on Schedule 13D (this "Statement") relates is the common stock, par value $1.00 per share (the "Common Stock"), of the Company. The address of the principal executive officers of the Company is 105 Carnegie Center, Princeton, New Jersey 08540-6215. ITEM 2. IDENTITY AND BACKGROUND (a) Name of Person(s) Filing this Statement (the "Filing Parties"): Mr. Thomas O. Hicks HM4 RCN Partners, a Texas partnership ("RCN Partners") HM4 RCN Qualified Fund, L.P., a Texas limited partnership ("RCN Qualified Fund") HM4 RCN Private Fund, L.P. a Texas limited partnership ("RCN Private Fund") HM4 RCN Coinvestors, L.P. a Texas limited partnership ("RCN Coinvestors") Hicks, Muse GP Partners IV, L.P., a Texas limited partnership ("HM Partners") Hicks, Muse Fund IV, LLC, a Texas limited liability company ("Fund IV LLC") (b) - (c) Mr. Thomas O. Hicks Mr. Thomas O. Hicks is a partner of Hicks, Muse, Tate & Furst Incorporated ("Hicks, Muse"), a private investment firm primarily engaged in leveraged acquisitions, recapitalizations and other investment activities. Mr. Hicks is also the sole member and sole manager of Fund IV LLC, the sole general partner of HM Partners, the sole general partner of each of RCN Qualified Fund, RCN Private Fund and RCN Coinvestors, the partners of RCN Partners. The business address of Mr. Hicks is 200 Crescent Court, Suite 1600, Dallas, Texas 75201-6950. RCN Partners RCN Partners is a Texas partnership formed to invest in the Series A 7% Senior Convertible Preferred Stock of the Company (the "Preferred Stock"). The business address of RCN Partners, which also serves as its principal office, is 200 Crescent Court, Suite 1600, Dallas, Texas 75201-6950. Pursuant to Instruction C to Schedule 13D of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), information with respect to each of RCN Qualified Fund, RCN Private Fund and RCN Coinvestors, the partners of RCN Partners, is set forth below. RCN Qualified Fund RCN Qualified Fund is a Texas limited partnership, the principal business of which is serving as a partner of RCN Partners. The business address of RCN Qualified Fund, which also serves as its principal office, is 200 Crescent Court, Suite 1600, Dallas, Texas 75201-6950. Pursuant to Page 9 Instruction C to Schedule 13D of the Exchange Act, information with respect to HM Partners, the sole general partner of RCN Qualified Fund, is set forth below. RCN Private Fund RCN Private Fund is a Texas limited partnership, the principal business of which is serving as a partner of RCN Partners. The principal business address of RCN Private Fund, which also serves as its principal office, is 200 Crescent Court, Suite 1600, Dallas, Texas 75201-6950. Pursuant to Instruction C to Schedule 13D of the Exchange Act, information with respect to HM Partners, the sole general partner of RCN Private Fund, is set forth below. RCN Coinvestors RCN Coinvestors is a Texas limited partnership, the principal business of which is serving as a partner of RCN Partners. The business address of RCN Coinvestors, which also serves as its principal office, is 200 Crescent Court, Suite 1600, Dallas, Texas 75201-6950. Pursuant to Instruction C to Schedule 13D of the Exchange Act, information with respect to HM Partners, the sole general partner of RCN Coinvestors, is set forth below. HM Partners HM Partners is a Texas limited partnership, the principal business of which is serving as the sole general partner in various limited partnership whose principal business is to serve as partners in various investment partnerships. The business address of HM Partners, which also serves as its principal office, is 200 Crescent Court, Suite 1600, Dallas, Texas 75201-6950. Pursuant to Instruction C to Schedule 13D of the Exchange Act, information with respect to Fund IV LLC, the sole general partner of HM Partners, is set forth below. Fund IV LLC Fund IV LLC is a Texas limited liability company, the principal business of which is serving as the sole general partner in various limited partnership whose principal business is to serve as partners in various investment partnerships. The business address of Fund IV LLC, which also serves as its principal office, is 200 Crescent Court, Suite 1600, Dallas, Texas 75201-6950. Pursuant to Instruction C to Schedule 13D of the Exchange Act, information with respect to Mr. Thomas O. Hicks, the sole member of Fund IV LLC, is set forth above. (d) None of the entities or persons identified in this Item 2 has, during the last five years, been convicted in a criminal proceeding (excluding traffic violations or similar misdemeanors). (e) None of the entities or persons identified in this Item 2 has, during the last five years, been a party to a civil proceeding of a judicial or administrative body of competent jurisdiction and as a result of such proceeding was or is subject to a judgement, decree or final order enjoining future violations of, or prohibiting or mandating activities subject to, federal or state securities laws or finding any violations with respect to such laws. Page 10 (f) All of the natural persons identified in this Item 2 are citizens of the United States of America. ITEM 3. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION As more fully described in Item 6 below, on April 7, 1999, RCN Partners purchased an aggregate of 250,000 shares of Preferred Stock for a purchase price of $250,000,000. The funds RCN Partners utilized for this purpose were provided by capital contributions to RCN Partners from RCN Qualified Fund, RCN Private Fund and RCN Coinvestors; each of RCN Qualified Fund, RCN Private Fund and RCN Coinvestors obtained such funds from capital contributions provided by their respective limited partners and HM Partners; HM Partners obtained such funds from capital contributions provided by its limited partners and Fund IV LLC; Fund IV LLC obtained such funds from capital contributions provided by Mr. Thomas O. Hicks, who obtained such funds from personal funds. ITEM 4. PURPOSE OF TRANSACTION The Reporting Persons consummated the transactions described herein in order to acquire an interest in the Company for investment purposes. The Reporting Persons intend to review continuously their position in the Company. Depending upon future evaluations of the business prospects of the Company and upon other developments, including, but not limited to, general economic and business conditions and stock market conditions, the Reporting Persons may retain or from time to time increase their holdings or dispose of all or a portion of their holdings, subject to any applicable legal and contractual restrictions on their ability to do so. In addition, the matters set forth in Item 6 below are incorporated in this Item 4 by reference as if fully set forth herein. Except as set forth in this Item 4 (including the matters described in Item 6 below which are incorporated in this Item 4 by reference), the Reporting Persons have no present plans or proposals that relate to or that would result in any of the actions specified in clauses (a) through (j) of Item 4 of Schedule 13D of the Exchange Act. ITEM 5. INTEREST IN SECURITIES OF ISSUER (a) (1) Assuming conversion of all Preferred Stock owned of record by RCN Partners, RCN Partners is the beneficial owner of 6,410,256 shares of Common Stock, which, based on calculations made in accordance with Rule 13-3(d) of the Exchange Act and there being 66,522,888 shares of Common Stock outstanding, represents approximately 8.7% of the outstanding shares of Common Stock. (2) Assuming conversion of all Preferred Stock owned of record by RCN Partners, in its capacity as a partner of RCN Partners, RCN Qualified Fund may, pursuant to Rule 13d-3 of the Exchange Act, be deemed to be the beneficial owner of 6,410,256 shares of Common Stock, which, based on calculations made in accordance with Rule 13d-3(d) of the Exchange Act and there being 66,522,888 shares of Common Stock outstanding, represents approximately 8.7% of the outstanding shares of Common Stock. Page 11 (3)Assuming conversion of all Preferred Stock owned of record by RCN Partners, in its capacity as a partner of RCN Partners, RCN Private Fund may, pursuant to Rule 13d-3 of the Exchange Act, be deemed to be the beneficial owner of 6,410,256 shares of Common Stock, which, based on calculations made in accordance with Rule 13d-3(d) of the Exchange Act and there being 66,522,888 shares of Common Stock outstanding, represents approximately 8.7% of the outstanding shares of Common Stock. (4) Assuming conversion of all Preferred Stock owned of record by RCN Partners, in its capacity as a partner of RCN Partners, RCN Coinvestors may, pursuant to Rule 13d-3 of the Exchange Act, be deemed to be the beneficial owner of 6,410,256 shares of Common Stock, which, based on calculations made in accordance with Rule 13d-3(d) of the Exchange Act and there being 66,522,888 shares of Common Stock outstanding, represents approximately 8.7% of the outstanding shares of Common Stock. (5) Assuming conversion of all Preferred Stock owned of record by RCN Partners, in its capacity as the sole general partner of each of RCN Qualified Fund, RCN Private Fund and RCN Coinvestors, HM Partners may, pursuant to Rule 13d-3 of the Exchange Act, be deemed to be the beneficial owner of 6,410,256 shares of Common Stock, which, based on calculations made in accordance with Rule 13d-3(d) of the Exchange Act and there being 66,522,888 shares of Common Stock outstanding, represents approximately 8.7% of the outstanding shares of Common Stock. (6) Assuming conversion of all Preferred Stock owned of record by RCN Partners, in its capacity as the sole partner of HM Partners, Fund IV LLC may, pursuant to Rule 13d-3 of the Exchange Act, be deemed to be the beneficial owner of 6,410,256 shares of Common Stock, which, based on calculations made in accordance with Rule 13d-3(d) of the Exchange Act and there being 66,522,888 shares of Common Stock outstanding, represents approximately 8.7% of the outstanding shares of Common Stock. (7) Assuming conversion of all Preferred Stock owned of record by RCN Partners, in his capacity as the sole member of Fund IV LLC, Mr. Thomas O. Hicks may, pursuant to Rule 13d-3 of the Exchange Act, be deemed to be the beneficial owner of 6,410,256 shares of Common Stock, which, based on calculations made in accordance with Rule 13d-3(d) of the Exchange Act and there being 66,522,888 shares of Common Stock outstanding, represents approximately 8.7% of the outstanding shares of Common Stock. Mr. Hicks expressly disclaims beneficial ownership with respect to any shares of Common Stock not owned of record by him. (b) The information set forth in Items 7 through 11 of the cover pages hereto is incorporated herein by reference. (c) Except as set forth herein, none of the persons named in response to paragraph (a) has effected any transactions in shares of Common Stock during the past 60 days. (d) The right to receive dividends on, and proceeds from the sale of, the shares of Common Stock beneficially owned by RCN Qualified Fund, RCN Private Fund and RCN Coinvestors described in (a) and (b) above is governed by the limited partnership agreements of each such entities, and such dividends Page 12 or proceeds may be distributed with respect to numerous general and limited partnership interests. ITEM 6. CONTRACTS, ARRANGEMENTS, UNDERSTANDINGS, OR RELATIONSHIPS WITH RESPECT TO THE ISSUER. The matters set forth in Item 2 are incorporated in this Item 6 by reference as if fully set forth herein. Stock Purchase Agreement Pursuant to the Stock Purchase Agreement (the "Stock Purchase Agreement"), dated as of March 18, 1999 between the Company and HMTF Live Wire Investors LLC ("HMTF Live Wire"), as amended by amendment No. 1 thereto, dated as of April 7, 1999 among RCN Corporation, HMTF Live Wire and RCN Partners (the "Amendment"; the Stock Purchase Agreement, as amended, the "Amended Stock Purchase Agreement"), the Company agreed to sell to HMTF Live Wire, and HMTF Live Wire agreed to purchase from the Company, 250,000 shares of the Preferred Stock for a purchase price of $250,000,000. As contemplated by the Stock Purchase Agreement and immediately prior to the issuance of the shares of Preferred Stock at the Closing (as defined below), pursuant to an Assignment and Assumption Agreement, HMTF Live Wire assigned all of its right, title and interest, in, to and under the Stock Purchase Agreement to RCN Partners. On April 7, 1999, pursuant to the Amended Stock Purchase Agreement, the Company sold the shares of Preferred Stock to RCN Partners (the "Closing"). The Amended Stock Purchase Agreement provides, among other things, that RCN Partners is entitled to designate for election to the Board of Directors of the Company one person, for so long as RCN Partners owns either (i) 50% or more of the shares of Preferred Stock, (ii) an amount of Common Stock issued upon conversion of 50% or more of the shares of Preferred Stock under the Certificate of Designations, Preferences and Rights of Series A 7% Senior Convertible Preferred Stock (the "Certificate of Designations") or (iii) any combination of shares of Preferred Stock and Common Stock issued upon conversion of 50% or more of the shares of Preferred Stock, subject to suspension of such right at any time that the holders of Preferred Stock have the right to designate a person for election to the Board of Directors of the Company under the Certificate. Pursuant to this contractual right, RCN Partners has designated Michael J. Levitt, a partner of Hicks, Muse, for election to the Board of Directors of the Company. The foregoing description of the Amended Stock Purchase Agreement is not, and does not purport to be, complete and is qualified in its entirety by reference to the Stock Purchase Agreement and Amendment, copies of which are filed herewith as Exhibits 10.1 and 10.2, respectively. Registration Rights Upon the Closing, certain registration rights of RCN Partners under the Amended Stock Purchase Agreement became effective. Pursuant to such provisions, the Company has agreed to effect four "demand" registrations at the request and expense of RCN Partners, provided that each such demand registration must be in respect of Registerable Securities (as defined below) with a fair market value of at least $50,000,000 (or, in respect of all remaining Page 13 Registrable Securities, $5,000,000). In addition, RCN Partners has certain piggyback registration rights in connection with registrations by the Company under the Securities Act of 1933 (the "Securities Act"). "Registerable Securities" means (a) the Preferred Stock and (b) the shares of Common Stock issued upon conversion of the Preferred Stock, including any additional shares of Common Stock issued in connection with a stock split, stock dividend or similar event with respect to the Common Stock. The foregoing description of the registration rights provisions of the Amended Stock Purchase Agreement is not, and does not purport to be, complete and is qualified in its entirety by reference to the registration rights provisions of the Amended Stock Purchase Agreement, a copy of which is filed as an exhibit to Exhibit 10.1. Certificate of Designations As contemplated by the Amended Stock Purchase Agreement, immediately prior to the Closing the Board of Directors of the Company approved and adopted the Certificate of Designations to create the series of Preferred Stock. Under the Certificate of Designations, any class or series of stock of the Company will be deemed to rank (i) prior to the Preferred Stock, if the holders of such class or series will be entitled by the terms thereof to receive dividends in preference or priority to the holders of Preferred Stock, (ii) on a parity with the Preferred Stock, if the holders of the Preferred Stock and the holders thereof will be entitled to receive dividends without preference or priority over one another and such class or series is not senior to the Preferred Stock and (iii) junior to the Preferred Stock, if such class or series is Common Stock or if the holders of the Preferred Stock will be entitled by the terms thereof to receive dividends in preference or priority to the holders of such class or series. Creation by the Company of securities senior to the Preferred Stock requires the vote of holders of a majority of the outstanding shares of Preferred Stock. The holders of the Preferred Stock will be entitled to receive with respect to each share of Preferred Stock, when and if declared by the Board of Directors of the Company, out of funds legally available for the payment of dividends, dividends at a rate per annum equal to seven percent (7%) of the Liquidation Preference per share, and an additional amount at a rate per annum equal to seven percent (7%) of all dividends and other amounts payable but which have not been paid with respect to each share of Preferred Stock. Such dividends shall be cumulative from the date of issuance of the Preferred Stock and shall be payable quarterly in arrears. The Company may pay accrued dividends (including accrued and unpaid dividends) and any other amounts accrued and unpaid on the Preferred Stock, at its election, in cash or shares of Preferred Stock. The Preferred Stock will not be redeemable by the Company prior to March 31, 2003. On and after March 31, 2003, to the extent the Company has funds legally available for such payment, the Company may redeem at its option shares of Preferred Stock, at any time, at a redemption price equal to the Liquidation Preference plus any amounts accrued and unpaid on the Preferred Stock from the last dividend payment date to the date fixed for redemption, without interest. The Company will redeem (but only to the extent the Company shall have funds legally available therefor), on March 31, 2014, all outstanding Page 14 shares of Preferred Stock, at a redemption price equal to the Liquidation Preference plus (i) an amount equal to (7%) of all dividends payable but which have not been paid with respect to each share of Preferred Stock and (ii) any amounts accrued and unpaid on the Preferred Stock from the last dividend payment date to such date. The holders of shares of Preferred Stock will have the right, generally, at any time, to convert any or all outstanding shares of Preferred Stock into fully paid and non-assessable shares of Common Stock. The number of shares of Common Stock deliverable upon such conversion (the "Conversion Ratio"), as of any date, shall be an amount equal to the sum of Liquidation Preference plus (i) an amount equal to (7%) of all dividends payable but which have not been paid with respect to each share of Preferred Stock and (ii) any amounts accrued and unpaid on the Preferred Stock, divided by $39.00, subject to adjustment as a result of Common Stock dividends, reclassifications, distributions or stock splits in connection with a merger or consolidation of the Company or otherwise. Upon the occurrence of a "Change of Control" (as defined in the Certificate), the Company will be required, generally, to make an offer to each holder of shares of Preferred Stock to repurchase such holder's shares at a price per share equal to the Liquidation Preference, plus an amount equal to any amounts accrued and unpaid on the Preferred Stock from the last dividend payment date. The holders of shares of Preferred Stock will not be entitled to any voting rights, provided that if six quarterly dividends or additional amounts payable on the Preferred Stock have not been paid in full or if the Company has failed to discharge its mandatory redemption obligation or its change of control obligation described above, the number of directors then constituting the Board of Directors of the Company will be increased by one and the holders of shares of Preferred Stock will be entitled to elect such additional director to serve on the Board of Directors. When all arrears in dividends and additional amounts payable on the shares of Preferred Stock then outstanding shall have been paid and dividends and additional amounts payable thereon for the current quarterly dividend period shall have been paid, or the Company shall have fulfilled its mandatory redemption obligation or change of change control obligation, then the right of the holders to elect such additional director will cease, and the term of office of any person elected as director by the holders will terminate and the number of the Board of Directors will be reduced accordingly. "Liquidation Preference" means an amount equal to $1,000.00 per share of Preferred Stock. The foregoing description of the Certificate of Designations is not, and does not purport to be, complete and is qualified in its entirety by reference to the Certificate of Designations, a copy of which is filed as Exhibit 10.3. Page 15 ITEM 7. MATERIAL TO BE FILED AS EXHIBITS Exhibit 10.1: Stock Purchase Agreement dated as of March 18 1999 between RCN Corporation and HMTF Live Wire Investors, LLC relating to the purchase and sale of Series A 7% Senior Convertible Preferred Stock of RCN Corporation. Exhibit 10.2: Amendment No. 1 to Stock Purchase Agreement dated as of April 7, 1999 among RCN Corporation, HMTF Live Wire Investors, LLC and HM4 RCN Partners. Exhibit 10.3: Certificate of Designations, Preferences and Rights of Series A 7% Senior Convertible Preferred Stock Exhibit 99.1: Joint Filing Agreement among the parties regarding filing of Schedule 13D. Page 16 SIGNATURE After reasonable inquiry and to the best of my knowledge and belief, I certify that the information set forth in this statement is true, complete and correct. April 19, 1999 * ------------------------------------- Thomas O. Hicks * By: /s/ Michael D. Salim ------------------------------- Michael D. Salim, Attorney-in-Fact Page 17 SIGNATURE After reasonable inquiry and to the best of my knowledge and belief, I certify that the information set forth in this statement is true, complete and correct. April 19, 1999 HM4 RCN PARTNERS -------------- Date By: HM4 RCN Qualified Fund, L.P. its Managing General Partner By: HICKS, MUSE GP PARTNERS IV, L.P., its General Partner By: HICKS, MUSE FUND IV LLC, its General Partner By: /s/ Michael D. Salim --------------------------------------- Michael D. Salim, Chief Financial and Administrative Officer Page 18 SIGNATURE After reasonable inquiry and to the best of my knowledge and belief, I certify that the information set forth in this statement is true, complete and correct. April 19, 1999 HM4 RCN QUALIFIED FUND, L.P. -------------- Date By: HICKS, MUSE GP PARTNERS IV, L.P., its General Partner By: HICKS, MUSE FUND IV LLC, its General Partner By: /s/ Michael D. Salim ----------------------------------------- Michael D. Salim, Chief Financial and Administrative Officer Page 19 SIGNATURE After reasonable inquiry and to the best of my knowledge and belief, I certify that the information set forth in this statement is true, complete and correct. April 19, 1999 HM4 RCN PRIVATE FUND, L.P. - -------------- Date By: HICKS, MUSE GP PARTNERS IV, L.P., its General Partner By: HICKS, MUSE FUND IV LLC, its General Partner By: /s/ Michael D. Salim ------------------------------------- Michael D. Salim, Chief Financial and Administrative Officer Page 20 SIGNATURE After reasonable inquiry and to the best of my knowledge and belief, I certify that the information set forth in this statement is true, complete and correct. April 19, 1999 HM4 RCN COINVESTORS, L.P. - -------------- Date By: HICKS, MUSE GP PARTNERS IV, L.P., its General Partner By: HICKS, MUSE FUND IV LLC, its General Partner By: /s/ Michael D. Salim --------------------------------------- Michael D. Salim, Chief Financial and Administrative Officer Page 21 SIGNATURE After reasonable inquiry and to the best of my knowledge and belief, I certify that the information set forth in this statement is true, complete and correct. April 19, 1999 HICKS, MUSE GP PARTNERS IV, L.P. - -------------- Date By: HICKS, MUSE FUND IV LLC, its General Partner By: /s/ Michael D. Salim --------------------------------------- Michael D. Salim, Chief Financial and Administrative Officer Page 22 SIGNATURE After reasonable inquiry and to the best of my knowledge and belief, I certify that the information set forth in this statement is true, complete and correct. April 19, 1999 HICKS, MUSE FUND IV LLC - -------------- Date By: /s/ Michael D. Salim --------------------------------------------- Michael D. Salim, Chief Financial and Administrative Officer Page 23 EXHIBIT INDEX 10.1 Stock Purchase Agreement dated as of March 18 1999 between RCN Corporation and HMTF Live Wire Investors LLC relating to the purchase and sale of Series A 7% Senior Convertible Preferred Stock of RCN Corporation.* 10.2 Amendment No. 1 to Stock Purchase Agreement dated as of April 7, 1999 among RCN Corporation, HMTF Live Wire Investors LLC and HM4 RCN Partners.* 10.3 Certificate of Designations, Preferences and rights of Series A 7% Senior Convertible Preferred Stock.* 99.1 Joint Filing Agreement among the parties regarding filing of Schedule 13D.* - ------------------------------ * Filed herewith. Page 24 EX-10 2 Exhibit 10.1 STOCK PURCHASE AGREEMENT dated as of March 18, 1999 between RCN CORPORATION and HMTF LIVE WIRE INVESTORS, LLC relating to the purchase and sale of SERIES A 7% SENIOR CONVERTIBLE PREFERRED STOCK of RCN CORPORATION (NY) 17431/028/SPA/stock.purch.agt.wpd TABLE OF CONTENTS
PAGE ARTICLE 1 DEFINITIONS SECTION1.01. Definitions.......................................................................1 ARTICLE 2 PURCHASE AND SALE SECTION2.01. Purchase and Sale.................................................................4 SECTION2.02. Closing...........................................................................4 SECTION2.03. Certificates for Restricted Securities............................................4 ARTICLE 3 REPRESENTATIONS AND WARRANTIES OF THE CORPORATION SECTION3.01. Corporate Existence and Power.....................................................5 SECTION3.02. Corporate Authorization...........................................................5 SECTION3.03. Authorization......................................................................5 SECTION3.04. Noncontravention..................................................................5 SECTION3.05. Capitalization....................................................................6 SECTION3.06. Authorization of Preferred Shares.................................................6 SECTION3.07. Finders'Fees......................................................................7 SECTION3.08. SEC Reports........................................................................7 SECTION3.09.Financial Statements................................................................7 SECTION3.10.Absence of Certain Changes..........................................................7 SECTION3.11. Litigation........................................................................8 SECTION3.12. Offering of Preferred Shares......................................................8 SECTION3.13. Accuracy and Completeness of Information Provided.................................8 ARTICLE 4 REPRESENTATIONS AND WARRANTIES OF BUYER SECTION4.01. Existence and Power...............................................................9 SECTION4.02. Authorization.....................................................................9 SECTION4.03. Authorization......................................................................9 SECTION4.04. Noncontravention..................................................................9 SECTION4.05. Purchase for Investment...........................................................9 SECTION4.06. Litigation.......................................................................10 SECTION4.07. Finders'Fees.....................................................................10 i ARTICLE 5 COVENANTS OF THE CORPORATION SECTION5.01. Access to Information............................................................10 SECTION5.02. Certificate of Designations.......................................................10 SECTION5.03. Restrictions Pending the Closing.................................................10 SECTION5.04. Buyer Director...................................................................11 SECTION5.05. Reservation of Rights............................................................12 SECTION5.06. Other Transfers of Restricted Securities.........................................12 SECTION5.07. Venture Capital Operating Company Requirements...................................12 ARTICLE 6 COVENANTS OF BUYER SECTION6.01. Confidentiality..................................................................12 SECTION6.02. Sale or Transfer of Restricted Securities.........................................14 ARTICLE 7 COVENANTS OF BUYER AND THE CORPORATION SECTION7.01. Reasonable Best Efforts; Further Assurances......................................14 SECTION7.02. Certain Filings..................................................................14 SECTION7.03. Public Announcements.............................................................14 SECTION7.04. Registration Rights Agreement....................................................15 ARTICLE 8 CONDITIONS TO CLOSING SECTION8.01. Conditions to Obligations of Buyer and the Corporation...........................15 SECTION8.02. Conditions to Obligation of Buyer................................................15 SECTION8.03. Conditions to Obligation of the Corporation......................................16 ARTICLE 9 TERMINATION SECTION9.01. Grounds for Termination..........................................................17 SECTION9.02. Effect of Termination............................................................17 ii ARTICLE 10 SURVIVAL; INDEMNIFICATION SECTION10.01. Survival of Representation and Warranties.......................................17 SECTION10.02. Indemnification.................................................................18 SECTION10.03. Procedures......................................................................18 SECTION10.04. Inspections; No Other Representations ..........................................19 SECTION10.05. Exclusivity.....................................................................19 ARTICLE 11 MISCELLANEOUS SECTION11.01. Notices.........................................................................19 SECTION11.02. Amendments and Waivers..........................................................21 SECTION11.03. Expenses........................................................................21 SECTION11.04. Assignment......................................................................21 SECTION11.05. Governing Law...................................................................21 SECTION11.06. Jurisdiction....................................................................21 SECTION11.07. Counterparts; Third Party Beneficiaries.........................................22 SECTION11.08. Entire Agreement................................................................22 SECTION11.09. Captions........................................................................22 SECTION11.10. Severability....................................................................22 SECTION11.11. Specific Performance............................................................23 SECTION11.12. No Recourse.....................................................................23
Exhibit A Certificate of Designations, Preferences and Rights of Series A 7% Senior Convertible Preferred Stock Exhibit B Registration Rights iii STOCK PURCHASE AGREEMENT AGREEMENT dated as of March 18, 1999 between RCN Corporation, a Delaware corporation (the "Corporation"), and HMTF Live Wire Investors, LLC, a Delaware limited liability company ("BUYER"). WHEREAS, the Corporation desires to sell the Preferred Shares (as defined herein) to Buyer, and Buyer desires to purchase the Preferred Shares from the Corporation, upon the terms and subject to the conditions hereinafter set forth; NOW, THEREFORE, in consideration of the premises and the mutual representations, warranties, covenants and undertakings contained herein, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows: ARTICLE 1 DEFINITIONS SECTION 1.1. Definitions. (a) The following terms, as used herein, have the following meanings: "AFFILIATE" means, with respect to any specified person, any other person which, directly or indirectly, controls, is controlled by or is under direct or indirect common control with, such specified 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 "affiliated," "controlling," and "controlled" have meanings correlative to the foregoing. "BOARD OF DIRECTORS" means the Board of Directors of the Corporation. "CLOSING DATE" means the date of the Closing. "COMMISSION" means the Securities and Exchange Commission. "EXCHANGE ACT" means the Securities Exchange Act of 1934, as amended, and the rules and regulations promulgated thereunder. "HMTF" means Hicks, Muse, Tate & Furst Incorporated, a Texas corporation. "HMTF GROUP" means HMTF and its Affiliates and its 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). "LIEN" means any mortgage, lien, pledge, charge, security interest or encumbrance of any kind. "MATERIAL ADVERSE EFFECT" means a material adverse effect on the condition (financial or otherwise), business, assets or results of operations of the Corporation and its Subsidiaries, taken as whole. "PERSON" means an individual, corporation, partnership, limited liability company, association, trust or other entity or organization, including a government or political subdivision or an agency or instrumentality thereof. "PREFERRED SHARES" means 250,000 shares of Preferred Stock issued on the Closing Date. "PREFERRED STOCK" means the Series A 7% Senior Convertible Preferred Stock of the Corporation. "RESTRICTED SECURITIES" means (i) the Preferred Stock issued hereunder, and (ii) any securities issued directly or indirectly with respect to the securities referred to in clause (i) above upon conversion of the Preferred Stock, including in connection with a stock split or combination of shares, recapitalization, merger, consolidation or other reorganization or otherwise pursuant to the terms of the Preferred Stock. As to any particular Restricted Securities, such securities shall cease to be Restricted Securities when they have (a) been effectively registered under the Securities Act and disposed of in accordance with the registration statement covering them, (b) become eligible for sale pursuant to Rule 144 (without any volume limitations) or (c) been otherwise transferred and new certificates for them not bearing the Securities Act legend set forth in Section 2.03(b) have been delivered by the Corporation. "SECURITIES ACT" means the Securities Act of 1933, as amended, and the rules and regulations promulgated thereunder. 2 "SUBSIDIARY" means any corporation or other entity (and any predecessor thereof) of which the securities or other ownership interests having ordinary voting power to elect a majority of the Board of Directors or other persons performing similar functions are directly or indirectly owned by the Corporation. (b) Each of the following terms is defined in the Section set forth opposite such term: TERM SECTION Buyer Director 5.04 Closing 2.02 Permitted Transferee 6.02 Purchase Price 2.01 SEC Reports 3.05 Certificate of Designations 3.06 (c) The following definitional provisions shall apply to this Agreement: (i) The words "hereof", "herein", and "hereunder" and words of similar import, when used in this Agreement, shall refer to this Agreement as a whole and not to any particular provision of this Agreement. (ii) The terms defined in the singular shall have a comparable meaning when used in the plural, and vice versa. (iii) The terms "Dollars" and "$" shall mean United States Dollars. (iv) References herein to a specific Section, Subsection or Schedule shall refer, respectively, to Sections, Subsections or Schedules of this Agreement, unless the express context otherwise requires. (v) Wherever the word "include," "includes," or "including" is used in this Agreement, it shall be deemed to be followed by the words "without limitation." 3 ARTICLE 2 PURCHASE AND SALE SECTION 2.1. Purchase and Sale. Upon the terms and subject to the conditions of this Agreement, the Corporation agrees to sell to Buyer, and Buyer agrees to purchase from the Corporation, the Preferred Shares at the Closing. The purchase price (the "PURCHASE PRICE") for the Preferred Shares is $250,000,000 in cash. The Purchase Price shall be paid as provided in Section 2.02. SECTION 2.2. Closing. The closing (the "CLOSING") of the purchase and sale of the Preferred Shares hereunder shall take place at the offices of Davis Polk & Wardwell, 450 Lexington Avenue, New York, New York, as soon as possible, but no earlier than April 1, 1999 and in no event later than five business days after satisfaction of the conditions set forth in Article 8.01, or at such other time or place as Buyer and the Corporation may agree. At the Closing: (a) following delivery of the certificate described in Section 8.02(d) and the filing of the Certificate of Designations in accordance with Section 8.02(c), Buyer shall deliver to the Corporation the Purchase Price (less the amount of a 2% transaction fee payable to Hicks, Muse & Co. Partners, L.P., ("HM&C")) in immediately available funds by wire transfer to an account of the Corporation with a bank designated by the Corporation, by notice to Buyer, not later than two business days prior to the Closing Date. (b) following delivery of the certificate described in Section 8.03(c), the Corporation shall deliver to Buyer certificates for the Preferred Shares. SECTION 2.3. Certificates for Restricted Securities. (a) Each certificate for Restricted Securities shall bear the following legend for so long as such securities constitute Restricted Securities: "The securities represented hereby have not been registered under the Securities Act of 1933, as amended, and may not be offered, sold, transferred or otherwise disposed of except in compliance with such laws." (b) The Corporation agrees that, at the request of Buyer or any Permitted Transferee, it will remove the legend contemplated by this Section from the certificates representing any Restricted Securities in the event that outside counsel for Buyer or such Permitted Transferee determines that the transfer of such Preferred Shares is no longer restricted by the Securities Act and outside counsel for the Corporation reasonably concurs in such determination. 4 ARTICLE 3 REPRESENTATIONS AND WARRANTIES OF THE CORPORATION The Corporation represents and warrants to Buyer as of the date hereof and as of the Closing that: SECTION 3.1. Corporate Existence and Power. The Corporation 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. SECTION 3.2. Corporate Authorization. The execution, delivery and performance of this Agreement by the Corporation is within the Corporation's corporate powers and has been duly authorized by all necessary corporate action on the part of the Corporation. This Agreement constitutes a legal and binding agreement of the Corporation, enforceable against the Corporation in accordance with its terms, except (a) as such enforcement is limited by bankruptcy, insolvency and other similar laws affecting the enforcement of creditors' rights generally and (b) for limitations imposed by general principles of equity. SECTION 3.3. Authorization. Except as set forth in Schedule 3.03 hereto, the execution, delivery and performance of this Agreement by the Corporation requires no action by or in respect of, or filing with, any governmental or non-governmental body, agency, official or authority other than (i) compliance with any applicable requirements of the Exchange Act; (ii) with respect to the Corporation's obligations under Section 7.04, compliance with any applicable requirements of the Securities Act; (iii) the filing of the Certificate of Designations in accordance with the laws of Delaware and (iv) other filings or notifications that are immaterial to the consummation of the transactions contemplated hereby. 5 SECTION 3.4. Noncontravention. The execution, delivery and performance of this Agreement by the Corporation do not and will not (i) violate the certificate of incorporation or bylaws of the Corporation, (ii) assuming compliance with the matters referred to in Section 3.03, violate any applicable law, rule, regulation, judgment, injunction, order or decree binding upon the Corporation, other than violations that would be immaterial to the Corporation or Buyer, or (iii) except as to matters which would be immaterial to the Corporation or Buyer, constitute a default under, or give rise to any right of termination, cancellation or acceleration of any right or obligation of the Corporation or to a loss of any benefit to which the Corporation is entitled under any provision of any agreement or other instrument binding upon the Corporation or (iv) result in the creation or imposition of any Lien on any asset of the Corporation except where such Lien would not have a Material Adverse Effect. SECTION 3.5. Capitalization. (a) As of the date hereof, the authorized capital stock of the Corporation consists of: 200,000,000 shares of common stock, par value $1.00 per share ("COMMON STOCK"); 400,000,000 shares of Class B common stock, par value $1.00 per share; and 25,000,000 shares of preferred stock, par value $1.00 per share. As of December 31, 1998, there were 64,920,493 shares of Common Stock issued and outstanding, no shares of Class B common stock outstanding and no shares of preferred stock outstanding. (b) All outstanding shares of Common Stock are duly authorized, validly issued and fully paid and nonassessable. There are no preemptive or other similar rights available to the existing holders of the capital stock of the Corporation. As of the date hereof and other than (i) as set forth in the financial statements contained in the forms, reports and documents filed with the Commission (the "SEC REPORTS") (ii) as set forth on Schedule 3.05 (b) hereto, and (iii) in connection with the transactions contemplated by this Agreement, there are no outstanding options, warrants, rights, puts, calls, commitments, or other contracts, arrangements, or understandings issued by or binding upon the Corporation requiring, and there are no outstanding debt or equity securities of the Corporation which upon the conversion, exchange or exercise thereof would require, the issuance, sale or transfer by the Corporation of any new or additional equity interests in the Corporation (or any other securities of the Corporation or any of its Subsidiaries which, whether after notice, lapse of time or payment of monies, are or would be convertible into or exercisable or exchangeable for equity interests in the Corporation). Except as set forth in the SEC Reports, there are no voting trusts or other agreements or understandings to which the Corporation or any of its Subsidiaries is a party with respect to the voting of capital stock of the Corporation. SECTION 3.6. Authorization of Preferred Shares. The issuance, sale and delivery of the Preferred Shares has been duly authorized by all requisite corporate action of the Corporation and the Preferred Shares issued to Buyer in accordance with the terms of the Certificate of Designations, Preferences and Rights of Series A 7% Senior Convertible Preferred Stock (the "CERTIFICATE OF DESIGNATIONS") set forth on Exhibit A hereto, when issued and delivered in accordance with the terms of this Agreement will be validly issued and outstanding, fully paid and nonassessable free and clear of any Liens and not subject to preemptive or other similar rights of the stockholders of the Corporation. 6 SECTION 3.7. Finders' Fees. Except for Chase Securities, Inc., whose fees will be paid by the Corporation, there is no investment banker, broker, finder or other intermediary which has been retained by or is authorized to act on behalf of the Corporation who might be entitled to any fee or commission in connection with the transactions contemplated by this Agreement. SECTION 3.8. SEC Reports. The Corporation has filed all required SEC Reports when due in accordance with the Exchange Act and delivered or made available to Buyer copies thereof. As of their respective dates, the SEC Reports complied in all material respects with all applicable requirements of the Exchange Act or the Securities Act, as the case may be. As of their respective dates, none of the SEC Reports contained any untrue statement of a material fact or omitted to state a material fact required to be stated or incorporated by reference therein or necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading. SECTION 3.9. Financial Statements. The consolidated financial statements of the Corporation contained in the SEC Reports complied as to form in all material respects with the published rules and regulations of the Commission with respect thereto, were prepared in accordance with GAAP applied on a consistent basis during the periods involved (except as may be indicated in the notes thereto) and fairly present, in conformity with GAAP (except as may be indicated in the notes thereto), the consolidated financial position of the Corporation and its consolidated subsidiaries as of the dates thereof and their consolidated results of operations and changes in financial position for the periods then ended (subject to (i) normal year-end adjustments in the case of any unaudited interim financial statements which will not be material, either individually or in the aggregate, and (ii) further adjustments that may be required by the Commission with respect to allocation of the purchase price of certain assets to in-process research and development as reflected in the Corporation's pending Registration Statement No. 333-71525). The Corporation has delivered to Buyer a copy of its consolidated financial statements for the year ended December 31, 1998, together with footnotes in draft form; such financial statements were prepared in accordance with GAAP applied on a consistent basis during the period involved (except as may be indicated in the notes thereto) and fairly present, in conformity with GAAP (except as may be indicated in the notes thereto), the consolidated financial position of the Corporation and its consolidated subsidiaries as of the date thereof and their consolidated results of operations and changes in financial position for the period then ended (subject to the adjustments referred to in the preceding sentence.) 7 SECTION 3.10. Absence of Certain Changes. Since December 31, 1998, there has not been any event, occurrence or development of a state of circumstances or facts that has had or could reasonably be expected to have a Material Adverse Effect or an adverse effect on the ability of the Corporation to perform its obligations under this Agreement. SECTION 3.11. Litigation. Except as set forth in Schedule 3.11, and except as disclosed in the SEC Reports and the Company's pending Registration Statement No. 333-71525, there is no action, suit, investigation or proceeding pending against, or to the knowledge of the Corporation threatened against or affecting, the Corporation or any Subsidiary before any court or arbitrator or any governmental body, agency or official which (i) in any manner challenges or seeks to prevent, enjoin, alter or materially delay the transactions contemplated by this Agreement or (ii) if resolved adversely to the Corporation or a Subsidiary would reasonably be likely to have, individually or in the aggregate, a Material Adverse Effect. SECTION 3.12. Offering of Preferred Shares. Neither the Corporation nor any Person acting on its behalf has taken or will take any action (including, without limitation, any offering of any securities of the Corporation under circumstances which would require, under the Securities Act, the integration of such offering with the offering and sale of the Preferred Shares) which might subject the offering, issuance or sale of the Preferred Shares to the registration requirements of Section 5 of the Securities Act. SECTION 3.13. Accuracy and Completeness of Information Provided. To the Corporation's knowledge, none of the documents or written information delivered by the Corporation to Buyer in connection with the transactions contemplated by this Agreement contains any untrue statement of a material fact or omits to state a material fact necessary in order to make the statements contained therein not misleading (for purposes of the preceding sentence, any preliminary document or written information shall be disregarded if a final version of such document or written information was delivered by Buyer to the Corporation prior to the date hereof). There is no fact or information relating to the Corporation or its subsidiaries that is known to the Corporation that could reasonably be expected to be material to the Corporation and its subsidiaries taken as a whole and that has not been disclosed to Buyer. 8 ARTICLE 4 REPRESENTATIONS AND WARRANTIES OF BUYER Buyer represents and warrants to the Corporation as of the date hereof and as of the Closing that: SECTION 4.1. Existence and Power. Buyer is a limited liability company duly formed, validly existing and in good standing under the laws of its jurisdiction of formation. SECTION 4.2. Authorization. The execution, delivery and performance of this Agreement by Buyer are within the Buyer's limited liability company powers and have been duly authorized by all necessary limited liability company action on the part of Buyer. This Agreement constitutes a legal, valid and binding agreement of Buyer, enforceable against Buyer in accordance with its terms, except (a) as such enforcement is limited by bankruptcy, insolvency and other similar laws affecting the enforcement of creditors' rights generally and (b) for limitations imposed by general principles of equity. SECTION 4.3. Authorization. The execution, delivery and performance of this Agreement by Buyer requires no action by or in respect of, or filing with, any governmental or non-governmental body, agency or official or any other Person other than (i) compliance with any applicable requirements of the Exchange Act and (ii) other filings or notifications that are immaterial to the consummation of the transactions contemplated hereby. SECTION 4.4. Noncontravention. The execution, delivery and performance of this Agreement by Buyer does not and will not (i) violate the certificate of formation or limited liability company agreement of Buyer, or, (ii) assuming compliance with the matters referred to in Section 4.03, violate any applicable law, rule, regulation, judgment, injunction, order or decree, except for any such violations which would not have a material adverse effect on the ability of Buyer to consummate the transactions contemplated hereby. SECTION 4.5. Purchase for Investment. Buyer is purchasing the Preferred Shares for investment for its own account and not with a view to, or for sale in connection with, any distribution thereof. Buyer (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 Preferred Shares and is capable of bearing the economic risks of such investment. 9 SECTION 4.6. Litigation. There is no action, suit, investigation or proceeding pending against, or to the knowledge of Buyer threatened against or affecting, Buyer before any court or arbitrator or any governmental body, agency or official which in any manner challenges or seeks to prevent, enjoin, alter or materially delay the transactions contemplated by this Agreement. SECTION 4.7. Finders' Fees. Except for HM&C, whose transaction fee shall be paid by the Corporation in accordance with Section 2.02, there is no investment banker, broker, finder or other intermediary which has been retained by or is authorized to act on behalf of Buyer who might be entitled to any fee or commission from the Corporation or any of its Affiliates upon consummation of the transactions contemplated by this Agreement. ARTICLE 5 COVENANTS OF THE CORPORATION The Corporation agrees that: SECTION 5.1. Access to Information. From the date hereof until the Closing Date, the Corporation will (i) furnish to Buyer and its authorized representatives such financial and operating data and other information relating to the Corporation and its Subsidiaries as such Persons may reasonably request and (ii) instruct its counsel, independent accountants and financial advisors to cooperate with Buyer and its authorized representatives in its investigation of the Corporation. Any investigation pursuant to this Section shall be conducted in such manner as not to interfere unreasonably with the conduct of the business of the Corporation. In addition, during any time that Buyer has the right to designate a Buyer Director pursuant to Section 5.04, the Corporation will provide Buyer with copies of all financial information, reports and presentations delivered to the lenders under the Corporation's principal credit facilities, subject to the confidentiality agreement set forth in Section 6.01. SECTION 5.2. Certificate of Designations. Prior to the Closing, the Corporation shall cause to be filed the Certificate of Designations set forth as Exhibit A hereto as required pursuant to the law of Delaware. SECTION 5.3. Restrictions Pending the Closing. After the date hereof and prior to the Closing Date, except as expressly provided for in this Agreement or as consented to in writing by Buyer, the Corporation will not: 10 (i) amend its Certificate of Incorporation or By-laws or similar organizational documents; (ii) split, combine or reclassify any shares of the Corporation's capital stock; (iii) declare or pay any dividend or distribution (whether in cash, stock or property) in respect of its capital stock; (iv) 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 Corporation set forth in Article 3 becoming untrue or (B) any of the conditions to the obligations of Buyer set forth in Section 8.02 not being satisfied; or (v) enter into any agreement or commitment to do any of the foregoing. SECTION 5.4. Buyer Director. Buyer shall be entitled to designate for election to the Board of Directors one person (the "BUYER DIRECTOR"), for so long as Buyer owns either (i) 50% or more of the Preferred Shares issued and outstanding on the Closing Date (the "ISSUED PREFERRED SHARES"), (ii) an amount of Common Stock issued upon conversion of 50% or more of the Issued Preferred Shares or (iii) any combination of Issued Preferred Shares and Common Stock issued upon conversion of Issued Preferred Shares which, taken together, represent an amount of Common Stock issuable upon conversion of 50% or more of the Issued Preferred Shares; provided, however, that the right to designate the Buyer Director under this Section shall be suspended at any time that the holders of Preferred Stock have the right to designate a person for election to the Board of Directors under the terms of the Preferred Stock set forth in the Certificate of Designations. In the event Buyer elects to have the Board of Directors appoint a Buyer Director, it shall so notify the Corporation in writing and the Corporation shall (a) increase the size of the Board of Directors by one and fill the vacancy created thereby by electing the Buyer Director and (b) in connection with the meeting of shareholders of the Corporation next following such election, nominate such Buyer Director for election as director by the shareholders and use its best efforts to cause the Buyer Director to be so elected. If a vacancy shall exist in the office of a Buyer Director, Buyer shall be entitled to designate a successor and the Board of Directors shall elect such successor and, in connection with the meeting of shareholders of the corporation next following such election, nominate such successor for election as director by the shareholders and use its best efforts to cause the successor to be such elected. 11 SECTION 5.5. Reservation of Rights. For so long as any of the Preferred Stock is outstanding, the Corporation shall keep reserved for issuance a sufficient number of shares of Common Stock to satisfy its conversion obligations under the Certificate of Designations. SECTION 5.6. Other Transfers of Restricted Securities. The Corporation shall take all actions reasonably necessary to enable holders of the Restricted Securities to sell such securities without registration under the Securities Act pursuant to Rule 144 under the Securities Act or any successor rule or regulation, subject in each case to the provisions of this Agreement and, specifically, the filing on a timely basis of all reports required to be filed under the Exchange Act. SECTION 5.7. Venture Capital Operating Company Requirements. The Corporation agrees that for so long as Buyer has the right to designate a Buyer Director pursuant to Section 5.04 of this Agreement, Hicks, Muse, Tate & Furst Equity Fund IV, L.P. and Hicks, Muse, Tate & Furst Private Equity Fund IV, L.P. (the "FUNDS") (which upon the Closing will collectively own substantially all of the membership interests of Buyer) shall have the right: (a) to receive the same information that is provided to members of the Corporation's board of directors; (b) upon reasonable request and at reasonable times during normal business hours, to receive income statements, balance sheets, budgets, business plans and other financial information and to inspect the books and records of the Corporation; and (c) upon reasonable request and at reasonable times during normal business hours, to meet and consult with management with respect to the business of the Corporation. The foregoing rights are intended to satisfy the requirement of management rights for purposes of qualifying the Funds' indirect ownership interests in the Corporation as venture capital investments for purposes of the Department of Labor's "plan assets" regulations, and in the event such rights are not satisfactory for such purpose, the Corporation and the Funds shall reasonably cooperate in good faith to agree upon mutually satisfactory management rights which satisfy such regulations. The Funds hereby agree to treat all information received by them pursuant to this Section 5.07 in accordance with the provisions of Section 6.01. ARTICLE 6 COVENANTS OF BUYER Buyer agrees that: 12 SECTION 6.1. Confidentiality. (a) Buyer will hold, and will use its best efforts to cause its officers, directors, members, employees, accountants, counsel, consultants, advisors, financing sources, financial institutions, and agents (the "REPRESENTATIVES") to hold, in confidence, unless compelled to disclose by judicial or administrative process or by other requirements of law or national stock exchange, all confidential documents and information concerning the Corporation or any of its Affiliates furnished to Buyer, except to the extent that such information can be shown to have been (i) previously known on a nonconfidential basis by Buyer, (ii) in the public domain through no fault of Buyer or (iii) later acquired by Buyer from sources other than the Corporation or any of its Affiliates not known by Buyer to be bound by any confidentiality obligation; provided that Buyer may disclose such information to any of the Representatives in connection with the transactions contemplated by this Agreement so long as such Persons are informed by Buyer of the confidential nature of such information and are directed by Buyer to treat such information confidentially. Buyer shall be responsible for any failure to treat such information confidentially by such Persons. The obligation of Buyer to hold and to cause the Representatives to hold any such information in confidence shall be satisfied if they exercise the same care with respect to such information as they would take to preserve the confidentiality of their own similar information. Buyer agrees that it shall not and it shall cause the Representatives not to use any confidential documents or information for any purpose other than monitoring and evaluating its investment in the Corporation and in connection with the transactions contemplated by this Agreement. If this Agreement is terminated, Buyer will, and will use its reasonable best efforts to cause its respective officers, directors, employees, accountants, counsel, consultants, advisors and agents to, destroy or deliver to the Corporation, upon request, all documents and other materials, and all copies thereof, obtained by Buyer or on its behalf from the Corporation, or any of the Representatives, in connection with this Agreement that are subject to such confidence. 13 (b) In the event Buyer or anyone to whom Buyer transmits confidential information is requested or required (by oral questions, interrogatories, requests for information or documents, subpoenas, civil investigative demand or similar process) to disclose any such information, Buyer will provide the Corporation with prompt notice so that the Corporation may seek a protective order or other appropriate remedy and/or waive Buyer's compliance with the provisions of this Section. In the event that such protective order or other remedy is not obtained sufficiently promptly so as not to adversely affect Buyer or those of its officers, directors, employees, accountants, counsel, consultants, advisors and agents as to whom the information has been requested or required, or the Corporation waives Buyer's compliance with the provisions of this Agreement, Buyer will furnish only that portion of such information that Buyer is advised by counsel is legally required and, at the Corporation's expense, will exercise its commercially reasonable efforts to obtain reliable assurance that confidential treatment will be accorded such information. SECTION 6.2. Sale or Transfer of Restricted Securities. Buyer will not sell, pledge, encumber or otherwise transfer, or agree to sell, pledge, encumber or otherwise transfer, directly or indirectly, any Restricted Securities; provided, that Buyer may sell, pledge, encumber or otherwise transfer Preferred Stock and Common Stock (a) (i) in any transaction in compliance with Rule 144 under the Securities Act or any successor rule or regulation, (ii) in a public offering, registered under the Securities Act or (iii) in a private transaction exempt from the registration requirements of the Securities Act and (b) to Permitted Transferees. A "PERMITTED TRANSFEREE" means a Person that (A) has agreed in writing to be bound by the terms of Sections 2.03, 6.02, 7.04 and Exhibit B of this Agreement and (B) is a member of the HMTF Group and any person investing, directly or indirectly, in or in parallel with HMTF or any Affiliate of HMTF in connection with the consummation of the transactions contemplated hereby. ARTICLE 7 COVENANTS OF BUYER AND THE CORPORATION SECTION 7.1. Reasonable Best Efforts; Further Assurances. Subject to the terms and conditions of this Agreement, Buyer and the Corporation will use their reasonable best efforts to take, or cause to be taken, all actions and to do, or cause to be done, all things necessary or desirable under applicable laws and regulations to consummate the transactions contemplated by this Agreement. The Corporation and Buyer agree to execute and deliver such other documents, certificates, agreements and other writings and to take such other actions as may be necessary or desirable in order to consummate or implement expeditiously the transactions contemplated by this Agreement. SECTION 7.2. Certain Filings. The Corporation and Buyer shall cooperate with one another (i) in determining whether any action by or in respect of, or filing with, any governmental body, agency, official or authority is required, or any actions, consents, approvals or waivers are required to be obtained from parties to any material contracts, in connection with the consummation of the transactions contemplated by this Agreement and (ii) in taking such actions or making any such filings, furnishing information required in connection therewith and seeking timely to obtain any such actions, consents, approvals or waivers. 14 SECTION 7.3. Public Announcements. Prior to the Closing, the parties agree to consult with each other before issuing any press release or making any public statement with respect to this Agreement or the transactions contemplated hereby and, except as may be required by applicable law or any listing agreement with any national securities exchange, will not issue any such press release or make any such public statement prior to such consultation. Following the Closing, the parties agree to consult with each other before issuing any press release or making any public filing that describes any terms of this Agreement. SECTION 7.4. Registration Rights Agreement. The terms set forth in Exhibit B hereto are hereby incorporated by reference. ARTICLE 8 CONDITIONS TO CLOSING SECTION 8.1. Conditions to Obligations of Buyer and the Corporation . The obligations of Buyer and the Corporation to consummate the Closing are subject to the satisfaction of the condition that no provision of any applicable law or regulation and no judgment, injunction, order or decree shall prohibit the consummation of the Closing. SECTION 8.2. Conditions to Obligation of Buyer. The obligation of Buyer to consummate the Closing is subject to the satisfaction of the following further conditions: (a) The Corporation shall have performed in all material respects all of its obligations hereunder required to be performed by it on or prior to the Closing. (b) The representations and warranties of the Corporation contained in this Agreement shall in each case, if specifically qualified by materiality, be true and correct and, if not so qualified, be true and correct in all material respects at and as of the Closing, as if made at and as of such date (except to the extent such representations and warranties expressly relate to an earlier date, in which case such representations and warranties shall be true and correct on and as of such earlier date). (c) The Certificate of Designations shall have been filed in accordance with the laws of Delaware. 15 (d) The Corporation shall have delivered to Buyer (i) a copy of the resolutions adopted by the Board of Directors, certified by the Secretary of the Corporation, authorizing this Agreement and (ii) a certificate dated the Closing Date, signed by an officer of the Corporation, certifying as to the fulfillment of the conditions set forth in Sections 8.02(a) and (b). (e) The Corporation shall have delivered to Buyer an opinion reasonably acceptable to Buyer from the General Counsel of the Corporation, with respect to the due incorporation, due authorization, non-contravention, capitalization of the Corporation and the validity of the Preferred Shares. (f) The Corporation shall have delivered to Buyer an opinion reasonably acceptable to Buyer from Davis Polk & Wardwell, special counsel to the Corporation, with respect to the valid, binding and enforceable nature of this Agreement. (g) 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 Corporation and its subsidiaries taken as a whole or (y) on the ability of the Corporation and such subsidiaries to perform on a timely basis any material obligation under this Agreement or to consummate the transactions contemplated hereby; or (ii) any material disruption of or material adverse change in financial, banking or capital market conditions. SECTION 8.3. Conditions to Obligation of the Corporation. The obligation of the Corporation to consummate the Closing is subject to the satisfaction of the following further conditions: (a) Buyer shall have performed in all material respects all of its obligations hereunder required to be performed by it at or prior to the Closing Date. (bi The representations and warranties of Buyer contained in this Agreement shall be true in all material respects at and as of the Closing Date, as if made at and as of such date. (ci The Corporation shall have received a certificate signed by an appropriate officer of Buyer to the foregoing effect. (di Buyer shall have delivered to the Corporation an opinion reasonably acceptable to Buyer from Weil, Gotshal & Manges LLP, special counsel to Buyer, with respect to the valid, binding and enforceable nature of this Agreement. 17 ARTICLE 9 TERMINATION SECTION 9.1. Grounds for Termination. This Agreement may be terminated at any time prior to the Closing: (a) by mutual written agreement of the Corporation and Buyer; (b) by either the Corporation or Buyer if the Closing shall not have been consummated on or before April 30, 1999; or (c) by either the Corporation or Buyer if consummation of the transactions contemplated hereby would violate any nonappealable final order, decree or judgment of any court or governmental body having competent jurisdiction. The party desiring to terminate this Agreement pursuant to clauses 9.01(b) or 9.01(c) shall promptly give notice of such termination to the other party. SECTION 9.2. Effect of Termination. If this Agreement is terminated as permitted by Section 9.01, such termination shall be without liability of either party (or any stockholder, director, officer, partner, employee, agent, consultant or representative of such party) to the other party to this Agreement; provided that if such termination shall result from the willful (a) failure of either 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 either party hereto of any representation or warranty or agreement contained herein, such party shall be fully liable for any and all losses incurred or suffered by the other party as a result of such failure or breach. The provisions of Sections 6.01, 11.01, 11.03, 11.05, 11.06, 11.07, 11.08, 11.09, 11.10, and 11.12 shall survive any termination hereof pursuant to Section 9.01. ARTICLE 10 SURVIVAL; INDEMNIFICATION 17 SECTION 10.1. Survival of Representation and Warranties. All representations and warranties contained in this Agreement and all claims with respect thereto shall terminate upon the expiration of 18 months after the Closing Date, except that the representations and warranties contained in Sections 3.01, 3.02, 3.03, 3.06, 4.01, 4.02, and 4.03 shall survive indefinitely. Notwithstanding the preceding sentence, any covenant, agreement, representation or warranty in respect of which indemnity may be sought under this Agreement shall survive the time at which it would otherwise terminate pursuant to the preceding sentence, if notice of the inaccuracy or breach thereof giving rise to such right of indemnity shall have been given to the party against whom such indemnity may be sought prior to such time. SECTION 10.2. Indemnification. (ai The Corporation hereby indemnifies Buyer against and agrees to hold Buyer harmless from any and all damage, loss, liability and expense (including, without limitation, reasonable expenses of investigation and reasonable attorneys' fees and expenses in connection with any action, suit or proceeding) ("DAMAGES") incurred or suffered by Buyer arising out of any misrepresentation or breach of warranty, covenant or agreement made or to be performed by the Corporation pursuant to this Agreement; provided that (i) the Corporation shall not be liable under this Section 10.02(a) unless the aggregate amount of Damages with respect to all matters referred to in this Section 10.02(a) exceeds $5,000,000, in which event the Buyer shall be entitled to make a claim against the Corporation for the full amount of such Damages and (ii) the Corporation's maximum liability under this Section 10.02(a) shall not exceed $200,000,000. (bi Buyer hereby indemnifies the Corporation against and agrees to hold the Corporation harmless from any and all Damages incurred or suffered by the Corporation arising out of any misrepresentation or breach of warranty, covenant or agreement made or to be performed by Buyer pursuant to this Agreement; provided that (i) Buyer shall not be liable under this Section 10.02(b) unless the aggregate amount of Damages with respect to all matters referred to in this Section 10.02(b) exceeds $5,000,000, in which event the Corporation shall be entitled to make a claim against the Buyer for the full amount of such Damages and (ii) Buyer's maximum liability under this Section 10.02(b) shall not exceed $200,000,000. SECTION 10.3. Procedures. The party seeking indemnification under Section 10.02 (the "INDEMNIFIED Party") agrees to give prompt notice to the party against whom indemnity is sought (the "INDEMNIFYING PARTY") of the assertion of any claim, or the commencement of any suit, action or proceeding in respect of which indemnity may be sought under such Section. The Indemnifying Party may at the request of the Indemnified Party participate in and control the defense of any such suit, action or proceeding at its own expense. The Indemnifying Party shall not be liable under Section 10.02 for any settlement effected without its consent of any claim, litigation or proceeding in respect of which indemnity may be sought hereunder. 18 SECTION 10.4. Inspections; No Other Representations . Buyer is an informed and sophisticated purchaser, and has undertaken such investigation and has been provided with and has evaluated such documents and information as it has deemed necessary to enable it to make an informed and intelligent decision with respect to the execution, delivery and performance of this Agreement. Buyer will undertake prior to the Closing such further investigation and request such additional documents and information as it deems necessary. Buyer agrees to accept the Preferred Shares based upon its own inspection, examination and determination with respect thereto as to all matters, and without reliance upon any express or implied representations or warranties of any nature made by or on behalf of or imputed to the Corporation, except as expressly set forth in this Agreement. Without limiting the generality of the foregoing, Buyer acknowledges that the Corporation makes no representation or warranty with respect to (i) any projections, estimates or budgets delivered to or made available to Buyer of future revenues, future results of operations (or any component thereof), future cash flows or future financial condition (or any component thereof) of the Corporation and the Subsidiaries or the future business and operations of the Corporation and the Subsidiaries or (ii) any other information or documents made available to Buyer or its counsel, accountants or advisors with respect to the Company or the Subsidiaries or their respective businesses or operations, except as expressly set forth in this Agreement. SECTION 10.5. Exclusivity. Except as specifically set forth in this Agreement and except in the case of fraud, effective as of the Closing Buyer waives any rights and claims Buyer may have against the Corporation, whether in law or in equity, relating to the Corporation or the Preferred Shares or the transactions contemplated hereby. The rights and claims waived by Buyer include, without limitation, claims for breach of contract, breach of representation or warranty, negligent misrepresentation and all other claims for breach of duty. After the Closing, Section 10.02 will provide the exclusive remedy for any misrepresentation, breach of warranty, covenant or other agreement or other claim arising out of this Agreement or the transactions contemplated hereby, except in the case of fraud. ARTICLE 11 MISCELLANEOUS 19 SECTION 11.1. Notices. All notices, requests and other communications to any party hereunder shall be in writing and shall be deemed duly given, effective (i) three Business Days later, if sent by registered or certified mail, return receipt requested, postage prepaid, (ii) when sent if sent by telecopier or fax, provided that the telecopy or fax is promptly confirmed by telephone confirmation thereof, (iii) when served, if delivered personally to the intended recipient, and (iv) one Business Day later, if sent by overnight delivery via a national courier service, and in each case, addressed, if to Buyer, to: HMTF Live Wire Investors, LLC c/o Hicks, Muse, Tate & Furst Incorporated 1325 Avenue of the Americas 25th Floor New York, New York 10019 Attention: Michael Levitt Fax: (212) 424-1450 with a copy to: Hicks, Muse, Tate & Furst Incorporated 200 Crescent Court Suite 1600 Dallas, Texas 75201 Attention: Lawrence D. Stuart, Jr., Esq. Fax: (214) 740-7313 with a copy to: Weil, Gotshal & Manges LLP 767 Fifth Avenue New York, New York 10153 Attention: Simeon Gold, Esq. Fax: (212) 310-8007 if to the Corporation, to: RCN Corporation 105 Carnegie Center Princeton, NJ 08540-6215 Attention: John J. Jones, Esq. Fax: (609) 734-3830 20 with a copy to: Davis Polk & Wardwell 450 Lexington Avenue New York, New York 10017 Attention: William L. Taylor, Esq. Fax: (212) 450-4800 Any party may change the address to which notices or other communications hereunder are to be delivered by giving the other party notice in the manner herein set forth. SECTION 11.2. Amendments and Waivers. Any provision of this Agreement may be amended or waived if, but only if, such amendment or waiver is in writing and is signed, in the case of an amendment, by each party to this Agreement, or in the case of a waiver, by the party against whom the waiver is to be effective. No failure or delay by any party in exercising any right, power or privilege hereunder shall operate as a waiver thereof nor shall any single or partial exercise thereof preclude any other or further exercise thereof or the exercise of any other right, power or privilege. The rights and remedies herein provided shall be cumulative. SECTION 11.3. Expenses. All costs and expenses incurred in connection with this Agreement shall be paid by the party incurring such cost or expense. SECTION 11.4. Assignment. The rights and obligations of the parties hereunder cannot be assigned or delegated except (i) that Buyer may assign any or all of its rights and obligations under this Agreement to any one or more of its Affiliates and (ii) that Buyer may assign its rights and obligations under Sections 2.03, 6.02, 7.04 and Exhibit B of this Agreement to any one or more Permitted Transferees. SECTION 11.5. Governing Law. This Agreement shall be governed by and construed in accordance with the law of the State of New York, without regard to the conflicts of law rules of such state. 21 SECTION 11.6. Jurisdiction. Except as otherwise expressly provided in this Agreement, the parties hereto agree that any suit, action or proceeding seeking to enforce any provision of, or based on any matter arising out of or in connection with, this Agreement or the transactions contemplated hereby may only be brought in the United States District Court for the Southern District of New York or any other New York State court sitting in New York City, and each of the parties hereby consents to the jurisdiction of such courts (and of the appropriate appellate courts therefrom) in any such suit, action or proceeding and irrevocably waives, to the fullest extent permitted by law, any objection which it may now or hereafter have to the laying of the venue of any such suit, action or proceeding in any such court or that any such suit, action or proceeding which is brought in any such court has been brought in an inconvenient forum. Process in any such suit, action or proceeding may be served on any party anywhere in the world, whether within or without the jurisdiction of any such court. Without limiting the foregoing, each party agrees that service of process on such party as provided in Section 11.01 shall be deemed effective service of process on such party. SECTION 11.7. Counterparts; Third Party Beneficiaries. This Agreement may be signed in any number of counterparts, each of which shall be an original, with the same effect as if the signatures thereto and hereto were upon the same instrument. This Agreement shall become effective when each party hereto shall have received a counterpart hereof signed by the other party hereto. No provision of this Agreement is intended to confer upon any Person other than the parties hereto any rights or remedies hereunder, except for rights provided to Permitted Transferees under Section 7.04. SECTION 11.8. Entire Agreement. This Agreement (including the Exhibits hereto) and the Certificate of Designations constitute the entire agreement between the parties with respect to the subject matter of this Agreement and supersede all prior agreements and understandings, both oral and written, between the parties with respect to the subject matter of this Agreement (except for the letter agreement dated March 9, 1999 with respect to confidential treatment of information provided by the Corporation, which remains in effect). SECTION 11.9. Captions. The captions herein are included for convenience of reference only and shall be ignored in the construction or interpretation hereof. 22 SECTION 11.10. Severability. The provisions of this Agreement shall be deemed severable and the invalidity or unenforceability of any provision shall not affect the validity or enforceability of the other provisions hereof. If any provision of this Agreement, or the application thereof to any person or entity or any circumstance, is invalid or unenforceable, (a) a suitable and equitable provision shall be substituted therefor in order to carry out, so far as may be valid and enforceable, the intent and purpose of such invalid or unenforceable provision and (b) the remainder of this Agreement and the application of such provision to other persons, entities or circumstances shall not be affected by such invalidity or unenforceability, nor shall such invalidity or unenforceability affect the validity or enforceability of such provision, or the application thereof, in any other jurisdiction. SECTION 11.11. Specific Performance. The parties hereto agree that the remedy at law for any breach of this Agreement will be inadequate and that 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 competition jurisdiction for specific performance or injunctive or such other relief as such court may deem just and proper in order to enforce this Agreement or prevent any violation hereof and, to the extent permitted by applicable law, each party waives any objection to the imposition of such relief. SECTION 11.12. No Recourse. Notwithstanding any of the terms or provisions of this Agreement, (i) the Corporation agrees that neither it nor any person acting on its behalf may assert any claims or cause of action against any officer, director, partner, member or stockholder of the Buyer or any of its Affiliates in connection with or arising out of this Agreement or the transactions contemplated hereby and (ii) the Buyer agrees that neither it nor any person acting on its behalf may assert any claims or cause of action against any officer, director, partner, member or stockholder of the Corporation or any of its Affiliates in connection with or arising out of this Agreement or the transactions contemplated hereby. 23 IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed by their respective authorized officers as of the day and year first above written. RCN CORPORATION By: /s/ Bruce Godfrey ---------------------------------- Name: Bruce Godfrey Title: Executive Vice President and CFO HMTF LIVE WIRE INVESTORS, LLC By: /s/ Michael Levitt ---------------------------------- Name: Michael Levitt Title: President 24 EXHIBIT B REGISTRATION RIGHTS This constitutes Exhibit B to the Stock Purchase Agreement (as it may be amended from time to time, the "STOCK PURCHASE AGREEMENT") dated as of March 18, 1999 between RCN Corporation, a Delaware corporation (the "CORPORATION") and HMTF Live Wire Investments, LLC, a Delaware limited liability company ("BUYER"). ARTICLE 1 DEFINITIONS SECTION 1.01. Definitions. Terms defined in the Stock Purchase Agreement are used herein as therein defined. In addition, the following terms, as used herein, have the following meanings: "COMMISSION" means the Securities and Exchange Commission. "DEMAND REGISTRATION STATEMENT" means the Demand Registration Statement as defined in Section 2.01. "HOLDER" means a person who owns Registrable Securities and is either (a) the Buyer or (b) a direct or an indirect transferee of the Buyer who has agreed in writing to be bound by the terms of Sections 2.03(b), 6.02 and 7.04 of the Stock Purchase Agreement and this Exhibit B. "PIGGYBACK REGISTRATION" means a Piggyback Registration as defined in Section 2.02. "REGISTRABLE COMMON STOCK" means the shares of Common Stock issued upon conversion of the Preferred Stock, including any additional shares of Common Stock issued the respect thereof in connection with a stock split, stock dividend or similar event with respect to the Common Stock. "REGISTRABLE SECURITIES" means (a) the Preferred Stock and (b) the Registrable Common Stock. As to any particular Registrable Securities, such Registrable Securities shall cease to be Registrable Securities as soon as they (i) (NY) 17431/028/RR/reg.rts.wpd have been sold or otherwise disposed of pursuant to a registration statement that was filed with the Commission and declared effective under the Securities Act, (ii) are eligible for sale pursuant to Rule 144 without being subject to applicable volume limitations thereunder, (iii) have been otherwise sold, transferred or disposed of by a Holder to any Person that is not a Holder, or (iv) have ceased to be outstanding. "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. "UNDERWRITER" means a securities dealer who purchases any Registrable Securities as principal and not as part of such dealer's market-making activities. SECTION 1.02. Internal References. Unless the context indicates otherwise, references to Articles, Sections and paragraphs shall refer to the corresponding articles, sections and paragraphs in this Exhibit B, and references to the parties shall mean the parties to the Stock Purchase Agreement. ARTICLE 2 REGISTRATION RIGHTS SECTION 2.01. Demand Registration. (a) The Buyer, on its own behalf and on behalf of the other Holders, may make up to four written requests for registration under the Securities Act of all or any part of the Registrable Securities held by the Holders (each, a "DEMAND REGISTRATION"); provided that (i) no Demand Registration may be requested within 180 days after the preceding request for a Demand Registration, and (ii) each Demand Registration must be (x) in respect of Registrable Securities with a fair market value of at least $50,000,000 or (y) in respect of all remaining Registrable Securities and have a fair market value of at least $5,000,000. Such request will specify the aggregate number of shares of Registrable Securities proposed to be sold 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 Exhibit B or the inability of the requesting Holders to reach agreement with the underwriters for the proposed sale (the "UNDERWRITERS") on price or other customary terms for such transaction, or in the event the requesting 2 Holders withdraw or do not pursue the request for the Demand Registration (in each of the foregoing cases, provided that at such time the Corporation is in compliance in all material respects with its obligations under this Exhibit B), then such Demand Registration shall be deemed to have been effected (provided that if the Demand Registration does not become effective because of a material adverse change in the condition (financial or otherwise), business, assets or results of operations of the Corporation and its subsidiaries taken as a whole that occurs subsequent to the date of the written request made by the requesting Holders, then the Demand Registration shall not be deemed to have been effected). (b) In the event that Buyer withdraws or does not pursue a request for a Demand Registration and, pursuant to Section 2.01(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 Corporation for any and all Registration Expenses incurred by the Corporation in connection with such request for a Demand Registration; provided that the right to reacquire a Demand Registration may be exercised a maximum of two times. (c) If the Selling Holders so elect, the offering of such Registrable Securities pursuant to such Demand Registration shall be in the form of an underwritten offering. A majority in interest of the Selling 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 2.01, subject to the Corporation's approval, which approval shall not be unreasonably withheld. (d) The Selling Holders will inform the Corporation of the time and manner of any disposition of Registrable Common Stock, and agree to reasonably cooperate with the Corporation 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. (e) The Corporation will have the right to preempt any Demand Registration with a primary registration by delivering written notice (within five business days after the Corporation has received a request for such Demand Registration) of such intention to the Buyer indicating that the Corporation has identified a specific business need and use for the proceeds of the sale of such securities and the Corporation shall use commercially reasonable efforts to effect a primary registration within 60 days of such notice. In the ensuing primary registration, the Holders will have such piggyback registration rights as are set forth in Section 2.02 hereof. Upon the Corporation's preemption of a requested Demand Registration, such requested registration will not count as the Holders' 3 Demand Registration; provided that a Demand Registration will not be deemed preempted if the Holders are permitted to sell all requested securities in connection with the ensuing primary offering by exercising their piggyback registration rights as set forth in Section 2.02. The Corporation may exercise the right to preempt only twice in any 360-day period; provided, that during any 360 day period there shall be a period of at least 120 consecutive days during which the Selling Holders may effect a Demand Regulation. SECTION 2.02. Piggyback Registration. If the Corporation 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 pursuant to Rule 415 (or any substitute form or rule, respectively, that may be adopted by the Commission)), the Corporation shall give written notice of such proposed filing to the Holders at the address set forth in the share register of the Corporation as soon as reasonably practicable (but in no event less than 10 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 Common Stock as such Holder may request (a "PIGGYBACK REGISTRATION"). Each Holder will have five business days after receipt of any such notice to notify the Corporation as to whether any it wishes to participate in a Piggyback Registration; provided that should a Holder fail to provide timely notice to the Corporation, such Holder will forfeit any rights to participate in the Piggyback Registration with respect to such proposed offering. In the event that the registration statement is filed on behalf of a Person other than the Corporation, the Corporation will use its best efforts to have the shares of Registrable Common Stock that the Holders wish to sell included in the registration statement. If the Corporation shall determine in its sole discretion not to register or to delay the proposed offering, the Corporation 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 Common Stock 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 Common Stock for the same period as the delay in respect of the proposed offering. As between the Corporation and the Selling Holders, the Corporation shall be entitled to select the Underwriters in connection with any Piggyback Registration. SECTION 2.03. Reduction of Offering. Notwithstanding anything contained herein, if the managing Underwriter of an offering described in Section 2.01 or 2.02 states in writing that the size of the offering that Holders, the Corporation and any other Persons intend to make is such that the inclusion of the Registrable Securities would be likely to materially and adversely affect the price, timing or 4 distribution of the offering, then the amount of Registrable Securities to be offered for the account of Holders shall be reduced to the extent necessary to reduce the total amount of securities to be included in such offering to the amount recommended by such managing Underwriter; provided that in the case of a Piggyback Registration, if securities are being offered for the account of Persons other than the Corporation, then the proportion by which the amount of Registrable Securities intended to be offered for the account of Holders is reduced shall not exceed the proportion by which the amount of securities intended to be offered for the account of such other Persons (other than any Person exercising a demand registration right) is reduced; provided further that in the case of a Demand Registration, the amount of Registrable Securities to be offered for the account of the Holders making the Demand Registration shall be reduced only after the amount of securities to be offered for the account of the Corporation and any other Persons has been reduced to zero. SECTION 2.04. Preservation of Rights. The Corporation will not grant any registration rights to third parties which contravene the rights granted hereunder. ARTICLE 3 REGISTRATION PROCEDURES SECTION 3.01. Filings; Information. In connection with the registration of Registrable Securities pursuant to Section 2.01 and Section 2.02 hereof, the Corporation 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 Corporation will expeditiously prepare and file with the Commission a registration statement on any form for which the Corporation then qualifies and which counsel for the Corporation 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 for such period, not to exceed 60 days, as may be reasonably necessary to effect the sale of such securities; provided that if the Corporation shall furnish to the Buyer a certificate signed by the Corporation's Chairman, President or any Vice-President stating that in his or her good faith judgment it would be detrimental or otherwise disadvantageous to the Corporation or its shareholders for such a registration statement to be filed as expeditiously 5 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 Corporation), the Corporation 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 there shall be a period of at least 120 consecutive days during which the Corporation will make a registration statement available under this Exhibit B; 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 Corporation's fiscal year, and (ii) the Securities Act requires the Corporation to include audited financials as of the end of such fiscal year, the Corporation 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. (b) The Corporation 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. (c) After the filing of the registration statement, the Corporation will promptly notify the Selling Holders of any stop order issued or, to the Corporation'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. (d) The Corporation will use its reasonable best 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; provided that the Corporation 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 3.01(d), 6 (ii) subject itself to taxation in any such jurisdiction or (iii) consent to general service of process in any such jurisdiction. (e) The Corporation 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 Corporation, the Selling Holders will deliver to the Corporation 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 Corporation shall give such notice, the Corporation shall extend the period during which such registration statement shall be maintained effective as provided in Section 3.01(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 Corporation shall make available to the Selling Holders such supplemented or amended prospectus. (f) The Corporation will enter into customary agreements (including an underwriting agreement in customary form) and take such other actions as are required in order to expedite or facilitate the sale of such Registrable Securities. (g) At the request of any Underwriter in connection with an underwritten offering the Corporation 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 Corporation's independent public accountants covering such customary matters as the managing Underwriter may reasonably request. 7 (h) The Corporation 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. (i) The Corporation will use its commercially reasonable efforts to cause all such Registrable Common Stock and, in the event of a public offering of Series A Preferred Stock, the Series A Preferred Stock (subject to applicable listing requirements) to be listed on each securities exchange or quoted on each inter-dealer quotation system on which the Common Stock is then listed or quoted. The Corporation may require Selling Holders promptly to furnish in writing to the Corporation such information regarding such Selling Holders, the plan of distribution of the Registrable Securities and other information as the Corporation may from time to time reasonably request or as may be legally required in connection with such registration. SECTION 3.02. Registration Expenses. In connection with any Demand Registration, the Corporation 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 Corporation and the reasonable fees and expenses of independent certified public accountants for the Corporation (including fees and expenses associated with the special audits or the delivery of comfort letters) and (vi) the reasonable fees and expenses of any additional experts retained by the Corporation in connection with such registration. In connection with any Piggyback Registration, the Corporation shall pay the Registration Expenses set forth in clauses (ii) through (vi) of the preceding sentence. The Selling Holders shall pay (i) any underwriting fees, discounts or commissions attributable to the sale of Registrable Securities, (ii) fees and expenses of counsel for the Selling Holders and (iii) any out-of-pocket expenses of the Selling Holders. In connection with any Piggyback Registration, the Selling Holders shall pay, in addition to items (i) through (iii) of the preceding sentence, registration and filing fees with the Commission and National Association of Securities Dealers Inc., in proportion to the ratio that the number of 8 shares of Registrable Common Stock being registered for the account of the Selling Holders bears to the aggregate number of shares of Common Stock being included in the applicable registration statement. ARTICLE 4 INDEMNIFICATION AND CONTRIBUTION SECTION 4.01. Indemnification by the Corporation. The Corporation 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 in any registration statement or prospectus relating to the Registrable Securities (as amended or supplemented if the Corporation 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 contained in or based upon any information furnished in writing to the Corporation by or on behalf of such Selling Holder or any Underwriter expressly for use therein or by the Selling Holder or Underwriter's failure to deliver a copy of the registration statement or prospectus or any amendments or supplements thereto after the Corporation has furnished the Buyer or Underwriter with copies of the same. The Corporation 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 4.01. SECTION 4.02. Indemnification by the Buyer. Each Selling Holder agrees to indemnify and hold harmless the Corporation, its officers and directors, and each Person, if any, which controls the Corporation 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 Corporation 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 9 any preliminary prospectus. Each Selling Holder also agrees to indemnify and hold harmless 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 Corporation provided in this Section 4.02. SECTION 4.03. 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 4.01 or Section 4.02, 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. SECTION 4.04. Contribution. If the indemnification provided for in this Article 4 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 10 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 other relevant equitable considerations. The relative fault of the Corporation, 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 Corporation and each Selling Holder agrees that it would not be just and equitable if contribution pursuant to this Section 4.04 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 4, 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 5 MISCELLANEOUS SECTION 5.01. 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 11 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 Exhibit B and (c) furnishes in writing to the Corporation such information regarding such Person, the plan of distribution of the Registrable Securities and other information as the Corporation may from time to time request or as may be legally required in connection with such registration. SECTION 5.02. Rule 144. The Corporation 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 the Buyer, the Corporation will deliver to the Buyer a written statement as to whether it has complied with such reporting requirements. SECTION 5.03. Holdback Agreements. Each Holder agrees, in the event of an underwritten offering for the Corporation (whether for the account of the Corporation 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 180-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). SECTION 5.04. Termination. The registration rights granted under this Agreement will terminate on March 31, 2014; provided, however, that if the shares of Preferred Stock outstanding on such date shall not have been redeemed in full in accordance with Section 6(b) of the Certificate of Designations, this Agreement shall remain in full force and effect with respect to such shares (and the shares of Common Stock issuable upon the conversion of such shares) until such time as such shares have been so redeemed in full. 12 EX-10 3 Exhibit 10.2 AMENDMENT NO. 1 TO STOCK PURCHASE AGREEMENT dated as of April 7, 1999 among RCN CORPORATION and HMTF LIVE WIRE INVESTORS, LLC and HM4 RCN PARTNERS (NY) 17431/028/SPA/amend1.spa.wpd TABLE OF CONTENTS PAGE SECTION 1. Definitions; References..............................1 SECTION 2. Representations and Warranties of Buyer..............1 SECTION 3. Representations and Warranties of Assignee...........1 SECTION 4. Covenants of the Assignee............................2 SECTION 5. Amendment to Article 3...............................2 SECTION 6. Amendment to Article 5...............................2 SECTION 7. Certificate of Designations..........................2 SECTION 8. Amendments...........................................2 SECTION 9. Governing Law........................................2 SECTION 10. Counterparts........................................2 Exhibit A Certificate of Designations, Preferences and Rights of Series A 7% Senior Convertible Preferred Stock AMENDMENT NO. 1 TO STOCK PURCHASE AGREEMENT AMENDMENT NO. 1 TO STOCK PURCHASE AGREEMENT dated as of April 7, 1999 among RCN Corporation, a Delaware corporation (the "CORPORATION"), HMTF Live Wire Investors, LLC, a Delaware limited liability company ("BUYER") and HM4 RCN Partners, a Texas general partnership ("ASSIGNEE"). WHEREAS, the Corporation and Buyer have entered into a Stock Purchase Agreement (the "STOCK PURCHASE AGREEMENT") dated as of March 18, 1999; WHEREAS, Buyer and Assignee have entered into an Assignment and Assumption Agreement (the "ASSIGNMENT AGREEMENT") dated as of April 7, 1999, in accordance with Section 11.04 of the Stock Purchase Agreement, pursuant to which Buyer assigned and Assignee assumed all of Buyers rights and obligations under the Stock Purchase Agreement (and the Corporation acknowledged such assignment and assumption); WHEREAS, the Corporation, Buyer and Assignee have agreed to amend the Stock Purchase Agreement as set forth herein; NOW, THEREFORE, the parties hereto agree as follows: SECTION 1. Definitions; References. Unless otherwise specifically defined herein, each term used herein which is defined in the Stock Purchase Agreement shall have the meaning assigned to such term in the Stock Purchase Agreement. Each reference to "hereof", "hereunder", "herein" and "hereby" and each other similar reference and each reference to "this Agreement" and each other similar reference contained in the Stock Purchase Agreement shall from and after the date hereof refer to the Stock Purchase Agreement as amended hereby. SECTION 2. Representations and Warranties of Buyer. Buyer represents and warrants to the Corporation as of the date hereof that Assignee is an Affiliate of Buyer. SECTION 3. Representations and Warranties of Assignee. Assignee represents and warrants to the Corporation as of the date hereof that each representation and warranty of Buyer set forth in Article 4 of the Stock Purchase Agreement is true and correct as of the date hereof with respect to Assignee (except that references to limited liability company status, power and authority in Sections 4.01, 4.02 and 4.04 shall be deemed references to general partnership status, power and authority). SECTION 4. Covenants of the Assignee. The Assignee agrees with the Corporation that, pursuant to the Assignment Agreement, it will perform all of the obligations of Buyer under the Stock Purchase Agreement subject to and in accordance with the terms and conditions of the Stock Purchase Agreement. SECTION 5. Amendment to Article 3. Section 3.03 of the Stock Purchase Agreement is amended by (i) deleting "Except as set forth in Schedule 3.03 hereto, the" and (ii) inserting "The" in its place. SECTION 6. Amendment to Article 5. Section 5.04 of the Stock Purchase Agreement is amended by adding the following sentence to the end of such section: "At such time as Buyer ceases to hold the minimum amount of Preferred Shares or Common Stock that would entitle Buyer to designate a Buyer Director under this Section 5.04, then Buyer's right to designate such additional director shall cease and, upon notice of termination from the Corporation to Buyer, the term of office of the Buyer Director shall forthwith terminate and the size of the Board of Directors shall be reduced accordingly." SECTION 7. Certificate of Designations. The form of Certificate of Designations attached to the Stock Purchase Agreement as Exhibit A thereto is amended and restated in its entirety to read as set forth on Exhibit A attached hereto. SECTION 8. Amendments. Except as expressly set forth herein, the amendments contained herein shall not constitute an amendment of any term or condition of the Stock Purchase Agreement and all such terms and conditions shall remain in full force and effect and are hereby ratified and confirmed in all respects. SECTION 9. Governing Law. This Amendment shall be governed by and construed in accordance with the law of the State of New York, without regard to the conflicts of law rules of such state. SECTION 10. Counterparts. This Amendment may be signed in any number of counterparts, each of which shall be an original, with the same effect as if the signatures thereto and hereto were upon the same instrument. This 2 Amendment shall become effective when each party hereto shall have received a counterpart hereof signed by the other party hereto. 3 IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be duly executed by their respective authorized officers as of the day and year first above written. RCN CORPORATION By: /s/ Bruce Godfrey ---------------------------------------- Name: Bruce Godfrey Title: Executive Vice President and CFO HMTF LIVE WIRE INVESTORS, LLC By: /s/ Andrew Rosen ---------------------------------------- Name: Andrew Rosen Title: Vice President HM4 RCN PARTNERS By: HM4 RCN Qualified Fund, L.P., its managing partner By: Hicks, Muse GP Partners IV, L.P., its general partner By: Hicks, Muse Fund IV LLC, its general partner By: /s/ Andrew Rosen ---------------------------------------- Name: Andrew Rosen Title: Principal 4 EX-10 4 Exhibit 10.3 CERTIFICATE OF DESIGNATIONS, PREFERENCES AND RIGHTS OF SERIES A 7% SENIOR CONVERTIBLE PREFERRED STOCK of RCN CORPORATION Pursuant to Section 151 of the General Corporation Law of the State of Delaware We, the undersigned, John J. Jones, Executive Vice President, General Counsel and Corporate Secretary, and Bruce C. Godfrey, Executive Vice President and Chief Financial Officer, of RCN Corporation, a Delaware corporation (hereinafter called the "CORPORATION"), pursuant to the provisions of Sections 103 and 151 of the General Corporation Law of the State of Delaware, do hereby make this Certificate of Designations and do hereby state and certify that pursuant to the authority expressly vested in the Board of Directors of the Corporation by the Certificate of Incorporation, the Board of Directors duly adopted the following resolutions: RESOLVED, that, pursuant to Article FOURTH of the Certificate of Incorporation (which authorizes 25,000,000 shares of preferred stock, $1.00 par value ("PREFERRED STOCK")), the Board of Directors hereby fixes the powers, designations, preferences and relative, participating, optional and other special rights, and the qualifications, limitations and restrictions, of a series of Preferred Stock. RESOLVED, that each share of such series of Preferred Stock shall rank equally in all respects and shall be subject to the following provisions: 1. Number and Designation. 708,000 shares of the Preferred Stock of the Corporation shall be designated as Series A 7% Senior Convertible Preferred Stock (the "SERIES A PREFERRED STOCK") (including 458,000 shares of Series A Preferred Stock reserved exclusively for the payment of dividends pursuant to paragraph 4). 2. Definitions. Unless the context otherwise requires, when used herein the following terms shall have the meaning indicated. "ADDITIONAL AMOUNT" shall have the meaning set forth in paragraph 4(a) hereof. (NY) 17431/028/CD/cert.desig.pref.wpd(2) "AFFILIATE" means, with respect to any specified person, any other person which, directly or indirectly, controls, is controlled by or is under direct or indirect common control with, such specified 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 "affiliated," "controlling," and "controlled" have meanings correlative to the foregoing. "BOARD OF DIRECTORS" means the Board of Directors of the Corporation. "BUSINESS DAY" means any day except Saturday, Sunday and any day which shall be a legal holiday or a day on which banking institutions in New York City, New York generally are authorized or required by law or other governmental actions to close. "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 Issue Date or issued after the Issue Date, and any and all rights (other than any evidence of indebtedness), warrants or options exchangeable for or convertible into such capital stock. "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), excluding the Kiewit Holders, 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 Stock of the Corporation; or (b) the Corporation 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 Corporation, in any such event pursuant to a transaction in which the outstanding Voting Stock of the Corporation is converted into or exchanged for cash, securities or other property, other than any such transaction where (i) the outstanding Voting Stock of the Corporation is converted into or exchanged for Voting Stock of the surviving or transferee corporation or its parent corporation and/or cash, securities or other property in an amount which could be paid by the Corporation under the terms of the Corporation's credit and financing agreements and (ii) immediately after such transaction no "person" or "group" (as such terms are used in Sections 13(d) and 14(d) of the Exchange Act), excluding the Kiewit 2 Holders, 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 Stock of the surviving or transferee corporation, as applicable; 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 Corporation 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 (other than by action of the Kiewit Holders) to constitute a majority of the Board of Directors then in office. "COMMON STOCK" means the Corporation's common stock, par value $1.00 per share. "CURRENT MARKET PRICE" means the average of the daily Market Prices of the Common Stock for ten consecutive trading days immediately preceding the date for which such value is to be computed. "EXCHANGE ACT" means the Securities Exchange Act of 1934, as amended, or any successor statute, and the rules and regulations promulgated thereunder. "ISSUE DATE" means the original date of issuance of shares of Series A Preferred Stock. "KIEWIT HOLDERS" means Peter Kiewit Sons Inc., Level 3 Communications, Inc. and Level 3 Telecom Holdings, Inc. and any of their respective controlled Affiliates. "LIQUIDATION PREFERENCE" is an amount equal to $1,000.00 per share of Series A Preferred Stock. "MARKET PRICE" means, with respect to the Common Stock, on any given day, (i) the price of the last trade, as reported on the Nasdaq National Market, not identified as having been reported late to such system, or (ii) if the Common Stock is so traded, but not so quoted, the average of the last bid and ask prices, as those prices are reported on the Nasdaq National Market, or (iii) if the Common Stock is not listed or authorized for trading on the Nasdaq National Market or any comparable system, the average of the closing bid and asked prices as furnished by two members of the National Association of Securities Dealers, Inc. selected 3 from time to time by the Corporation for that purpose. If the Common Stock is not listed and traded in a manner that the quotations referred to above are available for the period required hereunder, the Market Price per share of Common Stock shall be deemed to be the fair value per share of such security as determined in good faith by the Board of Directors of the Corporation. "SPECIAL AMOUNT" with respect of any share of Series A Preferred Stock shall mean all dividends and other amounts which have become payable in respect of such share under paragraph 4(a) but which have not been paid. The Special Amount with respect to any such share shall be reduced by the amount of any such dividends and other amounts actually paid in respect of such share under paragraph 4(c) (including any such amounts paid in shares of Series A Preferred Stock pursuant to paragraph 4(f)). "VOTING STOCK" means, with respect to any person, the Capital Stock of any class or kind ordinarily having the power to vote for the election of directors or other members of the governing body of such person. 3. Rank. (a) Any class or series of stock of the Corporation shall be deemed to rank: (i) prior to the Series A Preferred Stock, either as to the payment of dividends or other amounts or as to distribution of assets upon liquidation, dissolution or winding up, or both, if the holders of such class or series shall be entitled by the terms thereof to the receipt of dividends or other amounts and of amounts distributable upon liquidation, dissolution or winding up, in preference or priority to the holders of Series A Preferred Stock ("SENIOR SECURITIES"); (ii) on a parity with the Series A Preferred Stock, either as to the payment of dividends or other amounts or as to distribution of assets upon liquidation, dissolution or winding up, or both, whether or not the dividend rates, dividend payment dates or redemption or liquidation prices per share thereof be different from those of the Series A Preferred Stock, if the holders of the Series A Preferred Stock and of such class of stock or series shall be entitled by the terms thereof to the receipt of dividends or other amounts or of amounts distributable upon liquidation, dissolution or winding up, or both, in proportion to their respective amounts of accrued and unpaid dividends per share or liquidation preferences (including, but not limited to preferences as to payment of dividends or other amounts distributable upon liquidation), without 4 preference or priority one over the other and such class of stock or series is not a class of Senior Securities ("PARITY SECURITIES"); and (iii) junior to the Series A Preferred Stock, either as to the payment of dividends or as to the distribution of assets upon liquidation, dissolution or winding up, or both, if such stock or series shall be Common Stock or if the holders of the Series A Preferred Stock shall be entitled by the terms thereof to receipt of dividends or other amounts, and of amounts distributable upon liquidation, dissolution or winding up, in preference or priority to the holders of shares of such stock or series (including, but not limited to preferences as to payment of dividends or other amounts distributable upon liquidation) ("JUNIOR SECURITIES"). (b) The respective definitions of Senior Securities, Junior Securities and Parity Securities shall also include any rights or options exercisable or exchangeable for or convertible into any of the Senior Securities, Junior Securities and Parity Securities, as the case may be. (c) The Series A Preferred Stock shall be subject to the creation of Junior Securities and Parity Securities. 4. Dividends and Additional Amounts. (a) The holders of shares of Series A Preferred Stock shall be entitled to receive with respect to each share of Series A Preferred Stock, when, as and if declared by the Board of Directors, out of funds legally available for the payment of dividends, dividends at a rate per annum equal to seven percent (7%) of the Liquidation Preference per share, and an additional amount at a rate per annum equal to seven percent (7%) of the Special Amount with respect to any share of Series A Preferred Stock (an "ADDITIONAL AMOUNT"), if any, to be paid in accordance with the terms of this Section 4. Such dividends and Additional Amounts shall be cumulative from the Issue Date and shall be payable quarterly in arrears on March 31, June 30, September 30 and December 31 of each year (unless such day is not a Business Day, in which event such dividends and Additional Amounts shall be payable on the next succeeding Business Day) (each such date being a "DIVIDEND PAYMENT DATE" and each such quarterly period being a "DIVIDEND PERIOD"). Each such dividend and Additional Amount shall be payable to the holders of record of shares of the Series A Preferred Stock as they appear on the share register of the Corporation on the corresponding Record Date. As used herein, the term "RECORD DATE" means, with respect to the dividend payable on March 31, June 30, September 30 and December 31, respectively of each year, the preceding March 15, June 15, September 15 and December 15, or such other record date, not more 5 than 60 days or less than 10 days preceding the payment dates thereof, as shall be fixed by the Board of Directors. (b) The amount of dividends and Additional Amounts payable for each full Dividend Period for the Series A Preferred Stock shall be computed by dividing the annual seven percent (7%) rate by four. The amount of dividends and Additional Amounts payable for the initial Dividend Period, or any other period shorter or longer than a full Dividend Period, on the Series A Preferred Stock shall be computed on the basis of twelve 30-day months and a 360-day year. Holders of shares of Series A Preferred Stock shall not be entitled to any dividends, whether payable in cash, property or stock, in excess of amounts payable under Section 4(a) hereof (including Special Amounts), on the Series A Preferred Stock. Except as expressly provided herein, no interest, or sum of money in lieu of interest, shall be payable in respect of any dividend payment or payments on the Series A Preferred Stock that may be in arrears. (c) Accrued and unpaid Special Amounts for any past Dividend Periods may be declared and paid on any subsequent Dividend Payment Date, to holders of record on the corresponding Record Date. (d) So long as any shares of the Series A Preferred Stock are outstanding, no dividend, except any dividend paid to effectuate a stock split and except as described in the next succeeding sentence, shall be declared or paid or set apart for payment on any Parity Securities, nor shall any Parity Securities be redeemed, purchased or otherwise acquired for any consideration (or any moneys be paid to or made available for a sinking fund for the redemption of any shares of any such stock) by the Corporation, directly or indirectly (except by conversion into or exchange for Parity Securities or Junior Securities), unless in each case all Special Amounts have been or contemporaneously are declared and paid or declared and a sum sufficient for the payment thereof set apart for such payment on the Series A Preferred Stock for all Dividend Periods terminating on or prior to the date of payment of the dividend on such class or series of Parity Securities. When Special Amounts are not paid in full or a sum sufficient for such payment is not set apart, as aforesaid, all Special Amounts and Additional Amounts declared upon shares of the Series A Preferred Stock and all dividends and additional amounts declared upon any other class or series of Parity Securities shall be declared ratably in proportion to the respective amounts of Special Amounts and Additional Amounts accumulated and unpaid on the Series A Preferred Stock and dividends and additional amounts accumulated and unpaid on such Parity Securities. (e) So long as any shares of the Series A Preferred Stock are outstanding, no dividends (other than dividends or distributions paid in shares of, 6 or to effectuate a stock split on, or options, warrants or rights to subscribe for or purchase shares of, Junior Securities) shall be declared or paid or set apart for payment or other distribution declared or made upon Junior Securities, nor shall any Junior Securities be redeemed, purchased or otherwise acquired (other than a redemption, purchase or other acquisition of shares of Common Stock made for purposes of an employee incentive or benefit plan of the Corporation or any subsidiary) (any such dividend, distribution, redemption or purchase being hereinafter referred to as a "JUNIOR SECURITIES DISTRIBUTION") for any consideration (or any moneys be paid to or made available for a sinking fund for the redemption of any shares of any such stock) by the Corporation, directly or indirectly (except by conversion into or exchange for Junior Securities), unless in each case (i) all Special Amounts on all outstanding shares of the Series A Preferred Stock and accrued and unpaid dividends and additional amounts on any other Parity Securities shall have been paid or set apart for payment for all past Dividend Periods with respect to the Series A Preferred Stock and all past dividend periods with respect to such Parity Securities and (ii) sufficient funds shall have been paid or set apart for the payment of the dividend and Additional Amount for the current Dividend Period with respect to the Series A Preferred Stock and the current dividend period with respect to such Parity Securities. (f) The Corporation may pay accrued dividends (including accrued and unpaid dividends), Additional Amounts (including accrued and unpaid Additional Amounts) , if any, and Special Amounts at its election, in cash or shares of Series A Preferred Stock, or any combination thereof. The number of shares of Series A Preferred Stock to be issued in circumstances when dividends, Additional Amounts or Special Amounts are paid with additional shares of Series A Preferred Stock will equal the cash amount of the dividend, Additional Amount, or Special Amount, as the case may be, payable (but for the operation of this Section 4(f)), divided by the Liquidation Preference, rounded to the nearest full share, up or down, after taking into account all shares of Series A Preferred Stock owned by the holder thereof, provided that if the resulting fractional share held by such holder equals one-half of a share of Series A Preferred Stock, such fractional share shall be rounded up to the nearest full share. 5. Liquidation Preference. (a) In the event of any liquidation, dissolution or winding up of the Corporation, whether voluntary or involuntary, before any payment or distribution of the assets of the Corporation (whether capital or surplus) shall be made to or set apart for the holders of Junior Securities, the holders of the shares of Series A Preferred Stock shall be entitled to receive with respect to each share of Series A Preferred Stock an amount in cash equal to the Liquidation Preference, plus the Special Amount in respect of such share, plus an amount equal to all dividends and the Additional Amount accrued and unpaid thereon from the last Dividend Payment Date to the date of final distribution to 7 such holders, but such holders shall not be entitled to any further payment. If, upon any liquidation, dissolution or winding up of the Corporation, the assets of the Corporation, or proceeds thereof, shall be insufficient to pay in full the preferential amount aforesaid and liquidating payments on all Parity Securities, then such assets, or the proceeds thereof, shall be distributed among the holders of shares of Series A Preferred Stock and all such other Parity Securities ratably in accordance with the respective amounts that would be payable on such shares of Preferred Stock and any such other Parity Securities if all amounts payable thereon were paid in full. For the purposes of this paragraph 5, (i) a consolidation or merger of the Corporation with one or more corporations, or (ii) a sale or transfer of all or substantially all of the Corporation's assets, shall not be deemed to be a liquidation, dissolution or winding up, voluntary or involuntary, of the Corporation. (b) Subject to the rights of the holders of any Parity Securities, after payment shall have been made in full to the holders of the Series A Preferred Stock, as provided in this paragraph 5, any other series or class or classes of Junior Securities shall, subject to the respective terms and provisions (if any) applying thereto, be entitled to receive any and all assets remaining to be paid or distributed, and the holders of the Series A Preferred Stock and any Parity Securities shall not be entitled to share therein. 6. Redemption. (a) The Series A Preferred Stock shall not be redeemable by the Corporation prior to March 31, 2003. On and after March 31, 2003, to the extent the Corporation shall have funds legally available for such payment, the Corporation may redeem at its option shares of Series A Preferred Stock, at any time in whole or from time to time in part, at a redemption price per share equal to the Liquidation Preference, plus the Special Amount in respect of such share, plus an amount equal to all dividends and the Additional Amount accrued and unpaid thereon from the last Dividend Payment Date to the date fixed for redemption, without interest. (b) To the extent the Corporation shall have funds legally available for such payment, on March 31, 2014, the Corporation shall redeem all outstanding shares of the Series A Preferred Stock, if any, at a redemption price per share in cash equal to the Liquidation Preference, plus the Special Amount in respect of such share, plus an amount equal to all dividends and the Additional Amount accrued and unpaid thereon from the last Dividend Payment Date to such date, without interest. (c) Shares of Series A Preferred Stock which have been issued and reacquired in any manner, including shares purchased or redeemed, shall (upon compliance with any applicable provisions of the laws of the State of Delaware) 8 have the status of authorized and unissued shares of the class of Preferred Stock undesignated as to series and may be redesignated and reissued as part of any series of the Preferred Stock; provided that no such issued and reacquired shares of Series A Preferred Stock shall be reissued or sold as Series A Preferred Stock. (d) If the Corporation is unable or shall fail to discharge its obligation to redeem all outstanding shares of Series A Preferred Stock pursuant to paragraph 6(b) (the "MANDATORY REDEMPTION OBLIGATION"), the Mandatory Redemption Obligation shall be discharged as soon as the Corporation is able to discharge such Mandatory Redemption Obligation. If and so long as any Mandatory Redemption Obligation with respect to the Series A Preferred Stock shall not be fully discharged, the Corporation shall not (i) directly or indirectly, redeem, purchase, or otherwise acquire any Parity Security or discharge any mandatory or optional redemption, sinking fund or other similar obligation in respect of any Parity Securities (except in connection with a redemption, sinking fund or other similar obligation to be satisfied pro rata with the Series A Preferred Stock) or (ii) declare or make any Junior Securities Distribution, or, directly or indirectly, discharge any mandatory or optional redemption, sinking fund or other similar obligation in respect of any Junior Securities. 7. Procedure for Redemption. (a) In the event that fewer than all the outstanding shares of Series A Preferred Stock are to be redeemed, the number of shares to be redeemed shall be determined by the Board of Directors and the shares to be redeemed shall be selected pro rata (with any fractional shares being rounded to the nearest whole share). (b) In the event the Corporation shall redeem shares of Series A Preferred Stock, notice of such redemption shall be given by first class mail, postage prepaid, mailed not less than 30 days nor more than 60 days prior to the redemption date, to each holder of record of the shares to be redeemed at such holder's address as the same appears on the stock register of the Corporation; provided that neither the failure to give such notice nor any defect therein shall affect the validity of the giving of notice for the redemption of any share of Series A Preferred Stock to be redeemed except as to the holder to whom the Corporation has failed to give said notice or except as to the holder whose notice was defective. Each such notice shall state: (i) the redemption date; (ii) the number of shares of Series A Preferred Stock to be redeemed and, if fewer than all the shares held by such holder are to be redeemed, the number of shares to be redeemed from such holder; (iii) the redemption price; (iv) the place or places where certificates for such shares are to be surrendered for payment of the redemption price; and (v) that dividends and Additional Amounts on the shares to be redeemed will cease to accrue on such redemption date. 9 (c) Notice having been mailed as aforesaid, from and after the redemption date, dividends and Additional Amounts on the shares of Series A Preferred Stock so called for redemption shall cease to accrue, and all rights of the holders thereof as stockholders of the Corporation (except the right to receive from the Corporation the redemption price) shall cease. Upon surrender in accordance with said notice of the certificates for any shares so redeemed (properly endorsed or assigned for transfer, if the Board of Directors of the Corporation shall so require and the notice shall so state), such share shall be redeemed by the Corporation at the redemption price aforesaid. In case fewer than all the shares represented by any such certificate are redeemed, a new certificate shall be issued representing the unredeemed shares without cost to the holder thereof. 8. Conversion. (a) Subject to the provisions of this paragraph 8, the holders of the shares of Series A Preferred Stock shall have the right, at any time and from time to time, at such holder's option, to convert any or all outstanding shares (and fractional shares) of Series A Preferred Stock, in whole or in part, into fully paid and non-assessable shares of Common Stock. The number of shares of Common Stock deliverable upon conversion of a share of Series A Preferred Stock, adjusted as hereinafter provided, is referred to herein as the "CONVERSION RATIO." The Conversion Ratio as of any date shall be an amount equal to the sum of (i) the Liquidation Preference, (ii) the Special Amount and (iii) an amount equal to all dividends and the Additional Amount accrued thereon from the last Dividend Payment Date to such date, divided by $39.00, subject to adjustment from time to time pursuant to paragraph 8(g) hereof. Notwithstanding any call for redemption pursuant to paragraph 6, the right to convert shares so called for redemption shall terminate at the close of business on the date immediately preceding the date fixed for such redemption unless the Corporation shall default in making payment of the amount payable upon such redemption. (b) (i) In order to exercise the conversion privilege, the holder of the shares of Series A Preferred Stock to be converted shall surrender the certificate representing such shares at the office of the Corporation, with a written notice of election to convert completed and signed, specifying the number of shares to be converted. Unless the shares issuable on conversion are to be issued in the same name as the name in which such shares of Series A Preferred Stock are registered, each share surrendered for conversion shall be accompanied by instruments of transfer, in form satisfactory to the Corporation, duly executed by the holder or the holder's duly authorized attorney, and an amount sufficient to pay any transfer or similar tax. 10 (ii) As promptly as practicable after the surrender by the holder of the certificates for shares of Series A Preferred Stock as aforesaid, the Corporation shall issue and shall deliver to such holder, or on the holder's written order to the holder's transferee, (x) a certificate or certificates for the whole number of shares of Common Stock issuable upon the conversion of such shares in accordance with the provisions of this paragraph 8, (y) any cash adjustment required pursuant to Section 8(f), and (z) in the event of a conversion in part, a certificate or certificates for the whole number of Preferred Shares not being so converted. (iii) Each conversion shall be deemed to have been effected immediately prior to the close of business on the date on which the certificates for shares of Series A Preferred Stock shall have been surrendered and such notice received by the Corporation as aforesaid, and the person in whose name or names any certificate or certificates for shares of Common Stock shall be issuable upon such conversion shall be deemed to have become the holder of record of the shares of Common Stock represented thereby at such time on such date and such conversion shall be into a number of whole shares of Common Stock equal to the product of the number of shares of Series A Preferred Stock surrendered times the Conversion Ratio in effect at such time on such date. All shares of Common Stock delivered upon conversion of the Series A Preferred Stock will upon delivery be duly and validly issued and fully paid and non-assessable, free of all liens and charges and not subject to any preemptive rights. Upon the surrender of certificates representing the shares of Series A Preferred Stock to be converted, the shares to be so converted shall no longer be deemed to be outstanding and all rights of a holder with respect to such shares surrendered for conversion shall immediately terminate except the right to receive the Common Stock and other amounts payable pursuant to this paragraph 8 and a certificate or certificates representing the shares of Series A Preferred Stock not converted. (c) (i) Upon delivery to the Corporation by a holder of shares of Series A Preferred Stock of a notice of election to convert, the right of the Corporation to redeem such shares of Series A Preferred Stock shall terminate, regardless of whether a notice of redemption has been mailed as aforesaid. (ii) If a holder of Series A Preferred Stock delivers to the Corporation a notice of election to convert, the Series A Preferred Stock to be converted shall cease to accrue dividends and Additional Amounts pursuant to paragraph 4 but shall continue to be entitled to receive pro rata 11 dividends and Additional Amounts for the period from the last Dividend Payment Date to the date of delivery of the notice of election to convert in preference to and in priority over any dividends on any Junior Securities. (iii) Except as provided above and in paragraph 8(g), the Corporation shall make no payment or adjustment for accrued and unpaid dividends or Additional Amounts on shares of Series A Preferred Stock, whether or not in arrears, on conversion of such shares or for dividends in cash on the shares of Common Stock issued upon such conversion. (d) (i) The Corporation covenants that it will at all times reserve and keep available, free from preemptive rights, such number of its authorized but unissued shares of Common Stock as shall be required for the purpose of effecting conversions of the Series A Preferred Stock. (ii) Prior to the delivery of any securities which the Corporation shall be obligated to deliver upon conversion of the Series A Preferred Stock, the Corporation shall comply with all applicable federal and state laws and regulations which require action to be taken by the Corporation. (e) The Corporation will pay any and all documentary stamp or similar issue or transfer taxes payable in respect of the issue or delivery of shares of Common Stock on conversion of the Series A Preferred Stock pursuant hereto; provided that the Corporation shall not be required to pay any tax which may be payable in respect of any transfer involved in the issue or delivery of shares of Common Stock in a name other than that of the holder of the Series A Preferred Stock to be converted and no such issue or delivery shall be made unless and until the person requesting such issue or delivery has paid to the Corporation the amount of any such tax or has established, to the satisfaction of the Corporation, that such tax has been paid. (f) In connection with the conversion by a holder of any shares of Series A Preferred Stock, no fractions of shares of Common Stock shall be required to be issued to such holder, but in lieu thereof the Corporation shall pay a cash adjustment in respect of such fractional interest in an amount equal to such fractional interest multiplied by the Market Price per share of Common Stock on the business day on which such shares of Series A Preferred Stock are deemed to have been converted. (g) (i) In case the Corporation shall at any time after the date of issue of the Series A Preferred Stock (A) declare a dividend or make a distribution on Common Stock payable in Common Stock, (B) subdivide or split the outstanding Common Stock, (C) combine or reclassify the outstanding Common Stock into a 12 smaller number of shares, (D) issue any shares of its Capital Stock in a reclassification of Common Stock (including any such reclassification in connection with a consolidation or merger in which the Corporation is the continuing corporation), or (E) consolidate with, or merge with or into, any other Person, the Conversion Ratio in effect at the time of the record date for such dividend or distribution or of the effective date of such subdivision, split, combination, consolidation, merger or reclassification shall be proportionately adjusted so that the conversion of the Series A Preferred Stock after such time shall entitle the holder to receive the aggregate number of shares of Common Stock or other securities of the Corporation (or shares of any security into which such shares of Common Stock have been combined, consolidated, merged or reclassified pursuant to clause 8(g)(i)(C), 8(g)(i)(D) or 8(g)(i)(E) above) which, if this Series A Preferred Stock had been converted immediately prior to such time, such holder would have owned upon such conversion and been entitled to receive by virtue of such dividend, distribution, subdivision, split, combination, consolidation, merger or reclassification, assuming such holder of Common Stock of the Corporation (x) is not a Person with which the Corporation consolidated or into which the Corporation merged or which merged into the Corporation or to which such recapitalization, sale or transfer was made, as the case may be ("CONSTITUENT PERSON"), or an affiliate of a constituent person and (y) failed to exercise any rights of election as to the kind or amount of securities, cash and other property receivable upon such reclassification, change, consolidation, merger, recapitalization, sale or transfer (provided, that if the kind or amount of securities, cash and other property receivable upon such reclassification, change, consolidation, merger, recapitalization, sale or transfer is not the same for each share of Common Stock of the Corporation held immediately prior to such reclassification, change, consolidation, merger, recapitalization, sale or transfer by other than a constituent person or an affiliate thereof and in respect of which such rights of election shall not have been exercised ("NON-ELECTING SHARE"), then for the purpose of this subparagraph 8(g) the kind and amount of securities, cash and other property receivable upon such reclassification, change, consolidation, merger, recapitalization, sale or transfer by each non-electing share shall be deemed to be the kind and amount so receivable per share by a plurality of the non-electing shares). Such adjustment shall be made successively whenever any event listed above shall occur. (ii) In case the Corporation shall issue or sell any Common Stock (other than Common Stock issued (A) pursuant to the Corporation's existing or future stock option plans or pursuant to any other existing or future Common Stock-related director or employee compensation plan of the Corporation approved by the Board of Directors, (B) as consideration for the acquisition of a business or of assets, (C) in a firmly committed underwritten public offering, (D) to the Corporation's joint venture 13 partners in exchange for interests in the relevant joint venture or (E) upon exercise or conversion of any security the issuance of which caused an adjustment under paragraph 8(g)(i) or 8(g)(iii) hereof or the issuance of which did not require adjustment hereunder) without consideration or for a consideration per share less than the Current Market Price on the date of such issuance, or shall issue securities convertible into Common Stock having a conversion price per share less than the Current Market Price at the date of issuance of such convertible security, the Conversion Ratio to be in effect after such issuance or sale shall be determined by multiplying the Conversion Ratio in effect immediately prior to such issuance or sale by a fraction, (1) the numerator 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 securities, issued on conversion), and (2) the denominator 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 Corporation for the total number of additional shares of Common Stock so issued or sold (or issuable on conversion) would purchase at the Current Market Price in effect immediately prior to such issuance or sale. In case any portion of the consideration to be received by the Corporation shall be in a form other than cash, the fair market value of such noncash consideration shall be utilized in the foregoing computation. Such fair market value shall be determined in good faith by the Board of Directors. (iii) In case the Corporation shall fix a record date for the issuance of rights, options or warrants (other than rights, options or warrants issued under a shareholders' rights plan) to the holders of its Common Stock or other securities entitling such holders to subscribe for or purchase shares of Common Stock (or securities convertible into shares of Common Stock) at a price per share of Common Stock (or having a conversion price per share of Common Stock, if a security convertible into shares of Common Stock) less than the Current Market Price on such record date, the maximum number of shares of Common Stock issuable upon exercise of such rights, options or warrants (or conversion of such convertible securities) shall be deemed to have been issued and outstanding as of such record date and the Conversion Ratio shall be adjusted pursuant to paragraph 8(g)(ii) hereof, as though such maximum number of shares of Common Stock had been so issued for an aggregate consideration payable by the holders of such rights, options, warrants or convertible securities prior to their receipt of such shares of Common Stock. In case any portion of such consideration shall be in a form other than cash, the fair market 14 value of such noncash consideration shall be determined as set forth in paragraph 8(g)(ii) hereof. Such adjustment shall be made successively whenever such record date is fixed; and in the event that such rights, options or warrants are not so issued or expire in whole or in part unexercised, or in the event of a change in the number of shares of Common Stock to which the holders of such rights, options or warrants are entitled (other than pursuant to adjustment provisions therein comparable to those contained in this paragraph 8(g)), the Conversion Ratio shall again be adjusted as follows: (A) in the event that all of such rights, options or warrants expire unexercised, the Conversion Ratio shall be the Conversion Ratio that would then be in effect if such record date had not been fixed; (B) in the event that less than all of such rights, options or warrants expire unexercised, the Conversion Ratio shall be adjusted pursuant to paragraph 8(g)(ii) to reflect the maximum number of shares of Common Stock issuable upon exercise of such rights, options or warrants that remain outstanding (without taking into effect shares of Common Stock issuable upon exercise of rights, options or warrants that have lapsed or expired); and (C) in the event of a change in the number of shares of Common Stock to which the holders of such rights, options or warrants are entitled, the Conversion Ratio shall be adjusted to reflect the Conversion Ratio which would then be in effect if such holder had initially been entitled to such changed number of shares of Common Stock. Notwithstanding anything herein to the contrary, no further adjustment to the Conversion Ratio shall be made upon the issuance or sale of Common Stock upon the exercise of any rights, options or warrants to subscribe for or purchase Common Stock, if any adjustment in the Conversion Ratio was made or required to be made upon the record date for the issuance or sale of such rights, options or warrants under this clause 8(g)(iii). (iv) In case the Corporation shall fix a record date for the making of a distribution to holders of Common Stock (including any such distribution made in connection with a consolidation or merger in which the Corporation is the continuing corporation) of evidences of indebtedness, assets or other property (other than (x) dividends payable in Common Stock or rights, options or warrants referred to in, and for which an adjustment is made pursuant to, paragraph 8(g)(i) or 8(g)(iii) hereof, (y) cash dividends paid from the Corporation's retained earnings, or (z) distributions of stock or assets having an aggregate fair market value of less than $25 million), the Conversion Ratio to be in effect after such record date shall be determined by multiplying the Conversion Ratio in effect immediately prior to such record date by a fraction, (A) the numerator of which shall be the Current Market Price on such record date, and (B) the denominator of which shall be the Current Market Price on 15 such record date, less the fair market value (determined as set forth in paragraph 8(g)(ii) hereof) of the portion of the assets, other property or evidence of indebtedness so to be distributed which is applicable to one share of Common Stock. Such adjustments shall be made successively whenever such a record date is fixed; and in the event that such distribution is not so made, the Conversion Ratio shall again be adjusted to be the Conversion Ratio which would then be in effect if such record date had not been fixed. In addition to the foregoing, an adjustment to the Conversion Ratio shall be made in respect of dividends and distributions paid in cash (excluding any dividend or distribution in connection with the liquidation, dissolution or winding up of the Corporation, whether voluntary or involuntary, and any cash that is distributed upon a merger, consolidation or other transaction for which an adjustment pursuant to paragraph 8(g)(i) is made) where the sum of (1) all such cash dividends and distributions made within the preceding 12 months in respect of which no adjustment has been made and (2) any cash and the fair market value of other consideration paid in respect of any repurchases of Common Stock by the Corporation or any of its subsidiaries within the preceding 12 months in respect of which no adjustment has been made, exceeds 12.5% of the Corporation's market capitalization (being the product of the then Current Market Price of the Common Stock times the aggregate number of shares of Common Stock then outstanding on the record date for such distribution). (v) No adjustment to the Conversion Ratio pursuant to paragraphs 8(g)(ii), 8(g)(iii) or 8(g)(iv) above shall be required unless such adjustment would require an increase or decrease of at least 1% in the Conversion Ratio; provided however, that any adjustments which by reason of this paragraph 8(g)(v) are not required to be made shall be carried forward and taken into account in any subsequent adjustment. All calculations under this paragraph 8(g) shall be made to the nearest four decimal points. (vi) In the event that, at any time as a result of the provisions of this paragraph 8(g), a holder of Series A Preferred Stock upon subsequent conversion shall become entitled to receive any shares of Capital Stock of the Corporation other than Common Stock, the number of such other shares so receivable upon conversion of Series A Preferred Stock shall thereafter be subject to adjustment from time to time in a manner and on terms as nearly equivalent as practicable to the provisions contained herein. 16 (h) All adjustments pursuant to this paragraph 8 shall be notified to the holders of the Series A Preferred Stock and such notice shall be accompanied by a schedule of computations of the adjustments 9. Change of Control. (a) Subject to paragraph 9(c) and 9(d) below, upon the occurrence of a Change of Control (the date of such occurrence being the "CHANGE OF CONTROL DATE"), the Corporation shall be required to make an offer (the "CHANGE OF CONTROL OBLIGATION") to each holder of shares of Series A Preferred Stock to repurchase of such holder's shares of Series A Preferred Stock, or such portion thereof as may be determined by such holder, at a price per share in cash equal to the Liquidation Preference plus the Special Amount in respect of such share, plus an amount equal to all dividends and the Additional Amount accrued and unpaid thereon from the last Dividend Payment Date to the date of repurchase; provided, that the holders of Series A Preferred Stock shall not be entitled to tender any Series A Preferred Stock under this provision until such time as the Corporation has repurchased such debt securities as are required to be repurchased by the Corporation upon such event pursuant to Corporation's credit and financing agreements. (b) Such offer to purchase (the "CHANGE OF CONTROL OFFER"), shall take place on a Business Day (the "CHANGE OF CONTROL PAYMENT DATE") not later than 60 days following the Change of Control Date. Notice of a Change of Control Offer shall be given to holders of the Series A Preferred Stock, not less than 25 days nor more than 45 days before the Change of Control Payment Date. The Change of Control Offer is required to remain open for at least 20 business days and until the close of business on the Change of Control Payment Date. (c) Notwithstanding the foregoing, the Corporation shall not be required to make a Change of Control Offer following a Change of Control if a third party makes the Change of Control Offer in the manner, at the times and otherwise in compliance with the requirements applicable to a Change of Control Offer made by the Corporation and purchases all shares of Series A Preferred Stock validly tendered and not withdrawn under such Change of Control Offer. (d) If the Corporation is required to make a Change of Control Offer, the Corporation will comply with all applicable tender offer laws and regulations, including, to the extent applicable, Section 14(e) and Rule 14e-1 under the Securities Exchange Act of 1934, and any other applicable securities laws and regulations. 10. 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 paragraph 10 or as otherwise provided by law. 17 (b) If and whenever six quarterly dividends or Additional Amounts payable on the Series A Preferred Stock have not been paid in full or if the Corporation shall have failed to discharge its Mandatory Redemption Obligation or its Change of Control Obligation, the number of directors then constituting the Board of Directors shall be increased by one and the holders of shares of Series A Preferred Stock, voting as a single class, shall be entitled to elect the additional director 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 holders of the Series A Preferred Stock called as hereinafter provided. Whenever all arrears in dividends and Special Amounts on the Series A Preferred Stock then outstanding shall have been paid and dividends and Additional Amounts thereon for the current quarterly dividend period shall have been paid or declared and set apart for payment, or the Company shall have fulfilled its Mandatory Redemption Obligation or Change of Control Obligation, as the case may be, then the right of the holders of the Series A Preferred Stock to elect such additional director shall cease (but subject always to the same provisions for the vesting of such voting rights in the case of any similar future arrearage in six quarterly dividends or failure to fulfill any Mandatory Redemption Obligation or Change of Control Obligation), and the term of office of any person elected as director by the holders of the Series A Preferred Stock shall forthwith terminate and the number of the Board of Directors shall be reduced accordingly. At any time after voting power to elect a director shall have become vested and be continuing in the holders of Series A Preferred Stock pursuant to this paragraph, or if a vacancy shall exist in the office of a director elected by the holders of Series A Preferred Stock, a proper officer of the Corporation may, and upon the written request of the holders of record of at least twenty-five percent (25%) of the shares of Series A Preferred Stock then outstanding addressed to the Secretary of the Corporation shall, call a special meeting of the holders of Series A Preferred Stock, for the purpose of electing the director which such holders are entitled to elect. If such meeting shall not be called by a proper officer of the Corporation within twenty (20) days after personal service of said written request upon the Secretary of the Corporation, or within twenty (20) days after mailing the same within the United States by certified mail, addressed to the Secretary of the Corporation at its principal executive offices, then the holders of at least twenty-five percent (25%) of the outstanding shares of Series A Preferred Stock may designate in writing one of their number to call such meeting at the expense of the Corporation, and such meeting may be called by the person so designated upon the notice required for the annual meeting of stockholders of the Corporation and shall be held at the place for holding the annual meetings of stockholders. Any holder of Series A Preferred Stock so designated shall have, and the Corporation shall provide, access to the lists of stockholders to be called pursuant to the provisions hereof. 18 (c) Without the written consent of holders of a majority of the outstanding shares of Series A Preferred Stock or the vote of holders of a majority of the outstanding shares of Series A Preferred Stock at a meeting of the holders of Series A Preferred Stock called for such purpose, the Corporation will not amend, alter or repeal any provision of the Certificate of Incorporation or this Certificate of Designations so as to adversely affect the preferences, rights or powers of the Series A Preferred Stock or to authorize the issuance or issue of any additional shares of Series A Preferred Stock; provided that any such amendment that changes any dividend or other amount payable on or the liquidation preference of the Series A Preferred Stock shall require the written consent of holders of two-thirds of the outstanding shares of Series A Preferred Stock or the vote of holders of two-thirds of the outstanding shares of Series A Preferred Stock at a meeting of the holders of Series A Preferred Stock called for such purpose. (d) Without the written consent of holders of a majority of the outstanding shares of Series A Preferred Stock or the vote of holders of a majority of the outstanding shares of Series A Preferred Stock at a meeting of such holders called for such purpose, the Corporation will not create, authorize or issue any Senior Securities. (e) Without the written consent of holders of a majority of the outstanding shares of Series A Preferred Stock or the vote of holders of a majority of the outstanding shares of Series A Preferred Stock at a meeting of the holders of Series A Preferred Stock called for such purpose, the Corporation shall not, 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 unless: either (1) the Corporation 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 (2) (i) the person (if other than the Corporation) formed by such consolidation or into which the Corporation is merged or the person which acquires by conveyance, transfer or lease the properties and assets of the Corporation substantially as an entirety or in the case of a plan of liquidation, the person to which assets of the plan of liquidation, the person to which assets of the Corporation have been transferred, shall be a corporation, partnership or trust organized and existing under the laws of the United States or any State thereof or the District of Columbia and (ii) the Series A Preferred Stock shall be converted into or exchanged for and shall become shares of such successor, transferee or resulting person, having in respect of such successor, transferee or resulting person, the same powers, preferences and relative participating, optional or other special rights and the qualifications, limitations or restrictions thereon, that the Series A Preferred Stock had immediately prior to such transaction. For purposes 19 of the foregoing, the transfer (by lease, assignment, sale or otherwise, in a single transaction or series of related transactions) of all or substantially all of the properties or assets of one or more subsidiaries of the Corporation, the Capital Stock of which constitutes all or substantially all of the properties and assets of the Corporation, shall be deemed to be the transfer of all or substantially all of the properties and assets of the Corporation. (f) In exercising the voting rights set forth in this paragraph 10, each share of Series A Preferred Stock 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, then the Series A Preferred Stock shall have with respect to such matters one vote per $1,000 (or fraction thereof) of the aggregate Liquidation Preference plus Special Amounts. 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. 11. Reports. So long as any of the Series A Preferred Stock is outstanding, in the event the Corporation is not required to file quarterly and annual financial reports with the Securities and Exchange Commission pursuant to Section 13 or Section 15(d) of the Exchange Act, the Corporation will furnish the holders of the Series A Preferred Stock with reports containing the same information as would be required in such reports. 12. General Provisions. (a) The term "PERSON" as used herein means any corporation, limited liability company, partnership, trust, organization, association, other entity or individual. (b) The term "OUTSTANDING", when used with reference to shares of stock, shall mean issued shares, excluding shares held by the Corporation or a subsidiary. (c) The headings of the paragraphs, subparagraphs, clauses and subclauses of this Certificate of Designations are for convenience of reference only and shall not define, limit or affect any of the provisions hereof. (d) Each holder of Series A Preferred Stock, by acceptance thereof, acknowledges and agrees that payments of dividends, interest, premium and principal on, and exchange, redemption and repurchase of, such securities by the Corporation are subject to restrictions on the Corporation contained in certain credit and financing agreements. 20 IN WITNESS WHEREOF, RCN Corporation has caused this Certificate of Designations to be signed and attested by the undersigned this day of April, 1999. RCN CORPORATION By: ----------------------------------- Name: Title: By: ----------------------------------- Name: Title: 21 EX-99 5 Exhibit 99.1 JOINT FILING AGREEMENT The undersigned, and each of them, do hereby agree and consent to the filing of a single statement on behalf of all of them on Schedule 13D and amendments thereto, in accordance with the provisions of Rule 13d-1(f)(1) under the Securities Exchange Act of 1934, as amended. April 19, 1999 HMR RCN PARTNERS Date By: HM4 RCN QUALIFIED FUND, L.P., its Managing General Partner By: HICKS, MUSE GP PARTNERS IV, L.P., its General Partner By: HICKS, MUSE FUND IV LLC, its General Partner By: /s/ Michael D. Salim ----------------------------------------- Michael D. Salim, Chief Financial and Administrative Officer HM4 RCN QUALIFIED FUND, L.P. By: HICKS, MUSE GP PARTNERS IV, L.P., its General Partner By: HICKS, MUSE FUND IV LLC, its General Partner By: /s/ Michael D. Salim ----------------------------------------- Michael D. Salim, Chief Financial and Administrative Officer HM4 RCN PRIVATE FUND, L.P. By: HICKS, MUSE GP PARTNERS IV, L.P., its General Partner By: HICKS, MUSE FUND IV LLC, its General Partner By: /s/ Michael D. Salim ----------------------------------------- Michael D. Salim, Chief Financial and Administrative Officer HM4 RCN COINVESTORS, L.P. By: HICKS, MUSE GP PARTNERS IV, L.P., its General Partner By: HICKS, MUSE FUND IV LLC, its General Partner By: /s/ Michael D. Salim ----------------------------------------- Michael D. Salim, Chief Financial and Administrative Officer HICKS, MUSE GP PARTNERS IV, L.P. By: HICKS, MUSE FUND IV LLC, its General Partner By: /s/ Michael D. Salim ----------------------------------------- Michael D. Salim, Chief Financial and Administrative Officer HICKS, MUSE FUND IV LLC By: /s/ Michael D. Salim ----------------------------------------- Michael D. Salim, Chief Financial and Administrative Officer * ----------------------------------------- Thomas O. Hicks * By: /s/ Michael D. Salim ----------------------------------- Michael D. Salim, Attorney-in-Fact -----END PRIVACY-ENHANCED MESSAGE-----