<PAGE> 1
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 10-Q
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 1998
Commission file numbers: 000-22939
NEXTLINK Communications, Inc.
NEXTLINK Capital, Inc.
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(Exact name of registrant as specified in its charter)
Washington 91-1738221
Washington 91-1716062
------------------------------- ------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
155 108th Avenue NE, 8th Floor, Bellevue, WA 98004
-------------------------------------------- ----------
(Address of principal executive offices) (Zip Code)
(425) 519-8900
----------------------------------------------------
(Registrant's telephone number, including area code)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days. Yes [X] No [ ].
As of May 1, 1998, the number of shares of Class A and Class B common stock of
NEXTLINK Communications, Inc. issued and outstanding was 20,053,919 and
33,483,502, respectively, and there were 1,000 shares of common stock of
NEXTLINK Capital, Inc., all of which 1,000 shares were held by NEXTLINK
Communications, Inc.
NEXTLINK Capital, Inc. meets the conditions set forth in General Instruction
H(1)(a) and (b) of Form 10-Q and is therefore filing this Form with the reduced
disclosure format.
<PAGE> 2
PART I. FINANCIAL INFORMATION
Item 1(a). Financial Statements
NEXTLINK COMMUNICATIONS, INC.
CONSOLIDATED BALANCE SHEETS
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
(AMOUNTS AS OF MARCH 31, 1998 ARE UNAUDITED)
<TABLE>
<CAPTION>
MARCH 31, DECEMBER 31,
1998 1997
---------- ----------
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents .......... $ 438,027 $ 389,074
Marketable securities .............. 632,683 353,283
Accounts receivable, net ........... 22,364 22,955
Other .............................. 13,200 4,530
Pledged securities ................. 42,400 41,425
---------- ----------
Total current assets ........... 1,148,674 811,267
Pledged securities ..................... 21,142 21,185
Property and equipment, net ............ 298,752 253,653
Goodwill, net .......................... 51,569 52,278
Other assets, net ...................... 242,448 78,770
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Total assets ................... $1,762,585 $1,217,153
========== ==========
</TABLE>
--Continued--
<PAGE> 3
NEXTLINK COMMUNICATIONS, INC.
CONSOLIDATED BALANCE SHEETS (CONT'D)
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
(AMOUNTS AS OF MARCH 31, 1998 ARE UNAUDITED)
<TABLE>
<CAPTION>
MARCH 31, DECEMBER 31,
1998 1997
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<S> <C> <C>
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities:
Accounts payable ................................................... $ 31,923 $ 26,776
Accrued expenses ................................................... 61,070 13,082
Notes payable ...................................................... 1,977 8,234
Accrued interest payable ........................................... 41,577 18,880
Current portion of capital lease obligations ....................... 1,775 2,610
----------- -----------
Total current liabilities ...................................... 138,322 69,582
Long-term debt ......................................................... 1,084,328 750,000
Capital lease obligations .............................................. 5,724 7,640
Other long-term liabilities ............................................ 2,884 3,202
----------- -----------
Total liabilities .............................................. 1,231,258 830,424
Commitments and contingencies
Redeemable preferred stock, par value $0.01 per share, 25,000,000 shares
authorized; 14% Preferred, aggregate liquidation preference $334,800;
6,543,302 and 6,322,031 shares issued and outstanding in 1998 and
1997, respectively; 6 1/2% Convertible Preferred, 4,000,000 and 0
shares issued and outstanding in 1998 and 1997, respectively ......... 518,770 313,319
Common stock subject to redemption, par value $0.02 per
share, 63,355 and 456,595 Class A and Class B shares,
respectively, issued and outstanding in 1998; 519,950 Class B shares
issued and oustanding in 1997 ........................................ 4,950 4,950
Shareholders' equity:
Common Stock, par value $0.02 per share, stated at amounts paid in;
Class A, 110,334,000 shares authorized, 19,720,924 and 19,167,899
shares issued and outstanding in 1998 and 1997, respectively;
Class B, 44,133,600 shares authorized, 33,286,882 and 33,746,573
shares issued and outstanding in 1998 and 1997, respectively ..... 334,067 330,561
Deferred compensation .............................................. (10,092) (9,596)
Accumulated deficit ................................................ (316,368) (252,505)
----------- -----------
Total shareholders' equity ..................................... 7,607 68,460
----------- -----------
Total liabilities and shareholders' equity ..................... $ 1,762,585 $ 1,217,153
=========== ===========
</TABLE>
See accompanying notes to unaudited interim consolidated financial statements.
<PAGE> 4
NEXTLINK COMMUNICATIONS, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
(UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH 31,
---------------------------------
1998 1997
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<S> <C> <C>
Revenue ............................................... $ 26,545 $ 10,067
Costs and expenses:
Operating ......................................... 24,550 9,904
Selling, general and administrative ............... 31,957 13,274
Deferred compensation ............................. 624 892
Depreciation ...................................... 6,494 2,848
Amortization ...................................... 3,689 1,558
------------ ------------
Total costs and expenses ...................... 67,314 28,476
------------ ------------
Loss from operations .................................. (40,769) (18,409)
Interest income ....................................... 11,735 5,029
Interest expense ...................................... (23,278) (11,043)
------------ ------------
Net loss .............................................. $ (52,312) $ (24,423)
============ ============
Preferred stock dividends and accretion of preferred
stock redemption obligation, including issue costs $ (11,551) (6,803)
------------ ------------
Net loss applicable to common shares .................. $ (63,863) $ (31,226)
============ ============
Net loss per share .................................... $ (1.19) $ (0.79)
============ ============
Shares used in computation of net loss per share ...... 53,482,222 39,312,482
============ ============
</TABLE>
See accompanying notes to unaudited interim consolidated financial statements.
<PAGE> 5
NEXTLINK COMMUNICATIONS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(DOLLARS IN THOUSANDS)
(UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH 31,
-------------------------------
1998 1997
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<S> <C> <C>
OPERATING ACTIVITIES:
Net loss ............................................. $ (52,312) $ (24,423)
Adjustments to reconcile net loss to net cash used
in operating activities:
Deferred compensation expense .................... 624 892
Equity in loss of affiliates ..................... 723 495
Depreciation and amortization .................... 10,183 4,406
Changes in assets and liabilities, net of effects from
acquisitions:
Accounts receivable .............................. 591 (1,756)
Other assets ..................................... (10,091) (2,234)
Accounts payable ................................. (1,946) (2,073)
Accrued expenses and other liabilities ........... 5,316 (367)
Accrued interest payable ......................... 22,697 10,937
----------- -----------
Net cash used in operating activities ................ (24,215) (14,123)
INVESTING ACTIVITIES:
Purchase of property and equipment ................... (44,501) (17,648)
Net assets acquired in business and asset acquisitions
(net of cash acquired) ............................. -- (41,239)
Cash withdrawn from escrow to be used in business
acquisition ........................................ -- 6,000
Assets acquired in network lease agreement ........... (92,000) --
Contribution to NEXTBAND for purchase of spectrum
licenses ........................................... (25,000) --
Investments in unconsolidated affiliates ............. -- (1,800)
Purchase of marketable securities .................... (1,248,157) (59,635)
Sale of marketable securities ........................ 968,757 --
----------- -----------
Net cash used in investing activities ................ (440,901) (114,322)
</TABLE>
-- Continued --
<PAGE> 6
NEXTLINK COMMUNICATIONS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS (CONT'D)
(DOLLARS IN THOUSANDS)
(UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTHS ENDED
MARCH 31,
---------------------------
1998 1997
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<S> <C> <C>
FINANCING ACTIVITIES:
Net proceeds from issuance of redeemable preferred stock $ 193,900 $ 274,000
Repayment of note payable .............................. (6,257) --
Repayment of capital lease obligations ................. (2,751) (428)
Proceeds from issuance of common stock upon exercise of
stock options ....................................... 235 --
Repayment of loans to related parties .................. 2,151 --
Proceeds from issuance of senior notes (net of discount) 334,328 --
Costs incurred in connection with financing ............ (7,537) --
--------- ---------
Net cash provided by financing activities .............. 514,069 273,572
--------- ---------
Net increase in cash and cash equivalents .............. 48,953 145,127
Cash and cash equivalents, beginning of period ......... 389,074 76,807
--------- ---------
Cash and cash equivalents, end of period ............... $ 438,027 $ 221,934
========= =========
SUPPLEMENTAL CASH FLOW DISCLOSURES:
Noncash financing and investing activities:
Redeemable preferred stock dividends, paid in
redeemable preferred shares ...................... $ 11,064 $ --
========= =========
Accrued cumulative redeemable preferred stock
dividends, payable in redeemable preferred shares $ 488 $ 6,803
========= =========
Accrued contribution to NEXTBAND for purchase of
spectrum licenses ................................ $ 42,354 $ --
========= =========
Cash paid for interest ................................. $ 587 $ 244
========= =========
</TABLE>
See accompanying notes to unaudited interim consolidated financial statements.
<PAGE> 7
NEXTLINK COMMUNICATIONS, INC.
NOTES TO INTERIM CONSOLIDATED FINANCIAL STATEMENTS
(UNAUDITED)
1. BASIS OF PRESENTATION
The consolidated financial statements include the accounts of NEXTLINK
Communications, Inc., a Washington corporation, and its majority-owned
subsidiaries (collectively referred to as the Company). The Company, through
predecessor entities, was formed on September 16, 1994 and, through its
subsidiaries, provides competitive local telecommunications services in selected
markets in the United States. The Company is a majority-owned subsidiary of
Eagle River Investments, L.L.C. (Eagle River).
The Company's financial statements include 100% of the assets, liabilities
and results of operations of subsidiaries in which the Company has a controlling
interest of greater than 50%. The Company's investment in Telecommunications of
Nevada, L.L.C. (Nevada L.L.C.), a limited liability company in which the Company
has a 40% interest and which operates a network that is managed by the Company
in Las Vegas, Nevada, is accounted for on the equity method. All operational
statistics of the Company included in this Report include 100% of the
operational statistics of Nevada L.L.C. Investments in entities in which the
Company has voting interests of not more than 20% are accounted for on the cost
method. All significant intercompany accounts and transactions have been
eliminated.
The interim financial statements are unaudited and have been prepared
pursuant to the rules and regulations of the Securities and Exchange Commission.
Certain information and footnote disclosures normally included in financial
statements prepared in accordance with generally accepted accounting principles
have been condensed or omitted pursuant to such rules and regulations. These
condensed consolidated financial statements should be read in conjunction with
the audited consolidated financial statements and notes thereto included in the
Company's Form 10-KSB as filed with the Securities and Exchange Commission on
March 25, 1998.
The financial information included herein reflects all adjustments
(consisting only of normal recurring adjustments) which are, in the opinion of
management, necessary to a fair presentation of the results for interim periods.
The results of operations for the three-month period ended March 31, 1998 are
not necessarily indicative of the results to be expected for the full year.
2. FINANCINGS
Debt
On March 3, 1998, the Company completed the sale of $335.0 million in
aggregate principal amount of 9% Senior Notes due March 15, 2008. Proceeds from
the sale net of discounts, underwriting commissions, advisory fees and expenses
totaled approximately $326.5 million. The 9% Senior Notes are redeemable at the
option of the Company, in whole or in part, beginning March 15, 2003.
The indenture pursuant to which the 9% Senior Notes are issued contains
certain covenants that, among other things, limits the ability of the Company
and its subsidiaries to incur additional indebtedness, issue stock in
subsidiaries, pay dividends or make other distributions, repurchase equity
interests or subordinated indebtedness, engage in sale and leaseback
transactions, create certain liens, enter into certain transactions with
affiliates, sell assets of the Company and its subsidiaries, and enter into
certain mergers and consolidations.
In the event of a change in control of the Company as defined in the
indenture, holders of the 9% Senior Notes will have the right to require the
Company to purchase their 9% Senior Notes, in whole or in part, at a price equal
to 101% of the stated principal amount thereof, plus accrued and unpaid
interest, if any, thereon to the date of purchase. The 9% Senior Notes are
senior unsecured obligations of the Company, and are subordinated to all current
and future indebtedness of the Company's subsidiaries, including trade payables.
<PAGE> 8
Redeemable Preferred Stock
On March 31, 1998, the Company completed the sale of 4,000,000 shares of
6 1/2% cumulative convertible preferred stock (6 1/2% Preferred Stock) with a
liquidation preference of $50 per share. The sale generated gross proceeds to
the Company of $200.0 million, and proceeds net of underwriting discounts,
advisory fees and expenses of $193.9 million. Each share of 6 1/2% Preferred
Stock is convertible, at the option of the holder, into 1.145 shares of the
Company's Class A common stock (subject to customary adjustments). The Company
may cause such conversion rights to expire if the closing price of the Class A
common stock exceeds 120% of an implied conversion price (as defined) for 20
days in a 30 consecutive day trading period after April 15, 2001 and through
April 15, 2006. Dividends on the 6 1/2% Preferred Stock accrue from March 31,
1998 and are payable in cash quarterly, beginning on June 30, 1998, at an
annual rate of 6 1/2% of the liquidation preference thereof. The Company is
required to redeem all of the 6 1/2% Preferred Stock outstanding on March 31,
2010 at a redemption price equal to 100% of the liquidation preference thereof,
plus accumulated and unpaid dividends to the date of redemption.
3. NETWORK LEASE
In February 1998, the Company entered into a 20-year capital lease for
exclusive rights to multiple fibers and innerducts throughout New York, New
Jersey, Connecticut, Pennsylvania, Delaware, Maryland and Washington D.C. The
Company paid $92.0 million in the transaction, of which $80.3 million was placed
into escrow pending completion and delivery of segments of the network route to
the Company. The payment was recorded as a long-term asset, and will be
reclassified as property and equipment as portions of the network are completed.
The Company has the option to renew the lease for two additional 10-year terms.
4. JOINT VENTURE
In January 1998, the Company and Nextel Communications, Inc. (Nextel), a
nationwide provider of wireless telephone services, formed a joint venture
called NEXTBAND Communications, L.L.C. (NEXTBAND), which is owned 50% each by
the Company and Nextel. NEXTBAND was the successful bidder in 42 markets
covering approximately 105 million POPs, or persons located within the licensed
areas owned, in the FCC's recently concluded local multipoint distribution
service (LMDS) auctions. NEXTBAND's total bid in the LMDS auctions was $134.7
million. NEXTLINK and Nextel have each contributed $25.0 million to fund the
license payment, and the balance is expected to be payable in the second
quarter of 1998. NEXTLINK and Nextel are developing a strategy to implement LMDS
technology as a cost-effective enhancement to their respective businesses.
5. RECLASSIFICATIONS
Certain reclassifications have been made to prior period amounts in order to
conform to the current presentation.
6. SUBSEQUENT EVENT
On April 1, 1998, the Company completed the sale of 9.45% Senior Discount
Notes (9.45% Notes), due April 15, 2008. The 9.45% Notes were issued at a
discount from their principal amount to generate aggregate gross proceeds to the
Company of approximately $400.0 million. Proceeds net of underwriting
commissions, advisory fees and expenses totaled $390.9 million. The 9.45% Notes
will accrete at a rate of 9.45% compounded semi-annually, to an aggregate
principal amount of approximately $637.0 million by April 15, 2003. No cash
interest will accrue on the 9.45% Notes until April 15, 2003. Interest will
become payable in cash semi-annually beginning on October 15, 2003. The 9.45%
Notes are redeemable at the option of the Company, in whole or in part, at any
time after April 15, 2003.
The indenture pursuant to which the 9.45% Notes are issued contains certain
covenants that, among other things, limits the ability of the Company and its
subsidiaries to incur additional indebtedness, issue stock in subsidiaries, pay
dividends or make other distributions, repurchase equity interests or
subordinated indebtedness, engage in sale and leaseback transactions, create
certain liens, enter into certain transactions with affiliates, sell assets of
the Company and its subsidiaries, and enter into certain mergers and
consolidations.
<PAGE> 9
In the event of a change in control of the Company as defined in the
indenture, holders of the 9.45% Notes will have the right to require the Company
to purchase their 9.45% Notes, in whole or in part, at a price equal to 101% of
the accreted value thereof, plus accrued and unpaid interest, if any, thereon to
the date of purchase. The 9.45% Notes are senior unsecured obligations of the
Company, and are subordinated to all current and future indebtedness of the
Company's subsidiaries, including trade payables.
<PAGE> 10
PART I. FINANCIAL INFORMATION
Item 1(b). Financial Statements
NEXTLINK CAPITAL, INC.
BALANCE SHEETS
(UNAUDITED)
<TABLE>
<CAPTION>
MARCH 31,
1998 1997
---- ----
<S> <C> <C>
ASSETS
Cash in bank .......................................... $100 $100
==== ====
SHAREHOLDER'S EQUITY
Common stock, no par value,
1,000 shares authorized, issued and outstanding ... $100 $100
==== ====
</TABLE>
NOTES TO BALANCE SHEETS
1. DESCRIPTION
NEXTLINK Capital, Inc. (NEXTLINK Capital) is a Washington corporation and a
wholly owned subsidiary of NEXTLINK Communications, Inc. (NEXTLINK). NEXTLINK
Capital was formed for the sole purpose of obtaining financing from external
sources and is a joint obligor on the 12 1/2% Senior Notes due April 15, 2006 of
NEXTLINK. NEXTLINK Capital was initially funded with a $100 contribution from
NEXTLINK and has had no operations to date.
2. BASIS OF PRESENTATION
The interim financial statements have been prepared without audit, pursuant
to the rules and regulations of the Securities and Exchange Commission. These
consolidated financial statements should be read in conjunction with the audited
consolidated financial statements and notes thereto included in the Company's
Form 10-KSB as filed with the Securities and Exchange Commission on March 25,
1998.
<PAGE> 11
PART I. FINANCIAL INFORMATION
Item 2. Management's Discussion and Analysis of Financial Condition and Results
of Operations
OVERVIEW
Since its inception in 1994, the Company has executed a strategy of
constructing and acquiring fiber optic networks and acquiring related
telecommunications businesses. Over this period, the Company has pursued this
strategy by constructing, acquiring, leasing fibers or capacity on, and entering
into agreements to acquire local telecommunications networks.
The Company's primary focus is providing switched local and long distance
and enhanced communications services to small and medium sized commercial
end-user customers. The Company plans to acquire, build or develop networks in
new areas, expand its current networks, and also explore the acquisition or
licensing of additional enhanced communications services and other
telecommunications service providers. These efforts should allow the Company to
increase its presence in the marketplace, and facilitate providing a single
source solution for the telecommunications needs of its customers.
The Company currently operates 16 facilities-based networks providing
switched local and long distance services in 26 markets in eight states. The
Company anticipates developing additional new markets during 1998 which,
together with its existing markets, are expected to have a total of
approximately 15 million addressable business lines by the end of 1998. The
Company's goal is to add or expand markets to increase its addressable business
lines for markets in service or under development to approximately 21 million by
the end of 1999.
The table below provides selected key financial and operating data (dollars
are in thousands):
<TABLE>
<CAPTION>
AS OF AND
FOR THE THREE MONTHS
ENDED MARCH 31,
1998 1997
--------- ---------
<S> <C> <C>
FINANCIAL DATA:
Gross property and equipment ........... $ 341,664 $ 136,217
EBITDA (1) ............................. $ (29,962) $ (13,111)
OPERATING DATA (2):
Route miles (3) ........................ 2,036 1,355
Fiber miles (4) ........................ 141,788 90,378
On-net buildings connected (5) ......... 571 449
Off-net buildings connected (6) ........ 5,947 --
Switches installed ..................... 14 10
Access lines in service (7) ............ 72,834 11,256
Employees .............................. 1,499 679
</TABLE>
(1) EBITDA represents net loss before interest expense, interest income,
depreciation, amortization and deferred compensation expense. EBITDA
is commonly used to analyze companies on the basis of operating
performance, leverage and liquidity. While EBITDA should not be
construed as a substitute for operating income or a better measure of
liquidity than cash flow from operating activities, which are determined
in accordance with generally accepted accounting principles, it is
included herein to provide additional information with respect to the
ability of the Company to meet future debt service, capital expenditure
and working capital requirements.
(2) The operating data includes 100% of the statistics of the Las Vegas
network, which the Company manages and in which the Company has a 40%
membership interest.
(3) Route miles refers to the number of miles of the telecommunications path
in which the Company-owned or leased fiber optic cables are installed.
(4) Fiber miles refers to the number of route miles installed along a
telecommunications path, multiplied by the Company's estimate of the
number of fibers along that path.
<PAGE> 12
(5) Represents buildings physically connected to the Company's networks,
excluding those connected by unbundled incumbent local exchange carrier
(ILEC) facilities.
(6) Represents buildings connected to the Company's networks through leased
or unbundled ILEC facilities.
(7) Represents the number of access lines in service, including those lines
that are provided through resale of Centrex services, for which the
Company is billing services. Access lines in service as of March 31,
1998 includes 1,811 access lines acquired with the Company's shared
tenant services business.
The Company builds its networks to encompass the significant business
concentrations in each area it serves, focusing on direct connections to
end-user locations and ILEC central offices. The Company employs a uniform
technology platform for each of its local exchange networks that is based on the
Nortel DMS 500 digital local and long distance combination switching platform
and associated distribution technology. As of March 31, 1998, the Company had 12
operational Nortel DMS 500 switches, including one switch in its NEXTLAB
facility, and currently plans to install three additional switches by the end of
the second quarter of 1998. NEXTLAB is a fully functional model of one of the
Company's networks, which serves as a testing facility for switch software and
the Company's products and services and will serve as the Company's network
operations control center.
The Company also provides enhanced communications services including
interactive voice response (IVR) services, which provide an interface between
the Company's clients and their customers for a variety of applications.
Historically, the Company has derived a substantial portion of its revenues from
its IVR services. As local and long distance revenues are expected to grow more
rapidly than revenues from the Company's enhanced communications services, the
Company anticipates that, over the next five years, local and long distance
revenues will account for a significantly higher percentage of total revenues.
The development of the Company's businesses and the construction,
acquisition and expansion of its networks require significant expenditures,
substantial portions of which are incurred before the realization of revenues.
These expenditures, together with the associated early operating expenses,
result in negative cash flow until an adequate customer base is established.
However, as the customer base grows, the Company expects that incremental
revenues can be generated with decreasing incremental operating expenses, which
may provide positive contributions to cash flow. The Company has made the
strategic decision to build high capacity networks with broad market coverage,
which initially increases its level of capital expenditures and operating
losses. The Company believes that over the long term this will enhance the
Company's financial performance by increasing the traffic flow over the
Company's networks. The Company has recently entered into leased dark fiber and
fiber capacity arrangements which allow the Company, by installing one or more
switches and related electronics, to enter a market prior to completing
construction of its own fiber optic network.
RESULTS OF OPERATIONS
Revenue increased 164% to $26.5 million during the first quarter of 1998,
from $10.1 million in the same period in 1997. The increase was driven by 239%
growth in revenues from bundled local and long distance services and dedicated
services, as well as by the acquisitions of Start Technologies Corporation
(Start) and Chadwick Telecommunications Corporation (Chadwick) in the fourth
quarter of 1997. Revenues reported in the first quarter of 1998 included $21.3
million derived from local and long distance, competitive access, dedicated line
services and shared tenant services and $5.2 million derived from enhanced
communications services, primarily IVR. The Company's IVR revenue comprised 18%
and 30% of the Company's total revenues during the first quarter of 1998 and
1997, respectively. The revenues generated by this subsidiary have tended to
fluctuate from quarter to quarter, as the revenues are generally event driven
and seasonal in nature.
The Company began offering switched local and long distance services in
seven of its markets in July 1996, and in 18 additional markets during 1997.
Most recently, the Company began offering such services in Chicago, Illinois in
February 1998. In addition, the Company has offered dedicated line services
since January 1995 and has resold Centrex access lines since April 1995. The
Company increased the number of customer access lines added during the quarter
from 19,187 in the fourth quarter of 1997 to 22,703 during the first quarter of
1998. As of March 31, 1998, the Company had 72,834 access lines in service,
compared to 11,256 as of March 31, 1997, and 50,131 as
<PAGE> 13
of December 31, 1997. Revenues from the provision of such services are expected
to continue to increase as a component of total revenues over future periods.
Access lines in service includes those lines which are provided through resale
of Centrex services, the number of which is decreasing over time as the Company
converts those customers to its own network.
Operating expenses consist of costs directly related to providing
facilities-based network and enhanced communications services and also include
salaries and benefits and related costs of operations and engineering personnel.
Operating expenses increased 148% in the first quarter of 1998 to $24.6 million,
an increase of $14.6 million over the first quarter of 1997. This increase was
attributed to increased network costs related to provisioning higher volumes of
local, long distance and enhanced communications services, an increase in
employees and an increase in other related costs primarily to expand the
Company's switched local and long distance service businesses in its existing
and planned markets. To a lesser extent, the acquisitions of Start and Chadwick
in the fourth quarter of 1997 also contributed to the increase in operating
costs over those in the first quarter of 1997.
Selling, general and administrative (SG&A) expenses include salaries and
related personnel costs, facilities expenses, sales and marketing, systems
development costs, consulting and legal fees and equity in loss of affiliates.
SG&A increased 141% in the three month period ended March 31, 1998, as compared
to the corresponding period in 1997. The increase was due to the Company's
increase in employees, as well as other costs associated with the expansion of
the Company's switched local and long distance service businesses in its
existing and planned markets.
Deferred compensation expense was recorded in connection with the Company's
Equity Option Plan until April 1997, and in connection with the Company's Stock
Option Plan, which replaced the Equity Option Plan, subsequent to April 1997.
The stock options granted under the Equity Option Plan were considered
compensatory and were accounted for on a basis similar to that for stock
appreciation rights. All options outstanding under the Equity Option Plan were
regranted under the new Plan with terms and conditions substantially the same as
under the Equity Option Plan. As such, the Company continues to record deferred
compensation expense for those compensatory stock options issued, as well as for
compensatory stock options issued subsequent to the Plan conversion date.
Compensation expense is recognized over the vesting periods based on the excess
of the fair value of the stock options at the date of grant over the exercise
price.
Depreciation expense increased primarily due to placement in service of
additional telecommunications network assets, including switches, fiber optic
cable, network electronics and related equipment. Amortization of intangible
assets increased primarily as a result of the Start and Chadwick acquisitions in
the fourth quarter of 1997.
Interest expense increased 109% in the first quarter of 1998 over the
comparable period in the prior year due to an increase in the Company's average
outstanding indebtedness over the respective periods, primarily relating to the
9 5/8% Senior Notes issued in October 1997. See "--Liquidity and Capital
Resources." Pursuant to Statement of Financial Accounting Standards No. 34, the
Company capitalizes a portion of its interest costs as part of the construction
cost of its communications networks. Capitalized interest during the first
quarter of 1998 totaled $0.5 million. Interest expense will increase in future
periods in conjunction with the sale of $335.0 million in aggregate principal
amount of 9% Senior Notes on March 3, 1998, and the 9.45% Senior Discount Notes
on April 1, 1998. Interest income results from investment of excess cash and
certain securities that have been pledged as collateral for interest payments on
the 12 1/2% Senior Notes. The 133% increase in interest income in the first
quarter of 1997 over the same period in 1996 corresponded to the increase in the
Company's average outstanding cash balances.
LIQUIDITY AND CAPITAL RESOURCES
The competitive local telecommunications service business is a
capital-intensive business. The Company's existing operations have required and
will continue to require substantial capital investment for the acquisition and
installation of fiber, electronics and related equipment in order to provide
switched services in the Company's networks and the funding of operating losses
during the start-up phase of each market. In addition, the Company's strategic
plan calls for expansion into additional market areas. Such expansion will
require significant additional capital for: potential acquisitions of businesses
or assets; design, development and construction of new networks;
<PAGE> 14
and the funding of operating losses during the start-up phase of each market.
During the first three months of 1998, the Company used $24.2 million in cash
for operating activities, compared to $14.1 million for the same period in the
prior year. The increase was primarily due to a substantial increase in the
Company's activities associated with the continued development and expansion of
switched local and long distance service operations. During the first three
months of 1998, the Company invested an additional $44.5 million in property and
equipment. During the same period in 1997, the Company invested $17.6 million in
property and equipment, and $37.0 million in acquisitions of telecommunications
assets and businesses and equity investments in telecommunications businesses.
In February 1998, the Company signed a definitive agreement with Metromedia
Fiber Network for exclusive rights to multiple fibers and innerducts for 20
years, with two 10-year renewals. The route covered by the agreement extends
from Manhattan to White Plains (NY), to Stamford (CT), to Newark (NJ) and south
from Manhattan through Philadelphia, Wilmington (DE), Baltimore, and to
Washington (DC). The route will offer frequent splice points within metropolitan
areas and on routes between metropolitan areas, as well as provide access to
ILEC central and tandem switching offices. The Company paid $92.0 million in
cash for this transaction, $80.3 million of which was placed into escrow, to be
released as segments of the route are constructed and delivered to the Company.
In January 1998, the Company and Nextel Communications, Inc. (Nextel) formed
NEXTBAND, a joint venture that is owned 50% each by the Company and Nextel.
NEXTBAND was the successful bidder in 42 markets in the FCC's recently-concluded
local multipoint distribution service (LMDS) auctions. NEXTBAND's total bid in
the LMDS auctions was $134.7 million. NEXTLINK and Nextel have each contributed
$25.0 million to fund the license payment, and the balance is expected to be
payable in the second quarter of 1998. The Company is in process of defining
its operational and financial relationships with NEXTBAND and Nextel, as well
as its plans for implementation of an LMDS strategy, which could involve
substantial additional capital expenditures.
On March 3, 1998, the Company completed the sale of $335.0 million in
aggregate principal amount of 9% Senior Notes due March 15, 2008. Proceeds from
the sale net of discounts, underwriting commissions, advisory fees and expenses
totaled approximately $326.5 million. Interest payments on the 9% Senior Notes
are due semi-annually, beginning September 1998.
On March 31, 1998, the Company completed the sale of 4,000,000 shares of
6 1/2% cumulative convertible preferred stock (6 1/2% Preferred Stock) with a
liquidation preference of $50 per share. The sale generated gross proceeds to
the Company of $200.0 million, and proceeds net of underwriting discounts,
advisory fees and expenses of $193.9 million. Each share of 6 1/2% Preferred
Stock is convertible, at the option of the holder, into 1.145 shares of the
Company's Class A common stock (subject to customary adjustments). Dividends
on the 6 1/2% Preferred Stock accrue from March 31, 1998 and are payable
quarterly in cash, beginning on June 30, 1998.
On April 1, 1998, the Company completed the sale of 9.45% Senior Discount
Notes (9.45% Notes), due April 15, 2008. The 9.45% Notes were issued at a
discount from their principal amount to generate aggregate gross proceeds to the
Company of approximately $400.0 million. Proceeds net of underwriting
commissions, advisory fees and expenses totaled $390.9 million. The 9.45% Notes
will accrete at a rate of 9.45% compounded semi-annually, to an aggregate
principal amount of approximately $637.0 million by April 15, 2003. No cash
interest will accrue on the Notes until April 15, 2003. Interest will become
payable in cash semi-annually beginning on October 15, 2003.
The Company will use the net proceeds from the sale of the 9% Senior Notes,
the 6 1/2% Preferred Stock and the 9.45% Notes and existing unrestricted cash
balances for expenditures relating to the development, construction, acquisition
and operation of telecommunications networks and service providers and the
offering of telecommunications services in those areas where the Company
currently operates or intends to operate. Expenditures for the construction and
operation of networks include (i) the purchase and installation of switches and
related electronics in existing networks and in networks to be constructed or
acquired in new or adjacent markets, (ii) the purchase and installation of fiber
optic cable and electronics to expand existing networks and develop new
networks, including the connection of new buildings, (iii) the development of
its comprehensive information technology platform, (iv) the acquisition of LMDS
spectrum purchased in the FCC's auction and the construction
<PAGE> 15
and deployment of associated facilities and (v) the funding of operating losses
and working capital. The Company may also acquire or invest in businesses that
consist of existing networks or companies engaged in businesses similar to those
engaged in by the Company and its subsidiaries or other complementary
businesses.
As of March 31, 1998, the Company had unrestricted cash and investments of
$1,070.7 million and $1,461.6 million on a pro forma basis after giving effect
to the April 1, 1998 sale of the 9.45% Notes. The Company's current plan
contemplates an aggressive expansion into a number of new markets. The Company
may pursue various alternatives for achieving its growth strategy, including:
additional network construction; additional leases of network capacity from
third party providers; acquisitions of existing networks; and spectrum that was
purchased during the LMDS auctions and associated facilities construction and
deployment. The Company also anticipates that a substantial amount of additional
capital expenditures will be made in 1999 and beyond. The funding of these
capital expenditures is expected to be provided by existing cash balances,
future vendor and/or credit facilities, future public or private sales of debt
securities, future sales of public or private capital stock and joint ventures.
There can be no assurance, however, that the Company will be successful in
raising sufficient additional capital on terms that it will consider acceptable
or that the Company's operations will produce positive consolidated cash flow in
sufficient amounts to meet its interest and dividend obligations on its
outstanding securities. Failure to raise and generate sufficient funds may
require the Company to delay or abandon some of its planned future expansion or
expenditures, which could have a material adverse effect on the Company's growth
and its ability to compete in the telecommunications services industry.
In addition, the Company's operating flexibility with respect to certain
business matters is, and will continue to be, limited by covenants associated
with the 12 1/2% Senior Notes, the 9 5/8% Senior Notes, the 9% Senior Notes and
the 9.45% Notes (collectively referred to as the Senior Notes). Among other
things, these covenants limit the ability of the Company and its subsidiaries to
incur additional indebtedness, create liens upon assets, apply the proceeds from
the disposal of assets, make dividend payments and other distributions on
capital stock and redeem capital stock. In addition, the terms of the 14% Senior
Exchangeable Redeemable Preferred Shares and 6 1/2% Preferred Stock
(collectively referred to as the Preferred Shares) contain certain covenants
that may limit the Company's operating flexibility with respect to the
incurrence of indebtedness and/or issuance of additional preferred shares. There
can be no assurance that such covenants will not adversely affect the Company's
ability to finance its future operations or capital needs or to engage in other
business activities that may be in the interest of the Company. The Company was
in compliance with all covenants associated with the Senior Notes and Preferred
Shares as of March 31, 1998.
INFORMATION REGARDING FORWARD LOOKING STATEMENTS
The statements contained in this report and in associated prior filings by
the Company with the Securities and Exchange Commission which are not historical
facts are "forward-looking statements" (as such term is defined in the Private
Securities Litigation Reform Act of 1995), which can be identified by the use of
forward-looking terminology such as "believes", "expects", "may", "will",
"should", or "anticipates" or the negative thereof or other variations thereon
or comparable terminology, or by discussions of strategy that involve risks and
uncertainties. Such forward-looking statements include: the Company's plans to
build and acquire networks and offer services in new areas, expand its current
networks and explore the acquisition or licensing of additional enhanced
communications services and other telecommunications service providers; the
Company's presence in the marketplace and its ability to provide a single source
solution for the telecommunications needs of its customers; the Company's
anticipated development of new markets; its expected number of addressable
business lines by the end of 1998 and 1999; its plans to install additional
switches by the end of the second quarter of 1998; its anticipation regarding
the percentage of revenues accounted for by local and long distance services;
its expectation regarding incremental revenues, incremental operating expenses
and contributions to cash flow; the Company's belief regarding its financial
performance and traffic flow over its networks; its use of proceeds from various
financings; its anticipated capital expenditures; and other statements contained
herein regarding matters that are not historical facts. Management wishes to
caution the reader that these forward-looking statements are only predictions.
These statements are based on a number of assumptions that ultimately could
prove inaccurate and, therefore, no assurance can be given that the future
results will be achieved. Actual events or results may differ materially as a
result of a
<PAGE> 16
number of factors, including those identified in the Company's annual report on
Form 10-KSB (File No. 333-04603). Factors that could affect performance include:
the level of the Company's future negative cash flows and operating losses
incurred by the Company until it establishes an adequate revenue base and
generates substantial revenues from the provision of switched local and long
distance services; successfully generating or raising on terms that the Company
will consider acceptable sufficient capital to accommodate planned future
expansion and expenditures; continued attraction and retention of qualified
managerial, professional and technical personnel; timely installation of the
required switches, fiber optic cable and associated electronics necessary to
provide switched local service in a manner that will permit the resolution of
technical problems; successfully negotiating new and, to the extent necessary,
renegotiating existing interconnection agreements; successfully developing
effective systems relating to ordering, provisioning and billing for
telecommunications services; successfully offering, marketing and selling
switched local services and other enhanced products and services in all of the
Company's networks as quickly as practicable; sufficient access to the ILEC's
networks and adequate cooperation therefrom to connect new customers to the
Company's network on a timely basis; identifying, financing and completing
suitable acquisitions; maintaining existing, and obtaining and maintaining new,
franchises, permits and rights-of-way and any required governmental
authorizations, franchises and permits on a timely basis; competition from
incumbent providers and new entrants; the nature of regulatory, legislative and
judicial developments; and rapid and significant changes in technology. These
are representative of factors that could affect the outcome of the
forward-looking statements. In addition, such statements could be affected by
general industry and market conditions and economic conditions including
interest rate fluctuations.
NEW ACCOUNTING STANDARD
On April 9, 1998, the AICPA released Statement of Position 98-5,
"Reporting on the Costs of Start-Up Activities" (SOP 98-5). The new standard
requires that all entities expense costs of start-up activities as those costs
are incurred. SOP 98-5 defines "start-up costs" as those costs directly related
to pre-operating, pre-opening, and organization activities. This standard must
be adopted in fiscal years beginning after December 15, 1998. The Company does
not capitalize start-up costs as defined by SOP 98-5; as such, adoption of SOP
98-5 will not have a material impact on the Company's financial position.
<PAGE> 17
PART II. OTHER INFORMATION
Item 1. Legal Proceedings
The Company is not currently a party to any legal proceedings,
other than regulatory and other proceedings that are in the normal
course of its business.
Item 2. Changes in Securities and Use of Proceeds
On March 31, 1998, the Company issued and sold 4,000,000 shares of
6 1/2% cumulative convertible preferred stock (6 1/2% Preferred
Stock) with a liquidation preference of $50 per share. Of the
total shares sold, 3,980,000 were issued in reliance upon an
exemption from registration contained in Section 4(2) of the
Securities Act of 1933, as amended (the Act), and 20,000 shares
were sold outside of the United States pursuant to Regulation S
of the Act. The sale generated gross proceeds to the Company of
$200.0 million, and proceeds net of underwriting discounts,
advisory fees and expenses were $193.9 million. The initial
purchases of the 6 1/2% Preferred Stock were Solomon Smith Barney
and Goldman, Sachs & Co. Each share of 6 1/2% Preferred Stock is
convertible, at the option of the holder, into 1.145 shares of the
Company's Class A common stock (subject to customary adjustments).
The Company may cause such conversion rights to expire if the
closing price of the Class A common stock exceeds 120% of an
implied conversion price (as defined) for 20 days in a 30
consecutive day trading period after April 15, 2001 and through
April 15, 2006. The Company is required to redeem all of the
6 1/2% Preferred Stock outstanding on March 31, 2010 at a
redemption price equal to 100% of the liquidation preference
thereof, plus accumulated and unpaid dividends to the date of
redemption.
The Company filed a registration statement on Form S-1 (File No.
333-32001) which became effective on September 26, 1997, whereby
15,200,000 shares of Class A common stock, $.02 par value per
share, were sold in an initial public offering at a price of $17
per share. Of the 15,200,000 shares of Class A common stock sold,
12,000,000 were sold by the Company and 3,200,000 were sold by a
selling shareholder. The Company did not receive any of the
proceeds from the sale of shares by the selling shareholder. In
addition, the underwriters of the IPO, led by Salomon Brothers Inc,
exercised an option to purchase 2,280,000 additional shares of
Class A common stock at the same price per share. Net proceeds to
the Company from the initial public offering totaled approximately
$226.8 million, after deducting underwriting discounts, advisory
fees and expenses aggregating approximately $16.0 million. The
Company intends to use substantially all of the net proceeds from
the initial public offering for expenditures relating to the
expansion of existing networks and services, the development and
acquisition of new networks and services and the funding of
operating losses and working capital. Approximately $65.0 million
of the total proceeds from this offering had been used as of March
31, 1998, $44.5 million of which was used for the purchase of
property and equipment, and the remainder for the network lease
agreement entered into in February 1998.
The Company filed a registration statement on Form S-1 (File No.
333-32003) which became effective on September 26, 1997, whereby
the Company sold $400.0 million aggregate principal amount of 9
5/8% Senior Notes. The offering was led by Salomon Brothers Inc.
Net proceeds from the sale of the 9 5/8% Senior Notes totaled
approximately $388.5 million, after deducting issuance costs
aggregating approximately $11.5 million, relating to underwriting
discounts, advisory fees and expenses. The use of proceeds from the
debt offering are substantially the same as the Company's initial
public offering. None of the proceeds from this offering had been
used as of March 31, 1998.
Item 3. Defaults Upon Senior Securities
None.
<PAGE> 18
PART II. OTHER INFORMATION
Item 4. Submission of Matters to a Vote of Security Holders
None.
Item 5. Other Information
None.
<PAGE> 19
PART II. OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
<TABLE>
<S> <C>
3.1 Articles of Incorporation of NEXTLINK Communications, Inc.(2)
3.2 By-Laws of NEXTLINK Communications, Inc.(2)
3.3 Articles of Incorporation of NEXTLINK Capital, Inc.(1)
3.4 By-Laws of NEXTLINK Capital, Inc.(1)
4.1 Form of Exchange Note Indenture, by and among NEXTLINK
Communications, Inc. and United States Trust Company of New
York, as Trustee, relating to the Exchange Notes, including
form of Exchange Notes.(2)
4.2 Certificate of Designations of the Powers, Preferences and
Relative, Participating, Optional and Other Special Rights of
14% Senior Exchangeable Redeemable Preferred Shares and
Qualifications, Limitations and Restrictions Thereof.(2)
4.3 Form of stock certificate of 14% Senior Exchangeable
Redeemable Preferred Shares.(2)
4.4 Indenture, dated as of April 25, 1996, by and among NEXTLINK
Communications, Inc., NEXTLINK Capital, Inc. and United States
Trust Company of New York, as Trustee, relating to 12-1/2%
Senior Notes due April 15, 2006, including form of global
note.(1)
4.5 First Supplemental Indenture, dated January 31, 1997, by and
among NEXTLINK Communications, Inc., NEXTLINK Communications,
L.L.C., NEXTLINK Capital and United States Trust Company of
New York, as Trustee.(2)
4.6 Form of Indenture between United States Trust Company, as
Trustee and NEXTLINK Communications, Inc., relating to the
9-5/8% Senior Notes due 2007.(3)
4.7 Form of Indenture between United States Trust Company, as
Trustee and NEXTLINK Communications, Inc., relating to the 9%
Senior Notes due 2008.(4)
4.8 Certificate of Designations of the Powers, Preferences and
Relative, Participating, Optional and Other Special Rights of
6-1/2% Cumulative Convertible Preferred Stock and
Qualifications, Limitations and Restrictions Thereof.
4.9 Indenture between United States Trust Company, as Trustee and
NEXTLINK Communications, Inc. relating to the 9.45% Senior
Discount Notes due 2008.
10.1 Stock Option Plan of the Company(2)
10.2 First Amendment to Stock Option Plan of the Company.(4)
10.3 Registration Rights Agreement dated as of January 15, 1997,
between the Company and the signatories listed therein.(2)
10.4 Preferred Exchange and Registration Rights Agreement, dated
as of January 31, 1997, by and among the Company and the
Initial Purchasers.(2)
10.5 Fiber Lease and Innerduct Use Agreement, dated as of
February 23, 1998, by and between NEXTLINK Communications,
Inc. and Metromedia Fiber Network, Inc.(4)
10.6 Amendment No. 1 to Fiber Lease and Innerduct Use Agreement,
dated as of March 4, 1998, by and between NEXTLINK
Communications, Inc. and Metromedia Fiber Network, Inc.(4)
27 Financial Data Schedule
</TABLE>
---------
(1) Incorporated herein by reference to the exhibit filed with the
Registration Statement on Form S-4 of NEXTLINK Communications,
L.L.C. (the predecessor of NEXTLINK Communications, Inc.) and
NEXTLINK Capital, Inc. (Commission File No. 333-4603).
(2) Incorporated herein by reference to the exhibit filed with the
Annual Report on Form 10-KSB for the year ended December 31, 1996
of NEXTLINK Communications, Inc. and NEXTLINK Capital, Inc.
(Commission File Nos. 333-04603 and 333-04603-1).
(3) Incorporated herein by reference to the exhibit filed with the
Registration Statement on Form S-1 of NEXTLINK Communications,
Inc. (Commission File No. 333-32003).
(4) Incorporated herein by reference to the exhibit filed with the
Annual Report on Form 10-KSB for the year ended December 31, 1997
of NEXTLINK Communications, Inc. and NEXTLINK Capital, Inc.
(Commission File Nos. 333-04603 and 333-04603-01).
(b) Reports on Form 8-K
Current report on Form 8-K, filed March 12, 1998, regarding
execution of a network fiber lease agreement.
<PAGE> 20
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrants have duly caused this report to be signed on their behalf by the
undersigned thereunto duly authorized.
NEXTLINK Communications, Inc.
Date: May 15, 1998 By: /s/ Kathleen H. Iskra
-------------------------------
Kathleen H. Iskra
Vice President, Chief Financial
Officer and Treasurer
(Principal financial and accounting
officer)
NEXTLINK Capital, Inc.
Date: May 15, 1998 By: /s/ Kathleen H. Iskra
-------------------------------
Kathleen H. Iskra
Vice President, Chief Financial
Officer and Treasurer
(Principal financial and accounting
officer)
<PAGE> 21
NEXTLINK COMMUNICATIONS, INC.
EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit No. Description
----------- -----------
<S> <C>
3.1 Articles of Incorporation of NEXTLINK Communications, Inc.(2)
3.2 By-laws of NEXTLINK Communications, Inc.(2)
3.3 Articles of Incorporation of NEXTLINK Capital, Inc.(1)
3.4 By-laws of NEXTLINK Capital, Inc.(1)
4.1 Form of Exchange Note Indenture, by and among NEXTLINK
Communications, Inc. and United States Trust Company of
New York, as Trustee, relating to the Exchange Notes,
including form of Exchange Notes.(2)
4.2 Certificate of Designations of the Powers, Preferences and
Relative, Participating, Optional and Other Special Rights
of 14% Senior Exchangeable Redeemable Preferred Shares and
Qualifications, limitations and Restrictions Thereof.(2)
4.3 Form of stock certificate of 14% Senior Exchangeable
Redeemable Preferred Shares.(2)
4.4 Indenture, dated as of April 25, 1996, by and among
NEXTLINK Communications, Inc., NEXTLINK Capital, Inc. and
United States Trust Company of New York, as Trustee,
relating to 12 1/2% Senior Notes due April 15, 2006,
including form of global note.(1)
4.5 First Supplemental Indenture, dated as of January 31,
1997, by and among the Company, NEXTLINK Communications,
L.L.C., NEXTLINK Capital and United State Trust Company of
New York, as Trustee.(2)
4.6 Form of Indenture between United States Trust Company, as
Trustee and NEXTLINK Communications, Inc., relating to the
9 5/8% Senior Notes due 2007.(3)
4.7 Form of Indenture between United States Trust Company, as
Trustee and NEXTLINK Communications, Inc., relating to the
9% Senior Notes due 2008.(4)
4.8 Certificate of Designation of Powers, Preferences and
Relative, Participating, Optional and Other Special Rights
of 6 1/2% Cumulative Convertible Preferred Stock and
Qualifications, Limitations and Restrictions Thereof.
4.9 Indenture between United States Trust Company, as
Trustee and NEXTLINK Communications, Inc., relating to the
9.45% Senior Discount Notes due 2008.
10.1 Stock Option Plan of the Company.(2)
10.2 First Amendment to Stock Option Plan of the Company.(4)
10.3 Registration Rights Agreement dated as of January 15,
1997, between the Company and the signatories listed
therein.(2)
10.4 Preferred Exchange and Registration Rights Agreement,
dated as of January 31, 1997, by and among the Company
and the Initial Purchasers.(2)
10.5 Fiber Lease and Innerduct Use Agreement, dated as of
February 23, 1998, by and between NEXTLINK Communications,
Inc. and Metromedia Fiber Network, Inc.(4)
10.6 Amendment No. 1 to Fiber Lease and Innerduct Use
Agreement, dated as of March 4, 1998, by and between
NEXTLINK Communications, Inc. and Metromedia Fiber
Network, Inc.(4)
27 Financial Data Schedule
</TABLE>
___________________
(1) Incorporated herein by reference to the exhibit filed with the
Registration Statement on Form S-4 of NEXTLINK Communications,
L.L.C. (the predecessor of NEXTLINK Communications, Inc.) and
NEXTLINK Capital, Inc. (Commission File No. 333-4603).
(2) Incorporated herein by reference to the exhibit filed with the
Annual Report on Form 10-KSB for the year ended December 31, 1996 of
NEXTLINK Communications, Inc. and NEXTLINK Capital, Inc. (Commission
File Nos. 333-04603 and 333-04603-01).
(3) Incorporated herein by reference to the exhibit filed with the
Registration Statement on Form S-1 of NEXTLINK Communications, Inc.
(Commission File No. 333-32003).
(4) Incorporated herein by reference to the exhibit filed with the
Annual Report on Form 10-KSB for the year ended December 31, 1997
of NEXTLINK Communications, Inc. and NEXTLINK Capital, Inc.
(Commission File Nos. 333-04603 and 333-04603-01).
<PAGE> 1
FILED
STATE OF WASHINGTON
MAR 30, 1998
RALPH MUNRO
SECRETARY OF STATE
CERTIFICATE OF DESIGNATION OF THE POWERS,
PREFERENCES AND RELATIVE, PARTICIPATING,
OPTIONAL AND OTHER SPECIAL RIGHTS OF THE 6-1/2%
CUMULATIVE CONVERTIBLE PREFERRED STOCK AND
QUALIFICATIONS, LIMITATIONS AND RESTRICTIONS THEREOF
- --------------------------------------------------------------------------------
Pursuant to Section 23B.06.020 of the
Business Corporation Act of the State of Washington
- --------------------------------------------------------------------------------
NEXTLINK Communications, Inc. (the "Corporation"), a corporation
organized and existing under the Business Corporation Act of the State of
Washington, does hereby certify that, pursuant to authority conferred upon the
board of directors of the Corporation (the "Board of Directors") by its Articles
of Incorporation, as amended (the "Articles of Incorporation"), and pursuant to
the provisions of RCW 23B.06.020, by unanimous written consent, as permitted by
RCW 23B.08.210, effective as of March 26, 1998, established and authorized the
Pricing Committee of the Board of Directors (the "Pricing Committee"), as
permitted by RCW 23B.08.250, to fix the powers, designations, preferences and
relative participating, optional or other special rights and qualifications,
limitations or restrictions of a new series of Preferred Stock, and the Pricing
Committee, at a meeting thereof on March 30, 1998, duly approved and adopted a
resolution as follows (the "Resolution"):
RESOLVED, that, pursuant to the authority vested in the
Board of Directors by NEXTLINK Communications, Inc.'s Articles of
Incorporation, and delegated by the Board of Directors to the
Pricing Committee of the Board of Directors, does hereby create,
authorize and provide for the issuance of a series of Preferred
Stock designated as the 6-1/2% Cumulative Convertible Preferred
Stock, (liquidation preference $50 per share) in an amount not to
exceed 4,600,000 shares, having the designations, preferences,
relative, participating, optional and other special rights and
the qualifications, limitations and restrictions thereof that are
set forth in the Articles of Incorporation and in this Resolution
as follows:
(a) Designation.
There is hereby created out of the authorized and unissued
Preferred Stock of the Corporation a class of Preferred Stock designated
as the "6-1/2% Cumulative Convertible Preferred Stock." The number of
shares constituting such class shall not exceed
1
<PAGE> 2
4,600,000 and are referred to as the "Convertible Preferred Stock." The
liquidation preference of the Convertible Preferred Stock shall be $50
per share.
(b) Ranking.
The Convertible Preferred Stock shall, with respect to dividends
and distributions upon liquidation, winding-up and dissolution of the
Corporation, rank (i) senior to each class of Capital Stock of the
Corporation (including, without limitation, the Corporation's Class A
Common Stock, par value $.0l per share and the Class B Common Stock, par
value $.022658 per share) outstanding or hereafter created the terms of
which do not expressly provide that it ranks senior to, or on a parity
with, the Convertible Preferred Stock as to dividends and distributions
upon liquidation, winding-up and dissolution of the Corporation
(collectively referred to as "Junior Shares"); (ii) on a parity with any
class of Capital Stock of the Corporation or series of Preferred Stock
of the Corporation hereafter created the terms of which expressly
provide that such class or series will rank on a parity with the
Convertible Preferred Stock as to dividends and distributions upon
liquidation, winding-up and dissolution (collectively referred to as
"Parity Shares"); and (iii) junior to the Corporation's 14% Senior
Exchangeable Redeemable Preferred Shares and each other class of Capital
Stock of the Corporation or series of Preferred Stock of the Corporation
hereafter created the terms of which expressly provide that such class
or series will rank senior to the Convertible Preferred Stock as to
dividends and distributions upon liquidation, winding-up and dissolution
of the Corporation (collectively referred to as "Senior Shares").
(c) Dividends.
(i)
(A) Beginning on the Issue Date, the Holders of the
outstanding Convertible Preferred Stock shall be entitled to
receive, when, as and if declared by the Board of Directors, out
of funds legally available therefor, distributions in the form of
dividends on each share of Convertible Preferred Stock, at a rate
per annum equal to 6-1/2% of the liquidation preference per share
of the Convertible Preferred Stock, payable quarterly. No
interest shall be payable in respect to any dividends that may be
in arrears. All dividends shall be cumulative, whether or not
earned or declared, on a daily basis from their date of issuance
and shall be payable quarterly in arrears on each Dividend
Payment Date, commencing on the first Dividend Payment Date after
the Issue Date. Such dividends shall be paid only in cash. Each
dividend shall be payable to the shares of Convertible Preferred
Stock held by Holders of record as they appear on the share books
of the Corporation on the Dividend Record Date immediately
preceding the related Dividend Payment Date. Dividends shall
cease to accumulate in respect of shares of Convertible Preferred
Stock on the date of their redemption unless
2
<PAGE> 3
the Corporation shall have failed to pay the relevant redemption
price on the date fixed for redemption.
(B) In the event that (1) the Corporation has not
filed the registration statement relating to the shelf
registration of the Convertible Preferred Stock for resale by
Holders contemplated by the Registration Rights Agreement (the
"Resale Registration") on or before the 90th day after the Issue
Date, (2) the Resale Registration has not become effective on or
before the 120th day after the Issue Date, or (3) the Resale
Registration is filed and declared effective but shall thereafter
cease to be effective (except as specifically permitted therein)
without being succeeded immediately by an additional registration
statement filed and declared effective (any such event referred
to in clauses (1) through (3), a "Registration Default"), then
additional dividends will accrue (in addition to the stated
dividends on the Convertible Preferred Stock) at the rate of
0.25% per annum on the liquidation preference of the Convertible
Preferred Stock for the period from and including the occurrence
of the Registration Default until such time as no Registration
Default is in effect. Such additional dividends (the "Special
Dividends") will be payable quarterly in arrears on each regular
Dividend Payment Date in accordance with the provisions of this
paragraph (c). For each 90-day period that the Registration
Default continues, the per annum rate of such Special Dividends
will increase by an additional 0.25%; provided that such rate
shall in no event exceed 1.0% per annum in the aggregate. At such
time as the Registration Default is no longer in effect, the
dividend rate on the Convertible Preferred Stock shall be the
rate stated in paragraph (c)(i)(A) hereof and no further Special
Dividends will accrue unless and until another Registration
Default shall occur.
(ii) All dividends paid with respect to the Convertible
Preferred Stock pursuant to paragraph (c)(i) shall be paid pro rata to
the Holders entitled thereto.
(iii) Nothing herein contained shall in any way or under
any circumstances be construed or deemed to require the Board of
Directors to declare, or the Corporation to pay or set apart for
payment, any dividends on the Convertible Preferred Stock at any time.
(iv) Dividends on account of arrears for any past Dividend
Period and dividends in connection with any mandatory redemption
pursuant to paragraph (e)(ii) may be declared and paid at any time,
without reference to any regular Dividend Payment Date, to Holders of
record on such date, not more than forty-five (45) days prior to the
payment thereof, as may be fixed by the Board of Directors of the
Corporation.
(v) No full dividends shall be declared by the Board of
Directors or paid or set apart for payment by the Corporation on any
Parity Shares for any period unless full
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cumulative dividends have been or contemporaneously are declared and
paid in full, or declared and, if payable in cash, a sum in cash set
apart sufficient for such payment, on the Convertible Preferred Stock
for all Dividend Periods terminating on or prior to the date of payment
of such full dividends on such Parity Shares. If full dividends are not
so paid, all dividends declared upon the Convertible Preferred Stock and
any other Parity Shares shall be declared pro rata so that the amount of
dividends declared per share on the Convertible Preferred Stock and such
Parity Shares shall in all cases bear to each other the same ratio that
accrued dividends per share on the Convertible Preferred Stock and such
Parity Shares bear to each other.
(vi)
(A) Holders of shares of Convertible Preferred Stock
shall be entitled to receive the dividends provided for in
paragraph (c)(i) hereof in preference to and in priority over any
dividends upon any of the Junior Shares.
(B) No dividends may be paid or set apart for such
payment on Junior Shares (except dividends on Junior Shares
payable in additional Junior Shares) if full cumulative, accrued
dividends have not been paid in full on the Convertible Preferred
Stock. So long as any shares of Convertible Preferred Stock are
outstanding, the Corporation shall not make any payment on
account of, or set apart for payment money for a sinking or other
similar fund for, the purchase, redemption or other retirement
of, any Parity Shares or Junior Shares, or any warrants, rights,
calls or options to purchase any Parity Shares or Junior Shares,
whether in cash, obligations or shares of the Corporation or
other property, and shall not permit any corporation or other
entity directly or indirectly controlled by the Corporation to
purchase or redeem any Parity Shares or Junior Shares or any such
warrants, rights, calls or options unless full cumulative,
accrued dividends determined in accordance herewith on the
Convertible Preferred Stock have been paid in full.
(vii) Dividends payable on the Convertible Preferred Stock for
any period shorter than a quarterly dividend period shall be computed on
the basis of a 360-day year of twelve 30-day months and the actual
number of days elapsed in the period for which payable.
(d) Liquidation Preference.
(i) In the event of any voluntary or involuntary liquidation,
dissolution or winding-up of affairs of the Corporation, the Holders of
shares of Convertible Preferred Stock then outstanding shall be entitled
to be paid, out of the assets of the Corporation available for
distribution to its shareholders, an amount in cash equal to the
liquidation preference of $50 per share of Convertible Preferred Stock,
plus, without duplication, an
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amount in cash equal to accumulated and unpaid dividends thereon to the
date fixed for liquidation, dissolution or winding-up (including an
amount equal to a prorated dividend for the period from the last
Dividend Payment Date to the date fixed for liquidation, dissolution or
winding-up) before any payment shall be made or any assets distributed
to the holders of any of the Junior Shares including, without
limitation, common stock of the Corporation. Except as provided in the
preceding sentence, Holders of shares of Convertible Preferred Stock
shall not be entitled to any distribution in the event of any
liquidation, dissolution or winding-up of the affairs of the
Corporation. If the assets of the Corporation are not sufficient to pay
in full the liquidation payments payable to the Holders of outstanding
shares of Convertible Preferred Stock and all Parity Shares, then the
holders of all such shares shall share equally and ratably in such
distribution of assets in proportion to the full liquidation preference,
including, without duplication, all accrued unpaid dividends, to which
each is entitled.
(ii) For the purposes of this paragraph (d), neither the sale,
conveyance, exchange or transfer (for cash, shares of stock, securities
or other consideration) of all or substantially all of the property or
assets of the Corporation nor the consolidation or merger of the
Corporation with or into one or more entities shall be deemed to be a
liquidation, dissolution or winding-up of the affairs of the
Corporation.
(iii) Nothing herein contained shall in any way or under any
circumstances be construed or deemed to require the Board of Directors
to declare, or the Corporation to pay or set apart for payment, any
amounts for the payment of liquidation preference on Convertible
Preferred Stock at any time.
(e) Redemption.
(i) (A) Mandatory Redemption. On March 31, 2010, the
Corporation shall redeem, to the extent of funds legally available
therefor, in the manner provided for in paragraph (e)(ii) hereof, all of
the shares of Convertible Preferred Stock then outstanding at a
redemption price equal to 100% of the liquidation preference per share,
plus, without duplication, an amount in cash equal to all accumulated
and unpaid dividends per share (including an amount equal to a prorated
dividend for the period from the Dividend Payment Date immediately prior
to the Redemption Date to the Redemption Date).
(B) Optional Redemption. The Convertible Preferred
Stock shall be redeemable, at any time on or after April 16,
2006, in whole or in part, at the option of the Company, at a
redemption price equal to 100% of the liquidation preference per
share, plus, without duplication, an amount in cash equal to all
accumulated and unpaid dividends per share (including an amount
equal to a prorated dividend for the period from the Dividend
Payment Date immediately prior to the Redemption Date to the
Redemption Date).
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(ii) Procedures for Redemption.
(A) At least thirty (30) days and not more than sixty
(60) days prior to the date fixed for any redemption of shares of
Convertible Preferred Stock pursuant to paragraph (e)(i) hereof,
written notice (each, a "Redemption Notice") shall be given by
first class mail, postage prepaid, to each Holder of record on
the record date fixed for such redemption of shares of
Convertible Preferred Stock at such Holder's address as it
appears on the stock books of the Corporation, provided that no
failure to give such notice nor any deficiency therein shall
affect the validity of the procedure for the redemption of any
shares of Convertible Preferred Stock to be redeemed except as to
the Holder or Holders to whom the Corporation has failed to give
said notice or except as to the Holder or Holders whose notice
was defective. The Redemption Notice shall state:
(1) The redemption price;
(2) The Redemption Date;
(3) That the Holder is to surrender to the
Corporation, in the manner, at the place or
places and at the price designated, his
certificate or certificates representing the
shares of Convertible Preferred Stock to be
redeemed; and
(4) That dividends on the shares of Convertible
Preferred Stock to be redeemed shall cease to
accumulate on such Redemption Date unless the
Corporation defaults in the payment of the
redemption price.
(B) Each Holder of shares of Convertible Preferred
Stock shall surrender the certificate or certificates
representing such shares to the Corporation, duly endorsed (or
otherwise in proper form for transfer, as determined by the
Corporation), in the manner and at the place designated in the
Redemption Notice, and on the Redemption Date the full redemption
price for such shares shall be payable in cash to the Person
whose name appears on such certificate or certificates as the
owner thereof, and each surrendered certificate shall be canceled
and retired.
(C) On and after the Redemption Date, unless the
Corporation defaults in the payment in full of the applicable
redemption price, dividends on the shares of Convertible
Preferred Stock called for redemption shall cease to accumulate
on the Redemption Date, and all rights of the Holders of redeemed
shares shall terminate with respect thereto on the Redemption
Date, other than the right to receive the redemption price,
without interest; provided, however, that if a notice of
redemption shall have been given as provided in paragraph (ii)(A)
above and
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the funds necessary for redemption (including an amount in
respect of all dividends that will accrue to the Redemption Date)
shall have been irrevocably deposited in trust for the equal and
ratable benefit for the Holders of the shares called for
redemption, then, at the close of business on the day on which
such funds are segregated and set apart, the Holders of the
shares to be redeemed shall cease to be shareholders of the
Corporation and shall be entitled only to receive the redemption
price, without interest.
(f) Voting Rights.
(i) The Holders of shares of Convertible Preferred Stock, except
as otherwise required under Washington law or as set forth in paragraphs
(ii), (iii) and (iv) below, shall not be entitled or permitted to vote
on any matter required or permitted to be voted upon by the shareholders
of the Corporation.
(ii)
(A) So long as any shares of Convertible Preferred
Stock are outstanding, the Corporation shall not amend, alter or
repeal any of the provisions of the Corporation's Articles of
Incorporation (including this Certificate of Designations) or the
bylaws of the Corporation so as to affect adversely the specified
rights, powers, preferences, privileges or voting rights of the
Holders of the Convertible Preferred Stock or reduce the time for
any notice which the Holders of the Convertible Preferred Stock
may be entitled without the affirmative vote or consent of
Holders of at least two-thirds of the issued and outstanding
shares of Convertible Preferred Stock, voting or consenting, as
the case may be, as one class, given in person or by proxy,
either in writing or by resolution adopted at an annual or
special meeting.
(B) Notwithstanding the foregoing, modifications and
amendments of the terms of this Certificate of Designations
contained in paragraph (i) below may be made by the Corporation
with the consent of the Holders of a majority of the outstanding
shares of Convertible Preferred Stock. In addition, the Holders
of a majority of the outstanding shares of Convertible Preferred
Stock, on behalf of all holders of Convertible Preferred Stock,
may waive compliance by the Corporation with the covenant set
forth below in paragraph (i) and may waive any past default under
the Certificate of Designations.
(C) Notwithstanding anything to the contrary contained
herein, (x) the creation, authorization or issuance of any shares
of any Junior Shares, Parity Shares or Senior Shares or (y) the
increase or decrease in the amount of authorized Capital Stock of
any class, including Senior Shares or Parity Shares (other than a
reduction in the number of authorized shares of Preferred Stock
below the number
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thereof then outstanding), shall not require the consent of
Holders of Convertible Preferred Stock and shall not be deemed
to affect adversely the rights, preferences, privileges or
voting rights of Holders of shares of Convertible Preferred
Stock.
(iii) Without the affirmative vote or consent of Holders
of a majority of the issued and outstanding shares of Convertible
Preferred Stock, voting or consenting, as the case may be, as a
separate class, given in person or by proxy, either in writing or
by resolution adopted at an annual or special meeting, the
Corporation shall not, in a single transaction or series of
related transactions, consolidate with or merge with or into, or
sell, assign, transfer, lease, convey or otherwise dispose of all
or substantially all of its assets to, another Person or adopt a
plan of liquidation unless: (A) either (1) the Corporation is the
surviving or continuing Person or (2) the Person (if other than
the Corporation) formed by such consolidation or into which the
Corporation is merged or the Person that 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 Corporation have
been transferred, shall be a corporation, limited liability
Company, partnership or trust organized and existing under the
laws of the United States or any State thereof or the District of
Columbia; (B) either (1) the Corporation is the surviving or
continuing Person and the outstanding shares of Convertible
Preferred Stock continue to exist as outstanding shares of
Convertible Preferred Stock or are converted into or exchanged
for shares of Capital Stock of an Acquiring Entity, having the
same powers, preferences and relative, participating, optional or
other special rights and the qualifications, limitations or
restrictions thereon that the shares of Convertible Preferred
Stock had immediately prior to such transaction or (2) the shares
of Convertible Preferred Stock shall be converted into or
exchanged for shares of Capital Stock of such successor,
transferee or resulting Person or an Acquiring Entity, 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 shares of Convertible Preferred
Stock had immediately prior to such transaction; (C) immediately
after giving pro forma effect to such transaction, no Voting
Rights Triggering Event shall have occurred or be continuing; and
(D) the Corporation has delivered to the Transfer Agent prior to
the consummation of the proposed transaction an Officers'
Certificate and an Opinion of Counsel, each stating that such
consolidation, merger or transfer complies with the terms hereof
and that all conditions precedent herein relating to such
transaction have been satisfied.
For purposes 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
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Corporation, shall be deemed to be the transfer of all or substantially
all of the properties and assets of the Corporation.
Except as specified in this paragraph, the Holders of Convertible
Preferred Stock shall not have voting rights with respect to mergers.
(iv)
(A) If (1) dividends on the Convertible Preferred
Stock are in arrears and unpaid for six or more Dividend Periods
(whether or not consecutive) (a "Dividend Default"); (2) the
Corporation fails to redeem all of the then outstanding shares of
Convertible Preferred Stock on March 31, 2010 or fails otherwise
to discharge any redemption obligation with respect to the
Convertible Preferred Stock; (3) the Corporation breaches or
violates one of the provisions set forth in any paragraphs
(f)(iii) or (i) hereof and the breach or violation continues for
a period of 30 days or more after the Corporation receives notice
thereof specifying the default from the Holders of at least 25%
of the shares of Convertible Preferred Stock then outstanding, or
(4) the Corporation fails to pay at the final stated maturity
(giving effect to any extensions thereof) the principal amount of
any Debt of the Corporation or any Subsidiary of the Corporation,
or the final stated maturity of any such Debt is accelerated, if
the aggregate principal amount of such Debt, together with the
aggregate principal amount of any other such Debt in default for
failure to pay principal at the final stated maturity (giving
effect to any extensions thereof) or that has been accelerated,
aggregates $15,000,000 or more at any time, in each case, after a
10-day period during which such default shall not have been cured
or such acceleration rescinded, then in the case of any of
clauses (1)-(4) the number of directors constituting the Board of
Directors shall be adjusted by the number, if any, necessary to
permit the Holders of the Convertible Preferred Stock, voting
together with any outstanding Parity Shares separately as a
single class, to elect the lesser of two directors and that
number of directors constituting 25% of the members of the Board
of Directors. Each such event described in clauses (1), (2), (3)
and (4) is a "Voting Rights Triggering Event." Holders of a
majority of the issued and outstanding shares of Convertible
Preferred Stock, voting together with any outstanding Parity
Shares separately as a single class, shall have the exclusive
right to elect the lesser of two directors and that number of
directors constituting 25% of the members of the Board of
Directors at a meeting therefor called upon occurrence of such
Voting Rights Triggering Event, and at every subsequent meeting
at which the terms of office of the directors so elected shall
expire (other than as described in (f)(iv)(B) below). The voting
rights provided herein shall be the exclusive remedy at law or in
equity of the Holders of the Convertible Preferred Stock for any
Voting Rights Triggering Event.
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(B) The right of the Holders of Convertible Preferred
Stock to elect members of the Board of Directors as set forth in
subparagraph (f)(iv)(A) above shall continue until such time as
(x) in the event such right arises due to a Dividend Default, all
accumulated dividends that are in arrears on the Convertible
Preferred Stock are paid in full and (y) in all other cases, the
failure, breach or default giving rise to such Voting Rights
Triggering Event is remedied or waived by the Holders of at least
a majority of the shares of Convertible Preferred Stock then
outstanding, at which time (1) the special right of the Holders
of Convertible Preferred Stock so to vote for the election of
directors and (2) the term of office of the directors elected by
the Holders of the Convertible Preferred Stock shall each
terminate and the directors elected by the holders of Voting
Stock other than the Convertible Preferred Stock shall constitute
the entire Board of Directors. At any time after voting power to
elect directors shall have become vested and be continuing in the
Holders of Convertible Preferred Stock pursuant to paragraph
(f)(iv)(A) hereof, or if vacancies shall exist in the offices of
directors elected by the Holders of Convertible Preferred Stock,
a proper officer of the Corporation may, and upon the written
request of he Holders of record of at least twenty-five percent
(25%) of the shares of Convertible Preferred Stock then
outstanding addressed to the Secretary of the Corporation shall,
call a special meeting of the Holders of Convertible Preferred
Stock, for the purpose of electing the directors 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 record of at least
twenty-five percent (25%) of the outstanding shares of
Convertible 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 meetings of shareholders of
the Corporation and shall be held at the place for holding the
annual meetings of shareholders. Any Holder of shares of
Convertible Preferred Stock so designated shall have, and the
Corporation shall provide, access to the lists of shareholders to
be called pursuant to the provisions hereof.
(C) At any meeting held for the purpose of electing
directors at which the Holders of Convertible Preferred Stock
voting together with any outstanding shares of Parity Shares as a
separate class shall have the right as described herein to elect
directors, the presence in person or by proxy of the Holders of
at least a majority of the then outstanding shares of Convertible
Preferred Stock and Parity Shares shall be required to constitute
a quorum of such Convertible Preferred Stock and Parity Shares.
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(D) Any vacancy occurring in the office of a director
elected by the Holders of shares of Convertible Preferred Stock
and Parity Shares may be filled by the remaining directors
elected by the Holders of Convertible Preferred Stock and Parity
Shares unless and until such vacancy shall be filled by the
Holders of Convertible Preferred Stock and Parity Shares.
(v) In any case in which the Holders of Convertible Preferred
Stock shall be entitled to vote pursuant to this paragraph (f) or
pursuant to Washington law, each Holder of shares of Convertible
Preferred Stock entitled to vote with respect to such matter shall be
entitled to one vote for each share of Convertible Preferred Stock held.
(vi) The Corporation may voluntarily grant voting rights to the
holders of Convertible Preferred Stock under such terms and conditions
as the Corporation shall determine, provided, however, that such grant
does not affect adversely the then-existing voting rights of such
holders.
(g) Reissuance of Convertible Preferred Stock.
Shares of Convertible Preferred Stock that have been issued and
reacquired in any manner, including shares purchased or redeemed, shall (upon
compliance with any applicable provisions of the laws of Washington) have the
status of authorized and unissued shares of Preferred Stock undesignated as to
series and may be redesignated and reissued as part of any series of Preferred
Stock; provided that such reacquired shares shall not be reissued as shares of
Convertible Preferred Stock.
(h) Business Day.
If any payment, redemption or exchange shall be required by the
terms hereof to be made on a day that is not a Business Day, such payment,
redemption or exchange shall be made on the immediately succeeding Business Day.
(i) Certain Additional Provisions.
(i) Reports. So long as any shares of Convertible Preferred Stock
are outstanding, the Corporation will provide to the Holders of
Convertible Preferred Stock, within 15 days after it files them with the
Securities and Exchange Commission (or any successor agency performing
similar functions), copies of the annual reports and of the information,
documents and other reports (or copies of such portions of any of the
foregoing as the Commission may by rules and regulation prescribe) which
the Corporation files with the Commission pursuant to Section 13 or
15(d) of the Exchange Act. In the event that the Corporation is no
longer required to furnish such reports to its securityholders pursuant
to the Exchange Act, the Corporation will cause its consolidated
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financial statements, comparable to those which would have been required
to appear in annual or quarterly reports, to be delivered to the Holders
of Convertible Preferred Stock.
(j) Definitions.
As used in this Certificate of Designations, the following terms shall
have the following meanings (with terms defined in the singular having
comparable meanings when used in the plural and vice versa), unless the context
otherwise requires.
"Acquired Debt" means, with respect to any specified Person, (i) Debt of
any other Person existing at the time such Person merges with or into or
consolidates with or becomes a Restricted Subsidiary of such specified Person
and (ii) Debt secured by a Lien encumbering any asset acquired by such specified
Person, which Debt was not Incurred in anticipation of, and was outstanding
prior to, such merger, consolidation or acquisition.
"Acquiring Entity" means the entity that is a constituent party to a
transaction covered by paragraph (f)(iii) and that thereafter is the parent
entity of the Corporation or its successor and whose shares of Capital Stock the
holders of Class A Common Stock receive in a transaction in exchange for or in
consideration of their shares of Class A Common Stock.
"Affiliate" of any Person means any other Person directly or indirectly
controlling or controlled by or under direct or indirect common control with
such Person. For the purposes of this definition, "control" when used with
respect to any Person means the power to direct the management and policies of
such Person, directly or indirectly, whether through the ownership of voting
securities, by contract or otherwise; and the terms "controlling" and
"controlled" have meanings correlative to the foregoing.
"Applicable Price" means (i) in the event of a Non-Stock Change in
Control in which the holders of the Class A Common Stock receive only cash, the
amount of cash received by the holder of one share of Class A Common Stock and
(ii) in the event of any other Non-Stock Change in Control or any Common Stock
Change in Control, the average of the Closing Price for the Class A Common Stock
during the 10 Trading Days prior to and including the record date for the
determination of the holders of Class A Common Stock entitled to receive cash,
securities, property or other assets in connection with such Non-Stock Change in
Control or Common Stock Change in Control or, if there is no such record date,
the date upon which the holders of the Class A Common Stock shall have the right
to receive such cash, securities, property or other assets or the date upon
which such Non-Stock Change in Control is deemed to have occurred, as the case
may be, in each case as adjusted in good faith by the Board of Directors to
appropriately reflect any of the events referred to in paragraph (k)(vi).
"Business Day" means each Monday, Tuesday, Wednesday, Thursday and
Friday which is not a day on which banking institutions in the Borough of
Manhattan, The City of New York, New York are authorized or obligated by law or
executive order to close.
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"Capital Lease Obligation" of any Person means the obligation to pay
rent or other payment amounts under a lease of (or other Debt arrangements
conveying the right to use) real or personal property of such Person which is
required to be classified and accounted for as a capital lease or a liability on
the face of a balance sheet of such Person in accordance with generally accepted
accounting principles (a "Capital Lease"). The stated maturity of such
obligation shall be the date of the last payment of rent or any other amount due
under such lease prior to the first date upon which such lease may be terminated
by the lessee without payment of a penalty. The principle amount of such
obligation shall be the capitalized amount thereof that would appear on the face
of a balance sheet of such Person in accordance with generally accepted
accounting principles.
"Capital Stock" of any Person means any and all shares, interests,
participations or other equivalents (however designated) of corporate stock or
other equity participations, including partnership interests, whether general or
limited, of such Person.
"Change in Control" will be deemed to have occurred at such time as (i)
the sale, lease, transfer, conveyance or other disposition (other than by way of
merger or consolidation), in one or a series of related transactions, of all or
substantially all the assets of the Corporation and its Subsidiaries taken as a
whole to any "person" (as such term is used in Section 13(d)(3) of the Exchange
Act), (ii) the adoption of a plan relating to the liquidation or dissolution of
the Corporation, (iii) the consummation of any transaction (including any merger
or consolidation) the result of which is that any Person or any Persons acting
together that would constitute a "group" (a "Group") for purposes of Section
13(d) of the Exchange Act, or any successor provision thereto (other than Eagle
River, Mr. Craig O. McCaw and their respective Affiliates or an underwriter
engaged in a firm commitment underwriting on behalf of the Corporation), shall
beneficially own (within the meaning of Rule 13d-3 under the Exchange Act, or
any successor provision thereto) more than 50% of the aggregate voting power of
all classes of Voting Stock of the Corporation, (iv) neither Mr. Craig O. McCaw
nor any person designated by him to the Corporation as acting on his behalf
shall be a director of the Corporation; or (v) during any period of two
consecutive years, 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 shareholders of the
Corporation was proposed by a vote of a majority of the directors of the
Corporation then still in office who were either directors at the beginning of
such period or whose election or nomination for election was previously so
approved) cease for any reason to constitute a majority of the Board of
Directors then in office.
"Class A Common Stock" means the Class A Common Stock, par value
$0.022658 per share, of the Corporation.
"Closing Price" means, with respect to the Class A Common Stock of the
Corporation, for any day, the closing sale price (or, if no closing sale price
is reported, the last reported sale price) per share of the Class A Common Stock
as reported by the Nasdaq National Market, or, if the Class A Common Stock is
not so reported, on the principal national securities exchange or
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inter-dealer quotation system on which the Class A Common Stock is listed or
admitted to trading, or if not listed or admitted to trading on any national
securities exchange or inter-dealer quotation system, the average of the closing
bid and asked prices per share in the over-the-counter market as reported by the
National Quotation Bureau or similar organization or as furnished by any New
York Stock Exchange member firm selected from time to time by the Corporation
for that purpose.
"Common Stock" means the Class A Common Stock and the Class B Common
Stock, par value $0.022658 per share, of the Corporation.
"Common Stock Change in Control" means any Change in Control in which
more than 50% of the value (as determined in good faith by the Board of
Directors of the Corporation) of the consideration received by holders of Class
A Common Stock consists of common stock of another company that for each of the
10 consecutive Trading Days referred to in the definition of "Applicable Price"
above has been admitted for listing or admitted for listing subject to notice of
issuance on a national securities exchange or quoted on the Nasdaq National
Market; provided, however, that a Change in Control shall not be a Common Stock
Change in Control unless either (i) the Corporation continues to exist after the
occurrence of such Change in Control and the outstanding shares of Convertible
Preferred Stock continue to exist as outstanding shares of Convertible Preferred
Stock (or are converted into or exchanged for shares of Capital Stock of an
Acquiring Entity, having the same powers, preferences and relative,
participating, optional or other special rights and the qualifications,
limitations or restrictions thereon that the shares of Convertible Preferred
Stock had immediately prior to such transaction), or (ii) not later than the
occurrence of such Change in Control, the outstanding shares of Convertible
Preferred Stock are converted into or exchanged for shares of convertible
preferred stock of a corporation succeeding to the business of the Corporation
or the Acquiring Entity, which convertible preferred stock has powers,
preferences and relative, participating, optional or other rights, and
qualifications, limitations and restrictions, substantially similar to those of
the Convertible Preferred Stock.
"Conversion Agent" means the conversion agent for the Convertible
Preferred Stock designated by the Company from time to time.
"Current Market Price" per Junior Share or any other security at any
date means (i) if the security is not registered under the Exchange Act, (a) the
value of the security, determined in good faith by the Board of Directors of the
Corporation, based on the most recently completed arm's-length transaction
between the Corporation and a person other than an Affiliate of the Corporation
and the closing of which occurs on such date or shall have occurred within the
six-month period preceding such date, or (b) if no such transaction shall have
occurred on such date or within such six-month period, the value of the security
as determined by an independent financial expert (provided that, in the case of
the calculation of Current Market Price for determining the cash value of
fractional shares, any such determination within six months that is, in the good
faith judgment of the Board of Directors of the Corporation, a reasonable
determination, may be utilized) or (ii) (a) if the security is registered under
the Exchange Act, the
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<PAGE> 15
average of the daily market prices of the security for the 20 consecutive
trading days immediately preceding such date, or (b) if the security has been
registered under the Exchange Act for less than 20 consecutive trading days
before such date, then the average of the closing sales prices for all of the
trading days before such date for which closing sales prices are available, in
the case of each of (ii) (a) and (ii) (b), as certified to the Conversion Agent
by the President, any Vice President or the Chief Financial Officer of the
Corporation. The market price for each such trading day shall be: (A) in the
case of a security listed or admitted to trading on any national securities
exchange or quotation system, the closing sales price, regular way, on such day,
or if no sale takes place on such day, the average of the closing bid and asked
prices on such day, (B) in the case of a security not then listed or admitted to
trading on any national securities exchange or quotation system, the last
reported sale price on such day, or if no sale takes place on such day, the
average of the closing bid and asked prices on such day, as reported by a
reputable quotation source designated by the Corporation, (C) in the case of a
security not then listed or admitted to trading on any national securities
exchange or quotation system and as to which no such reported sale price or bid
and asked prices are available, the average of the reported high bid and low
asked prices on such day, as reported by a reputable quotation service, or a
newspaper of general circulation in the Borough of Manhattan, City and State of
New York, customarily published on each Business Day, designated by the
Corporation, or, if there shall be no bid and asked prices on such day, the
average of the high bid and low asked prices, as so reported, on the most recent
day (not more than 30 days prior to the date in question) for which prices have
been so reported and (D) if there are no bid and asked prices reported during
the 30 days prior to the date in question, the Current Market Price shall be
determined as if the securities were not registered under the Exchange Act.
"Debt" means (without duplication), with respect to any Person, whether
recourse is to all or a portion of the assets of such Person and whether or not
contingent, (i) every obligation of such Person for money borrowed, (ii) every
obligation of such Person evidenced by bonds, debentures, notes or other similar
instruments, including any such obligations Incurred in connection with the
acquisition of property, assets or businesses, (iii) every reimbursement
obligation of such Person with respect to letters of credit, bankers'
acceptances or similar facilities issued for the account of such Person, (iv)
every obligation of such Person issued or assumed as the deferred purchase price
of property or services (including securities repurchase agreements but
excluding, trade accounts payable or accrued liabilities arising in the ordinary
course of business which are not overdue or which are being contested in good
faith), (v) every Capital Lease Obligation of such Person, (vi) all Receivables
Sales of such Person, together with any obligation of such Person to pay any
discount, interest, fees, indemnities, penalties, recourse, expenses or other
amounts in connection therewith, (vii) all obligations to redeem Disqualified
Stock issued by such Person, (viii) every obligation under Interest Rate or
Currency Protection Agreements of such Person, and (ix) every obligation of the
type referred to in clauses (i) through (viii) of another Person and all
dividends of another Person the payment of which, in either case, such Person
has Guaranteed. The "amount" or "principal amount" of Debt at any time of
determination as used herein represented by (a) any Debt issued at a price that
is less than the principal amount at maturity thereof, shall be the amount of
the liability in respect thereof
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<PAGE> 16
determined in accordance with generally accepted accounting principles, (b) any
Receivables Sale, shall be the amount of the unrecovered capital or principal
investment of the purchaser (other than the Corporation or a Wholly-Owned
Restricted Subsidiary of the Corporation) thereof, excluding amounts
representative of yield or interest earned on such investment, (c) any
Disqualified Stock, shall be the maximum fixed redemption or repurchase price in
respect thereof, (d) any Capital Lease Obligation, shall be determined in
accordance with the definition thereof, or (e) any Permitted Interest Rate or
Currency Protection Agreement shall be zero. In no event shall Debt include any
liability for taxes.
"Depositary" means, with respect to the shares of Convertible Preferred
Stock issuable or issued in whole or in part in the form of a Global Share
Certificate, DTC for so long as it shall be a clearing agency registered under
the Exchange Act, or such successor (which shall be a clearing agency registered
under the Exchange Act) as the Corporation shall designate from time to time in
an Officer's Certificate delivered to the Transfer Agent.
"Disqualified Stock" of any Person means any Capital Stock of such
Person which, by its terms (or by the terms of any security into which it is
convertible or for which it is exchangeable), or upon the happening of any
event, matures or is mandatorily redeemable, pursuant to a sinking fund
obligation or otherwise, or is redeemable at the option of the holder thereof,
in whole or in part, on or prior to March 31, 2010; provided, however, that any
Convertible Preferred Stock which would not constitute Disqualified Stock but
for provisions thereof giving holders thereof the right to require the
Corporation to repurchase or redeem such Convertible Preferred Stock upon the
occurrence of a Change in Control occurring prior to March 31, 2010 shall not
constitute Disqualified Stock.
"Dividend Payment Date" means March 31, June 30, September 30 and
December 31, of each year.
"Dividend Period" means the Initial Dividend Period, and thereafter,
each Quarterly Dividend Period.
"Dividend Record Date" means March 15, June 15, September 15 and
December 15 of each year.
"DTC" means The Depository Trust Company.
"Eagle River" means Eagle River Investments, L.L.C., a limited liability
company formed under the laws of the State of Washington.
"Exchange Act" means the Securities Exchange Act of 1934, and the rules
and regulations promulgated thereunder.
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<PAGE> 17
"Guarantee" by any Person means any obligation, contingent or otherwise,
of such Person guaranteeing, or having the economic effect of guaranteeing, any
Debt of any other Person (the "primary obligor") in any manner, whether directly
or indirectly, and including, without limitation, any obligation of such Person,
(i) to purchase or pay (or advance or supply funds for the purchase of) such
Debt or to purchase (or to advance or supply funds for the purchase of) any
security for the payment of such Debt, (ii) to purchase property, securities or
services for the purpose of assuring the holder of such Debt of the payment of
such Debt, or (iii) to maintain working capital, equity capital or other
financial statement condition or liquidity of the primary obligor so as to
enable the primary obligor to pay such Debt (and "Guaranteed", "Guaranteeing"
and "Guarantor" shall have meanings correlative to the foregoing); provided,
however, that the Guarantee by any Person shall not include endorsements by such
Person for collection or deposit, in either case, in the ordinary course of
business; and provided further, that the incurrence by a Restricted Subsidiary
of the Corporation of a lien on real or personal property of such Restricted
Subsidiary acquired, constructed or constituting improvements made after the
Issue Date to secure Purchase Money Debt which is Incurred for the construction,
acquisition and improvement of Telecommunications Assets, shall not be deemed to
constitute a Guarantee by such Restricted Subsidiary of any Purchase Money Debt
of the Corporation secured thereby; provided, however, that (a) the net proceeds
of any Debt secured by such a Lien does not exceed 100% of such purchase price
or cost of construction or improvement of the property subject to such Lien; (b)
such Lien attaches to such property prior to, at the time of or within 180 days
after the acquisition, completion of construction or commencement of operation
of such property; and (c) such Lien does not extend to or cover any property (or
identifiable portions thereof) acquired, constructed or constituting
improvements made with the proceeds of such Purchase Money Debt (it being
understood and agreed that all Debt owed to any single lender or group of
lenders or outstanding under any single credit facility shall be considered a
single Purchase Money Debt, whether drawn at one time or from time to time).
"Holder" means a holder of shares of Convertible Preferred Stock as
reflected in the share books of the Corporation.
"Implied Conversion Price" means the quotient obtained by dividing
$50.00 by the Conversion Rate.
"Incur" means, with respect to any Debt or other obligation of any
Person, to create, issue, incur (by conversion, exchange or otherwise), assume,
Guarantee or otherwise become liable in respect of such Debt or other obligation
including by acquisition of Subsidiaries or the recording, as required pursuant
to generally accepted accounting principles or otherwise, of any such Debt or
other obligation on the balance sheet of such Person (and "Incurrence",
"Incurred", "Incurrable" and "Incurring" shall have meanings correlative to the
foregoing): provided, however, that a change in generally accepted accounting
principles that results in an obligation of such Person that exists at such time
becoming Debt shall not be deemed an Incurrence of such Debt and that neither
the accrual of interest nor the accretion of original issue discount shall be
deemed an Incurrence of Debt; provided, further, however, that the Corporation
may elect to treat
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<PAGE> 18
all or any portion of revolving credit debt of the Corporation or a Subsidiary
as being Incurred from and after any date beginning the date the revolving
credit commitment is extended to the Corporation or a Subsidiary, by furnishing
notice thereof to the Trustee or the Transfer Agent, as applicable, and any
borrowings or reborrowings by the Corporation or a Subsidiary under such
commitment up to the amount of such commitment designated by the Corporation as
Incurred shall not be deemed to be new Incurrence of Debt by the Corporation or
such Subsidiary.
"Initial Dividend Period" means the dividend period commencing on the
Issue Date and ending on the first Dividend Payment Date to occur thereafter.
"Interest Rate or Currency Protection Agreement" of any Person means any
forward contract, futures contract, swap, option or other financial agreement or
arrangement (including, without limitation, caps, floors, collars and similar
agreements) relating to, or the value of which is dependent upon, interest rates
or currency exchange rates or indices.
"Issue Date" means the date of original issuance of the Convertible
Preferred Stock.
"Junior Shares" shall have the meaning ascribed to it in paragraph (b)
hereof.
"Lien" means, with respect to any property or assets, any mortgage or
deed of trust, pledge, hypothecation, assignment, Receivables Sale, deposit
arrangement, security interest, lien, charge, easement (other than any easement
not materially impairing usefulness or marketability), encumbrances, preference,
priority or other security agreement or preferential arrangement of any kind or
nature whatsoever on or with respect to such property or assets (including,
without limitation, any conditional sale or other title retention agreement
having substantially the same economic effect as any of the foregoing).
"Non-Stock Change in Control" means any Change in Control other than a
Common Stock Change in Control.
"Officers' Certificate" means a certificate signed by (i) the Chief
Executive Officer, President, an Executive Vice President or a Vice President,
and (ii) the Treasurer, Assistant Treasurer, Secretary or an Assistant
Secretary, of the Corporation and delivered to the Transfer Agent and containing
the following:
(a) a statement that each individual signing such
certificate has read such covenant or condition and the definitions
herein relating thereto;
(b) a brief statement as to the nature and scope of the
examination or investigation upon which the statement or opinions
contained in such certificate or opinion are based;
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<PAGE> 19
(c) a statement that, in the opinion of each such
individual, he has made such examination or investigation as is
necessary to enable him to express an informed opinion as to whether or
not such covenant or condition has been complied with; and
(d) a statement as to whether, in the opinion of each such
individual, such condition or covenant has been complied with.
"Opinion of Counsel" means a written opinion of legal counsel, who may
be counsel for the Corporation and containing the following statements:
(a) a statement that such counsel has read such covenant
or condition and the definitions herein relating thereto;
(b) a brief statement as to the nature and scope of the
examination or investigation upon which the statements or opinions
contained in such certificate or opinion are based;
(c) a statement that, in the opinion of each such
individual, he has made such examination or investigation as is
necessary to enable him to express an informed opinion as to whether or
not such covenant or condition has been complied with; and
(d) a statement as to whether, in the opinion of each such
individual, such condition or covenant has been complied with.
"Parity Shares" shall have the meaning ascribed to it in paragraph (b)
hereof.
"Permitted Interest Rate or Currency Protection Agreement" of any Person
means any Interest Rate or Currency Protection Agreement entered into with one
or more financial institutions in the ordinary course of business that is
designed to protect such Person against fluctuations in interest rates or
currency exchange rates with respect to Debt Incurred and which shall have a
notional amount no greater than the payments due with respect to the Debt being
hedged thereby and not for purposes of speculation.
"Person" means any individual, corporation, partnership, limited
liability company, joint venture, association, joint stock company, trust,
unincorporated organization, government or agency or political subdivision
thereof or any other entity.
"Preferred Stock" of any Person means Capital Stock of such Person of
any class or classes (however designated) that ranks prior, as to the payment of
dividends or as to the distribution of assets upon any voluntary or involuntary
liquidation, dissolution or winding up of such Person, to shares of Capital
Stock of any other class of such Person.
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<PAGE> 20
"Purchase Money Debt" means (i) Acquired Debt Incurred in connection
with the acquisition of Telecommunications Assets and (ii) Debt of the
Corporation or of any Restricted Subsidiary of the Corporation (including,
without limitation, Debt represented by Capital Lease Obligations, Vendor
Financing Facilities, mortgage financings and purchase money obligations)
Incurred for the purpose of financing all or any part of the cost of
construction, acquisition or improvement by the Corporation or any Restricted
Subsidiary of the Corporation or any Joint Venture of any Telecommunications
Assets of the Corporation, any Restricted Subsidiary of the Corporation or any
Joint Venture, and including any related notes, Guarantees, collateral
documents, instruments and agreements executed in connection therewith, as the
same may be amended, supplemented, modified or restated from time to time.
"Purchaser Stock Price" means, with respect to any Common Stock Change
in Control, the average of the per share Closing Prices for the common stock
received as consideration in such Common Stock Change in Control for the 10
consecutive Trading Days prior to and including the record date for the
determination of the holders of Class A Common Stock entitled to receive such
common stock, or if there is no such record date, the date upon which the
holders of the Class A Common Stock shall have the right to receive such common
stock, in each case, as adjusted in good faith by the Board of Directors to
appropriately reflect any of the events referred to in paragraph (k)(vi);
provided, however, that if no such Closing Prices exist, then the Purchaser
Stock Price shall be set at a price determined in good faith by the Board of
Directors of the Corporation..
"Quarterly Dividend Period" shall mean the quarterly period commencing
on each March 31, June 30, September 30 and December 31 and ending on the next
succeeding Dividend Payment Date, respectively.
"Receivables" means receivables, chattel paper, instruments, documents
or intangibles evidencing or relating to the right to payment of money in
respect of the sale of the goods or services.
"Receivables Sale" of any Person means any sale of Receivables of such
Person (pursuant to a purchase facility or otherwise), other than in connection
with a disposition of the business operations of such Person relating thereto or
a disposition of defaulted Receivables for purpose of collection and not as a
financing agreement.
"Redemption Date", with respect to any share of Convertible Preferred
Stock, means the date on which such share of Convertible Preferred Stock is
redeemed by the Corporation.
"Redemption Notice" shall have the meaning ascribed to it in paragraph
(e) hereof.
"Reference Market Price" shall initially mean $23.33, and in the event
of any adjustment to the Conversion Rate other than as a result of a Change in
Control, the Reference Market Price shall also be adjusted so that the ratio of
the Reference Market Price to the Implied Conversion
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<PAGE> 21
Price after giving effect to any such adjustment shall always be the same as the
ratio of $23.33 to $43.67.
"Registration Rights Agreement" means the Registration Rights Agreement
dated as of March 31, 1998 among the Corporation, Smith Barney, Inc. and
Goldman, Sachs & Co. (for the benefit of Holders from time to time).
"Restricted Period Termination Date" means the date that is two years
after the later of the Issue Date or the last date on which the Corporation or
an Affiliate of the Corporation was the owner thereof.
"Restricted Subsidiary" of the Corporation means any Subsidiary, whether
existing on or after the Issue date, other than an Unrestricted Subsidiary.
"Senior Shares" shall have the meaning ascribed to it in paragraph (b)
hereof.
"Subsidiary" of any Person means (i) a corporation more than 50% of the
combined voting power of the outstanding Voting Stock of which is owned,
directly or indirectly, by such Person or by one or more other Subsidiaries of
such Person or by such Person and one or more Subsidiaries thereof or (ii) any
other Person (other than a corporation) in which such Person, or one or more
other Subsidiaries of such Person or such Person and one or more other
Subsidiaries thereof, directly or indirectly, has at least a majority ownership
and power to direct the policies, management and affairs thereof.
"Telecommunications Assets" means all assets, rights (contractual or
otherwise) and properties, whether tangible or intangible, used or intended for
use in connection with a Telecommunications Business."
"Telecommunications Business" means the business of (i) transmitting, or
providing services relating to the transmission of, voice, video or data through
owned or leased transmission facilities, (ii) creating, developing or marketing
communications related network equipment, software and other devices for use in
a Telecommunication Business or (iii) evaluating, participating or pursuing any
other activity or opportunity that is primarily related to those identified in
(i) or (ii) above and shall, in any event, include all businesses in which the
Company or any of its Subsidiaries are engaged on the Issue Date; provided that
the determination of what constitutes a Telecommunications Business shall be
made in good faith by the Board of Directors of the Company, which determination
shall be conclusive.
"Trading Day" means (i) if the Class A Common Stock is admitted to
trading on the Nasdaq National Market or any other system of automated
dissemination of quotations of securities prices, a day on which trades may be
effected through such system; (ii) if the Class A Common Stock is not so
admitted for trading but is listed or admitted for trading on the American Stock
Exchange or any other national securities exchange, a day on which such
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<PAGE> 22
exchange is open for business; or (iii) if the Class A Common Stock is not
listed or admitted for trading on any national securities exchange or admitted
to trading on the Nasdaq National Market or any other system of automated
dissemination of quotation of securities prices, a day on which the Common Stock
is traded regular way in the over-the-counter market and for which a closing bid
and a closing asked price for the Class A Common Stock are available.
"Transfer Agent" means the transfer agent for the Convertible Preferred
Stock designated by the Corporation from time to time.
"Unrestricted Subsidiary" means (1) any Subsidiary of the Corporation
designated as such by the Board of Directors of the Corporation as set forth
below where (a) neither the Corporation nor any of its other Subsidiaries (other
than another Unrestricted Subsidiary) (i) provides credit support for, or
Guarantee of, any Debt of such Subsidiary or any Subsidiary of such Subsidiary
(including any undertaking, agreement or instrument evidencing such Debt) or
(ii) is directly or indirectly liable for any Debt of such Subsidiary or any
Subsidiary of such Subsidiary and (b) no default with respect to any Debt of
such Subsidiary or any Subsidiary of such Subsidiary (including any right which
the holders thereof may have to take enforcement action against such Subsidiary)
would permit (upon notice, lapse of time or both) any holder of any other Debt
of the Corporation and its Restricted Subsidiaries to declare a default on such
other Debt or cause the payment thereof to be accelerated or payable prior to
its final scheduled maturity and (2) any Subsidiary of an Unrestricted
Subsidiary. The Board of Directors of the Corporation may designate any
Subsidiary to be an Unrestricted Subsidiary unless such Subsidiary owns any
Capital Stock of, or owns or holds any Lien on any property of, any other
Subsidiary of the Corporation which is not a Subsidiary of the Subsidiary to be
so designated or otherwise an Unrestricted Subsidiary, provided that either (x)
the Subsidiary to be so designated has total assets of $1,000 or less or (y)
immediately after giving effect to such designation, the Corporation could incur
at least $1.00 of additional Debt pursuant to certain covenants under the
12-1/2% Notes, the 9 % Notes and the 9% Notes. The Board of Directors of the
Corporation may designate any Unrestricted Subsidiary to be a Restricted
Subsidiary, provided that, immediately after giving effect to such designation,
the Corporation could incur at least $1.00 of additional Debt pursuant to
certain covenants under the 12-1/2% Notes, the 9 % Notes and the 9% Notes, as
applicable.
"Vice President", when used with respect to the Corporation means any
vice president, whether or not designated by a number or a word or words added
before or after the title "Vice President".
"Voting Rights Triggering Event" shall have the meaning ascribed to it
in paragraph (f)(iv) hereof.
"Voting Stock" of any Person means Capital Stock of such Person which
ordinarily has voting power for the election of directors (or persons performing
similar functions) of such
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Person, whether at all times or only so long as no senior class of securities
has such voting power by reason of any contingency.
"Wholly-Owned Restricted Subsidiary" of any Person means a Restricted
Subsidiary of such Person 99% or more of the outstanding Capital Stock or other
ownership interests of which (other than directors' qualifying shares) shall at
the time be owned by such Person or by one or more Wholly-Owned Restricted
Subsidiaries of such Person or by such Person and one or more Wholly-Owned
Restricted Subsidiaries of such Person.
(k) Conversion Rights
(i) The Convertible Preferred Stock will be convertible at the
option of the Holder, into shares of Class A Common Stock at any time,
unless previously redeemed or repurchased, at a conversion rate of 1.145
shares of Class A Common Stock per share of the Convertible Preferred
Stock (as adjusted pursuant to the provisions hereof, the "Conversion
Rate") (subject to the adjustments described below). The right to
convert a share of the Convertible Preferred Stock called for redemption
will terminate at the close of business on the Redemption Date for such
share of Convertible Preferred Stock. In addition, at any time from and
after April 15, 2001, through and including April 15, 2006, the
Corporation may elect to cause such conversion right to expire, upon not
less than 30 nor more than 60 days' notice to the holders of shares of
Convertible Preferred Stock, if the Closing Price of the Class A Common
Stock exceeds 120% of the Implied Conversion Price for 20 Trading Days
in any period of 30 consecutive Trading Days, including the last Trading
Day of such period; provided that such conversion right shall expire
only if the Corporation is current in the payment of accrued dividends
on the Convertible Preferred Stock at such expiration date.
(ii) The right of conversion attaching to any shares of
Convertible Preferred Stock may be exercised by the Holder thereof by
delivering the shares to be converted to the office of the Conversion
Agent, accompanied by a duly signed and completed notice of conversion
in form reasonably satisfactory to the Conversion Agent. The conversion
date will be the date on which the shares of Convertible Preferred Stock
and the duly signed and completed notice of conversion are so delivered.
The Person or Persons entitled to receive the Class A Common Stock
issuable upon such conversion shall be treated for all purposes as the
record holder or holders of such Class A Common Stock as of such
conversion date and such Person or Persons will cease to be a record
Holder or record Holders of the Convertible Preferred Stock on that
date. As promptly as practicable on or after the conversion date, the
Corporation will issue and deliver to the Conversion Agent a certificate
or certificates for the number of full shares of Class A Common Stock
issuable upon conversion, with any fractional shares rounded up to full
shares or, at the Corporation's option, payment in cash in lieu of any
fraction of a share, based on the Closing Price of the Class A Common
Stock on the Trading Day preceding the conversion date. Such certificate
or certificates will be delivered by the Conversion
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<PAGE> 24
Agent to the appropriate Holder on a book-entry basis or by mailing
certificates evidencing the additional shares to the Holders at their
respective addresses set forth in the register of Holders maintained by
the Transfer Agent. Any shares of Convertible Preferred Stock
surrendered for conversion during the period from the close of business
on any Record Date to the opening of business on the next succeeding
Dividend Payment Date must be accompanied by payment of an amount equal
to the dividends payable on such Dividend Payment Date on the shares of
Convertible Preferred Stock being surrendered for conversion. In the
case of any shares of Convertible Preferred Stock that have been
converted after any Record Date but before the next Dividend Payment
Date, dividends that are payable on such Dividend Payment Date will be
payable on such Dividend Payment Date notwithstanding such conversion,
and such dividends will be paid to the Holder of such shares of
Convertible Preferred Stock on such Record Date. No other payment or
adjustment for dividends, or for any dividends in respect of shares of
Class A Common Stock, will be made upon conversion. Holders of Class A
Common Stock issued upon conversion will not be entitled to receive any
dividends payable to holders of Class A Common Stock as of any record
time before the close of business on the conversion date.
(iii) All shares of Class A Common Stock delivered upon any
conversion of Convertible Preferred Stock prior to the Restricted Period
Termination Date shall bear a legend substantially in the form of the
legend required to be set forth on the Convertible Preferred Stock and
shall be subject to the restrictions on transfer provided in such
legend.
(iv) The Corporation shall at all times reserve and keep
available out of its authorized and unissued Class A Common Stock,
solely for issuance upon the conversion of the Convertible Preferred
Stock, such number of shares of Class A Common Stock as shall from time
to time be issuable upon the conversion of all the shares of Convertible
Preferred Stock then outstanding. Whenever the Corporation issues shares
of Class A Common Stock upon conversion of shares of Convertible
Preferred Stock and the Corporation has in effect at such time a share
purchase rights agreement under which holders of Class A Common Stock
are issued rights ("Rights") entitling the holders under certain
circumstances to purchase an additional share or shares of stock, the
Corporation will issue, together with each such share of Class A Common
Stock, such number of Rights (which number may be a fraction) as shall
at that time be issuable with a share of Class A Common Stock pursuant
to such share purchase rights agreement. Any shares of Class A Common
Stock issued upon conversion of the Convertible Preferred Stock shall be
duly authorized, validly issued and fully paid and nonassessable and
shall rank pari passu with the other shares of Class A Common Stock
outstanding from time to time. The Conversion Agent shall deliver the
shares of Class A Common Stock received upon conversion of the
Convertible Preferred Stock to the converting Holder free and clear of
all liens, charges, security interests and encumbrances, except for
United States withholding taxes. The Corporation shall use its best
efforts to obtain and keep in force
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<PAGE> 25
such governmental or regulatory permits or other authorizations as may
be required by law, and shall comply with all applicable requirements as
to registration or qualification of the Class A Common Stock (and all
requirements to list the Class A Common Stock issuable upon conversion
of the Convertible Preferred Stock that are at the time applicable), in
order to enable the Corporation to lawfully issue Class A Common Stock
upon conversion of the Convertible Preferred Stock and to lawfully
deliver the Class A Common stock to each Holder upon conversion of the
Convertible Preferred Stock.
(v) The Corporation will pay any and all taxes that may be
payable in respect of the issue or delivery of shares of Class A Common
Stock on conversion of Convertible Preferred Stock. The Corporation
shall not, however, be required to pay any tax which may be payable in
respect of any transfer involved in the issue and delivery of shares of
Class A Common Stock in a name other than that in which the Convertible
Preferred Stock so converted were registered, and no such issue or
delivery shall be made unless and until the Person requesting such issue
has paid to the Conversion Agent the amount of any such tax, or has
established to the satisfaction of the Conversion Agent that such tax
has been paid.
(vi) The Conversion Rate shall be subject to adjustment (without
duplication) from time to time as follows:
(1) In case the Corporation shall pay or make a
dividend or other distribution on any class of Capital Stock
of the Corporation payable in shares of Common stock, the
Conversion Rate in effect at the opening of business on the
day following the date fixed for the determination of
shareholders entitled to receive such dividend or other
distribution shall be increased by dividing such Conversion
Rate by a fraction of which the numerator shall be the number
of shares of Common Stock outstanding at the close of business
on the date fixed for such determination and the denominator
shall be the sum of such number of shares and the total number
of shares constituting such dividend or other distribution,
such increase to become effective immediately after the
opening of business on the day following the date fixed for
such determination. If, after any such date fixed for
determination, any dividend or distribution is not in fact
paid, the Conversion Rate shall be immediately readjusted,
effective as of the date the Board of Directors determines not
to pay such dividend or distribution, to the Conversion Rate
that would have been in effect if such determination date had
not been fixed. For the purposes of this paragraph (1), the
number of shares of Common Stock at any time outstanding shall
not include shares held in the treasury of the Corporation but
shall include shares issuable in respect of scrip certificates
issued in lieu of fractions of shares of Common Stock. The
Corporation will not pay any dividend or make any distribution
on shares of Common Stock held in the treasury of the
Corporation.
25
<PAGE> 26
(2) In case outstanding shares of Common Stock shall
be subdivided into a greater number of shares of Common Stock,
the Conversion Rate in effect at the opening of business on
the day following the day upon which such subdivision becomes
effective shall be proportionately increased, and, conversely,
in case outstanding shares of Common Stock shall be combined
into a smaller number of shares of Common Stock, the
Conversion Rate in effect at the opening of business on the
day following the day upon which such combination becomes
effective shall be proportionately reduced, such increase or
reduction, as the case may be, to become effective immediately
after the opening of business on the day following the day
upon which such subdivision or combination becomes effective.
(3) In case the Company shall issue rights, options or
warrants to holders of its Common Stock (by reason of such
holder's ownership of such stock) entitling them to subscribe
for or purchase shares of Common Stock at a price per share
less than the Current Market Price per share of the Class A
Common Stock on the date fixed for the determination of
stockholders entitled to receive such rights, options or
warrants (other than any rights, options or warrants that by
their terms will also be issued to any Holder upon conversion
of a share of Convertible Preferred Stock into shares of Class
A Common Stock without any action required by the Corporation
or any other Person), the Conversion Rate in effect at the
opening of business on the day following the date fixed for
such determination shall be increased by dividing such
Conversion Rate by a fraction of which the numerator shall be
the number of shares of Common Stock outstanding at the close
of business on the date fixed for such determination plus the
number of shares of Common Stock which the aggregate of the
offering price of the total number of shares of Common Stock
so offered for subscription or purchase would purchase at such
Current Market Price and the denominator shall be the number
of shares of Common Stock outstanding at the close of business
on the date fixed for such determination plus the number of
shares of Common Stock so offered for such subscription or
purchase, such increase to become effective immediately after
the opening of business on the day following the date fixed
for such determination. If, after any such date fixed for
determination, any such rights, options or warrants are not in
fact issued, the Conversion Rate shall be immediately
readjusted, effective as of the date the Board of Directors
determines not to issue such rights, options or warrants, to
the Conversion Rate that would have been in effect if such
determination date had not been fixed. For the purposes of
this paragraph (3), the number of shares of Common Stock at
any time outstanding shall not include shares held in the
treasury of the Corporation but shall include shares issuable
in respect of scrip certificates issued in lieu of fractions
of shares of Common Stock. The Corporation will not issue any
26
<PAGE> 27
rights, options or warrants in respect of shares of Common
Stock held in the treasury of the Corporation.
(4) In case the Corporation shall, by dividend or
otherwise, distribute to holders of its Common Stock evidences
of its indebtedness, shares of any class of Capital Stock, or
other property (including securities, but excluding (i) any
rights, options or warrants referred to in paragraph (3) of
this Section, (ii) any dividend or distribution paid
exclusively in cash, (iii) any dividend or distribution
referred to in paragraph (1) of this paragraph (k)(vi) and
(iv) any merger or consolidation to which paragraph (k)(ix)
applies), the Conversion Rate shall be adjusted so the same
shall equal the rate determined by dividing the Conversion
Rate in effect immediately prior to the close of business on
the date fixed for the determination of stockholders entitled
to receive such distribution by a fraction of which the
numerator shall be the Current Market Price per share of the
Common Stock on the date fixed for such determination less the
then fair market value (as determined by the Board of
Directors, whose determination shall be conclusive) of the
portion of the assets, shares or evidences of indebtedness so
distributed applicable to one share of Common Stock entitled
to such distribution and the denominator shall be such Current
Market Price per share of the Class A Common Stock, such
adjustment to become effective immediately prior to the
opening of business on the day following the date fixed for
the determination of stockholders entitled to receive such
distribution. If, after any such date fixed for determination,
any such distribution is not in fact made, the Conversion Rate
shall be immediately readjusted, effective as of the date of
the Board of Directors determines not to make such
distribution, to the Conversion Rate that would have been in
effect if such determination date had not been fixed.
(5) In case the Corporation shall, by dividend or
otherwise, distribute to holders of its Common Stock cash
(excluding any cash that is distributed upon a merger or
consolidation to which paragraph (k)(ix) applies or as part of
a distribution referred to in paragraph (4) of this paragraph
(k)(vi)) in an aggregate amount that, combined together with
(I) the aggregate amount of any other cash distributions to
all holders of its Common Stock made exclusively in cash
within the 12 months preceding the date of payment of such
distribution and in respect of which no adjustment pursuant to
this paragraph (5) has been made and (II) the aggregate of any
cash plus the fair market value (as determined by the Board of
Directors, whose determination shall be conclusive) of
consideration payable in respect of any tender offer or other
stock repurchase program by the Corporation or any of its
Subsidiaries for all or any portion of the Common Stock
concluded within the 12 months preceding the date of payment
of such distribution and in respect of which no adjustment
pursuant to paragraph (6) of this paragraph (k)(vi) has been
made
27
<PAGE> 28
(the "combined cash and tender amount"), exceeds 12.5% of the
product of the Current Market Price per share of the Class A
Common Stock on the date for the determination of holders of
shares of Common Stock entitled to receive such distribution
times the number of shares of Common Stock outstanding on such
date (the "Aggregate Current Market Price"), then, and in each
such case, immediately after the close of business on such
date for determination, the Conversion Rate shall be adjusted
so that the same shall equal the rate determined by dividing
the Conversion Rate in effect immediately prior to the close
of business on the date fixed for determination of the
stockholders entitled to receive such distribution by a
fraction (i) the numerator of which shall be equal to the
Current Market Price per share of the Class A Common Stock on
the date fixed for such determination less an amount equal to
the quotient of (x) the excess of such combined cash and
tender amount over such Aggregate Current Market Price divided
by (y) the number of shares of Common Stock outstanding on
such date for determination and (ii) the denominator of which
shall be equal to the Current Market Price per share of the
Class A Common Stock on such date for determination.
(6) In case a tender offer made by the Corporation or
any Subsidiary for all or any portion of the Common Stock
shall expire and such tender offer (as amended upon the
expiration thereof) shall require the payment to stockholders
(based on the acceptance (up to any maximum specified in the
terms of the tender offer) of Common Stock (as defined below)
of an aggregate consideration having a fair market value (as
determined by the Board of Directors, whose determination
shall be conclusive) that combined together with (I) the
aggregate of the cash plus the fair market value (as
determined by the Board of Directors, whose determination
shall be conclusive) as of the expiration of such tender
offer, of consideration payable in respect of any other tender
offer or other stock repurchase program by the Corporation or
any Subsidiary for all or any portion of the Common Stock
expiring within the 12 months preceding the expiration of such
tender offer and in respect of which no adjustment pursuant to
this paragraph (6) has been made and (II) the aggregate amount
of any cash distributions to all holders of the Corporation's
Common Stock within 12 months preceding the expiration of such
tender offer and in respect of which no adjustment pursuant to
paragraph (5) of this paragraph (k)(vi) has been made (the
"combined tender and cash amount") exceeds 12.5 % of the
product of the Current Market Price per share of the Class A
Common Stock as of the last time (the "Expiration Time")
tenders could have been made pursuant to such tender offer (as
it may be amended) times the number of shares of Common Stock
outstanding (including any tendered shares) as of the
Expiration Time, then, and in each such case, immediately
prior to the opening of business on the day after the
28
<PAGE> 29
date of the Expiration Time, the Conversion Rate shall be
adjusted so that the same shall equal the rate determined by
dividing the Conversion Rate immediately prior to close of
business on the date of the Expiration Time by a fraction (i)
the numerator of which shall be equal to (A) the product of
(I) the Current Market Price per share of Common Stock on the
date of the Expiration Time multiplied by (II) the number of
shares of Common Stock outstanding (including any tendered
shares) on the Expiration Time less (B) the combined tender
and cash amount, and (ii) the denominator of which shall be
equal to the product of (A) the Current Market Price per share
of the Class A Common Stock as of the Expiration Time
multiplied by (B) the number of shares of Common Stock
outstanding (including any tendered shares) as of the
Expiration Time less the number of all shares validly tendered
and not withdrawn as of the Expiration Time (the shares deemed
so accepted up to any such maximum, being referred to as the
"Purchased Shares").
(7) The reclassification of Common Stock into
securities including other than Common Stock (other than any
reclassification upon a consolidation or merger to which
paragraph (k)(ix) applies) shall be deemed to involve (a) a
distribution of such securities other than Common Stock to all
holders of Common Stock (and the effective date of such
reclassification shall be deemed to be "the date fixed for the
determination of stockholders entitled to receive such
distribution" and "the date fixed for such determination"
within the meaning of paragraph (4) of this paragraph (k)(vi),
and (b) a subdivision or combination, as the case may be, of
the number of shares of Common Stock outstanding immediately
prior to such reclassification into the number of shares of
Common Stock outstanding immediately thereafter (and the
effective date of such reclassification shall be deemed to be
"the day upon which such subdivision becomes effective" or
"the day upon which such combination becomes effective", as
the case may be, and "the day upon which such subdivision or
combination becomes effective" within the meaning of paragraph
(3) of this paragraph (k)(vi).
(8) For the purpose of any computation under
paragraphs (2), (4), (5) or (6) of this paragraph (k)(vi), the
Current Market Price per share of Class A Common Stock on any
date shall be calculated by the Company and be based on a
period of Trading Days ending not later than the earlier of
the day in question and the day before the "'ex" date with
respect to the issuance or distribution requiring such
computation. For purposes of this paragraph, the term "'ex"
date", when used with respect to any issuance or distribution,
means the first date on which the Common Stock trades regular
way in the applicable securities market or on the applicable
securities exchange without the right to receive such issuance
or distribution.
29
<PAGE> 30
(9) No adjustment in the Conversion Rate shall be
required unless such adjustment (plus any adjustments not
previously made by reason of this paragraph (9)) would require
an increase or decrease of at least one percent (1%) in such
rate; provided, however, that any adjustments which by reason
of this paragraph (9) are not required to be made shall be
carried forward and taken into account in any subsequent
adjustment. All calculations under this paragraph (f) shall be
made to the nearest cent or to the nearest one-hundredth of a
share, as the case may be.
(10) The Corporation may make voluntary increases in
the Conversion Rate, for the remaining term of the Convertible
Preferred Stock or any shorter term, in addition to those
required by paragraphs (1), (2), (3), (4), (5) and (6) of this
paragraph (f)(vi), provided that each such increase is in
effect for at least 20 calendar days.
(vii) Whenever the Conversion Rate is adjusted as herein
provided:
(1) the Corporation shall compute the adjusted
Conversion Rate in accordance with paragraph (f)(vi) and shall
prepare a certificate signed by the Chief Financial Officer of
the Corporation setting forth the adjusted Conversion Rate and
showing in reasonable detail the facts upon which such
adjustment is based, and such certificate shall promptly be
filed with the Conversion Agent; and
(2) upon each such adjustment, a notice stating that
the Conversion Rate has been adjusted and setting forth the
adjusted Conversion Rate shall be required, and as soon as
practicable after it is required, such notice shall be
provided by the Company to all Holders.
The Conversion Agent shall not be under any duty or responsibility with
respect to any such certificate or the information and calculations contained
therein, except to exhibit the same to any Holder of Convertible Preferred Stock
desiring inspection thereof at its office during normal business hours.
(viii) In case:
(a) the Corporation shall declare a dividend (or any other
distribution) on its Class A Common Stock payable (i) otherwise
than exclusively in cash or (ii) exclusively in cash in an amount
that would require any adjustment pursuant to paragraph (f)(vi);
or
30
<PAGE> 31
(b) the Corporation shall authorize the granting to
holders of its Class A Common Stock (by reason of such holders'
ownership of such stock) of rights, options or warrants to
subscribe for or purchase any shares of capital stock of any
class or of any other rights; or
(c) of any reclassification of the Class A Common Stock of
the Corporation, or of any consolidation, merger or share
exchange to which the Corporation is a party and for which
approval of any stockholders of the Corporation is required, or
of the conveyance, sale, transfer or lease of all or
substantially all of the assets of the Corporation; or
(d) of the voluntary or involuntary dissolution,
liquidation or winding up of the Corporation;
then the Corporation shall cause to be filed at the office of the Conversion
Agent, and shall cause to be provided to all Holders, at least 20 days (or 10
days in any case specified in clause (a) or (b) above) prior to the applicable
record or effective date hereinafter specified, a notice stating (x) the date on
which a record is to be taken for the purpose of such dividend, distribution,
rights, options or warrants, or, if a record is not to be taken, the date as of
which the holders of Class A Common Stock of record to be entitled to such
dividend, distribution, rights, options or warrants are to be determined or (y)
the date on which such reclassification, consolidation, merger, conveyance,
transfer, sale, lease, dissolution, liquidation or winding up is expected to
become effective, and the date as of which it is expected that holders of Common
Stock of record shall be entitled to exchange their shares of Common Stock for
securities, cash or other property deliverable upon such reclassification,
consolidation, merger, conveyance, transfer, sale, lease, dissolution,
liquidation or winding up. Neither the failure to give such notice referred to
in the following paragraph nor any defect therein shall affect the legality or
validity of the proceedings described in clauses (a) through (d) of this
paragraph (f)(vi).
The Company shall cause to be filed at the office of the Conversion
Agent and shall cause to be provided to all Holders, notice of any tender offer
by the Corporation or any Subsidiary for all or any portion of the Class A
Common Stock at or about the time that such notice of tender offer is provided
to the public generally.
(ix) (a) In the event that the Corporation is a party to any transaction
including, without limitation, a merger (other than a merger that does not
result in a reclassification, conversion, exchange or cancellation of Class A
Common Stock), consolidation, sale of all or substantially all of the assets of
the Corporation, recapitalization or reclassification of Class A Common Stock
(other than a change in par value, or from par value to no par value, or from no
par value to par value or as a result of a subdivision or combination of Class A
Common Stock) or any compulsory share exchange (each of the foregoing being
referred to as a "Transaction"), in each case, as a result of which shares of
Class A Common Stock shall be converted into the right to receive, or shall be
exchanged for, (i) in the case of any Transaction other than a Transaction
31
<PAGE> 32
involving a Common Stock Change in Control (and subject to funds being legally
available for such purpose under applicable law at the time of such conversion),
securities, cash or other property, each share of Convertible Preferred Stock
shall thereafter be convertible solely into the kind and amount of securities,
cash and other property receivable upon the consummation of such Transaction by
a holder of that number of shares of Class A Common Stock into which a share of
Convertible Preferred Stock was convertible immediately prior to such
Transaction (but after giving effect to any adjustment discussed in paragraphs
(b) and (c) relating to Change in Control if such Transaction constitutes a
Change in Control), or (ii) in the case of a Transaction involving a Common
Stock Change in Control, common stock, each share of Convertible Preferred Stock
shall thereafter be convertible solely (in the manner described herein) into
common stock of the kind received by holders of Class A Common Stock (but after
giving effect to any adjustment discussed in paragraphs (b) and (c) relating to
Change in Control if such Transaction constitutes a Change in Control). The
Holders of Convertible Preferred Stock will have no voting rights with respect
to any Transaction described in this section. Shares of Convertible Preferred
Stock issued in a Transaction by the successor transferee or resulting Person or
an Acquiring Entity as provided in paragraph (f)(iii) will be subject to this
paragraph k(ix)(a) and will be convertible solely into the consideration
provided for herein.
(b)If any Change in Control occurs, then the Conversion Rate in
effect will be adjusted immediately after such Change in Control as described in
paragraph (c) below.
(c)For purposes of calculating any adjustment to be made in the
event of a Change in Control, immediately after such Change in Control:
(i) in the case of a Non-Stock Change in Control, the
Conversion Rate will thereupon become the higher of (A) the
Conversion Rate in effect immediately prior to such Non-Stock
Change in Control, but after giving effect to any other prior
adjustments, and (B) a fraction, the numerator of which is the
then-current deemed redemption price per share, which shall be
equal to the product of the liquidation preference per share of
$50.00 and 105.20% in year one, 104.55% in year 2, 103.9% in year
3, 103.25% in year 4, 102.6% in year 5, 101.95% in year 6, 101.3%
in year 7, 100.65% in year 8 and 100.00 in year 9 and thereafter,
respectively and the denominator of which is the greater of the
Applicable Price or the then applicable Reference Market Price;
and
(ii) in the case of a Common Stock Change in Control, the
Conversion Rate in effect immediately prior to such Common Stock
Change in Control, but after giving effect to any other prior
adjustments, will thereupon be adjusted by multiplying such
Conversion Rate by a fraction, of which the numerator will be the
Applicable Price and the denominator will be the Purchaser Stock
Price (as defined); provided, however, that in the event of a
Common Stock Change in Control in which (A) 100% of the value of
the consideration received by a holder of Class A Common Stock is
common stock of the successor, acquiror or other
32
<PAGE> 33
third party (and cash, if any, with respect to any fractional
interests) and (B) all the Class A Common Stock (other than
shares of Class A Common Stock for which cash was paid pursuant
to rights of dissent and appraisal) will have been exchanged for,
converted into, or acquired for, common stock (and cash with
respect to fractional interests) of the successor, acquiror or
other third party, the Conversion Rate in effect immediately
prior to such Common Stock Change in Control will thereupon be
adjusted by multiplying such Conversion Rate by the number of
shares of common stock of the successor, acquiror, or other third
party received by a holder of one share of Class A Common Stock
as a result of such Common Stock Change in Control.
(1) Restrictions on Transfer.
(i) Each share of Convertible Preferred Stock shall
contain a legend substantially to the following effect until the date
that is two years after the later of the Issue Date or the last date on
which the Corporation or any Affiliate of the Corporation was the owner
thereof, unless the Corporation determines otherwise:
THESE SECURITIES HAVE NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933 (THE "SECURITIES ACT") AND MAY NOT BE OFFERED, SOLD, PLEDGED OR
OTHERWISE TRANSFERRED EXCEPT (1) TO A PERSON WHOM THE SELLER REASONABLY
BELIEVES IS A QUALIFIED INSTITUTIONAL BUYER WITHIN THE MEANING OF RULE
144A UNDER THE SECURITIES ACT PURCHASING FOR ITS OWN ACCOUNT OR FOR THE
ACCOUNT OF A QUALIFIED INSTITUTIONAL BUYER IN A TRANSACTION MEETING THE
REQUIREMENTS OF RULE 144A, (2) IN AN OFFSHORE TRANSACTION COMPLYING WITH
RULE 903 OR RULE 904 OF REGULATION S UNDER THE SECURITIES ACT, (3)
PURSUANT TO AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT
PROVIDED BY RULE 144 THEREUNDER (IF AVAILABLE), OR (4) PURSUANT TO AN
EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT, AND IN EACH
CASE, IN ACCORDANCE WITH ALL APPLICABLE SECURITIES LAWS OF THE STATES OF
THE UNITED STATES.
(m) Book Entry Delivery and Form.
The Convertible Preferred Stock sold will be issued in the form of a
Global Share Certificate. The Global Share Certificate will be deposited with,
or on behalf of, the Depositary and registered in the name of the Depositary or
its nominee. Except as set forth below, the Global Share Certificate may be
transferred, in whole and not in part, only to the Depositary or other nominee
of the Depositary. Holders may hold their beneficial interests in the Global
Share Certificate directly through the Depositary if they have an account with
the Depositary or indirectly through organizations which have accounts with the
Depositary.
33
<PAGE> 34
The Convertible Preferred Stock represented by the Global Share
Certificate is exchangeable for certificated Convertible Preferred Stock in
definitive form of like tenor as such Convertible Preferred Stock if (i) the
Depositary notifies the Company that it is unwilling or unable to continue as
Depositary for the Global Share Certificate and a successor is not promptly
appointed or if at any time the Depositary ceases to be a clearing agency
registered under the Exchange Act or (ii) the Company in its discretion at any
time determines not to have all of the Convertible Preferred Stock represented
by the Global Share Certificate. Any Convertible Preferred Stock that is
exchangeable pursuant to the preceding sentence is exchangeable for certificated
Convertible Preferred Stock issuable in authorized denominations and registered
in such names as the Depositary shall direct. Subject to the foregoing, the
Global Share Certificate is not exchangeable, except for a Global Share
Certificate of the same aggregate denomination to be registered in the name of
the Depositary or its nominee.
(n) Amendments Without Consent of Holders.
Without the Consent of any Holders, the Company, when authorized by
Board Resolution may amend this Certificate of Designation to cure any
ambiguity, correct or supplement any provision herein which may be inconsistent
with any other provision herein, make any other provisions with respect to
matters or questions arising under this Certificate of Designation that are not
inconsistent with the provisions of this Certificate of Designation, provided
that such action pursuant to this paragraph (n) shall not adversely affect the
legal rights of the Holders.
34
<PAGE> 35
IN WITNESS WHEREOF, said NEXTLINK Communications, Inc. has caused this
Certificate to be signed by R. Bruce Easter, Jr., its Vice President, this 30th
day of March, 1998.
NEXTLINK COMMUNICATIONS, INC.
By /s/ R. BRUCE EASTER, JR.
-----------------------------------------
Name: R. Bruce Easter, Jr.
Title: Vice President
35
<PAGE> 1
EXHIBIT 4.9
NEXTLINK COMMUNICATIONS, INC.
TO
UNITED STATES TRUST COMPANY OF NEW YORK
Trustee
Indenture
Dated as of April 1, 1998
$636,974,000
9.45% SENIOR DISCOUNT NOTES
DUE 2008
<PAGE> 2
NEXTLINK COMMUNICATIONS, INC.
Certain Sections of this Indenture relating to
Sections 310 through 318 of the
Trust Indenture Act of 1939:
<TABLE>
<CAPTION>
Trust Indenture Indenture
Act Section Section
- -------------------------------
<S> <C>
Section 310(a)(1) ..................................................... 609
(a)(2) ........................................................ 609
(a)(3) ........................................................ Not Applicable
(a)(4) ........................................................ Not Applicable
(b) ........................................................... 608
610
Section 311(a) ........................................................ 613
(b) ........................................................... 613
Section 312(a) ........................................................ 701
(b) ........................................................... 702
(c) ........................................................... 702
Section 313(a) ........................................................ 703
(b) ........................................................... 703
(c) ........................................................... 703
(d) ........................................................... 703
Section 314(a) ........................................................ 704
1018
(b) ........................................................... Not Applicable
(c)(1) ........................................................ 102
(c)(2) ........................................................ 102
(c)(3) ........................................................ Not Applicable
(d) ........................................................... Not Applicable
(e) ........................................................... 102
Section 315(a) ........................................................ 601
(b) ........................................................... 602
(c) ........................................................... 601
(d) ........................................................... 601
(e) ........................................................... 514
Section 316(a)(1)(A) .................................................. 502
512
</TABLE>
<PAGE> 3
<TABLE>
<S> <C>
(a)(1)(B) ..................................................... 513
(a)(2) ........................................................ Not Applicable
(b) ........................................................... 508
(c) ........................................................... 104
Section 317(a)(1) ..................................................... 503
(a)(2) ........................................................ 504
(b) ........................................................... 1003
Section 318(a) ........................................................ 107
</TABLE>
<PAGE> 4
TABLE OF CONTENTS
<TABLE>
<CAPTION>
Page
----
<S> <C>
RECITALS OF THE COMPANY ................................................. 1
ARTICLE ONE Definitions and Other Provisions of General Application
SECTION 101. Definitions ................................................ 1
Act ........................................................ 2
Accreted Value ............................................. 2
Acquired Debt .............................................. 2
Additional Interest ........................................ 2
Affiliate .................................................. 2
Agent Member ............................................... 3
Applicable Procedures ...................................... 3
Asset Disposition .......................................... 3
Attributable Value ......................................... 3
Bank Credit Agreement ...................................... 4
Board of Directors ......................................... 4
Board Resolution ........................................... 4
Business Day ............................................... 4
Capital Lease Obligation ................................... 4
Capital Stock .............................................. 5
Cedel ...................................................... 5
Change of Control .......................................... 5
Commission ................................................. 5
Common Equity .............................................. 5
Company .................................................... 5
Company Request ............................................ 5
Company Order .............................................. 5
Consolidated Capital Ratio ................................. 5
Consolidated Cash Flow Available for Fixed Charges ......... 6
Consolidated Income Tax Expense ............................ 6
Consolidated Interest Expense .............................. 6
Consolidated Net Income .................................... 7
Consolidated Net Worth ..................................... 7
Consolidated Tangible Assets ............................... 8
Corporate Trust Office ..................................... 8
corporation ................................................ 8
Debt ....................................................... 8
Default .................................................... 9
Defaulted Interest ......................................... 9
Depositary ................................................. 9
</TABLE>
<PAGE> 5
<TABLE>
<S> <C>
Disqualified Stock ........................................ 9
DTC ....................................................... 10
Eagle River ............................................... 10
Eligible Institution ...................................... 10
Event of Default .......................................... 10
Exchange Act .............................................. 10
Expiration Date ........................................... 11
Global Security ........................................... 11
Government Securities ..................................... 11
Guarantee ................................................. 11
Holder .................................................... 12
Incur ..................................................... 12
Indenture ................................................. 12
Interest Payment Date ..................................... 12
Interest Rate or Currency Protection Agreement ............ 12
Investment ................................................ 13
Issue Date ................................................ 13
Joint Venture ............................................. 13
Lien ...................................................... 13
Marketable Securities ..................................... 13
Maturity .................................................. 14
Net Available Proceeds .................................... 14
Offer to Purchase ......................................... 15
Officers' Certificate ..................................... 18
Opinion of Counsel ........................................ 18
Outstanding ............................................... 18
Paying Agent .............................................. 19
Permitted Interest Rate or Currency Protection Agreement .. 19
Permitted Investment ...................................... 19
Permitted Liens ........................................... 20
Person .................................................... 21
Predecessor Security ...................................... 21
Preferred Dividends ....................................... 21
Preferred Stock ........................................... 21
Purchase Agreement ........................................ 21
Purchase Date ............................................. 21
Purchase Money Debt ....................................... 21
readily marketable cash equivalents ....................... 22
Receivables ............................................... 22
Receivables Sale .......................................... 22
Redemption Date ........................................... 22
Redemption Price .......................................... 23
Regular Record Date ....................................... 23
Regulation S .............................................. 23
Regulation S Certificate .................................. 23
</TABLE>
<PAGE> 6
<TABLE>
<S> <C>
Regulation S Global Security .............................. 23
Regulation S Legend ....................................... 23
Regulation S Securities ................................... 23
Related Person ............................................ 23
Resale Registration Statement ............................. 23
Responsible Officer ....................................... 23
Restricted Global Security ................................ 24
Restricted Period ......................................... 24
Restricted Securities ..................................... 24
Restricted Securities Certificate ......................... 24
Restricted Securities Legend .............................. 24
Restricted Subsidiary ..................................... 24
Rule 144A ................................................. 24
Rule 144A Securities ...................................... 24
Sale and Leaseback Transaction ............................ 24
SEC Reports ............................................... 25
Securities ................................................ 25
Securities Act ............................................ 25
Securities Act Legend ..................................... 25
Security Register ......................................... 25
Security Registrar ........................................ 25
Significant Subsidiary .................................... 25
Special Record Date ....................................... 25
Stated Maturity ........................................... 25
Step-Down Date ............................................ 25
Step-Up ................................................... 25
Subordinated Debt ......................................... 25
Subsidiary ................................................ 27
Successor Security ........................................ 27
Telecommunications Assets ................................. 27
Telecommunications Business ............................... 27
Trustee ................................................... 27
Trust Indenture Act ....................................... 28
Unrestricted Securities Certificate ....................... 28
Unrestricted Subsidiary ................................... 28
Vendor Financing Facility ................................. 29
Vice President ............................................ 29
Voting Stock .............................................. 29
</TABLE>
Note: This table of contents shall not, for any purpose, be deemed to be a
part of the Indenture.
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<PAGE> 7
<TABLE>
<S> <C>
Wholly-Owned Restricted Subsidiary ........................ 29
SECTION 102. Compliance Certificates and Opinions ...................... 29
SECTION 103. Form of Documents Delivered to Trustee .................... 30
SECTION 104. Acts of Holders; Record Dates ............................. 31
SECTION 105. Notices, Etc., to Trustee and Company ..................... 34
SECTION 106. Notice to Holders; Waiver ................................. 34
SECTION 107. Application of Trust Indenture Act ........................ 35
SECTION 108. Effect of Headings and Table of Contents .................. 35
SECTION 109. Successors and Assigns .................................... 35
SECTION 110. Separability Clause ....................................... 35
SECTION 111. Benefits of Indenture ..................................... 35
SECTION 112. Governing Law ............................................. 36
SECTION 113. Legal Holidays ............................................ 36
ARTICLE TWO Security Forms
SECTION 201. Forms Generally ........................................... 36
SECTION 202. Form of Face of Security .................................. 37
SECTION 203. Form of Reverse of Security ............................... 42
SECTION 204. Additional Provisions Required in Global Security ......... 47
SECTION 205. Form of Trustee's Certificate of Authentication ........... 47
ARTICLE THREE The Securities
SECTION 301. Title and Terms ........................................... 48
SECTION 302. Denominations ............................................. 49
SECTION 303. Execution, Authentication, Delivery and Dating ............ 50
SECTION 304 Temporary Securities ...................................... 51
SECTION 305. Registration, Registration of Transfer and Exchange ....... 51
SECTION 306. Mutilated, Destroyed, Lost and Stolen Securities .......... 57
SECTION 307. Payment of Interest; Interest Rights Preserved ............ 58
SECTION 308. Persons Deemed Owners ..................................... 59
SECTION 309. Cancellation .............................................. 60
SECTION 310. Computation of Interest ................................... 60
SECTION 311. CUSIP and ISIN Numbers .................................... 60
ARTICLE FOUR Satisfaction and Discharge
</TABLE>
<PAGE> 8
<TABLE>
<S> <C>
SECTION 401. Satisfaction and Discharge of Indenture ................... 61
SECTION 402. Application of Trust Money ................................ 62
ARTICLE FIVE Remedies
SECTION 501. Events of Default ......................................... 62
SECTION 502. Acceleration of Maturity; Rescission and Annulment ........ 65
SECTION 503. Collection of Indebtedness and Suits for Enforcement
by Trustee ................................................ 66
SECTION 504. Trustee May File Proofs of Claim .......................... 67
SECTION 505. Trustee May Enforce Claims Without Possession of
Securities ................................................ 68
SECTION 506. Application of Money Collected ............................ 68
SECTION 507. Limitation on Suits ....................................... 69
SECTION 508. Unconditional Right of Holders to Receive
Principal, Premium and Interest ........................... 69
SECTION 509. Restoration of Rights and Remedies ........................ 70
SECTION 510. Rights and Remedies Cumulative ............................ 70
SECTION 511. Delay or Omission Not Waiver .............................. 70
SECTION 512. Control by Holders ........................................ 71
SECTION 513. Waiver of Past Defaults ................................... 71
SECTION 514. Undertaking for Costs ..................................... 72
SECTION 515. Waiver of Stay or Extension Laws .......................... 72
ARTICLE SIX The Trustee
SECTION 601. Certain Duties and Responsibilities ....................... 72
SECTION 602. Notice of Defaults ........................................ 73
SECTION 603. Certain Rights of Trustee ................................. 73
SECTION 604. Not Responsible for Recitals or Issuance of
Securities ................................................ 74
SECTION 605. May Hold Securities ....................................... 75
SECTION 606. Money Held in Trust ....................................... 75
SECTION 607. Compensation and Reimbursement ............................ 75
SECTION 608. Disqualification; Conflicting Interests ................... 76
SECTION 609. Corporate Trustee Required; Eligibility ................... 76
</TABLE>
Note: This table of contents shall not, for any purpose, be deemed to be a
part of the Indenture.
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<PAGE> 9
<TABLE>
<S> <C>
SECTION 610. Resignation and Removal; Appointment of Successor ........... 77
SECTION 611. Acceptance of Appointment by Successor ...................... 78
SECTION 612. Merger, Conversion, Consolidation or Succession to Business.. 79
SECTION 613. Preferential Collection of Claims Against the Company ....... 79
SECTION 614. Appointment of Authenticating Agent ......................... 79
ARTICLE SEVEN Holders' Lists and Reports by Trustee and the Company
SECTION 701. Company to Furnish Trustee Names and Addresses of Holders ... 81
SECTION 702. Preservation of Information; Communications to Holders ...... 82
SECTION 703. Reports by Trustee .......................................... 82
SECTION 704. Reports by Company .......................................... 82
SECTION 705. Officers' Certificate with Respect to Change in
Interest Rates .............................................. 83
ARTICLE EIGHT Merger, Consolidation, Etc.
SECTION 801. Mergers, Consolidations and Certain Sales of Assets ......... 83
SECTION 802. Successor Substituted ....................................... 85
ARTICLE NINE Supplemental Indentures
SECTION 901. Supplemental Indentures Without Consent of Holders .......... 85
SECTION 902. Supplemental Indentures with Consent of Holders ............. 86
SECTION 903. Execution of Supplemental Indentures ........................ 87
SECTION 904. Effect of Supplemental Indentures ........................... 87
SECTION 905. Conformity with Trust Indenture Act ......................... 88
SECTION 906. Reference in Securities to Supplemental Indentures .......... 88
ARTICLE TEN Covenants
SECTION 1001. Payment of Principal, Premium and Interest ................. 88
SECTION 1002. Maintenance of Office or Agency ............................ 88
SECTION 1003. Money for Security Payments to be Held in Trust ............ 89
</TABLE>
<PAGE> 10
<TABLE>
<S> <C>
SECTION 1004. Existence .................................................. 91
SECTION 1005. Maintenance of Properties and Insurance .................... 91
SECTION 1006. Payment of Taxes and Other Claims .......................... 92
SECTION 1007. Limitation on Consolidated Debt ............................ 92
SECTION 1008. Limitation on Debt and Preferred Stock of
Restricted Subsidiaries .................................... 96
SECTION 1009. Limitation on Restricted Payments .......................... 98
SECTION 1010. Limitation on Dividend and Other Payment
Restrictions Affecting Restricted Subsidiaries ............. 101
SECTION 1011. Limitation on Liens ........................................ 102
SECTION 1012. Limitation on Sale and Leaseback Transactions .............. 103
SECTION 1013. Limitation on Asset Dispositions ........................... 104
SECTION 1014. Limitation on Issuances and Sales of Capital
Stock of Restricted Subsidiaries ........................... 106
SECTION 1015. Transactions with Affiliates and Related Persons ........... 107
SECTION 1016. Change of Control .......................................... 107
SECTION 1017. Provision of Financial Information ......................... 109
SECTION 1018. Statement by Officers as to Default ........................ 109
SECTION 1019. Waiver of Certain Covenants ................................ 109
ARTICLE ELEVEN Redemption of Securities
SECTION 1101. Right of Redemption ........................................ 110
SECTION 1102. Applicability of Article ................................... 111
SECTION 1103. Election to Redeem; Notice to Trustee ...................... 111
SECTION 1104. Securities to Be Redeemed Pro Rata ......................... 111
SECTION 1105. Notice of Redemption ....................................... 112
SECTION 1106. Deposit of Redemption Price ................................ 113
SECTION 1107. Securities Payable on Redemption Date ...................... 113
SECTION 1108. Securities Redeemed in Part ................................ 113
ARTICLE TWELVE Defeasance and Covenant Defeasance
SECTION 1201. Company's Option to Effect Defeasance or
Covenant Defeasance ........................................ 114
</TABLE>
Note: This table of contents shall not, for any purpose, be deemed to be a
part of the Indenture.
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<PAGE> 11
<TABLE>
<S> <C>
SECTION 1202. Defeasance and Discharge ................................... 114
SECTION 1203. Covenant Defeasance ........................................ 115
SECTION 1204. Conditions to Defeasance or Covenant Defeasance ............ 115
SECTION 1205. Deposited Money and U.S. Government Obligations
to Be Held in Trust;Other Miscellaneous Provisions ......... 118
SECTION 1206. Reinstatement .............................................. 118
SECTION 1207. Repayment to Company ....................................... 119
</TABLE>
ANNEX A -- Form of Regulation S Certificate
ANNEX B -- Form of Restricted Securities Certificate
ANNEX C -- Form of Unrestricted Securities Certificate
<PAGE> 12
INDENTURE, dated as of April 1, 1998, between NEXTLINK
Communications, Inc., a corporation organized under the laws of the State of
Washington (the "Company"), having its principal office at 155 108th Avenue
N.E., 8th Floor, Bellevue, Washington 98004, and United States Trust Company of
New York, duly organized and existing under the laws of the State of New York,
as Trustee (herein called the "Trustee").
RECITALS OF THE COMPANY
The Company has duly authorized the creation of an issue of
$636,974,000 aggregate principal amount of its 9.45% Senior Discount Notes Due
2008 (the "Securities") of substantially the tenor and amount hereinafter set
forth, and to provide therefor the Company has duly authorized the execution and
delivery of this Indenture. The Securities may consist of Original Securities
and/or Exchange Securities, each as defined herein. The Original Securities and
the Exchange Securities shall rank pari passu in right of payment with all
existing and future senior obligations of the Company.
All things necessary to make the Securities, when executed by the
Company and authenticated and delivered hereunder and duly issued by the
Company, the valid obligations of the Company, and to make this Indenture a
valid agreement of the Company, in accordance with their and its terms, have
been done.
NOW, THEREFORE, THIS INDENTURE WITNESSETH:
For and in consideration of the premises and the purchase of the
Securities by the Holders thereof, it is mutually covenanted and agreed, for the
equal and proportionate benefit of all Holders of the Securities, as follows:
ARTICLE ONE
Definitions and Other Provisions
of General Application
SECTION 101. Definitions.
For all purposes of this Indenture, except as otherwise expressly
provided or unless the context otherwise requires:
(1) the terms defined in this Article have the meanings assigned
to them in this Article and include the plural as well as the singular;
<PAGE> 13
(2) all other terms used herein which are defined in the Trust
Indenture Act, either directly or by reference therein, have the
meanings assigned to them therein;
(3) all accounting terms not otherwise defined herein have the
meanings assigned to them in accordance with generally accepted
accounting principles (whether or not such is indicated herein) and,
except as otherwise herein expressly provided, the term "generally
accepted accounting principles" with respect to any computation required
or permitted hereunder shall mean such accounting principles as are
generally accepted as consistently applied by the Company at the date of
such computation; and
(4) the words "herein", "hereof" and "hereunder" and other words
of similar import refer to this Indenture as a whole and not to any
particular Article, Section or other subdivision.
Certain terms, used principally in Article Six, are defined in
that Article.
"Act", when used with respect to any Holder, has the meaning
specified in Section 104.
"Accreted Value" means, as of any date prior to April 15, 2003,
an amount per $1000 principal amount at maturity of Securities that is equal to
the sum of (a) the offering price ($627.97 per $1000 principal amount at
maturity of Securities) of such Securities and (b) the portion of the excess of
the principal amount of such Securities over such offering price which shall
have been amortized on a daily basis and compounded semi-annually on each April
15 and October 15 at the rate of 9.45% per annum from the date of original issue
of the Securities through the date of determination computed on the basis of a
360-day year of twelve 30-day months, and as of any date on or after April 15,
2003,the principal amount of each Security.
"Acquired Debt" means, with respect to any specified Person, (i)
Debt of any other Person existing at the time such Person merges with or into or
consolidates with or becomes a Restricted Subsidiary of such specified Person
and (ii) Debt secured by a Lien encumbering any asset acquired by such specified
Person, which Debt was not Incurred in anticipation of, and was outstanding
prior to, such merger, consolidation or acquisition.
"Additional Interest" has the meaning set forth in the form of
Security contained in Section 202. Unless the context otherwise requires,
references herein to "interest" on the Securities shall include Additional
Interest.
<PAGE> 14
"Affiliate" of any specified Person means any other Person
directly or indirectly controlling or controlled by or under direct or indirect
common control with such specified Person. For the purposes of this definition,
"control" when used with respect to any specified Person means the power to
direct the management and policies of such Person, directly or indirectly,
whether through the ownership of voting securities, by contract or otherwise;
and the terms "controlling" and "controlled" have meanings correlative to the
foregoing.
"Agent Member" means any member of, or participant in, the
Depository.
"Applicable Procedures" means, with respect to any transfer or
transaction involving a Global Security or beneficial interest therein, the
rules and procedures of the Depositary for such Security, Euroclear and Cedel,
in each case to the extent applicable to such transaction and as in effect from
time to time.
"Asset Disposition" by the Company or any Restricted Subsidiary
means any transfer, conveyance, sale, lease or other disposition (other than a
creation of a Lien) by such Person, (including a consolidation or merger or
other sale of any such Restricted Subsidiary with, into or to another Person in
a transaction in which such Restricted Subsidiary ceases to be a Restricted
Subsidiary of the Company, but excluding a disposition by a Restricted
Subsidiary of the Company to the Company or a Restricted Subsidiary of the
Company or by the Company to a Restricted Subsidiary of the Company) of (i)
shares of Capital Stock or other ownership interests of a Restricted Subsidiary
of the Company, other than as permitted by the provisions of Section 1008 or
pursuant to a transaction in compliance with Section 801, (ii) substantially all
of the assets of the Company or any of its Restricted Subsidiaries representing
a division or line of business (other than as part of a Permitted Investment) or
(iii) other assets or rights of the Company or any of its Restricted
Subsidiaries other than (A) in the ordinary course of business or (B) that
constitutes a Restricted Payment which is permitted by the provisions of Section
1009; provided that a transaction described in clauses (i), (ii) and (iii) shall
constitute an Asset Disposition only if the aggregate consideration for such
transfer, conveyance, sale, lease or other disposition is equal to $5 million or
more in any 12month period.
"Attributable Value" means, as to any particular lease under
which any Person is at the time liable other than a Capital Lease Obligation,
and at any date as of which the amount thereof is to be determined, the total
net amount of rent required to be paid by such Person under such lease during
the initial term thereof as determined in accordance with generally accepted
accounting principles, discounted from the last date of such initial term to the
date of
-3-
<PAGE> 15
determination at a rate per annum equal to the discount rate which would be
applicable to a Capital Lease Obligation with like term in accordance with
generally accepted accounting principles. The net amount of rent required to be
paid under any such lease for any such period shall be the aggregate amount of
rent payable by the lessee with respect to such period after excluding amounts
required to be paid on account of insurance, taxes, assessments, utility,
operating and labor costs and similar charges. In the case of any lease which is
terminable by the lessee upon the payment of penalty, such net amount shall also
include the lesser of the amount of such penalty (in which case no rent shall be
considered as required to be paid under such lease subsequent to the first date
upon which it may be so terminated) or the rent which would otherwise be
required to be paid if such lease is not so terminated. "Attributable Value"
means, as to a Capital Lease Obligation, the principal amount thereof.
"Bank Credit Agreement" means any one or more credit agreements
(which may include or consist of revolving credits) between the Company or any
Restricted Subsidiary of the Company and one or more banks or other financial
institutions providing financing for the business of the Company and its
Restricted Subsidiaries.
"Board of Directors" means either the board of directors of the
Company or any duly authorized committee of that Board.
"Board Resolution" means a copy of a resolution certified by the
Secretary or an Assistant Secretary of the Company to have been duly adopted by
the Board of Directors and to be in full force and effect on the date of such
certification, and delivered to the Trustee.
"Business Day" means each Monday, Tuesday, Wednesday, Thursday
and Friday which is not a day on which banking institutions in The Borough of
Manhattan, The City of New York, New York are authorized or obligated by law or
executive order to close.
"Capital Lease Obligation" of any Person means the obligation to
pay rent or other payment amounts under a lease of (or other Debt arrangements
conveying the right to use) real or personal property of such Person which is
required to be classified and accounted for as a capital lease or a liability on
the face of a balance sheet of such Person in accordance with generally accepted
accounting principles (a "Capital Lease"). The stated maturity of such
obligation shall be the date of the last payment of rent or any other amount due
under such lease prior to the first date upon which such lease may be terminated
by the lessee without payment of a penalty. The principal amount of such
obligation shall be the capitalized amount thereof that would appear on the face
of a balance sheet of such Person in accordance with generally accepted
accounting principles.
<PAGE> 16
"Capital Stock" of any Person means any and all shares,
interests, participations or other equivalents (however designated) of corporate
stock or other equity participations, including partnership interests, whether
general or limited, of such Person.
"Cedel" means Cedel Bank, S.A. (or any successor securities
clearing agency).
"Change of Control" has the meaning specified in Section 1016.
"Commission" means the Securities and Exchange Commission, as
from time to time constituted, created under the Exchange Act, or, if at any
time after the execution of this instrument such Commission is not existing and
performing the duties now assigned to it under the Trust Indenture Act, then the
body performing such duties at such time.
"Common Equity" of any Person means Capital Stock of such Person
that is not Disqualified Stock, and a "sale of Common Equity" includes any sale
of Common Equity effected by private sale or public offering.
"Company" means the Person named as the "Company" in the first
paragraph of this instrument until a successor Person shall have become such
pursuant to the applicable provisions of this Indenture and thereafter "Company"
shall mean such successor Person.
"Company Request" or "Company Order" means a written request or
order signed in the name of the Company by (i) the Chief Executive Officer, the
President, an Executive Vice President or a Vice President of the Company, and
(ii) the Treasurer, Assistant Treasurer or Secretary of the Company, and
delivered to the Trustee.
"Consolidated Capital Ratio" of any Person as of any date means
the ratio of (i) the aggregate consolidated principal amount of Debt (or in the
case of Debt issued at a discount the accreted amount thereof) of such Person
then outstanding (which amount of Debt shall be reduced by any amount of cash or
cash equivalent collateral securing on a perfected basis and dedicated for
disbursement exclusively to the payment of principal of and interest on such
Debt) to (ii) the aggregate consolidated Capital Stock (other than Disqualified
Stock) and paid in capital (other than in respect of Disqualified Stock) of such
Person as of such date.
"Consolidated Cash Flow Available for Fixed Charges" for any
period means the Consolidated Net Income of the Company and its Restricted
Subsidiaries for such period increased by the sum of (i) Consolidated Interest
-5-
<PAGE> 17
Expense of the Company and its Restricted Subsidiaries for such period, plus
(ii) Consolidated Income Tax Expense of the Company and its Restricted
Subsidiaries for such period, plus (iii) the consolidated depreciation and
amortization expense included in the income statement of the Company and its
Restricted Subsidiaries for such period, plus (iv) any noncash expense for such
period (excluding any noncash charge to the extent that it requires an accrual
of or a reserve for cash disbursements in any future period), plus (v) any
charge related to any premium or penalty paid in connection with redeeming or
retiring any Debt prior to its stated maturity; provided, however, that there
shall be excluded therefrom the Consolidated Cash Flow Available for Fixed
Charges (if positive) of any Restricted Subsidiary of the Company (calculated
separately for such Restricted Subsidiary in the same manner as provided above
for the Company) that is subject to a restriction which prevents the payment of
dividends or the making of distributions to the Company or another Restricted
Subsidiary of the Company to the extent of such restriction.
"Consolidated Income Tax Expense" for any period means the
consolidated provision for income taxes of the Company and its Restricted
Subsidiaries for such period calculated on a consolidated basis in accordance
with generally accepted accounting principles.
"Consolidated Interest Expense" means for any period the
consolidated interest expense included in a consolidated income statement
(excluding interest income) of the Company and its Restricted Subsidiaries for
such period calculated on a consolidated basis in accordance with generally
accepted accounting principles, including without limitation or duplication (or,
to the extent not so included, with the addition of), (i) the amortization of
Debt discounts; (ii) any payments or fees with respect to letters of credit,
bankers' acceptances or similar facilities; (iii) fees with respect to interest
rate swap or similar agreements or foreign currency hedge, exchange or similar
agreements; (iv) Preferred Dividends of the Company and its Restricted
Subsidiaries (other than dividends paid in shares of Preferred Stock that is not
Disqualified Stock) declared and paid or payable; (v) accrued Disqualified Stock
dividends of the Company and its Restricted Subsidiaries, whether or not
declared or paid; (vi) interest on Debt guaranteed by the Company and its
Restricted Subsidiaries; and (vii) the portion of any Capital Lease Obligation
paid or accrued during such period that is allocable to interest expense.
"Consolidated Net Income" for any period means the consolidated
net income (or loss) of the Company and its Restricted Subsidiaries for such
period determined on a consolidated basis in accordance with generally accepted
accounting principles; provided that there shall be excluded therefrom (a) the
net income (or loss) of any Person acquired by the Company or a Restricted
Subsidiary of the Company in a pooling-of-interests transaction for any period
prior to the date of such transaction, (b) the net income (or loss) of
<PAGE> 18
any Person that is not a Restricted Subsidiary of the Company except to the
extent of the amount of dividends or other distributions actually paid to the
Company or a Restricted Subsidiary of the Company by such Person during such
period, (c) gains or losses on Asset Dispositions by the Company or its
Restricted Subsidiaries, (d) all extraordinary gains and extraordinary losses,
(e) the cumulative effect of changes in accounting principles, (f) non-cash
gains or losses resulting from fluctuations in currency exchange rates, (g) any
non-cash gain or loss realized on the termination of any employee pension
benefit plan and (h) the tax effect of any of the items described in clauses (a)
through (g) above; provided, further, that for purposes of any determination
pursuant to the provisions of Section 1009 there shall further be excluded
therefrom the net income (but not net loss) of any Restricted Subsidiary of the
Company that is subject to a restriction which prevents the payment of dividends
or the making of distributions to the Company or another Restricted Subsidiary
of the Company to the extent of such restriction.
"Consolidated Net Worth" of any Person means the consolidated
stockholders' equity of such Person, determined on a consolidated basis in
accordance with generally accepted accounting principles, less amounts
attributable to Disqualified Stock of such Person; provided that, with respect
to the Company, adjustments following the date of this Indenture to the
accounting books and records of the Company in accordance with Accounting
Principles Board Opinions Nos. 16 and 17 (or successor opinions thereto) or
otherwise resulting from the acquisition of control of the Company by another
Person shall not be given effect to.
"Consolidated Tangible Assets" of any Person means the total
amount of assets (less applicable reserves and other properly deductible items)
which under generally accepted accounting principles would be included on a
consolidated balance sheet of such Person and its Restricted Subsidiaries after
deducting therefrom all goodwill, trade names, trademarks, patents, unamortized
debt discount and expense and other like intangibles, which in each case under
generally accepted accounting principles would be included on such consolidated
balance sheet; provided that, with respect to the Company, adjustments following
the date of this Indenture to the accounting books and records of the Company in
accordance with Accounting Principles Board Opinions Nos. 16 and 17 (or
successor opinions thereto) or otherwise resulting from the acquisition of
control of the Company by another Person shall not be given effect to.
"Corporate Trust Office" means the principal office of the
Trustee in the Borough of Manhattan, The City of New York, New York, at which at
any particular time its corporate trust business shall be administered, which at
the date hereof is located at 114 West 47th Street, New York, New York 10036.
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<PAGE> 19
"corporation" means a corporation, association, company, limited
liability company, joint-stock company or business trust.
"Debt" means (without duplication), with respect to any Person,
whether recourse is to all or a portion of the assets of such Person and whether
or not contingent, (i) every obligation of such Person for money borrowed, (ii)
every obligation of such Person evidenced by bonds, debentures, notes or other
similar instruments, including any such obligations Incurred in connection with
the acquisition of property, assets or businesses, (iii) every reimbursement
obligation of such Person with respect to letters of credit, bankers'
acceptances or similar facilities issued for the account of such Person, (iv)
every obligation of such Person issued or assumed as the deferred purchase price
of property or services (including securities repurchase agreements but
excluding trade accounts payable or accrued liabilities arising in the ordinary
course of business which are not overdue or which are being contested in good
faith), (v) every Capital Lease Obligation of such Person, (vi) all Receivables
Sales of such Person, together with any obligation of such Person to pay any
discount, interest, fees, indemnities, penalties, recourse, expenses or other
amounts in connection therewith, (vii) all obligations to redeem Disqualified
Stock issued by such Person, (viii) every obligation under Interest Rate or
Currency Protection Agreements of such Person and (ix) every obligation of the
type referred to in clauses (i) through (viii) of another Person and all
dividends of another Person the payment of which, in either case, such Person
has Guaranteed. The "amount" or "principal amount" of Debt at any time of
determination as used herein represented by (a) any Debt issued at a price that
is less than the principal amount at maturity thereof, shall be the amount of
the liability in respect thereof determined in accordance with generally
accepted accounting principles, (b) any Receivables Sale, shall be the amount of
the unrecovered capital or principal investment of the purchaser (other than the
Company or a Wholly-Owned Restricted Subsidiary of the Company) thereof,
excluding amounts representative of yield or interest earned on such investment,
(c) any Disqualified Stock, shall be the maximum fixed redemption or repurchase
price in respect thereof, (d) any Capital Lease Obligation, shall be determined
in accordance with the definition thereof, or (e) any Permitted Interest Rate or
Currency Protection Agreement, shall be zero. In no event shall Debt include any
liability for taxes.
"Default" means an event that with the passing of time or the
giving of notice or both shall constitute an Event of Default.
"Defaulted Interest" has the meaning specified in Section 307.
"Depositary" means, with respect to the Securities issuable or
issued in whole or in part in the form of one or more Global Securities, DTC for
so long as it shall be a clearing agency registered under the Exchange Act, or
<PAGE> 20
such successor (which shall be a clearing agency registered under the Exchange
Act) as the Company shall designate from time to time in an Officers'
Certificate delivered to the Trustee.
"Disqualified Stock" of any Person means any Capital Stock of
such Person (other than Capital Stock outstanding on the Issue Date) which, by
its terms (or by the terms of any security into which it is convertible or for
which it is exchangeable), or upon the happening of any event, matures or is
mandatorily redeemable, pursuant to a sinking fund obligation or otherwise, or
is redeemable at the option of the holder thereof, in whole or in part, on or
prior to the final Stated Maturity of the Securities; provided, however, that
any Preferred Stock which would not constitute Disqualified Stock but for
provisions thereof giving holders thereof the right to require the Company to
repurchase or redeem such Preferred Stock upon the occurrence of an asset sale
or a Change of Control occurring prior to the final Stated Maturity of the
Securities shall not constitute Disqualified Stock if the asset sale or change
of control provisions applicable to such Preferred Stock are no more favorable
to the holders of such Preferred Stock than the provisions applicable to the
Securities contained in Section 1013 or Section 1016 and such Preferred Stock
specifically provides that the Company will not repurchase or redeem any such
stock pursuant to such provisions prior to the Company's repurchase of such
Securities as are required to be repurchased pursuant to Section 1013 or Section
1016.
"DTC" means The Depository Trust Company.
"Eagle River" means Eagle River Investments, L.L.C., a limited
liability company formed under the laws of the State of Washington.
"Eligible Institution" means a commercial banking institution
that has combined capital and surplus of not less than $500 million or its
equivalent in foreign currency, whose debt is rated "A3" or higher, "A" or
higher or "A" or higher according to Moody's Investors Service, Inc., Standard &
Poor's Ratings Group or Duff & Phelps Credit Rating Co. (or such similar
equivalent rating by at least one "nationally recognized statistical rating
organization" (as defined in Rule 436 under the Securities Act)) respectively,
at the time as of which any investment or rollover therein is made.
"Eligible Receivables" means, at any time, Receivables of the
Company and its Restricted Subsidiaries, as evidenced on the most recent
quarterly consolidated balance sheet of the Company as at a date at least 45
days prior to such time arising in the ordinary course of business of the
Company or any Restricted Subsidiary of the Company.
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<PAGE> 21
"Euroclear" means the Euroclear Clearance System (or any
successor securities clearing agency).
"Event of Default" has the meaning specified in Section 501.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended (or any successor act) and the rules and regulations thereunder.
"Exchange Offer" has the meaning set forth in the form of the
Securities contained in Section 202.
"Exchange Registration Statement" has the meaning set forth in
the form of the Securities contained in Section 202.
"Exchange Security" means any Security issued in exchange for an
Original Security or Original Securities pursuant to the Exchange Offer or
otherwise registered under the Securities Act and any Security with respect to
which the next preceding Predecessor Security of such Security was an Exchange
Security.
"Expiration Date" has the meaning set forth in the definition of
"Offer to Purchase" in this Section 101.
"Global Security" means a Security in the form prescribed in
Section 204 evidencing all or part of the Securities, issued to the Depositary
or its nominee, and registered in the name of such Depositary or its nominee.
"Government Securities" means direct obligations of, or
obligations guaranteed by, the United States of America for the payment of which
obligations or guarantee the full faith and credit of the United States is
pledged and which have a remaining weighted average life to maturity of not more
than 18 months from the date of Investment therein.
"Guarantee" by any Person means any obligation, contingent or
otherwise, of such Person guaranteeing, or having the economic effect of
guaranteeing, any Debt of any other Person (the "primary obligor") in any
manner, whether directly or indirectly, and including, without limitation, any
obligation of such Person, (i) to purchase or pay (or advance or supply funds
for the purchase or payment of) such Debt or to purchase (or to advance or
supply funds for the purchase of) any security for the payment of such Debt,
(ii) to purchase property, securities or services for the purpose of assuring
the holder of such Debt of the payment of such Debt, or (iii) to maintain
working capital, equity capital or other financial statement condition or
liquidity of the primary obligor so as to enable the primary obligor to pay such
Debt (and "Guaranteed", "Guaranteeing" and "Guarantor" shall have meanings
correlative to the fore-
<PAGE> 22
going); provided, however, that the Guarantee by any Person shall not include
endorsements by such Person for collection or deposit, in either case, in the
ordinary course of business; and provided, further, that the incurrence by a
Restricted Subsidiary of the Company of a lien permitted under clause (iv) of
the second paragraph of Section 1011 shall not be deemed to constitute a
Guarantee by such Restricted Subsidiary of any Purchase Money Debt of the
Company secured thereby.
"Holder" means a Person in whose name a Security is registered in
the Security Register.
"Incur" means, with respect to any Debt or other obligation of
any Person, to create, issue, incur (by conversion, exchange or otherwise),
assume, Guarantee or otherwise become liable in respect of such Debt or other
obligation including by acquisition of Subsidiaries or the recording, as
required pursuant to generally accepted accounting principles or otherwise, of
any such Debt or other obligation on the balance sheet of such Person (and
"Incurrence", "Incurred", "Incurrable" and "Incurring" shall have meanings
correlative to the foregoing); provided, however, that a change in generally
accepted accounting principles that results in an obligation of such Person that
exists at such time becoming Debt shall not be deemed an Incurrence of such Debt
and that neither the accrual of interest nor the accretion of original issue
discount shall be deemed an Incurrence of Debt; provided, further, however, that
the Company may elect to treat all or any portion of revolving credit debt of
the Company or a Subsidiary as being incurred from and after any date beginning
the date the revolving credit commitment is extended to the Company or a
Subsidiary, by furnishing notice thereof to the Trustee, and any borrowings or
reborrowings by the Company or a Subsidiary under such commitment up to the
amount of such commitment designated by the Company as Incurred shall not be
deemed to be new Incurrences of Debt by the Company or such Subsidiary.
"Indenture" means this instrument as originally executed or as it
may from time to time be supplemented or amended by one or more indentures
supplemental hereto entered into pursuant to the applicable provisions hereof.
"Interest Payment Date" means the Stated Maturity of an
installment of interest on the Securities.
"Interest Rate or Currency Protection Agreement" of any Person
means any forward contract, futures contract, swap, option or other financial
agreement or arrangement (including, without limitation, caps, floors, collars
and similar agreements) relating to, or the value of which is dependent upon,
interest rates or currency exchange rates or indices.
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<PAGE> 23
"Investment" by any Person means any direct or indirect loan,
advance or other extension of credit or capital contribution (by means of
transfers of cash or other property to others or payments for property or
services for the account or use of others, or otherwise) to, or purchase or
acquisition of Capital Stock, bonds, notes, debentures or other securities or
evidence of Debt issued by, any other Person, including any payment on a
Guarantee of any obligation of such other Person, but excluding any loan,
advance or extension of credit to an employee of the Company or any of its
Restricted Subsidiaries in the ordinary course of business, accounts receivable
and other commercially reasonable extensions of trade credit.
"Issue Date" means the date on which the Securities are first
authenticated and delivered under this Indenture.
"Joint Venture" means a corporation, partnership or other entity
engaged in one or more Telecommunications Businesses as to which the Company
(directly or through one or more Restricted Subsidiaries) exercises managerial
control and in which the Company owns (i) a 50% or greater interest, or (ii) a
30% or greater interest, together with options or other contractual rights,
exercisable not more than seven years after the Company's initial Investment in
such Joint Venture, to increase its interest to not less than 50%.
"Lien" means, with respect to any property or assets, any
mortgage or deed of trust, pledge, hypothecation, assignment, Receivables Sale,
deposit arrangement, security interest, lien, charge, easement (other than any
easement not materially impairing usefulness or marketability), encumbrance,
preference, priority or other security agreement or preferential arrangement of
any kind or nature whatsoever on or with respect to such property or assets
(including, without limitation, any conditional sale or other title retention
agreement having substantially the same economic effect as any of the
foregoing).
"Marketable Securities" means: (i) Government Securities; (ii)
any time deposit account, money market deposit and certificate of deposit
maturing not more than 365 days after the date of acquisition issued by, or time
deposit of, an Eligible Institution; (iii) commercial paper maturing not more
than 365 days after the date of acquisition issued by a corporation (other than
an Affiliate of the Company) with a rating, at the time as of which any
investment therein is made, of "P1" or higher according to Moody's Investors
Service, Inc., "A1" or higher according to Standard & Poor's Ratings Group or
"A1" or higher according to Duff & Phelps Credit Rating Co. (or such similar
equivalent rating by at least one "nationally recognized statistical rating
organization" (as defined in Rule 436 under the Securities Act)); (iv) any
banker's acceptances or money market deposit accounts issued or offered by an
Eligible Institution; (v) repurchase obligations with a term of not more than 7
days for Government Securities
<PAGE> 24
entered into with an Eligible Institution; (vi) auction-rate preferred stocks of
any corporation maturing within 90 days after the date of acquisition by the
Company thereof, having a rating of at least AA by Standard & Poor's; and (vii)
any fund investing exclusively in investments of the types described in clauses
(i) through (vi) above.
"Maturity", when used with respect to any Security, means the
date on which the principal of such Security becomes due and payable as therein
or herein provided, whether at the Stated Maturity or by declaration of
acceleration, call for redemption or otherwise.
"Net Available Proceeds" from any Asset Disposition by any Person
means cash or readily marketable cash equivalents received (including by way of
sale or discounting of a note, installment receivable or other receivable, but
excluding any other consideration received in the form of assumption by the
acquiror of Debt or other obligations relating to such properties or assets)
therefrom by such Person, net of (i) all legal, title and recording tax
expenses, commissions and other fees and expenses Incurred and all federal,
state, provincial, foreign and local taxes (including taxes payable upon payment
or other distribution of funds from a foreign subsidiary to the Company or
another subsidiary of the Company) required to be accrued as a liability as a
consequence of such Asset Disposition, (ii) all payments made by such Person or
its Restricted Subsidiaries on any Debt which is secured by such assets in
accordance with the terms of any Lien upon or with respect to such assets or
which must by the terms of such Lien, or in order to obtain a necessary consent
to such Asset Disposition or by applicable law, be repaid out of the proceeds
from such Asset Disposition, (iii) all distributions and other payments made to
minority interest holders in Restricted Subsidiaries of such Person or joint
ventures as a result of such Asset Disposition, (iv) appropriate amounts to be
provided by such Person or any Restricted Subsidiary thereof, as the case may
be, as a reserve in accordance with generally accepted accounting principles
against any liabilities associated with such assets and retained by such Person
or any Restricted Subsidiary thereof, as the case may be, after such Asset
Disposition, including, without limitation, liabilities under any
indemnification obligations and severance and other employee termination costs
associated with such Asset Disposition, in each case as determined by the Board
of Directors, in its reasonable good faith judgment evidenced by a Board
Resolution filed with the Trustee; provided, however, that any reduction in such
reserve within twelve months following the consummation of such Asset
Disposition will be treated for all purposes of this Indenture and the
Securities as a new Asset Disposition at the time of such reduction with Net
Available Proceeds equal to the amount of such reduction, and (v) any
consideration for an Asset Disposition (which would otherwise constitute Net
Available Proceeds) that is required to be held in escrow pending determination
of whether a purchase price adjustment will be
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<PAGE> 25
made, but amounts under this clause (v) shall become Net Available Proceeds at
such time and to the extent such amounts are released to such Person.
"Offer to Purchase" means a written offer (the "Offer") sent by
the Company by first class mail, postage prepaid, to each Holder at his address
appearing in the Security Register on the date of the Offer offering to purchase
up to the principal amount of Securities specified in such Offer at the purchase
price specified in such Offer (as determined pursuant to this Indenture). Unless
otherwise required by applicable law, the Offer shall specify an expiration date
(the "Expiration Date") of the Offer to Purchase which shall be, subject to any
contrary requirements of applicable law, not less than 30 days or more than 60
days after the date of such Offer and a settlement date (the "Purchase Date")
for purchase of Securities within five Business Days after the Expiration Date.
The Company shall notify the Trustee at least 15 Business Days (or such shorter
period as is acceptable to the Trustee) prior to the mailing of the Offer of the
Company's obligation to make an Offer to Purchase, and the Offer shall be mailed
by the Company or, at the Company's request, by the Trustee in the name and at
the expense of the Company. The Offer shall contain information concerning the
business of the Company and its Subsidiaries which the Company in good faith
believes will enable such Holders to make an informed decision with respect to
the Offer to Purchase (which at a minimum will include (i) the most recent
annual and quarterly financial statements and "Management's Discussion and
Analysis of Financial Condition and Results of Operations" contained in the
documents required to be filed with the Trustee pursuant to this Indenture
(which requirements may be satisfied by delivery of such documents together with
the Offer), (ii) a description of material developments in the Company's
business subsequent to the date of the latest of such financial statements
referred to in clause (i) (including a description of the events requiring the
Company to make the Offer to Purchase), (iii) if applicable, appropriate pro
forma financial information concerning the Offer to Purchase and the events
requiring the Company to make the Offer to Purchase and (iv) any other
information required by applicable law to be included therein). The Offer shall
contain all instructions and materials necessary to enable such Holders to
tender Securities pursuant to the Offer to Purchase. The Offer shall also state:
(a) the Section of this Indenture pursuant to which the Offer to
Purchase is being made;
(b) the Expiration Date and the Purchase Date;
(c) the aggregate principal amount of the Outstanding Securities
offered to be purchased by the Company pursuant to the Offer to Purchase
(including, if less than 100%, the manner by which such has been
determined pursuant to Section 1013 or 1016) (the "Purchase Amount");
<PAGE> 26
(d) the purchase price to be paid by the Company for each $1,000
aggregate principal amount of Securities accepted for payment (as
specified pursuant to this Indenture) (the "Purchase Price");
(e) that the Holder may tender all or any portion of the
Securities registered in the name of such Holder and that any portion of
a Security tendered must be tendered in an integral multiple of $1,000
principal amount;
(f) the place or places where Securities are to be surrendered
for tender pursuant to the Offer to Purchase;
(g) that interest on any Security not tendered or tendered but
not purchased by the Company pursuant to the Offer to Purchase will
continue to accrue;
(h) that on the Purchase Date the Purchase Price will become due
and payable upon each Security being accepted for payment pursuant to
the Offer to Purchase and that interest thereon shall cease to accrue on
and after the Purchase Date;
(i) that each Holder electing to tender a Security pursuant to
the Offer to Purchase will be required to surrender such Security at the
place or places specified in the Offer prior to the close of business on
the Expiration Date (such Security being, if the Company or the Trustee
so requires, duly endorsed by, or accompanied by a written instrument of
transfer in form satisfactory to the Company and the Trustee duly
executed by, the Holder thereof or his attorney duly authorized in
writing);
(j) that Holders will be entitled to withdraw all or any portion
of Securities tendered if the Company (or its Paying Agent) receives,
not later than the close of business on the Expiration Date, a telegram,
telex, facsimile transmission or letter setting forth the name of the
Holder, the principal amount of the Security the Holder tendered, the
certificate number of the Security the Holder tendered and a statement
that such Holder is withdrawing all or a portion of his tender;
(k) that (a) if Securities in an aggregate principal amount less
than or equal to the Purchase Amount are duly tendered and not withdrawn
pursuant to the Offer to Purchase, the Company shall purchase all such
Securities and (b) if Securities in an aggregate principal amount in
excess of the Purchase Amount are tendered and not withdrawn pursuant to
the Offer to Purchase, the Company shall purchase Securities having an
aggregate principal amount equal to the Purchase Amount on a pro
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<PAGE> 27
rata basis (with such adjustments as may be deemed appropriate so that
only Securities in denominations of $1,000 or integral multiples thereof
shall be purchased);
(l) that in the case of any Holder whose Security is purchased
only in part, the Company shall execute, and the Trustee shall
authenticate and deliver to the Holder of such Security without service
charge, a new Security or Securities, of any authorized denomination as
requested by such Holder, in an aggregate principal amount equal to and
in exchange for the unpurchased portion of the Security so tendered; and
(m) the CUSIP number or numbers of the Securities offered to be
purchased by the Company pursuant to the Offer to Purchase.
Any Offer to Purchase shall be governed by and effected in accordance with the
Offer for such Offer to Purchase.
"Officers' Certificate" means a certificate signed by (i) the
Chief Executive Officer, President, an Executive Vice President or a Vice
President, and (ii) the Treasurer, Assistant Treasurer, Secretary or an
Assistant Secretary, of the Company, and delivered to the Trustee and containing
the statements provided for in Section 102. One of the officers signing an
Officers' Certificate given pursuant to Section 1018 shall be the principal
executive, financial or accounting officer of the Company.
"Opinion of Counsel" means a written opinion of legal counsel,
who may be counsel for the Company, and who shall be acceptable to the Trustee,
and containing the statements provided for in Section 102.
"Original Securities" means all Securities other than Exchange
Securities.
"Outstanding", when used with respect to Securities, means, as of
the date of determination, all Securities theretofore authenticated and
delivered under this Indenture, except:
(i) Securities theretofore cancelled by the Trustee or
delivered to the Trustee for cancellation;
(ii) Securities for whose payment or redemption money in the
necessary amount has been theretofore deposited with the Trustee or any
Paying Agent (other than the Company) in trust or set aside and
segregated in trust by the Company (if the Company shall act as its own
Paying Agent) for the Holders of such Securities; provided that, if such
Securities are to be redeemed,
<PAGE> 28
notice of such redemption has been duly given pursuant to this
Indenture; and
(iii) Securities which have been paid pursuant to Section 306 or
in exchange for or in lieu of which other Securities have been
authenticated and delivered pursuant to this Indenture, other than any
such Securities in respect of which there shall have been presented to
the Trustee proof satisfactory to it that such Securities are held by a
bona fide purchaser in whose hands such Securities are valid obligations
of the Company;
provided, however, that in determining whether the Holders of the requisite
principal amount of the Outstanding Securities have given any request, demand,
authorization, direction, notice, consent or waiver hereunder, Securities owned
by the Company or any other obligor upon the Securities or any Affiliate of the
Company or of such other obligor shall be disregarded and deemed not to be
Outstanding, except that, in determining whether the Trustee shall be protected
in relying upon any such request, demand, authorization, direction, notice,
consent or waiver, only Securities which the Trustee knows to be so owned shall
be so disregarded. Securities so owned which have been pledged in good faith may
be regarded as Outstanding if the pledgee establishes to the satisfaction of the
Trustee the pledgee's right so to act with respect to such Securities and that
the pledgee is not the Company or any other obligor upon the Securities or any
Affiliate of the Company or of such other obligor.
"Paying Agent" means any Person authorized by the Company to pay
the principal of (and premium, if any) or interest on any Securities on behalf
of the Company. The Trustee is hereby authorized by the Company to act as a
"Paying Agent" for the purposes of this Indenture, until such time as the
Company notifies the Trustee in writing that such authorization is revoked.
"Permitted Interest Rate or Currency Protection Agreement" of any
Person means any Interest Rate or Currency Protection Agreement entered into
with one or more financial institutions in the ordinary course of business that
is designed to protect such Person against fluctuations in interest rates or
currency exchange rates with respect to Debt Incurred and which shall have a
notional amount no greater than the payments due with respect to the Debt being
hedged thereby and not for purposes of speculation.
"Permitted Investment" means (i) any Investment in a Joint
Venture (including the purchase or acquisition of any Capital Stock of a Joint
Venture), provided the aggregate amount of all outstanding Investments pursuant
to this clause (i) in Joint Ventures in which the Company owns, directly or
indirectly, a less than 50% interest shall not exceed $25 million, (ii) any
Investment in any
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<PAGE> 29
Person as a result of which such Person becomes a Restricted Subsidiary, or,
subject to the proviso to clause (i) of this definition, becomes a Joint Venture
of the Company, (iii) any Investment in Marketable Securities, (iv) Investments
in Permitted Interest Rate or Currency Protection Agreements, (v) Investments
made as a result of the receipt of noncash consideration from an Asset
Disposition that was made pursuant to and in compliance with Section 1013 of
this Indenture and (vi) other Investments in an aggregate amount not to exceed
the aggregate net proceeds received by the Company or any Restricted Subsidiary
after the date of this Indenture from the sale or liquidation of any
Unrestricted Subsidiary or any interest therein (except to the extent that any
such amount is included in the calculation of Consolidated Net Income).
"Permitted Liens" means (a) Liens for taxes, assessments,
governmental charges or claims which are not yet delinquent or which are being
contested in good faith by appropriate proceedings, if a reserve or other
appropriate provision, if any, as shall be required in conformity with generally
accepted accounting principles shall have been made therefor; (b) other Liens
incidental to the conduct of the Company's and its Restricted Subsidiaries'
business or the ownership of its property and assets not securing any Debt, and
which do not in the aggregate materially detract from the value of the Company's
and its Restricted Subsidiaries' property or assets when taken as a whole, or
materially impair the use thereof in the operation of its business; (c) Liens
with respect to assets of a Restricted Subsidiary granted by such Restricted
Subsidiary to the Company to secure Debt owing to the Company; (d) pledges and
deposits made in the ordinary course of business in connection with workers'
compensation, unemployment insurance and other types of statutory obligations
(including to secure government contracts); (e) deposits made to secure the
performance of tenders, bids, leases, and other obligations of like nature
incurred in the ordinary course of business (exclusive of obligations for the
payment of borrowed money); (f) zoning restrictions, servitudes, easements,
rights-of-way, restrictions and other similar charges or encumbrances incurred
in the ordinary course of business which, in the aggregate, do not materially
detract from the value of the property subject thereto or interfere with the
ordinary conduct of the business of the Company or its Restricted Subsidiaries;
(g) Liens arising out of judgments or awards against the Company or any
Restricted Subsidiary with respect to which the Company or such Restricted
Subsidiary is prosecuting an appeal or proceeding for review and the Company or
such Restricted Subsidiary is maintaining adequate reserves in accordance with
generally accepted accounting principles; (h) any interest or title of a lessor
in the property subject to any lease other than a Capital Lease; and (i) any
statutory warehousemen's, materialmen's or other similar Liens for sums not then
due and payable (or which, if due and payable, are being contested in good faith
and with respect to which adequate reserves are being maintained to the extent
required by generally accepted accounting principles).
<PAGE> 30
"Person" means any individual, corporation, partnership, limited
liability company, joint venture, association, joint stock company, trust,
unincorporated organization, government or agency or political subdivision
thereof or any other entity.
"Predecessor Security" of any particular Security means every
previous Security issued before, and evidencing all or a portion of the same
debt as that evidenced by, such particular Security; and, for the purposes of
this definition, any Security authenticated and delivered under Section 306 in
exchange for or in lieu of a mutilated, destroyed, lost or stolen Security shall
be deemed to evidence the same debt as the mutilated, destroyed, lost or stolen
Security.
"Preferred Dividends" for any Person means for any period the
quotient determined by dividing the amount of dividends and distributions paid
or accrued (whether or not declared) on Preferred Stock of such Person during
such period calculated in accordance with generally accepted accounting
principles, by 1 minus the maximum statutory income tax rate then applicable to
the Company (expressed as a decimal).
"Preferred Stock" of any Person means Capital Stock of such
Person of any class or classes (however designated) that ranks prior, as to the
payment of dividends or as to the distribution of assets upon any voluntary or
involuntary liquidation, dissolution or winding up of such Person, to shares of
Capital Stock of any other class of such Person.
"Purchase Agreement" means the Purchase Agreement, dated as of
March 27, 1998, between the Company and the Purchasers, as such agreement may be
amended from time to time.
"Purchase Date" has the meaning set forth in the definition of
"Offer to Purchase" in this Section 101.
"Purchase Money Debt" means (i) Acquired Debt Incurred in
connection with the acquisition of Telecommunications Assets and (ii) Debt of
the Company or of any Restricted Subsidiary of the Company (including, without
limitation, Debt represented by Bank Credit Agreements, Capital Lease
Obligations, Vendor Financing Facilities, mortgage financings and purchase money
obligations) Incurred for the purpose of financing all or any part of the cost
of construction, acquisition or improvement by the Company or any Restricted
Subsidiary of the Company or any Joint Venture of any Telecommunications Assets
of the Company, any Restricted Subsidiary of the Company or any Joint Venture,
and including any related notes, Guarantees, collateral documents, instruments
and agreements executed in connection
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<PAGE> 31
therewith, as the same may be amended, supplemented, modified or restated from
time to time.
"Purchasers" means Salomon Brothers Inc and Goldman, Sachs & Co.
"readily marketable cash equivalents" means (i) marketable
securities issued or directly and unconditionally guaranteed by the United
States Government or issued by any agency thereof and backed by the full faith
and credit of the United States; (ii) marketable direct obligations issued by
any state of the United States of America or any political subdivision of any
such state or any public instrumentality thereof and, at the time of
acquisition, having the highest rating obtainable from either Standard & Poor's
Rating Group or Moody's Investors Service, Inc.; (iii) commercial paper maturing
no more than 180 days from the date of acquisition thereof and, at the time of
acquisition, having a rating of P-1 according to Moody's Investors Service,
Inc., "A1" or higher according to Standard & Poor's Ratings Group or "A1" or
higher according to Duff & Phelps Credit Rating Co. (or such similar equivalent
rating by at least one "nationally recognized statistical rating organization"
(as defined in Rule 436 under the Securities Act)); and (iv) certificates of
deposit or bankers' acceptance maturing within one year from the date of
acquisition thereof issued by any commercial bank organized under the laws of
the United States of America or any state thereof or the District of Columbia
having unimpaired capital and surplus of not less than $100,000,000.
"Receivables" means receivables, chattel paper, instruments,
documents or intangibles evidencing or relating to the right to payment of money
in respect of the sale of goods or services.
"Receivables Sale" of any Person means any sale of Receivables of
such Person (pursuant to a purchase facility or otherwise), other than in
connection with a disposition of the business operations of such Person relating
thereto or a disposition of defaulted Receivables for purpose of collection and
not as a financing arrangement.
"Redemption Date", when used with respect to any Security to be
redeemed, means the date fixed for such redemption by or pursuant to this
Indenture.
"Redemption Price", when used with respect to any Security to be
redeemed, means the price at which it is to be redeemed pursuant to this
Indenture.
"Registered Securities" means the Exchange Securities and all
other Securities sold or otherwise disposed of pursuant to an effective
<PAGE> 32
registration statement under the Securities Act, together with their respective
Successor Securities.
"Regular Record Date" for the interest payable on any Interest
Payment Date means the April 1 or October 1 (whether or not a Business Day), as
the case may be, next preceding such Interest Payment Date.
"Regulation S" means Regulation S under the Securities Act (or
any successor provision), as it may be amended from time to time.
"Regulation S Certificate" means a certificate substantially in
the form set forth in Annex A.
"Regulation S Global Security" has the meaning specified in
Section 201.
"Regulation S Legend" means a legend substantially in the form of
the legend required in the form of Security set forth in Section 202 to be
placed upon each Regulation S Security.
"Regulation S Securities" means all Securities required pursuant
to Section 305(c) to bear a Regulation S Legend. Such term includes the
Regulation S Global Security.
"Related Person" of any Person means any other Person directly or
indirectly owning (a) 10% or more of the Outstanding Common Equity of such
Person (or, in the case of a Person that is not a corporation, 10% or more of
the equity interest in such Person) or (b) 10% or more of the combined voting
power of the Voting Stock of such Person.
"Resale Registration Statement" has the meaning set forth in the
Form of the Securities contained in Section 202.
"Responsible Officer", when used with respect to the Trustee,
means the chairman or any vice-chairman of the board of directors, the chairman
or any vice-chairman of the executive committee of the board of directors, the
chairman of the trust committee, the president, any vice president, the
secretary, any assistant secretary, the treasurer, any assistant treasurer, the
cashier, any assistant cashier, any trust officer or assistant trust officer,
the controller or any assistant controller or any other officer of the Trustee
customarily performing functions similar to those performed by any of the above
designated officers and also means, with respect to a particular corporate trust
matter, any other officer to whom such matter is referred because of his
knowledge of and familiarity with the particular subject.
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<PAGE> 33
"Restricted Global Security" has the meaning specified in Section
201.
"Restricted Period" means the period of 41 consecutive days
beginning on and including the later of (i) the day on which Securities are
first offered to persons other than distributors (as defined in Regulation S) in
reliance on Regulation S and (ii) the original issuance date of the Securities.
"Restricted Securities" means all Securities required pursuant to
Section 305(c) to bear any Restricted Securities Legend. Such term includes the
Restricted Global Security.
"Restricted Securities Certificate" means a certificate
substantially in the form set forth in Annex B.
"Restricted Securities Legend" means, collectively, the legends
substantially in the forms of the legends required in the form of Security set
forth in Section 202 to be placed upon each Restricted Security.
"Restricted Subsidiary" of the Company means any Subsidiary,
whether existing on or after the date of this Indenture, unless such Subsidiary
is an Unrestricted Subsidiary.
"Rule 144A" means Rule 144A under the Securities Act (or any
successor provision), as it may be amended from time to time.
"Rule 144A Securities" means the Securities purchased by the
Purchasers from the Company pursuant to the Purchase Agreement, other than the
Regulation S Securities.
"Sale and Leaseback Transaction" of any Person means an
arrangement with any lender or investor or to which such lender or investor is a
party providing for the leasing by such Person of any property or asset of such
Person which has been or is being sold or transferred by such Person more than
365 days after the acquisition thereof or the completion of construction or
commencement of operation thereof to such lender or investor or to any person to
whom funds have been or are to be advanced by such lender or investor on the
security of such property or asset. The stated maturity of such arrangement
shall be the date of the last payment of rent or any other amount due under such
arrangement prior to the first date on which such arrangement may be terminated
by the lessee without payment of a penalty.
"SEC Reports" has the meaning specified in Section 704.
<PAGE> 34
"Securities" means the Exchange Securities and the Original
Securities.
"Securities Act" means the Securities Act of 1933 and any statute
successor thereto, in each case as amended from time to time.
"Securities Act Legend" means a Restricted Securities Legend or a
Regulation S Legend.
"Security Register" and "Security Registrar" have the respective
meanings specified in Section 305(b).
"Significant Subsidiary" means a Restricted Subsidiary that is a
"significant subsidiary" as defined in Rule 102(w) of Regulation SX under the
Securities Act and the Exchange Act.
"Special Record Date" for the payment of any Defaulted Interest
means a date fixed by the Trustee pursuant to Section 307.
"Stated Maturity", when used with respect to any Security or any
installment of interest thereon, means the date specified in such Security as
the fixed date on which the principal of such Security or such installment of
interest, as the case may be, is due and payable.
"Step-Down Date" has the meaning set forth in the form of the
Security contained in Section 202.
"Step-Up" has the meaning set forth in the form of the Security
contained in Section 202.
"Subordinated Debt" means Debt of the Company as to which the
payment of principal of (and premium, if any) and interest and other payment
obligations in respect of such Debt shall be subordinate to the prior payment in
full of the Securities to at least the following extent: (i) no payments of
principal of (or premium, if any) or interest on or otherwise due in respect of
such Debt may be permitted for so long as any default in the payment of
principal (or premium, if any) or interest on the Securities exists; (ii) in the
event that any other default that with the passing of time or the giving of
notice, or both, would constitute an Event of Default exists with respect to the
Securities, upon notice by 25% or more in principal amount of the Securities to
the Trustee, the Trustee shall have the right to give notice to the Company and
the holders of such Debt (or trustees or agents therefor) of a payment blockage,
and thereafter no payments of principal of (or premium, if any) or interest on
or otherwise due in respect of such Debt may be made for a period of 179 days
from the date of
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<PAGE> 35
such notice or for the period until such default has been cured or waived or
ceased to exist and any acceleration of the Securities has been rescinded or
annulled, whichever period is shorter (which Debt may provide that (A) no new
period of payment blockage may be commenced by a payment blockage notice unless
and until 360 days have elapsed since the effectiveness of the immediately prior
notice, (B) no nonpayment default that existed or was continuing on the date of
delivery of any payment blockage notice to such holders (or such agents or
trustees) shall be, or be made, the basis for a subsequent payment blockage
notice and (C) failure of the Company to make payment on such Debt when due or
within any applicable grace period, whether or not on account of such payment
blockage provisions, shall constitute an event of default thereunder); and (iii)
such Debt may not (x) provide for payments of principal of such Debt at the
stated maturity thereof or by way of a sinking fund applicable thereto or by way
of any mandatory redemption, defeasance, retirement or repurchase thereof by the
Company (including any redemption, retirement or repurchase which is contingent
upon events or circumstances, but excluding any retirement required by virtue of
acceleration of such Debt upon an event of default thereunder), in each case
prior to the final Stated Maturity of the Securities or (y) permit redemption or
other retirement (including pursuant to an offer to purchase made by the
Company) of such other Debt at the option of the holder thereof prior to the
final Stated Maturity of the Securities, other than a redemption or other
retirement at the option of the holder of such Debt (including pursuant to an
offer to purchase made by the Company) which is conditioned upon a change of
control of the Company pursuant to provisions substantially similar to those of
Section 1016 (and which shall provide that such Debt will not be repurchased
pursuant to such provisions prior to the Company's repurchase of the Securities
required to be repurchased by the Company pursuant to the provisions of Section
1016.
"Subsidiary" of any Person means (i) a corporation more than 50%
of the combined voting power of the outstanding Voting Stock of which is owned,
directly or indirectly, by such Person or by one or more other Subsidiaries of
such Person or by such Person and one or more Subsidiaries thereof or (ii) any
other Person (other than a corporation) in which such Person, or one or more
other Subsidiaries of such Person or such Person and one or more other
Subsidiaries thereof, directly or indirectly, has at least a majority ownership
and power to direct the policies, management and affairs thereof.
"Successor Security" of any particular Security means every
Security issued after, and evidencing all or a portion of the same debt as that
evidenced by, such particular Security; and, for the purposes of this
definition, any Security authenticated and delivered under Section 306 in
exchange for or in lieu of a mutilated, destroyed, lost or stolen Security shall
be deemed to evidence the same debt as the mutilated, destroyed, lost or stolen
Security.
<PAGE> 36
"Telecommunications Assets" means all assets, rights (contractual
or otherwise) and properties, whether tangible or intangible, used or intended
for use in connection with a Telecommunications Business.
"Telecommunications Business" means the business of (i)
transmitting, or providing services relating to the transmission of, voice,
video or data through owned or leased transmission facilities, (ii) creating,
developing or marketing communications related network equipment, software and
other devices for use in a Telecommunication Business or (iii) evaluating,
participating or pursuing any other activity or opportunity that is primarily
related to those identified in (i) or (ii) above and shall, in any event,
include all businesses in which the Company or any of its Subsidiaries are
engaged on the Issue Date; provided that the determination of what constitutes a
Telecommunications Business shall be made in good faith by the Board of
Directors, which determination shall be conclusive.
"Trustee" means the Person named as the "Trustee" in the first
paragraph of this instrument until a successor Trustee shall have become such
pursuant to the applicable provisions of this Indenture, and thereafter
"Trustee" shall mean such successor Trustee.
"Trust Indenture Act" means the Trust Indenture Act of 1939 as in
force at the date as of which this instrument was executed; provided, however,
that in the event the Trust Indenture Act of 1939 is amended after such date,
"Trust Indenture Act" means, to the extent required by any such amendment, the
Trust Indenture Act of 1939 as so amended.
"Unrestricted Securities Certificate" means a certificate
substantially in the form set forth in Annex C.
"Unrestricted Subsidiary" means (1) any Subsidiary of the Company
designated as such by the Board of Directors as set forth below where (a)
neither the Company nor any of its other Subsidiaries (other than another
Unrestricted Subsidiary) (i) provides credit support for, or Guarantee of, any
Debt of such Subsidiary or any Subsidiary of such Subsidiary (including any
undertaking, agreement or instrument evidencing such Debt) or (ii) is directly
or indirectly liable for any Debt of such Subsidiary or any Subsidiary of such
Subsidiary, and (b) no default with respect to any Debt of such Subsidiary or
any Subsidiary of such Subsidiary (including any right which the holders thereof
may have to take enforcement action against such Subsidiary) would permit (upon
notice, lapse of time or both) any holder of any other Debt of the Company and
its Restricted Subsidiaries to declare a default on such other Debt or cause the
payment thereof to be accelerated or payable prior to its final scheduled
maturity and (2) any Subsidiary of an Unrestricted Subsidiary. The Board of
Directors
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<PAGE> 37
may designate any Subsidiary to be an Unrestricted Subsidiary unless such
Subsidiary owns any Capital Stock of, or owns or holds any Lien on any property
of, any other Subsidiary of the Company which is not a Subsidiary of the
Subsidiary to be so designated or otherwise an Unrestricted Subsidiary, provided
that either (x) the Subsidiary to be so designated has total assets of $1,000 or
less or (y) immediately after giving effect to such designation, the Company
could Incur at least $1.00 of additional Debt pursuant to the first paragraph of
Section 1007 and provided, further, that the Company could make a Restricted
Payment in an amount equal to the greater of the fair market value and the book
value of such Subsidiary pursuant to Section 1009 and such amount is thereafter
treated as a Restricted Payment for the purpose of calculating the aggregate
amount available for Restricted Payments thereunder. The Board of Directors may
designate any Unrestricted Subsidiary to be a Restricted Subsidiary, provided
that if such Unrestricted Subsidiary has Debt outstanding at such time, either
(a) immediately after giving effect to such designation, the Company could Incur
at least $1.00 of additional Debt pursuant to the first paragraph of Section
1007 or (b) the Company or such Restricted Subsidiary could Incur such Debt
hereunder (other than as Acquired Debt).
"Vendor Financing Facility" means any agreements between the
Company or a Restricted Subsidiary of the Company and one or more vendors or
lessors of equipment to the Company or any of its Restricted Subsidiaries (or
any affiliate of any such vendor or lessor) providing financing for the
acquisition by the Company or any such Restricted Subsidiary of equipment from
any such vendor or lessor.
"Vice President", when used with respect to the Company or the
Trustee, means any vice president, whether or not designated by a number or a
word or words added before or after the title "vice president".
"Voting Stock" of any Person means Capital Stock of such Person
which ordinarily has voting power for the election of directors (or persons
performing similar functions) of such Person, whether at all times or only so
long as no senior class of securities has such voting power by reason of any
contingency.
"Wholly-Owned Restricted Subsidiary" of any Person means a
Restricted Subsidiary of such Person 99% or more of the outstanding Capital
Stock or other ownership interests of which (other than directors' qualifying
shares) shall at the time be owned by such Person or by one or more Wholly-Owned
Restricted Subsidiaries of such Person or by such Person and one or more
Wholly-Owned Restricted Subsidiaries of such Person.
SECTION 102. Compliance Certificates and Opinions.
<PAGE> 38
Upon any application or request by the Company to the Trustee to
take any action under any provision of this Indenture, the Company shall furnish
to the Trustee such certificates and opinions as may be required under the Trust
Indenture Act and under this Indenture. Each such certificate or opinion shall
be given in the form of an Officers' Certificate, if to be given by an officer
of the Company, or an Opinion of Counsel, if to be given by counsel, and shall
comply with the requirements of the Trust Indenture Act and any other
requirement set forth in this Indenture.
Every certificate or opinion with respect to compliance with a
condition or covenant provided for in this Indenture shall include
(1) a statement that each individual signing such certificate or
opinion has read such covenant or condition and the definitions herein
relating thereto;
(2) a brief statement as to the nature and scope of the
examination or investigation upon which the statements or opinions
contained in such certificate or opinion are based;
(3) a statement that, in the opinion of each such individual, he
has made such examination or investigation as is necessary to enable him
to express an informed opinion as to whether or not such covenant or
condition has been complied with; and
(4) a statement as to whether, in the opinion of each such
individual, such condition or covenant has been complied with.
SECTION 103. Form of Documents Delivered to Trustee.
In any case where several matters are required to be certified
by, or covered by an opinion of, any specified Person, it is not necessary that
all such matters be certified by, or covered by the opinion of, only one such
Person, or that they be so certified or covered by only one document, but one
such Person may certify or give an opinion with respect to some matters and one
or more other such Persons as to other matters, and any such Person may certify
or give an opinion as to such matters in one or several documents.
Any certificate of an officer of the Company may be based,
insofar as it relates to legal matters, upon an opinion of counsel submitted
therewith, unless such officer knows, or in the exercise of reasonable care
should know, that the opinion with respect to the matters upon which his
certificate is based is
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<PAGE> 39
erroneous. Any opinion of counsel may be based, insofar as it relates to factual
matters, upon a certificate of an officer or officers of the Company submitted
therewith stating the information on which counsel is relying, unless such
counsel knows, or in the exercise of reasonable care should know, that the
certificate with respect to such matters is erroneous.
Where any Person is required to make, give or execute two or more
applications, requests, consents, certificates, statements, opinions or other
instruments under this Indenture, they may, but need not, be consolidated and
form one instrument.
SECTION 104. Acts of Holders; Record Dates.
Any request, demand, authorization, direction, notice, consent,
waiver or other action provided by this Indenture to be given or taken by
Holders may be embodied in and evidenced by one or more instruments of
substantially similar tenor signed by such Holders in person or by agent duly
appointed in writing; and, except as herein otherwise expressly provided, such
action shall become effective when such instrument or instruments are delivered
to the Trustee and, where it is hereby expressly required, to the Company. Such
instrument or instruments (and the action embodied therein and evidenced
thereby) are herein sometimes referred to as the "Act" of the Holders signing
such instrument or instruments. Proof of execution of any such instrument or of
a writing appointing any such agent shall be sufficient for any purpose of this
Indenture and (subject to Section 601) conclusive in favor of the Trustee and
the Company, if made in the manner provided in this Section.
The fact and date of the execution by any Person of any such
instrument or writing pursuant to this Section 104 may be proved by the
affidavit of a witness of such execution or by a certificate of a notary public
or other officer authorized by law to take acknowledgments of deeds, certifying
that the individual signing such instrument or writing acknowledged to him the
execution thereof. Where such execution is by a signer acting in a capacity
other than his individual capacity, such certificate or affidavit shall also
constitute sufficient proof of his authority. The fact and date of the execution
of any such instrument or writing, or the authority of the Person executing the
same, may also be proved in any other manner which the Trustee deems sufficient.
The ownership of Securities shall be proved by the Security
Register.
Any request, demand, authorization, direction, notice, consent,
waiver or other Act of the Holder of any Security shall bind every future Holder
of the same Security and the Holder of every Security issued upon the
registration
<PAGE> 40
of transfer thereof or in exchange therefor or in lieu thereof in respect of
anything done, omitted or suffered to be done by the Trustee or the Company in
reliance thereon, whether or not notation of such action is made upon such
Security.
The Company may set any day as a record date for the purpose of
determining the Holders of Outstanding Securities entitled to give, make or take
any request, demand, authorization, direction, notice, consent, waiver or other
action provided or permitted by this Indenture to be given, made or taken by
Holders of Securities, provided that the Company may not set a record date for,
and the provisions of this paragraph shall not apply with respect to, the giving
or making of any notice, declaration, request or direction referred to in the
next paragraph. If not set by the Company prior to the first solicitation of a
Holder made by any Person in respect of any such matter referred to in the
foregoing sentence, the record date for any such matter shall be the 30th day
(or, if later, the date of the most recent list of Holders required to be
provided pursuant to Section 701) prior to such first solicitation. If any
record date is set pursuant to this paragraph, the Holders of Outstanding
Securities on such record date, and no other Holders, shall be entitled to take
the relevant action, whether or not such Holders remain Holders after such
record date; provided that no such action shall be effective hereunder unless
taken on or prior to the applicable Expiration Date by Holders of the requisite
principal amount of Outstanding Securities on such record date. Nothing in this
paragraph shall be construed to prevent the Company from setting a new record
date for any action for which a record date has previously been set pursuant to
this paragraph (whereupon the record date previously set shall automatically and
with no action by any Person be cancelled and of no effect), and nothing in this
paragraph shall be construed to render ineffective any action taken by Holders
of the requisite principal amount of Outstanding Securities on the date such
action is taken. Promptly after any record date is set pursuant to this
paragraph, the Company, at its own expense, shall cause notice of such record
date, the proposed action by Holders and the applicable Expiration Date to be
given to the Trustee in writing and to each Holder of Securities in the manner
set forth in Section 106.
The Trustee may set any day as a record date for the purpose of
determining the Holders of Outstanding Securities entitled to join in the giving
or making of (i) any Notice of Default, (ii) any declaration of acceleration
referred to in Section 502, (iii) any request to institute proceedings referred
to in Section 507(2) or (iv) any direction referred to in Section 512. If any
record date is set pursuant to this paragraph, the Holders of Outstanding
Securities on such record date, and no other Holders, shall be entitled to join
in such notice, declaration, request or direction, whether or not such Holders
remain Holders after such record date; provided that no such action shall be
effective hereunder unless taken on or prior to the applicable Expiration Date
by Holders of the requisite principal amount of Outstanding Securities on such
record date. Nothing in this paragraph shall be construed to prevent the Trustee
from setting a new record
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<PAGE> 41
date for any action for which a record date has previously been set pursuant to
this paragraph (whereupon the record date previously set shall automatically and
with no action by any Person be cancelled and of no effect), and nothing in this
paragraph shall be construed to render ineffective any action taken by Holders
of the requisite principal amount of Outstanding Securities on the date such
action is taken. Promptly after any record date is set pursuant to this
paragraph, the Trustee, at the Company's expense, shall cause notice of such
record date, the proposed action by Holders and the applicable Expiration Date
to be given to the Company in writing and to each Holder of Securities in the
manner set forth in Section 106.
With respect to any record date set pursuant to this Section, the
party hereto which sets such record dates may designate any day as the
"Expiration Date" and from time to time may change the Expiration Date to any
earlier or later day; provided that no such change shall be effective unless
notice of the proposed new Expiration Date is given to the other party hereto in
writing, and to each Holder of Securities in the manner set forth in Section
106, on or prior to the existing Expiration Date. If an Expiration Date is not
designated with respect to any record date set pursuant to this Section, the
party hereto which set such record date shall be deemed to have initially
designated the 180th day after such record date as the Expiration Date with
respect thereto, subject to its right to change the Expiration Date as provided
in this paragraph. Notwithstanding the foregoing, no Expiration Date shall be
later than the 180th day after the applicable record date.
Without limiting the foregoing, a Holder entitled hereunder to
take any action hereunder with regard to any particular Security may do so with
regard to all or any part of the principal amount of such Security or by one or
more duly appointed agents each of which may do so pursuant to such appointment
with regard to all or any part of such principal amount.
SECTION 105. Notices, Etc., to Trustee and Company.
Any request, demand, authorization, direction, notice, consent,
waiver or Act of Holders or other document provided or permitted by this
Indenture to be made upon, given or furnished to, or filed with,
(1) the Trustee by any Holder or by the Company shall be
sufficient for every purpose hereunder if delivered in writing to the
Trustee at its Corporate Trust Office, Attention: Corporate Trust
Administration, or
(2) the Company by the Trustee or by any Holder shall be
sufficient for every purpose hereunder (unless otherwise herein
expressly provided) if in writing and mailed, first-class postage
prepaid, to the
<PAGE> 42
Company addressed to the Company at the address of its principal office
specified in the first paragraph of this instrument or at any other
address previously furnished in writing to the Trustee by the Company.
SECTION 106. Notice to Holders; Waiver.
Where this Indenture provides for notice to Holders of any event,
such notice shall be sufficiently given (unless otherwise herein expressly
provided) if (i) in the case of a Global Security, in writing by facsimile
and/or by overnight mail to the Depositary, and (ii) in the case of securities
other than Global Securities, in writing and mailed, first-class postage
prepaid, to each Holder affected by such event, at his address as it appears in
the Security Register, not later than the latest date (if any), and not earlier
than the earliest date (if any), prescribed for the giving of such notice. In
any case where notice to Holders is given by mail, neither the failure to mail
such notice, nor any defect in any notice so mailed, to any particular Holder
shall affect the sufficiency of such notice with respect to other Holders. Where
this Indenture provides for notice in any manner, such notice may be waived in
writing by the Person entitled to receive such notice, either before or after
the event, and such waiver shall be the equivalent of such notice. Waivers of
notice by Holders shall be filed with the Trustee, but such filing shall not be
a condition precedent to the validity of any action taken in reliance upon such
waiver.
In case by reason of the suspension of regular mail service or by
reason of any other cause it shall be impracticable to give such notice by mail,
then such notification as shall be made with the approval of the Trustee shall
constitute a sufficient notification for every purpose hereunder.
SECTION 107. Application of Trust Indenture Act.
The Trust Indenture Act shall apply as a matter of contract to
this Indenture for purposes of interpretation, construction and defining the
rights and obligations hereunder. If any provision hereof limits, qualifies or
conflicts with a provision of the Trust Indenture Act that is required under
such Act to be a part of and govern this Indenture, the latter provision shall
control. If any provision of this Indenture modifies or excludes any provision
of the Trust Indenture Act that may be so modified or excluded, the latter
provision shall be deemed to apply to this Indenture as so modified or to be
excluded, as the case may be.
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<PAGE> 43
SECTION 108. Effect of Headings and Table of Contents.
The Article and Section headings herein and the Table of Contents
are for convenience only and shall not affect the construction hereof.
SECTION 109. Successors and Assigns.
All covenants and agreements in this Indenture by the Company
shall bind its successors and assigns, whether so expressed or not.
SECTION 110. Separability Clause.
In case any provision in this Indenture or in the Securities
shall be invalid, illegal or unenforceable, the validity, legality and
enforceability of the remaining provisions shall not in any way be affected or
impaired thereby.
SECTION 111. Benefits of Indenture.
Nothing in this Indenture or in the Securities, express or
implied, shall give to any Person, other than the parties hereto and their
successors hereunder and the Holders of Securities, any benefit or any legal or
equitable right, remedy or claim under this Indenture.
SECTION 112. Governing Law.
This Indenture and the Securities shall be governed by and
construed in accordance with the laws of the State of New York.
SECTION 113. Legal Holidays.
In any case where any Interest Payment Date, Redemption Date,
Purchase Date or Stated Maturity of any Security shall not be a Business Day,
then (notwithstanding any other provision of this Indenture or of the
Securities) payment of interest or principal (and premium, if any) need not be
made on such date, but may be made on the next succeeding Business Day with the
same force and effect as if made on the Interest Payment Date, Redemption Date,
Purchase Date or at the Stated Maturity, provided that no interest shall accrue
for the period from and after such Interest Payment Date, Redemption Date,
Purchase Date or Stated Maturity, as the case may be.
<PAGE> 44
ARTICLE TWO
Security Forms
SECTION 201. Forms Generally.
The Securities and the Trustee's certificates of authentication
thereof shall be in substantially the forms set forth in this Article, with such
appropriate legends, insertions, omissions, substitutions and other variations
as are required or permitted by this Indenture, and may have such letters,
numbers or other marks of identification and such legends or endorsements placed
thereon as may be required to comply with the rules of any securities exchange
or as may, consistently herewith, be determined by the officers executing such
Securities, as evidenced by their execution of the Securities.
Upon their original issuance, Rule 144A Securities shall be
issued in the form of one or more Global Securities registered in the name of
the Depositary or its nominee and deposited with the Trustee, as custodian for
the Depositary, for credit by the Depositary to the respective accounts of
beneficial owners of the Securities represented thereby (or such other accounts
as they may direct). Such Global Securities, together with their Successor
Securities which are Global Securities other than the Regulation S Global
Security, are collectively herein called the "Restricted Global Security". Upon
their original issuance, Regulation S Securities shall be issued in the form of
one or more Global Securities registered in the name of the Depositary, or its
nominee and deposited with the Trustee, as custodian for the Depositary, for
credit to the respective accounts of the beneficial owners of the Securities
represented thereby (or such other accounts as they may direct), provided that
upon such deposit all such Securities shall be credited to or through accounts
maintained at the Depositary by or on behalf of Euroclear or Cedel. Such Global
Securities, together with their Successor Securities which are Global Securities
other than the Restricted Global Security, are collectively herein called the
"Regulation S Global Security".
The definitive Securities shall be printed, lithographed or
engraved or produced by any combination of these methods on steel engraved
borders or may be produced in any other manner, all as determined by the
officers executing such Securities, as evidenced by their execution of such
Securities.
In certain cases described elsewhere herein, the legends set
forth in Section 202 may be omitted from Securities issued hereunder.
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<PAGE> 45
SECTION 202. Form of Face of Security.
[If Restricted Securities, then insert -- THIS NOTE HAS NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT").
THE HOLDER HEREOF, BY PURCHASING THIS NOTE, AGREES FOR THE BENEFIT OF THE
COMPANY THAT THIS NOTE MAY NOT BE RESOLD, PLEDGED OR OTHERWISE TRANSFERRED (X)
PRIOR TO THE SECOND ANNIVERSARY OF THE ISSUANCE HEREOF (OR ANY PREDECESSOR
SECURITY HERETO) OR (Y) BY ANY HOLDER THAT WAS AN AFFILIATE OF THE COMPANY AT
ANY TIME DURING THE THREE MONTHS PRECEDING THE DATE OF SUCH TRANSFER, IN EITHER
CASE, OTHER THAN (1) TO THE COMPANY, (2) SO LONG AS THIS NOTE IS ELIGIBLE FOR
RESALE PURSUANT TO RULE 144A UNDER THE SECURITIES ACT ("RULE 144A") TO A PERSON
WHOM THE SELLER REASONABLY BELIEVES IS A QUALIFIED INSTITUTIONAL BUYER WITHIN
THE MEANING OF RULE 144A, PURCHASING FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF A
QUALIFIED INSTITUTIONAL BUYER TO WHOM NOTICE IS GIVEN THAT RESALE, PLEDGE OR
OTHER TRANSFER IS BEING MADE IN RELIANCE ON RULE 144A (3) IN AN OFFSHORE
TRANSACTION IN ACCORDANCE WITH REGULATIONS UNDER THE SECURITIES ACT, (4)
PURSUANT TO AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT PROVIDED BY
RULE 144 (IF APPLICABLE) UNDER THE SECURITIES ACT, OR (5) PURSUANT TO AN
EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES ACT, IN EACH CASE IN
ACCORDANCE WITH ANY APPLICABLE SECURITIES LAWS OF ANY STATE OF THE UNITED
STATES. THE HOLDER HEREOF, BY PURCHASING THIS NOTE REPRESENTS AND AGREES FOR THE
BENEFIT OF THE COMPANY THAT IT IS (1) A QUALIFIED INSTITUTIONAL BUYER WITHIN THE
MEANING OF RULE 144A OR (2) A NON-U.S. PERSON OUTSIDE THE UNITED STATES WITHIN
THE MEANING OF (OR AN ACCOUNT SATISFYING THE REQUIREMENTS OF PARAGRAPH (O)(2) OF
RULE 902 UNDER) REGULATIONS UNDER THE SECURITIES ACT.]
[If a Regulation S Security, then insert -- THIS SECURITY HAS NOT
BEEN REGISTERED UNDER THE U.S. SECURITIES ACT OF 1933 (THE "SECURITIES ACT") AND
MAY NOT BE OFFERED, SOLD OR DELIVERED IN THE UNITED STATES OR TO, OR FOR THE
ACCOUNT OR BENEFIT OF, ANY U.S. PERSON, UNLESS THIS SECURITY IS REGISTERED UNDER
THE SECURITIES ACT OR AN EXEMPTION FROM THE REGISTRATION REQUIREMENTS THEREOF IS
AVAILABLE.]
THIS NOTE WAS ISSUED WITH ORIGINAL ISSUE DISCOUNT. FOR PURPOSES
OF SECTIONS 1272, 1273 AND 1275 OF THE UNITED STATES INTERNAL REVENUE CODE OF
1986, AS AMENDED, THE ISSUE
<PAGE> 46
PRICE OF THIS SECURITY IS 62.797% OF ITS PRINCIPAL AMOUNT, THE AMOUNT OF
ORIGINAL ISSUE DISCOUNT IS $372.03 PER $1000 OF STATED FACE AMOUNT, THE ISSUE
DATE IS APRIL 1, 1998 AND THE YIELD TO MATURITY IS 9.45%.
NEXTLINK Communications, Inc.
9.45% SENIOR DISCOUNT NOTES DUE 2008
[IF RESTRICTED GLOBAL SECURITY - CUSIP NO. ________]
[IF ANY REGULATION S SECURITY - CUSIP NO. ________]
[IF REGULATION S GLOBAL SECURITY - ISIN NO. - __________]
No. ______ $_______________
NEXTLINK Communications, Inc., a corporation organized under the
laws of the State of Washington (herein called the "Company", which term
includes any successor Person under the Indenture hereinafter referred to), for
value received, hereby promises to pay to Cede & Co., or registered assigns, the
principal sum of _____________ Dollars [if this Security is a Global Security,
then insert: (which principal amount may from time to time be increased or
decreased to such other principal amounts (which, taken together with the
principal amounts of all other Outstanding Securities, shall not exceed
$636,974,000 in the aggregate at any time) by adjustments made on the records of
the Trustee hereinafter referred to in accordance with the Indenture)] on April
15, 2008, and to pay interest thereon from April 15, 2003 or from the most
recent Interest Payment Date to which interest has been paid or duly provided
for, semi-annually on April 15 and October 15 in each year, commencing October
15, 2003 at the rate of 9.45% per annum, until the principal hereof is paid or
made available for payment. [If Original Securities, then insert: provided,
however, that if (i) the Company has not filed a registration statement (the
"Exchange Registration Statement") under the Securities Act of 1933, as amended
(the "Securities Act"), registering a security substantially identical to this
Security (except that such Security will not contain terms with respect to the
Additional Interest payments described below or transfer restrictions) pursuant
to an exchange offer (the "Exchange Offer") (or, in lieu thereof, a registration
statement registering this Security for resale (a "Resale Registration
Statement")) by June 30, 1998, or (ii) the Exchange Registration Statement
relating to the Exchange Offer or, if applicable, the Resale Registration
Statement has not become or been declared effective by July 30, 1998, or (iii)
the Exchange Offer has not been completed within 45 days after the date on which
the Exchange Registration Statement has become or been declared effective
initially (if the
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<PAGE> 47
Exchange Offer is then required to be made pursuant to the Exchange and
Registration Rights Agreement (the "Exchange and Registration Rights
Agreement"), dated as of April 1, 1998, by and between the Company, the
Purchasers (as defined therein) and the Holders from time to time of the
Securities) or (iv) either the Exchange Registration Statement or, if
applicable, the Resale Registration Statement is filed and declared effective
(except as specifically permitted therein) but shall thereafter cease to be
effective without being succeeded promptly by an additional registration
statement filed and declared effective, in each case (i) through (iv) upon the
terms and conditions set forth in the Exchange and Registration Rights Agreement
(each such event referred to in clauses (i) through (iv), a "Registration
Default"), then interest will accrue (in addition to the original issue discount
and any stated interest on the Securities) (the "Step-Up") at a rate of 0.5% per
annum, determined daily, on the Accreted Value of the Securities (or after April
15, 2003 on the principal amount of the Securities), from the period from the
occurrence of the Registration Default until such time (the "Step-Down Date") as
no Registration Default is in effect and, provided, further, that if either the
Exchange Offer has not been consummated or, if applicable, the Resale
Registration Statement has not become or been declared effective, in each case
by September 13, 1998, then the per annum rate of such Additional Interest shall
increase (the "Subsequent StepUp") by an additional 0.25% per annum for each
subsequent 90day period (provided that the Step-Up and all Subsequent Step-Up
interest rates shall not exceed 1.0% per annum in the aggregate) and Additional
Interest will be payable at such increased rate until such time (the "Subsequent
Step Down Date") as the Company consummates the Exchange Offer or, if
applicable, the Resale Registration Statement becomes or has been declared
effective (after which such interest rate will be restored to its initial rate).
Interest accruing as a result of the StepUp or the Subsequent StepUp (which
shall be computed on the basis of a 365-day year) is referred to herein as
"Additional Interest." Accrued Additional Interest, if any, shall be paid
semi-annually on April 15 and October 15, in each year; and the amount of
accrued Additional Interest shall be determined on the basis of the number of
days actually elapsed. Any accrued and unpaid interest (including Additional
Interest) on this Security upon the issuance of an Exchange Security (as defined
in the Indenture) in exchange for this Security shall cease to be payable to the
Holder hereof but such accrued and unpaid interest (including Additional
Interest) shall be payable on the next Interest Payment Date for such Exchange
Security to the Holder thereof on the related Regular Record Date.] The interest
so payable, and punctually paid or duly provided for, on any Interest Payment
Date will, as provided in such Indenture, be paid to the Person in whose name
this Security (or one or more Predecessor Securities) is registered at the close
of business on the Regular Record Date for such interest, which shall be April 1
or October 1 (whether or not a Business Day), as the case may be, next preceding
such Interest Payment Date. Any such interest not so punctually paid or duly
provided for will forthwith cease to be payable to the Holder on such Regular
Record Date and may either
<PAGE> 48
be paid to the Person in whose name this Security (or one or more Predecessor
Securities) is registered at the close of business on a Special Record Date for
the payment of such Defaulted Interest to be fixed by the Trustee, notice
whereof shall be given to Holders of Securities not less than 10 days prior to
such Special Record Date, or be paid at any time in any other lawful manner not
inconsistent with the requirements of any securities exchange on which the
Securities may be listed, and upon such notice as may be required by such
exchange, all as more fully provided in said Indenture.
The principal of this Security shall not accrue interest (other
than Additional Interest, if any) until April 15, 2003, except in the case of a
default in payment of principal and premium, if any, upon acceleration or
redemption, in which case interest shall be payable pursuant to the preceding
paragraph on such overdue principal (and premium, if any), such interest shall
be payable on demand and, if not so paid on demand, such interest shall itself
bear interest at the rate of 9.45% per annum (to the extent that the payment of
such interest shall be legally enforceable), and shall accrue from the date of
such demand for payment to the date payment of such interest has been made or
duly provided for, and such interest on unpaid interest shall also be payable on
demand.
If this Security is issued in the form of a Global Security,
payments of the principal of (and premium, if any) and interest on this Security
shall be made in immediately available funds to the Depositary. If this Security
is issued in certificated form, payment of the principal of (and premium, if
any) and interest on this Security will be made at the corporate trust office of
the Trustee and at the office or agency of the Company maintained for that
purpose in the Borough of Manhattan, The City of New York, New York, and at any
other office or agency maintained by the Company for such purpose, in such coin
or currency of the United States of America as at the time of payment is legal
tender for payment of public and private debts; provided, however, that at the
option of the Company payment of interest may be made by check mailed to the
address of the Person entitled thereto as such address shall appear in the
Security Register.
Reference is hereby made to the further provisions of this
Security set forth on the reverse hereof, which further provisions shall for all
purposes have the same effect as if set forth at this place.
Unless the certificate of authentication hereon has been executed
by the Trustee referred to on the reverse hereof by manual signature, this
Security shall not be entitled to any benefit under the Indenture or be valid or
obligatory for any purpose.
IN WITNESS WHEREOF, the Company has caused this instrument to be
duly executed.
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<PAGE> 49
Dated:
NEXTLINK Communications, Inc.
By__________________________________
Name:
Title:
Attest:
______________________________
Name:
Title:
SECTION 203. Form of Reverse of Security.
This Security is one of a duly authorized issue of Securities of
the Company designated as its 9.45% Senior Discount Notes Due 2008 (the
"Securities") issued under an Indenture, dated as of April 1, 1998 (herein
called the "Indenture"), between the Company and United States Trust Company of
New York, as trustee (herein called the "Trustee", which term includes any
successor trustee under the Indenture). The Securities are limited in aggregate
principal amount to $636,974,000. Reference is hereby made to the Indenture and
all indentures supplemental thereto for a statement of the respective rights,
limitations of rights, duties and immunities thereunder of the Company, the
Trustee and the Holders of the Securities and of the terms upon which the
Securities are, and are to be, authenticated and delivered.
The Securities are subject to redemption upon not less than 30
nor more than 60 days' notice by mail to each Holder of Securities to be
redeemed at such Holder's address appearing in the Security Register, in amounts
of $1,000 or an integral multiple of $1,000, at any time on or after April 15,
2003 and prior to maturity, as a whole or in part, at the election of the
Company, at the following Redemption Prices (expressed as percentages of the
principal amount) plus accrued and unpaid interest to but excluding the
Redemption Date (subject to the right of Holders of record on the relevant
Regular Record Date to receive interest due on an Interest Payment that is on or
prior to the Redemption Date), if redeemed during the 12-month period beginning
April 15, of each of the years indicated below:
<TABLE>
<CAPTION>
Year Redemption
---- Price
-----------
<S> <C>
2003 104.725%
2004 103.150%
</TABLE>
<PAGE> 50
<TABLE>
<S> <C>
2005 101.575%
</TABLE>
and thereafter at a Redemption Price equal to 100.000% of the principal amount,
together in the case of any such redemption with accrued interest to the
Redemption Date, but interest installments whose Stated Maturity is on or prior
to such Redemption Date will be payable to the Holders of such Securities, or
one or more Predecessor Securities, of record at the close of business on the
relevant Record Dates referred to on the face hereof, all as provided in the
Indenture.
The Securities are further subject to redemption prior to April
15, 2003 only in the event that on or before April 15, 2001 the Company receives
net proceeds from a sale of its Common Equity, in which case the Company may, at
its option, use all or a portion of any such net proceeds to redeem Securities
in a principal amount of up to an aggregate amount equal to 33 % of the original
principal amount of the Securities, provided, however, that Securities in an
amount equal to at least 66 % of the original aggregate principal amount of the
Securities remain Outstanding after such redemption. Such redemption must occur
on a Redemption Date within 90 days of any such sale and upon not less than 30
nor more than 60 days' notice by mail to each Holder of Securities to be
redeemed at such Holder's address appearing in the Security Register, in amounts
of $1,000 or an integral multiple of $1,000 at a Redemption Price of 109.450% of
the Accreted Value of the Securities to be redeemed to but excluding the
Redemption Date.
In the event of redemption of this Security in part only, a new
Security or Securities for the unredeemed portion hereof will be issued in the
name of the Holder hereof upon the cancellation hereof.
The Securities do not have the benefit of any sinking fund
obligations.
The Indenture provides that, subject to certain conditions, if
(i) a Change of Control occurs or (ii) certain Net Available Proceeds are
available to the Company as a result of any Asset Disposition, the Company shall
be required to make an Offer to Purchase for all or a specified portion of the
Securities.
[If not a Global Security -- In the event of redemption or
purchase pursuant to an Offer to Purchase of this Security in part only, a new
Security or Securities of like tenor for the unredeemed or unpurchased portion
hereof will be issued in the name of the Holder hereof upon the cancellation
hereof.]
[If a Global Security insert -- In the event of a deposit or
withdrawal of an interest in this Security (including upon an exchange,
transfer,
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<PAGE> 51
redemption or repurchase of this Security in part only) effected in accordance
with the Applicable Procedures, the Security Registrar, upon receipt of notice
of such event from the Depositary's custodian for this Security, shall make an
adjustment on its records to reflect an increase or decrease of the Outstanding
principal amount of this Security resulting from such deposit or withdrawal, as
the case may be.]
If an Event of Default shall occur and be continuing, the
principal of all the Securities may be declared due and payable in the manner
and with the effect provided in the Indenture.
The Indenture contains provisions for defeasance at any time of
(i) the entire indebtedness of this Security, or (ii) certain restrictive
covenants and Events of Default with respect to this Security, in each case upon
compliance with certain conditions set forth therein.
Unless the context otherwise requires, the Original Securities
(as defined in the Indenture) and the Exchange Securities (as defined in the
Indenture) shall constitute one series for all purposes under the Indenture,
including without limitation, amendments, waivers, redemptions and Offers to
Purchase.
The Indenture permits, with certain exceptions as therein
provided, the amendment thereof and the modification of the rights and
obligations of the Company and the rights of the Holders of the Securities under
the Indenture at any time by the Company and the Trustee with the consent of the
Holders of a majority in aggregate principal amount of the Securities at the
time Outstanding. The Indenture also contains provisions permitting the Holders
of specified percentages in aggregate principal amount of the Securities at the
time Outstanding, on behalf of the Holders of all the Securities, to waive
compliance by the Company with certain provisions of the Indenture and certain
past defaults under the Indenture and their consequences. Any such consent or
waiver by the Holder of this Security shall be conclusive and binding upon such
Holder and upon all future Holders of this Security and of any Security issued
upon the registration of transfer hereof or in exchange herefor or in lieu
hereof, whether or not notation of such consent or waiver is made upon this
Security.
As provided in and subject to the provisions of the Indenture,
the Holder of this Security shall not have the right to institute any proceeding
with respect to the Indenture or for the appointment of a receiver or trustee or
for any other remedy thereunder, unless such Holder shall have previously given
the Trustee written notice of a continuing Event of Default, the Holders of not
less than 25% in principal amount of the Outstanding Securities shall have made
written request to the Trustee to institute proceedings in respect of such Event
of Default as Trustee and offered the Trustee reasonable indemnity, and the
<PAGE> 52
Trustee shall not have received from the Holders of a majority in principal
amount of Outstanding Securities a direction inconsistent with such request, and
shall have failed to institute any such proceeding, for 60 days after receipt of
such notice, request and offer of indemnity. The foregoing shall not apply to
any suit instituted by the Holder of this Security for the enforcement of any
payment of principal hereof or any premium or interest hereon on or after the
respective due dates expressed herein.
No reference herein to the Indenture and no provision of this
Security or of the Indenture shall alter or impair the obligation of the
Company, which is absolute and unconditional, to pay the principal of (and
premium, if any) and interest on this Security at the times, place and rate, and
in the coin or currency, herein prescribed.
As provided in the Indenture and subject to certain limitations
therein set forth, the transfer of this Security is registrable in the Security
Register, upon surrender of this Security for registration of transfer at the
office or agency of the Company in the Borough of Manhattan, The City of New
York, New York, duly endorsed by, or accompanied by a written instrument of
transfer in form satisfactory to the Company and the Security Registrar duly
executed by, the Holder hereof or his attorney duly authorized in writing, and
thereupon one or more new Securities, of authorized denominations and like tenor
and for the same aggregate principal amount, will be issued to the designated
transferee or transferees.
The Securities are issuable only in registered form without
coupons in denominations of $1,000 and any integral multiple thereof. As
provided in the Indenture and subject to certain limitations therein set forth,
Securities are exchangeable for a like tenor and aggregate principal amount of
Securities of a different authorized denomination, as requested by the Holder
surrendering the same.
No service charge shall be made for any such registration of
transfer or exchange, but the Company may require payment of a sum sufficient to
cover any tax or other governmental charge payable in connection therewith.
Prior to due presentment of this Security for registration of
transfer, the Company, the Trustee and any agent of the Company or the Trustee
may treat the Person in whose name this Security is registered as the owner
hereof for all purposes, whether or not this Security be overdue, and none of
the Company, the Trustee or any such agent shall be affected by notice to the
contrary.
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<PAGE> 53
Interest [If an Original Security, then insert: (other than
Additional Interest)] on this Security shall be computed on the basis of a
360-day year of twelve 30-day months.
All terms used in this Security which are defined in the
Indenture shall have the meanings assigned to them in the Indenture.
OPTION OF HOLDER TO ELECT PURCHASE
If you want to elect to have this Security purchased in its
entirety by the Company pursuant to Section 1013 or 1016 of the Indenture, check
the box:
If you want to elect to have only a part of this Security
purchased by the Company pursuant to Section 1013 or 1016 of the Indenture,
state the amount:
$___________
Dated:________________ Your Signature _______________________________
(Sign exactly as name appears on the other side
of this Security)
Signature Guarantee:____________________________________________________________
Notice: Signature(s) must be guaranteed by an "eligible
guarantor institution" meeting the requirements of the
Trustee, which requirements will include membership or
participation in STAMP or such other "signature guarantee
program" as may be determined by the Trustee in addition to,
or in substitution for STAMP, all in accordance with the
Securities Exchange Act of 1934, as amended.
SECTION 204. Additional Provisions Required in Global Security.
Any Global Security issued hereunder shall, in addition to the
provisions contained in Sections 202 and 203, bear a legend in substantially the
following form:
<PAGE> 54
[If a Global Security, insert -- THIS SECURITY IS A GLOBAL
SECURITY WITHIN THE MEANING OF THE INDENTURE HEREINAFTER REFERRED TO AND IS
REGISTERED IN THE NAME OF A DEPOSITARY OR A NOMINEE THEREOF. THIS SECURITY MAY
NOT BE EXCHANGED IN WHOLE OR IN PART FOR A SECURITY REGISTERED, AND NO TRANSFER
OF THIS SECURITY IN WHOLE OR IN PART MAY BE REGISTERED, IN THE NAME OF ANY
PERSON OTHER THAN SUCH DEPOSITARY OR A NOMINEE THEREOF, EXCEPT IN THE LIMITED
CIRCUMSTANCES DESCRIBED IN THE INDENTURE.]
[If a Global Security to be held by the Depository Trust Company,
insert -- UNLESS THIS SECURITY IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF
THE DEPOSITORY TRUST COMPANY, A NEW YORK CORPORATION ("DTC"), TO ISSUER OR ITS
AGENT FOR REGISTRATION OF TRANSFER, EXCHANGE, OR PAYMENT, AND ANY SECURITY
ISSUED IS REGISTERED IN THE NAME OF CEDE & CO. OR IN SUCH OTHER NAME AS IS
REQUESTED BY AN AUTHORIZED REPRESENTATIVE OF DTC (AND ANY PAYMENT IS MADE TO
CEDE & CO. OR TO SUCH OTHER ENTITY AS IS REQUESTED BY AN AUTHORIZED
REPRESENTATIVE OF DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR
OTHERWISE BY A PERSON IS WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE
& CO., HAS AN INTEREST HEREIN.]
SECTION 205. Form of Trustee's Certificate of
Authentication.
This is one of the Securities referred to in the within-mentioned
Indenture.
United States Trust Company of New York,
as Trustee
By ________________________________
Authorized Signatory
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<PAGE> 55
ARTICLE THREE
The Securities
SECTION 301. Title and Terms.
The aggregate principal amount of Securities which may be
authenticated and delivered under this Indenture is limited to $636,974,000,
except for Securities authenticated and delivered upon registration of transfer
of, or in exchange for, or in lieu of, other Securities pursuant to Section 304,
305, 306, 906 or 1108 or in connection with an Offer to Purchase pursuant to
Section 1013 or 1016.
The Company may issue Exchange Securities from time to time
pursuant to an Exchange Offer or otherwise, in each case pursuant to a Board
Resolution, subject to Section 303, included in an Officers' Certificate
delivered to the Trustee, in authorized denominations in exchange for a like
principal amount of Original Securities. Upon any such exchange the Original
Securities shall be canceled in accordance with Section 309 and shall no longer
be deemed Outstanding for any purpose. In no event shall the aggregate principal
amount of Original Securities and Exchange Securities Outstanding exceed
$636,974,000.
The Securities shall be known and designated as the "9.45% Senior
Discount Notes Due 2008" of the Company. The Stated Maturity of the Securities
shall be April 15, 2008. The Securities shall bear interest at the rate of 9.45%
per annum, from April 15, 2003 or from the most recent Interest Payment Date
thereafter to which interest has been paid or duly provided for, as the case may
be, payable semi-annually on April 15 and October 15, commencing October 15,
2003, until the principal thereof is paid or made available for payment;
provided, however, with respect to Original Securities, if there has been a
Registration Default, a Step-Up will occur and the Original Securities will from
then bear Additional Interest until the Step-Down Date and, if either the
Exchange Offer has not been consummated or, if applicable, the Resale
Registration Statement has not become or been declared effective, in each case,
by September 13, 1998, a Subsequent Step-Up will occur and the Original
Securities will from then bear Additional Interest until the Subsequent
Step-Down Date. Accrued Additional Interest, if any, shall be paid in cash in
arrears semi-annually on April 15 and October 15 in each year, and the amount of
accrued Additional Interest shall be determined on the basis of the number of
days actually elapsed. In connection with the cash payment of any Additional
Interest, the Company shall notify the Trustee (the "Additional Interest
Notice") on or before the later to occur of (i) the Regular Record Date
preceding such payment
<PAGE> 56
of any Additional Interest, and (ii) the date on which any such Additional
Interest begins to accrue, of the amount of Additional Interest to be paid by
the Company on the next Interest Payment Date. In the event of the occurrence of
a Step-Down Date during the period between the date on which the Additional
Interest Notice is given and the next Interest Payment Date, the Company shall
so notify the Trustee and shall provide the Trustee with the revised amount of
Additional Interest to be paid by the Company on such Interest Payment Date.
In the case of a default in payment of principal and premium, if
any, upon acceleration or redemption, interest shall be payable pursuant to the
preceding paragraph on such overdue principal (and premium, if any), such
interest shall be payable on demand and, if not so paid on demand, such interest
shall itself bear interest at the rate of 1% per annum (to the extent that the
payment of such interest shall be legally enforceable), and shall accrue from
the date of such demand for payment to the date payment of such interest has
been made or duly provided for, and such interest on unpaid interest shall also
be payable on demand.
The principal of and premium, if any, and interest on the
Securities shall be payable at the corporate trust office of the Trustee in the
Borough of Manhattan, The City of New York, New York, maintained for such
purpose and at any other office or agency maintained by the Company for such
purpose; provided, however, that at the option of the Company payment of
interest may be made by check mailed to the address of the Person entitled
thereto as such address shall appear in the Security Register.
The Securities shall be subject to repurchase by the Company
pursuant to an Offer to Purchase as provided in Sections 1013 and 1016.
The Securities shall be redeemable as provided in Article Eleven.
The Securities shall not have the benefit of any sinking fund
obligations.
The Securities shall be subject to defeasance at the option of
the Company as provided in Article Twelve.
Unless the context otherwise requires, the Original Securities
and the Exchange Securities shall constitute one series for all purposes under
the Indenture, including without limitation, amendments, waivers, redemptions
and Offers to Purchase.
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<PAGE> 57
SECTION 302. Denominations.
The Securities shall be issuable only in registered form without
coupons and only in denominations of $1,000 and any integral multiple thereof.
SECTION 303. Execution, Authentication, Delivery
and Dating.
The Securities shall be executed on behalf of the Company by its
Chief Executive Officer, its President, its Executive Vice President or one of
its Vice Presidents and attested by its Secretary. The signature of any of these
officers on the Securities may be manual or facsimile.
Securities bearing the manual or facsimile signatures of
individuals who were at any time the proper officers of the Company shall bind
the Company, notwithstanding that such individuals or any of them have ceased to
hold such offices prior to the authentication and delivery of such Securities or
did not hold such offices at the date of such Securities.
At any time and from time to time after the execution and
delivery of this Indenture, the Company may deliver Securities executed by the
Company to the Trustee for authentication, together with a Company Order for the
authentication and delivery of such Securities; and the Trustee in accordance
with such Company Order shall authenticate and deliver such Securities as in
this Indenture provided and not otherwise.
At any time and from time to time after the execution and
delivery of this Indenture and after the effectiveness of a Registration
Statement under the Securities Act with respect thereto, the Company may deliver
Exchange Securities executed by the Company to the Trustee for authentication,
together with a Company Order for the authentication and delivery of such
Exchange Securities and a like principal amount of Original Securities for
cancellation in accordance with Section 309 of this Indenture, and the Trustee
in accordance with the Company Order shall authenticate and deliver such
Securities. In authenticating such Exchange Securities, and accepting the
additional responsibilities under this Indenture in relation to such Securities,
the Trustee shall be entitled to receive, and (subject to Section 601) shall be
fully protected in relying upon, an Opinion of Counsel stating,
(a) that such Exchange Securities have been duly and validly
issued in accordance with the terms of the Indenture, and are entitled
to all the rights and benefits set forth herein; and
<PAGE> 58
(b) that the issuance of the Exchange Securities in exchange for
the Original Securities has been effected in compliance with the
Securities Act of 1933, as amended.
Each Security shall be dated the date of its authentication.
No Security shall be entitled to any benefit under this Indenture
or be valid or obligatory for any purpose unless there appears on such Security
a certificate of authentication substantially in the form provided for herein
executed by the Trustee by manual signature, and such certificate upon any
Security shall be conclusive evidence, and the only evidence, that such Security
has been duly authenticated and delivered hereunder.
SECTION 304. Temporary Securities.
Pending the preparation of definitive Securities, the Company may
execute, and upon a Company Order the Trustee shall authenticate and deliver,
temporary Securities which are printed, lithographed, typewritten, mimeographed
or otherwise produced, in any authorized denomination, substantially of the
tenor of the definitive Securities in lieu of which they are issued and with
such appropriate insertions, omissions, substitutions and other variations as
the officers executing such Securities may determine, as evidenced by their
execution of such Securities.
If temporary Securities are issued, the Company will cause
definitive Securities to be prepared without unreasonable delay. After the
preparation of definitive Securities, the temporary Securities shall be
exchangeable for definitive Securities upon surrender of the temporary
Securities at any office or agency of the Company designated pursuant to Section
1002, without charge to the Holder. Upon surrender for cancellation of any one
or more temporary Securities, the Company shall execute and the Trustee shall
authenticate and deliver in exchange therefor a like tenor and principal amount
of definitive Securities of authorized denominations. Until so exchanged, the
temporary Securities shall in all respects be entitled to the same benefits
under this Indenture as definitive Securities.
-47-
<PAGE> 59
SECTION 305. Registration, Registration of Transfer and Exchange.
(a) The Company shall cause to be kept at the Corporate Trust
Office of the Trustee a register (the register maintained in such office and in
any other office or agency designated pursuant to Section 1002 being herein
sometimes collectively referred to as the "Security Register") in which, subject
to such reasonable regulations as they may prescribe, the Company shall provide
for the registration of Securities and of transfers and exchanges of Securities.
The Trustee is hereby appointed "Security Registrar" for the purpose of
registering Securities and transfers and exchanges of Securities as herein
provided. Such Security Register shall distinguish between Original Securities
and Exchange Securities.
Subject to the other provisions of this Indenture regarding
restrictions on transfer, upon surrender for registration of transfer of any
Security at an office or agency of the Company designated pursuant to Section
1002 for such purpose in accordance with the terms hereof, the Company shall
execute, and the Trustee shall authenticate and deliver, in the name of the
designated transferee or transferees, one or more new Securities of any
authorized denominations and of a like tenor and aggregate principal amount and
bearing such restrictive legends as may be required by this Indenture.
At the option of the Holder and subject to the other provisions
of this Section 305, Securities may be exchanged for other Securities of any
authorized denominations and of a like tenor and aggregate principal amount,
upon surrender of the Securities to be exchanged at such office or agency.
Whenever any Securities are so surrendered for exchange, the Company shall
execute, and the Trustee shall authenticate and deliver, the Securities which
the Holder making the exchange is entitled to receive.
All Securities issued upon any registration of transfer or
exchange of Securities shall be the valid obligations of the Company, evidencing
the same debt, and (subject to the provisions in the Original Securities
regarding the payment of Additional Interest) entitled to the same benefits
under this Indenture, as the Securities surrendered upon such registration of
transfer or exchange.
Every Security presented or surrendered for registration of
transfer or for exchange shall (if so required by the Company or the Trustee) be
duly endorsed, or be accompanied by a written instrument of transfer in form
satisfactory to the Company and the Security Registrar duly executed, by the
Holder thereof or his attorney duly authorized in writing.
<PAGE> 60
No service charge shall be made to the Holder for any
registration of transfer or exchange of Securities, but the Company may require
payment of a sum sufficient to cover any tax or other governmental charge that
may be imposed in connection with any registration of transfer or exchange of
Securities, other than exchanges pursuant to Section 304, 305, 906 or 1108 or in
accordance with any Offer to Purchase pursuant to Section 1013 or 1016 not
involving any transfer.
The Company shall not be required (i) to issue, register the
transfer of or exchange any Security during a period beginning at the opening of
business 15 days before the day of the mailing of a notice of redemption of
Securities selected for redemption under Section 1104 and ending at the close of
business on the day of such mailing, or (ii) to register the transfer of or
exchange any Security so selected for redemption in whole or in part, except the
unredeemed portion of any Security being redeemed in part.
(b) Certain Transfers and Exchanges. Notwithstanding any other
provision of this Indenture or the Securities, transfers and exchanges of
Securities and beneficial interests in a Global Security of the kinds specified
in this Section 305(b) shall be made only in accordance with this Section
305(b).
(i) Restricted Global Security to Regulation S Global
Security. If the owner of a beneficial interest in the Restricted Global
Security wishes at any time to transfer such interest to a Person who
wishes to acquire the same in the form of a beneficial interest in the
Regulation S Global Security, such transfer may be effected only in
accordance with the provisions of this Clause (b)(i) and Clause (b)(iv)
below and subject to the Applicable Procedures. Upon receipt by the
Trustee, as Security Registrar, of (A) an order given by the Depositary
or its authorized representative directing that a beneficial interest in
the Regulation S Global Security in a specified principal amount be
credited to a specified Agent Member's account and that a beneficial
interest in the Restricted Global Security in an equal principal amount
be debited from another specified Agent Member's account and (B) a
Regulation S Certificate, satisfactory to the Trustee and duly executed
by the owner of such beneficial interest in the Restricted Global
Security or his attorney duly authorized in writing, then the Trustee,
as Security Registrar but subject to Clause (b)(vii) below, shall reduce
the principal amount of the Restricted Global Security and increase the
principal amount of the Regulation S Global Security by such specified
principal amount.
(ii) Regulation S Global Security to Restricted Global
Security. If the owner of a beneficial interest in the Regulation S
Global Security wishes at any time to transfer such interest to a Person
who
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wishes to acquire the same in the form of a beneficial interest in the
Restricted Global Security, such transfer may be effected only in
accordance with this Clause (b)(ii) and subject to the Applicable
Procedures. Upon receipt by the Trustee, as Security Registrar, of (A)
an order given by the Depositary or its authorized representative
directing that a beneficial interest in the Restricted Global Security
in a specified principal amount be credited to a specified Agent
Member's account and that a beneficial interest in the Regulation S
Global Security in an equal principal amount be debited from another
specified Agent Member's account and (B) if such transfer is to occur
during the Restricted Period, a Restricted Securities Certificate,
satisfactory to the Trustee and duly executed by the owner of such
beneficial interest in the Regulation S Global Security or his attorney
duly authorized in writing, then the Trustee, as Security Registrar,
shall reduce the principal amount of the Regulation S Global Security
and increase the principal amount of the Restricted Global Security by
such specified principal amount.
(iii) Non-Global Security to Non-Global Security. A
Security that is not a Global Security may be transferred, in whole or
in part, to a Person who takes delivery in the form of another Security
that is not a Global Security as provided in Section 305(a), provided
that, if the Security to be transferred in whole or in part is a
Restricted Security, or is a Regulation S Security and the transfer is
to occur during the Restricted Period, then the Trustee shall have
received (A) a Restricted Securities Certificate, satisfactory to the
Trustee and duly executed by the transferor Holder or his attorney duly
authorized in writing, in which case the transferee Holder shall take
delivery in the form of a Restricted Security, or (B) a Regulation S
Certificate, satisfactory to the Trustee and duly executed by the
transferor Holder or his attorney duly authorized in writing, in which
case the transferee Holder shall take delivery in the form of a
Regulation S Security (subject in every case to Section 305(c)).
(iv) Regulation S Global Security to be Held Through
Euroclear or Cedel during Restricted Period. The Company shall use its
best efforts to cause the Depositary to ensure that, until the
expiration of the Restricted Period, beneficial interests in the
Regulation S Global Security may be held only in or through accounts
maintained at the Depositary by Euroclear or Cedel (or by Agent Members
acting for the account thereof), and no person shall be entitled to
effect any transfer or exchange that would result in any such interest
being held otherwise than in or through such an account; provided that
this Clause (b)(iv) shall not prohibit any transfer or exchange of such
an interest in accordance with Clause (b)(ii) above.
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(v) Exchanges of Book-Entry Securities for Certificated
Securities. A beneficial interest in a Global Security may not be
exchanged for a Security in certificated form unless (i) DTC (x)
notifies the Company that it is unwilling or unable to continue as
Depositary for the Global Security or (y) has ceased to be a clearing
agency registered under the Exchange Act and in either case the Company
thereupon fails to appoint a successor Depositary, (ii) the Company, at
its option, notifies the Trustee in writing that it elects to cause the
issuance of the Securities in certificated form or (iii) there shall
have occurred and be continuing an Event of Default or any event which
after notice or lapse of time or both would be an Event of Default with
respect to the Securities. In all cases, certificated Securities
delivered in exchange for any Global Security or beneficial interests
therein will be registered in the names, and issued in any approved
denominations, requested by or on behalf of the Depositary (in
accordance with its customary procedures). Any certificated Security
issued in exchange for an interest in a Global Security will bear the
legend restricting transfers that is borne by such Global Security. Any
such exchange will be effected through the DWAC System and an
appropriate adjustment will be made in the records of the Security
Registrar to reflect a decrease in the principal amount of the relevant
Global Security.
(c) Securities Act Legends. Rule 144A Securities and their
Successor Securities shall bear a Restricted Securities Legend, and the
Regulation S Securities and their Successor Securities shall bear a Regulation S
Legend, subject to the following:
(i) subject to the following Clauses of this Section
305(c), a Security or any portion thereof which is exchanged, upon
transfer or otherwise, for a Global Security or any portion thereof
shall bear the Securities Act Legend borne by such Global Security while
represented thereby;
(ii) subject to the following Clauses of this Section
305(c), a new Security which is not a Global Security and is issued in
exchange for another Security (including a Global Security) or any
portion thereof, upon transfer or otherwise, shall bear the Securities
Act Legend borne by such other Security, provided that, if such new
Security is required pursuant to Section 305(b)(v) or (vi) to be issued
in the form of a Restricted Security, it shall bear a Restricted
Securities Legend and, if such new Security is so required to be issued
in the form of a Regulation S Security, it shall bear a Regulation S
Legend;
(iii) Registered Securities shall not bear a Securities
Act Legend;
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(iv) at any time after the Securities may be freely
transferred without registration under the Securities Act or without
being subject to transfer restrictions pursuant to the Securities Act, a
new Security which does not bear a Securities Act Legend may be issued
in exchange for or in lieu of a Security (other than a Global Security)
or any portion thereof which bears such a legend if the Trustee has
received an Unrestricted Securities Certificate, satisfactory to the
Trustee and duly executed by the Holder of such legended Security or his
attorney duly authorized in writing, and after such date and receipt of
such certificate, the Trustee shall authenticate and deliver such a new
Security in exchange for or in lieu of such other Security as provided
in this Article Three;
(v) a new Security which does not bear a Securities Act
Legend may be issued in exchange for or in lieu of a Security (other
than a Global Security) or any portion thereof which bears such a legend
if, in the Company's judgment, placing such a legend upon such new
Security is not necessary to ensure compliance with the registration
requirements of the Securities Act, and the Trustee, at the direction of
the Company, shall authenticate and deliver such a new Security as
provided in this Article Three; and
(vi) notwithstanding the foregoing provisions of this
Section 305(c), a Successor Security of a Security that does not bear a
particular form of Securities Act Legend shall not bear such form of
legend unless the Company has reasonable cause to believe that such
Successor Security is a "restricted security" within the meaning of Rule
144, in which case the Trustee, at the direction of the Company, shall
authenticate and deliver a new Security bearing a Restricted Securities
Legend in exchange for such Successor Security as provided in this
Article Three.
SECTION 306. Mutilated, Destroyed, Lost and Stolen Securities.
If any mutilated Security is surrendered to the Trustee, the
Company shall execute and the Trustee shall authenticate and deliver in exchange
therefor a new Security of like tenor and principal amount and bearing a number
not contemporaneously outstanding.
If there shall be delivered to the Company and the Trustee (i)
evidence to their satisfaction of the destruction, loss or theft of any Security
and (ii) such security or indemnity as may be required by them to save each of
them and any agent of either of them harmless, then, in the absence of notice to
the Company or the Trustee that such Security has been acquired by a bona fide
purchaser, the Company shall execute and the Trustee shall authenticate and
<PAGE> 64
deliver, in lieu of any such destroyed, lost or stolen Security, a new Security
of like tenor and principal amount and bearing a number not contemporaneously
outstanding.
In case any such mutilated, destroyed, lost or stolen Security
has become or is about to become due and payable, the Company in the discretion
of the Company may, instead of issuing a new Security, pay such Security.
Upon the issuance of any new Security under this Section, the
Company may require the payment of a sum sufficient to cover any tax or other
governmental charge that may be imposed in relation thereto and any other
expenses (including the fees and expenses of the Trustee) connected therewith.
Every new Security issued pursuant to this Section in lieu of any
destroyed, lost or stolen Security shall constitute an original additional
contractual obligation of the Company, whether or not the destroyed, lost or
stolen Security shall be at any time enforceable by anyone, and shall be
entitled to all the benefits of this Indenture equally and proportionately with
any and all other Securities duly issued hereunder.
The provisions of this Section are exclusive and shall preclude
(to the extent lawful) all other rights and remedies with respect to the
replacement or payment of mutilated, destroyed, lost or stolen Securities.
SECTION 307. Payment of Interest; Interest Rights Preserved.
Interest on any Security which is payable, and is punctually paid
or duly provided for, on any Interest Payment Date shall be paid to the Person
in whose name that Security (or one or more Predecessor Securities) is
registered at the close of business on the Regular Record Date for such
interest.
Any interest (including Additional Interest) on any Security
which is payable, but is not punctually paid or duly provided for, on any
Interest Payment Date (herein called "Defaulted Interest") shall (a) bear
interest at the rate per annum stated in the form of Security included herein
(to the extent that the payment of such interest shall be legally enforceable),
and (b) forthwith cease to be payable to the Holder on the relevant Regular
Record Date by virtue of having been such Holder, and such Defaulted Interest
may be paid by the Company, at its election in each case, as provided in Clause
(1) or (2) below:
(1) The Company may elect to make payment of any Defaulted Interest to
the Persons in whose names the Securities (or their respective Predecessor
Securities) are
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registered at the close of business on a Special Record Date for the
payment of such Defaulted Interest, which shall be fixed in the
following manner. The Company shall notify the Trustee in writing of the
amount of Defaulted Interest proposed to be paid on each Security and
the date of the proposed payment, and at the same time the Company shall
deposit with the Trustee an amount of money equal to the aggregate
amount proposed to be paid in respect of such Defaulted Interest or
shall make arrangements satisfactory to the Trustee for such deposit
prior to the date of the proposed payment, such money when deposited to
be held in trust for the benefit of the Persons entitled to such
Defaulted Interest as in this Clause provided. Thereupon the Trustee
shall fix a Special Record Date for the payment of such Defaulted
Interest which shall be not more than 15 days and not less than 10 days
prior to the date of the proposed payment and not less than 10 days
after the receipt by the Trustee of the notice of the proposed payment.
The Trustee shall promptly notify the Company of such Special Record
Date and, in the name and at the expense of the Company, shall cause
notice of the proposed payment of such Defaulted Interest and the
Special Record Date therefor to be mailed, first-class postage prepaid,
to each Holder at his address as it appears in the Security Register,
not less than 10 days prior to such Special Record Date. Notice of the
proposed payment of such Defaulted Interest and the Special Record Date
therefor having been so mailed, such Defaulted Interest shall be paid to
the Persons in whose names the Securities (or their respective
Predecessor Securities) are registered at the close of business on such
Special Record Date and shall no longer be payable pursuant to the
following Clause (2).
(2) The Company may make payment of any Defaulted Interest in any
other lawful manner not inconsistent with the requirements of any
securities exchange on which the Securities may be listed, and upon such
notice as may be required by such exchange, if, after notice given by
the Company to the Trustee of the proposed payment pursuant to this
Clause, such manner of payment shall be deemed practicable by the
Trustee.
Subject to the foregoing provisions of this Section, each
Security delivered under this Indenture upon registration of transfer of or in
exchange for
<PAGE> 66
or in lieu of any other Security shall carry the rights to interest
accrued and unpaid, and to accrue, which were carried by such other Security.
SECTION 308. Persons Deemed Owners.
Prior to due presentment of a Security for registration of
transfer, the Company, the Trustee and any agent of the Company or the Trustee
may treat the Person in whose name such Security is registered as the owner of
such Security for the purpose of receiving payment of principal of and premium,
if any, and (subject to Section 307) interest on such Security and for all other
purposes whatsoever, whether or not such Security be overdue, and none of the
Company, the Trustee or any agent of the Company or the Trustee shall be
affected by notice to the contrary.
SECTION 309. Cancellation.
All Securities surrendered for payment, redemption, registration
of transfer, exchange or pursuant to any Offer to Purchase pursuant to Section
1013 or 1016 shall, if surrendered to any Person other than the Trustee, be
delivered to the Trustee and shall be promptly cancelled by it. The Company may
at any time deliver to the Trustee for cancellation any Securities previously
authenticated and delivered hereunder which the Company may have acquired in any
manner whatsoever, and all Securities so delivered shall be promptly cancelled
by the Trustee. No Securities shall be authenticated in lieu of or in exchange
for any Securities cancelled as provided in this Section, except as expressly
permitted by this Indenture. All cancelled Securities held by the Trustee shall
be disposed of in accordance with its standard procedures or as directed by a
Company Order; provided, however, that the Trustee shall not be required to
destroy such Securities.
SECTION 310. Computation of Interest.
Interest on the Securities shall be computed on the basis of a
360day year of twelve 30-day months, except that Additional Interest shall be
computed on the basis of a 365-day year.
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SECTION 311. CUSIP and ISIN Numbers.
The Company in issuing Securities may use "CUSIP" and "ISIN"
numbers (if then generally in use) in addition to serial numbers; if so, the
Trustee shall use such "CUSIP" and "ISIN" numbers in addition to serial numbers
in notices of redemption and repurchase as a convenience to Holders; provided
that any such notice may state that no representation is made as to the
correctness of such CUSIP and ISIN numbers either as printed on the Securities
or as contained in any notice of a redemption or repurchase and that reliance
may be placed only on the serial or other identification numbers printed on the
Securities, and any such redemption or repurchase shall not be affected by any
defect in or omission of such CUSIP and ISIN numbers.
ARTICLE FOUR
Satisfaction and Discharge
SECTION 401. Satisfaction and Discharge of Indenture.
This Indenture shall cease to be of further effect as to all
outstanding Securities (except as to (i) rights of registration of transfer and
exchange and the Company's right of optional redemption, (ii) substitution of
apparently mutilated, defaced, destroyed, lost or stolen Securities, (iii)
rights of holders of Securities to receive payment of principal of and premium,
if any, and interest on the Securities, (iv) rights, obligations and immunities
of the Trustee under the Indenture and (v) rights of the holders of the
Securities as beneficiaries of the Indenture with respect to any property
deposited with the Trustee payable to all or any of them), and the Trustee, on
demand of and at the expense of the Company, shall execute proper instruments
acknowledging satisfaction and discharge of this Indenture, when
(1) either
(A) the Company will have paid or caused to be paid the
principal of and premium, if any, and interest on the Securities
as and when the same will have become due and payable; or
(B) all outstanding Securities (except lost, stolen or
destroyed Securities which have been replaced or paid) have been
delivered to the Trustee for cancellation;
and the Company, in the case of (A) above, has deposited or
caused to be deposited with the Trustee as trust funds in trust
for
<PAGE> 68
the purpose an amount sufficient to pay and discharge the entire
indebtedness on such Securities not theretofore delivered to the
Trustee for cancellation, for principal of and premium, if any,
and interest to the date of such deposit (in the case of
Securities which have become due and payable) or to the Stated
Maturity or Redemption Date, as the case may be;
(2) the Company has paid or caused to be paid all other sums
payable hereunder by the Company;
(3) the Company has delivered to the Trustee an Officers'
Certificate and an Opinion of Counsel, each stating that all conditions
precedent herein provided for relating to the satisfaction and discharge
of this Indenture have been complied with; and
(4) the Trustee shall have received such other documents and
assurances as the Trustee shall have reasonably requested.
Notwithstanding the satisfaction and discharge of this Indenture, (i) the
obligations of the Company to the Trustee under Section 607, (ii) substitution
of apparently mutilated, defaced, destroyed, lost or stolen Securities, (iii)
rights of holders of Securities to receive payment of principal of and premium,
if any, and interest on the Securities, (iv) rights, obligations and immunities
of the Trustee under this Indenture (including, if money shall have been
deposited with the Trustee pursuant to subclause (B) of Clause (1) of this
Section, the obligations of the Trustee under Section 402 and the last paragraph
of Section 1003), and (v) rights of holders of the Securities as beneficiaries
of this Indenture with respect to any property deposited with the Trustee
payable to all or any of them, shall survive.
SECTION 402. Application of Trust Money.
Subject to the provisions of the last paragraph of Section 1003,
all money deposited with the Trustee pursuant to Section 401 shall be held in
trust and applied by it, in accordance with the provisions of the Securities and
this Indenture, to the payment, either directly or through any Paying Agent
(including the Company acting as its own Paying Agent) as the Trustee may
determine, to the Persons entitled thereto, of the principal (and premium, if
any) and interest for whose payment such money has been deposited with the
Trustee.
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ARTICLE FIVE
Remedies
SECTION 501. Events of Default.
"Event of Default", wherever used herein, means any one of the
following events (whatever the reason for such Event of Default and whether it
shall be voluntary or involuntary or be effected by operation of law or pursuant
to any judgment, decree or order of any court or any order, rule or regulation
of any administrative or governmental body):
(1) default in the payment of any interest upon any Security when
it becomes due and payable, and continuance of such default for a period
of 30 days; or
(2) default in the payment of the principal of (or premium, if
any, on) any Security when due; or
(3) default in the payment of principal and interest upon any
Security required to be purchased pursuant to an Offer to Purchase
pursuant to Sections 1013 or 1016 when due and payable; or
(4) default in the performance, or breach, of Section 801; or
(5) default in the performance, or breach, of any covenant or
warranty of the Company in this Indenture or in any Security (other than
a covenant or warranty a default in whose performance or whose breach is
elsewhere in this Section specifically dealt with), and continuance of
such default or breach for a period of 60 days after there has been
given, by registered or certified mail, to the Company by the Trustee or
to the Company and the Trustee by the Holders of at least 25% in
aggregate principal amount of the Outstanding Securities a written
notice specifying such default or breach and requiring it to be remedied
and stating that such notice is a "Notice of Default" hereunder; or
(6) a default or defaults under any bond(s), debenture(s),
note(s) or other evidence(s) of Debt by the Company or any Significant
Subsidiary of the Company or under any mortgage(s), indenture(s) or
instrument(s) under which there may be issued or by which there may be
secured or evidenced any Debt of such type by the Company or any such
Significant Subsidiary with a principal amount then outstanding,
individually or in the aggregate, in excess of $10 million, whether such
Debt now exists or shall hereafter be created, which default or defaults
shall constitute a failure to pay such Debt when due at the final
maturity thereof, or shall have
<PAGE> 70
resulted in such Debt becoming or being declared due and payable prior
to the date on which it would otherwise have become due and payable; or
(7) a final judgment or final judgments (not subject to appeal)
for the payment of money are entered against the Company or any
Significant Subsidiary in an aggregate amount in excess of $10 million
by a court or courts of competent jurisdiction, which judgments remain
undischarged or unstayed for a period (during which execution shall not
be effectively stayed) of 45 days after the right to appeal all such
judgments has expired; or
(8) the entry by a court having jurisdiction in the premises of
(A) a decree or order for relief in respect of the Company or any
Significant Subsidiary in an involuntary case or proceeding under any
applicable Federal or State bankruptcy, insolvency, reorganization or
other similar law or (B) a decree or order adjudging the Company or any
Significant Subsidiary a bankrupt or insolvent, or approving as properly
filed a petition seeking reorganization, arrangement, adjustment or
composition of or in respect of the Company or any Significant
Subsidiary under any applicable Federal or State law, or appointing a
custodian, receiver, liquidator, assignee, trustee, sequestrator or
other similar official of the Company or any Significant Subsidiary or
of any substantial part of its property, or ordering the winding up or
liquidation of its affairs, and the continuance of any such decree or
order for relief or any such other decree or order unstayed and in
effect for a period of 60 consecutive days; or
(9) the commencement by the Company or any Significant Subsidiary
of a voluntary case or proceeding under any applicable Federal or State
bankruptcy, insolvency, reorganization or other similar law or of any
other case or proceeding to be adjudicated a bankrupt or insolvent, or
the consent by it to the entry of a decree or order for relief in
respect of the Company or any Significant Subsidiary in an involuntary
case or proceeding under any applicable Federal or State bankruptcy,
insolvency, reorganization or other similar law or to the commencement
of any bankruptcy or insolvency case or proceeding against it, or the
filing by it of a petition or answer or consent seeking reorganization
or relief under any applicable Federal or State law, or the consent by
it to the filing of such petition or to the appointment of or taking
possession by a custodian, receiver, liquidator, assignee, trustee,
sequestrator or other similar official of the Company or any Significant
Subsidiary or of any substantial part of its property, or the making by
it of an assignment for the benefit of creditors, or the admission by it
in writing of its inability to pay its debts generally as they become
due, or the taking of corporate action by
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the Company or any Significant Subsidiary in furtherance of any such
action.
SECTION 502. Acceleration of Maturity; Rescission and Annulment.
If an Event of Default (other than an Event of Default specified
in Section 501(8) or (9) with respect to the Company) occurs and is continuing,
then and in every such case the Trustee or the Holders of not less than 25% in
aggregate principal amount of the Outstanding Securities may declare the Default
Amount of all the Securities to be due and payable immediately, by a notice in
writing to the Company (and to the Trustee if given by Holders), and upon any
such declaration such Default Amount and any accrued interest, together with all
other amounts due under this Indenture, shall become immediately due and
payable. If an Event of Default specified in Section 501(8) or (9) with respect
to the Company occurs, the Default Amount of and any accrued interest on the
Securities then Outstanding, together with all other amounts due under this
Indenture, shall ipso facto become immediately due and payable without any
declaration or other Act on the part of the Trustee or any Holder.
The "Default Amount" in respect of any particular Security as of
any particular date of acceleration on or before April 15, 2003 shall equal the
Accreted Value of the Security on such date and as of any particular date of
acceleration thereafter, shall equal the principal amount of the Security plus
accrued and unpaid interest to such date.
At any time after such a declaration of acceleration has been
made and before a judgment or decree for payment of the money due based on
acceleration has been obtained by the Trustee as hereinafter in this Article
provided, the Holders of a majority in aggregate principal amount of the
Outstanding Securities, by written notice to the Company and the Trustee, may
rescind and annul such declaration and its consequences if:
(1) the Company has paid or deposited with the Trustee a sum
sufficient to pay
(A) all overdue interest on all Securities,
(B) the principal of (and premium, if any, on) any
Securities which have become due otherwise than by such
declaration of acceleration (including any Securities required to
have been purchased on the Purchase Date pursuant to an Offer to
Purchase
<PAGE> 72
made by the Company) and interest thereon at the rate borne by
the Securities,
(C) to the extent that payment of such interest is lawful,
interest upon overdue interest at the applicable rate borne by
the Securities, and
(D) all sums paid or advanced by the Trustee hereunder and
the reasonable compensation, expenses, disbursements and advances
of the Trustee, its agents and counsel;
and
(2) all Events of Default, other than the non-payment of the
principal of Securities which have become due solely by such declaration
of acceleration, have been cured or waived as provided in Section 513.
No such rescission shall affect any subsequent default or impair any right
consequent thereon.
SECTION 503. Collection of Indebtedness and Suits
for Enforcement by Trustee.
The Company covenants that if
(1) default is made in the payment of any interest on any
Security when such interest becomes due and payable and such default
continues for a period of 30 days, or
(2) default is made in the payment of the principal of (or
premium, if any, on) any Security at the Maturity thereof or, with
respect to any Security required to have been purchased pursuant to an
Offer to Purchase made by the Company, at the Purchase Date thereof,
the Company will, upon demand of the Trustee, pay to it, for the benefit of the
Holders of such Securities, the whole amount then due and payable on such
Securities for principal (and premium, if any) and interest, and, to the extent
that payment of such interest shall be legally enforceable, interest on any
overdue principal (and premium, if any) and on any overdue interest, at the rate
provided by the Securities, and, in addition thereto, such further amount as
shall be sufficient to cover the costs and expenses incurred by the Trustee
under this Indenture, including the reasonable compensation, expenses,
disbursements and advances of the Trustee, its agents and counsel.
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If the Company fails to pay such amounts forthwith upon such
demand, the Trustee, in its own name and as trustee of an express trust, may
institute a judicial proceeding for the collection of the sums so due and
unpaid, may prosecute such proceeding to judgment or final decree, and may
enforce the same against the Company or any other obligor upon the Securities
and collect the moneys adjudged or decreed to be payable in the manner provided
by law out of the property of the Company or any other obligor upon the
Securities, wherever situated.
If an Event of Default occurs and is continuing, the Trustee may
in its discretion proceed to protect and enforce its rights and the rights of
the Holders by such appropriate judicial proceedings as the Trustee shall deem
most effective to protect and enforce any such rights, whether for the specific
enforcement of any covenant or agreement in this Indenture or in aid of the
exercise of any power granted herein, or to enforce any other proper remedy.
SECTION 504. Trustee May File Proofs of Claim.
In case of any judicial proceeding relative to the Company (or
any other obligor upon the Securities), its property or its creditors, the
Trustee shall be entitled and empowered, by intervention in such proceeding or
otherwise, to take any and all actions authorized under the Trust Indenture Act
in order to have claims of the Holders and the Trustee allowed in any such
proceeding. In particular, the Trustee shall be authorized to collect and
receive any moneys, securities or other property payable or deliverable upon the
exchange of the Securities or upon any such claims and to distribute the same;
and any custodian, receiver, assignee, trustee, liquidator, sequestrator or
other similar official in any such judicial proceeding is hereby authorized by
each Holder to make such payments to the Trustee and, in the event that the
Trustee shall consent to the making of such payments directly to the Holders, to
pay to the Trustee any amount due it for the reasonable compensation, expenses,
disbursements and advances of the Trustee, its agents and counsel, and any other
amounts due the Trustee under Section 607.
No provision of this Indenture shall be deemed to authorize the
Trustee to authorize or consent to or accept or adopt on behalf of any Holder
any plan of reorganization, arrangement, adjustment or composition affecting the
Securities or the rights of any Holder thereof or to authorize the Trustee to
vote in respect of the claim of any Holder in any such proceeding; provided,
however, that the Trustee may, on behalf of the Holders, vote for the election
of a trustee in bankruptcy or similar official and be a member of a creditors or
other similar committee.
<PAGE> 74
SECTION 505. Trustee May Enforce Claims Without Possession of Securities.
All rights of action and claims under this Indenture or the
Securities may be prosecuted and enforced by the Trustee without the possession
of any of the Securities or the production thereof in any proceeding relating
thereto, and any such proceeding instituted by the Trustee shall be brought in
its own name as trustee of an express trust, and any recovery of judgment shall,
after provision for the payment of the reasonable compensation, expenses,
disbursements and advances of the Trustee, its agents and counsel, be for the
ratable benefit of the Holders of the Securities in respect of which such
judgment has been recovered.
SECTION 506. Application of Money Collected.
Any money collected by the Trustee pursuant to this Article shall
be applied in the following order, at the date or dates fixed by the Trustee
and, in case of the distribution of such money on account of principal (or
premium, if any) or interest, upon presentation of the Securities and the
notation thereon of the payment if only partially paid and upon surrender
thereof if fully paid:
FIRST: To the payment of all amounts due the Trustee under
Section 607; and
SECOND: To the payment of the amounts then due and unpaid for
principal of (and premium, if any) and interest on the Securities in
respect of which or for the benefit of which such money has been
collected, ratably, without preference or priority of any kind,
according to the amounts due and payable on such Securities for
principal (and premium, if any) and interest, respectively.
The Trustee, upon prior written notice to the Company, may fix a record date and
payment date for any payment to the Holders pursuant to this Section 506.
SECTION 507. Limitation on Suits.
No Holder of any Security shall have any right to institute any
proceeding, judicial or otherwise, with respect to this Indenture, or for the
appointment of a receiver or trustee, or for any other remedy hereunder, unless
(1) such Holder has previously given written notice to the
Trustee of a continuing Event of Default;
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(2) the Holders of at least 25% in aggregate principal amount of
the Outstanding Securities shall have made written request to the
Trustee to institute proceedings in respect of such Event of Default in
its own name as Trustee hereunder;
(3) such Holder or Holders have offered and, if requested,
provided to the Trustee reasonable indemnity against the costs, expenses
and liabilities to be incurred in compliance with such request;
(4) the Trustee for 60 days after its receipt of such notice,
request and offer and, if requested, provision of indemnity has failed
to institute any such proceeding; and
(5) no direction inconsistent with such written request has been
given to the Trustee during such 60day period by the Holders of a
majority in principal amount of the Outstanding Securities;
it being understood and intended that no one or more Holders shall have any
right in any manner whatever by virtue of, or by availing of, any provision of
this Indenture to affect, disturb or prejudice the rights of any other Holders,
or to obtain or to seek to obtain priority or preference over any other Holders
or to enforce any right under this Indenture, except in the manner herein
provided and for the equal and ratable benefit of all the Holders.
SECTION 508. Unconditional Right of Holders to Receive Principal, Premium and
Interest.
Notwithstanding any other provision in this Indenture, the Holder
of any Security shall have the right, which is absolute and unconditional, to
receive payment of the principal of (and premium, if any) and (subject to
Section 307) interest on such Security on the respective Stated Maturities
expressed in such Security (or, in the case of redemption, on the Redemption
Date or, in the case of an Offer to Purchase made by the Company and required to
be accepted as to such Security, on the Purchase Date) and to institute suit for
the enforcement of any such payment, and such rights shall not be impaired
without the consent of such Holder.
<PAGE> 76
SECTION 509. Restoration of Rights and Remedies.
If the Trustee or any Holder has instituted any proceeding to
enforce any right or remedy under this Indenture and such proceeding has been
discontinued or abandoned for any reason, or has been determined adversely to
the Trustee or to such Holder, then and in every such case, subject to any
determination in such proceeding, the Company, the Trustee and the Holders shall
be restored severally and respectively to their former positions hereunder and
thereafter all rights and remedies of the Trustee and the Holders shall continue
as though no such proceeding had been instituted.
SECTION 510. Rights and Remedies Cumulative.
Except as otherwise provided with respect to the replacement or
payment of mutilated, destroyed, lost or stolen Securities in the last paragraph
of Section 306, no right or remedy herein conferred upon or reserved to the
Trustee or to the Holders is intended to be exclusive of any other right or
remedy, and every right and remedy shall, to the extent permitted by law, be
cumulative and in addition to every other right and remedy given hereunder or
now or hereafter existing at law or in equity or otherwise. The assertion or
employment of any right or remedy hereunder, or otherwise, shall not prevent the
concurrent assertion or employment of any other appropriate right or remedy.
SECTION 511. Delay or Omission Not Waiver.
No delay or omission of the Trustee or of any Holder of any
Security to exercise any right or remedy accruing upon any Event of Default
shall impair any such right or remedy or constitute a waiver of any such Event
of Default or an acquiescence therein. Every right and remedy given by this
Article or by law to the Trustee or to the Holders may be exercised from time to
time, and as often as may be deemed expedient, by the Trustee or by the Holders,
as the case may be.
SECTION 512. Control by Holders.
The Holders of a majority in aggregate principal amount of the
Outstanding Securities shall have the right to direct the time, method and place
of conducting any proceeding for any remedy available to the Trustee or
exercising any trust or power conferred on the Trustee, provided that
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(1) such direction shall not be in conflict with any rule of law
or with this Indenture or expose the Trustee to personal liability (as
determined in the sole discretion of the Trustee), and
(2) the Trustee may take any other action deemed proper by the
Trustee which is not inconsistent with such direction.
The Trustee may refuse, however, to follow any direction that the Trustee, in
its sole discretion, determines may be unduly prejudicial to the rights of
another Holder or that may subject the Trustee to any liability or expense if
the Trustee determines, in its sole discretion, that it lacks indemnification
against such loss or expense.
SECTION 513. Waiver of Past Defaults.
The Holders of not less than a majority in aggregate principal
amount of the Outstanding Securities may on behalf of the Holders of all the
Securities by written notice to the Trustee waive any past default hereunder and
its consequences, except a default
(1) in the payment of the principal of (or premium, if any) or
interest on any Security (including any Security which is required to
have been purchased pursuant to an Offer to Purchase which has been made
by the Company), or
(2) in respect of a covenant or provision hereof which under
Article Nine cannot be modified or amended without the consent of the
Holder of each Outstanding Security affected or
(3) arising from failure to purchase any Security tendered
pursuant to Sections 1013 and 1016.
Upon any such waiver, such default shall cease to exist, and any
Event of Default arising therefrom shall be deemed to have been cured, for every
purpose of this Indenture; but no such waiver shall extend to any subsequent or
other default or impair any right consequent thereon.
<PAGE> 78
SECTION 514. Undertaking for Costs.
In any suit for the enforcement of any right or remedy under this
Indenture, or in any suit against the Trustee for any action taken or omitted by
it as Trustee, a court may require any party litigant in such suit to file an
undertaking to pay the costs of such suit, and may assess costs against any such
party litigant, in the manner and to the extent provided in the Trust Indenture
Act; provided that neither this Section nor the Trust Indenture Act shall be
deemed to authorize any court to require such an undertaking or to make such an
assessment in any suit instituted by the Company.
SECTION 515. Waiver of Stay or Extension Laws.
The Company covenants (to the extent that it may lawfully do so)
that it will not at any time insist upon, or plead, or in any manner whatsoever
claim or take the benefit or advantage of, any stay or extension law wherever
enacted, now or at any time hereafter in force, which may affect the covenants
or the performance of this Indenture; and the Company (to the extent that it may
lawfully do so) hereby expressly waives all benefit or advantage of any such law
and covenants that it will not hinder, delay or impede the execution of any
power herein granted to the Trustee, but will suffer and permit the execution of
every such power as though no such law had been enacted.
ARTICLE SIX
The Trustee
SECTION 601. Certain Duties and Responsibilities.
The duties and responsibilities of the Trustee shall be as
provided by the Trust Indenture Act. Notwithstanding the foregoing, no provision
of this Indenture shall require the Trustee to expend or risk its own funds or
otherwise incur any financial liability in the performance of any of its duties
hereunder, or in the exercise of any of its rights or powers, if it shall have
reasonable grounds for believing that repayment of such funds or adequate
indemnity against such risk or liability is not reasonably assured to it.
Whether or not therein expressly so provided, every provision of this Indenture
relating to the conduct or affecting the liability of or affording protection to
the Trustee shall be subject to the provisions of this Section.
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SECTION 602. Notice of Defaults.
The Trustee shall give the Holders notice of any Default
hereunder as and to the extent provided by the Trust Indenture Act, unless such
Default has been cured or waived; provided, however, that in the case of any
Default of the character specified in Section 501(5), no such notice to Holders
shall be given until at least 30 days after the occurrence thereof.
SECTION 603. Certain Rights of Trustee.
Subject to the provisions of Section 601:
(a) the Trustee may rely and shall be protected in acting or
refraining from acting upon any resolution, certificate, statement,
instrument, opinion, report, notice, request, direction, consent, order,
bond, debenture, note, other evidence of indebtedness or other paper or
document believed by it to be genuine and to have been signed or
presented by the proper party or parties;
(b) any request or direction of the Company mentioned herein
shall be sufficiently evidenced by a Company Request or a Company Order
and any resolution of the Board of Directors may be sufficiently
evidenced by a Board Resolution;
(c) whenever in the administration of this Indenture the Trustee
shall deem it desirable that a matter be proved or established prior to
taking, suffering or omitting any action hereunder, the Trustee (unless
other evidence be herein specifically prescribed) may, in the absence of
bad faith on its part, rely upon an Officers' Certificate or an Opinion
of Counsel;
(d) the Trustee may consult with counsel and the written advice
of such counsel or any Opinion of Counsel shall be full and complete
authorization and protection in respect of any action taken, suffered or
omitted by it hereunder in good faith and in reliance thereon;
(e) the Trustee shall be under no obligation to exercise any of
the rights or powers vested in it by this Indenture at the request or
direction of any of the Holders pursuant to this Indenture, unless such
Holders shall have offered to the Trustee reasonable security or
indemnity against the costs, expenses and liabilities which might be
incurred by it in compliance with such request or direction reasonably
satisfactory to the Trustee;
<PAGE> 80
(f) the Trustee shall not be bound to make any investigation into
the facts or matters stated in any resolution, certificate, statement,
instrument, opinion, report, notice, request, direction, consent, order,
bond, debenture, note, other evidence of indebtedness or other paper or
document, but the Trustee, in its discretion, may make such further
inquiry or investigation into such facts or matters as it may see fit,
and, if the Trustee shall determine to make such further inquiry or
investigation, it shall be entitled to examine the books, records and
premises of the Company, personally or by agent or attorney;
(g) the Trustee may execute any of the trusts or powers hereunder
or perform any duties hereunder either directly or by or through agents
or attorneys and the Trustee shall not be responsible for any misconduct
or negligence on the part of any agent or attorney appointed with due
care by it hereunder; and
(h) the Trustee shall not be liable for any action taken,
suffered or omitted by it in good faith which the Trustee reasonably
believed to have been authorized or within its rights or powers.
SECTION 604. Not Responsible for Recitals or Issuance of Securities.
The recitals contained herein and in the Securities, except the
Trustee's certificates of authentication, shall be taken as the statements of
the Company, and the Trustee assumes no responsibility for their correctness.
The Trustee makes no representations as to the validity or sufficiency of this
Indenture or the Securities. The Trustee shall not be accountable for the use or
application by the Company of Securities or the proceeds thereof.
SECTION 605. May Hold Securities.
The Trustee, any Paying Agent, any Security Registrar (if other
than the Trustee) or any other agent of the Company, in its individual or any
other capacity, may become the owner or pledgee of Securities and, subject to
Sections 608 and 613, may otherwise deal with the Company with the same rights
it would have if it were not Trustee, Paying Agent, Security Registrar or such
other agent.
<PAGE> 81
SECTION 606. Money Held in Trust.
Money held by the Trustee in trust hereunder need not be
segregated from other funds except to the extent required by law. The Trustee
shall be under no liability for interest on any money received by it hereunder
except as otherwise agreed with the Company.
SECTION 607. Compensation and Reimbursement.
The Company agrees
(1) to pay to the Trustee from time to time reasonable
compensation for all services rendered by it hereunder (which
compensation shall not be limited by any provision of law in regard to
the compensation of a trustee of an express trust);
(2) except as otherwise expressly provided herein, to reimburse
the Trustee upon its request for all reasonable expenses, disbursements
and advances incurred or made by the Trustee in accordance with any
provision of this Indenture (including the reasonable compensation and
the expenses and disbursements of its agents and counsel), except any
such expense, disbursement or advance as may be attributable to its
negligence or bad faith; and
(3) to indemnify the Trustee for, and to hold it harmless
against, any loss, liability or expense (including the reasonable
compensation, expenses and disbursements of its agents, accountants,
experts and counsel) incurred without negligence or bad faith on its
part, arising out of or in connection with the acceptance or
administration of this trust, including the costs and expenses of
enforcing this Indenture against the Company (including, without
limitation, this Section 607) and of defending itself against any claim
(whether asserted by any Holder or the Company) or liability in
connection with the exercise or performance of any of its powers or
duties hereunder. The provisions of this Section 607 shall survive any
termination of this Indenture and the resignation or removal of the
Trustee.
As security for the performance of the obligations of the Company
under this Section 607, the Trustee shall have a lien prior to the Securities
upon all property and funds held or collected by the Trustee, except funds held
in trust for the payment of principal of (and premium, if any) or interest on
particular Securities. The Trustee's right to receive payment of any amounts due
under
<PAGE> 82
this Section 607 shall not be subordinate to any other liability or indebtedness
of the Company (even though the Securities may be so subordinated).
When the Trustee incurs expenses or renders services after an
Event of Default specified in Section 501(8) or (9) occurs, the expenses and the
compensation for such services are intended to constitute expenses of
administration under Title 11, U.S. Code, or any similar Federal state or
foreign law for the relief of debtors.
SECTION 608. Disqualification; Conflicting Interests.
If the Trustee has or shall acquire a conflicting interest within
the meaning of the Trust Indenture Act, the Trustee shall either eliminate such
interest or resign, to the extent and in the manner provided by, and subject to
the provisions of, the Trust Indenture Act and this Indenture.
SECTION 609. Corporate Trustee Required; Eligibility.
There shall at all times be a Trustee hereunder which shall be a
Person that is eligible pursuant to the Trust Indenture Act to act as such and
has a combined capital and surplus of at least $50,000,000 and its Corporate
Trust Office in the Borough of Manhattan, The City of New York, New York. If
such Person publishes reports of condition at least annually, pursuant to law or
to the requirements of a Federal, State, Territorial or District of Columbia
supervising or examining authority, then for the purposes of this Section, the
combined capital and surplus of such Person shall be deemed to be its combined
capital and surplus as set forth in its most recent report of condition so
published. If at any time the Trustee shall cease to be eligible in accordance
with the provisions of this Section, it shall resign immediately in the manner
and with the effect hereinafter specified in this Article.
SECTION 610. Resignation and Removal; Appointment
of Successor.
(a) No resignation or removal of the Trustee and no appointment
of a successor Trustee pursuant to this Article shall become effective until the
acceptance of appointment by the successor Trustee under Section 611, at which
time the retiring Trustee shall be fully discharged from its obligations
hereunder.
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(b) The Trustee may resign at any time by giving written notice
thereof to the Company. If an instrument of acceptance by a successor Trustee
shall not have been delivered to the Trustee within 30 days after the giving of
such notice of resignation, the resigning Trustee may petition any court of
competent jurisdiction for the appointment of a successor Trustee.
(c) The Trustee may be removed at any time by Act of the Holders
of a majority in principal amount of the Outstanding Securities, delivered to
the Trustee and to the Company.
(d) If at any time:
(1) the Trustee shall fail to comply with Section 608 after
written request therefor by the Company or by any Holder who has been a
bona fide Holder of a Security for at least six months, or
(2) the Trustee shall cease to be eligible under Section 609 and
shall fail to resign after written request therefor by the Company or by
any such Holder, or
(3) the Trustee shall become incapable of acting or shall be
adjudged a bankrupt or insolvent or a receiver of the Trustee or of its
property shall be appointed or any public officer shall take charge or
control of the Trustee or of its property or affairs for the purpose of
rehabilitation, conservation or liquidation,
then, in any such case, (i) the Company, by Board Resolution, may remove the
Trustee, or (ii) subject to Section 514, any Holder who has been a bona fide
Holder of a Security for at least six months may, on behalf of himself and all
others similarly situated, petition any court of competent jurisdiction for the
removal of the Trustee and the appointment of a successor Trustee.
(e) If the Trustee shall resign, be removed or become incapable
of acting, or if a vacancy shall occur in the office of Trustee for any cause,
the Company, by Board Resolution, shall promptly appoint a successor Trustee.
If, within one year after such resignation, removal or incapability, or the
occurrence of such vacancy, a successor Trustee shall be appointed by Act of the
Holders of a majority in principal amount of the Outstanding Securities
delivered to the Company and the retiring Trustee, the successor Trustee so
appointed shall, forthwith upon its acceptance of such appointment, become the
successor Trustee and supersede the successor Trustee appointed by the Company.
If no successor Trustee shall have been so appointed by the Company or the
Holders and accepted appointment in the manner hereinafter provided, any Holder
who has been a bona fide Holder of a Security for at least six months may, on
behalf
<PAGE> 84
of himself and all others similarly situated, petition any court of competent
jurisdiction for the appointment of a successor Trustee.
(f) The Company shall give notice of each resignation and each
removal of the Trustee and each appointment of a successor Trustee to all
Holders in the manner provided in Section 106. Each notice shall include the
name of the successor Trustee and the address of its Corporate Trust Office.
SECTION 611. Acceptance of Appointment by Successor.
Every successor Trustee appointed hereunder shall execute,
acknowledge and deliver to the Company and to the retiring Trustee an instrument
accepting such appointment, and thereupon the resignation or removal of the
retiring Trustee shall become effective and such successor Trustee, without any
further act, deed or conveyance, shall become vested with all the rights,
powers, trusts and duties of the retiring Trustee; but, on request of the
Company or the successor Trustee under Section 607, execute and deliver an
instrument transferring to such successor Trustee all the rights, powers and
trusts of the retiring Trustee and shall duly assign, transfer and deliver to
such successor Trustee all property and money held by such retiring Trustee
hereunder. Upon request of any such successor Trustee, the Company shall execute
any and all instruments for more fully and certainly vesting in and confirming
to such successor Trustee all such rights, powers and trusts.
No successor Trustee shall accept its appointment unless at the
time of such acceptance such successor Trustee shall be qualified and eligible
under this Article.
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SECTION 612. Merger, Conversion, Consolidation or Succession to Business.
Any corporation into which the Trustee may be merged or converted
or with which it may be consolidated, or any corporation resulting from any
merger, conversion or consolidation to which the Trustee shall be a party, or
any corporation succeeding to all or substantially all the corporate trust
business of the Trustee, shall be the successor of the Trustee hereunder,
provided that such corporation shall be otherwise qualified and eligible under
this Article, without the execution or filing of any paper or any further act on
the part of any of the parties hereto. In case any Securities shall have been
authenticated, but not delivered, by the Trustee then in office, any successor
by merger, conversion or consolidation to such authenticating Trustee may adopt
such authentication and deliver the Securities so authenticated with the same
effect as if such successor Trustee had itself authenticated such Securities.
SECTION 613. Preferential Collection of Claims Against the Company.
If and when the Trustee shall be or become a creditor of the
Company (or any other obligor upon the Securities), the Trustee shall be subject
to the provisions of the Trust Indenture Act regarding the collection of claims
against the Company (or any such other obligor).
SECTION 614. Appointment of Authenticating Agent.
The Trustee may appoint an Authenticating Agent or Agents with
respect to the Securities which shall be authorized to act on behalf of the
Trustee to authenticate Securities issued upon original issue and upon exchange,
registration of transfer or partial redemption thereof or pursuant to Section
306, and Securities so authenticated shall be entitled to the benefits of this
Indenture and shall be valid and obligatory for all purposes as if authenticated
by the Trustee hereunder. Wherever reference is made in this Indenture to the
authentication and delivery of Securities by the Trustee or the Trustee's
certificate of authentication, such reference shall be deemed to include
authentication and delivery on behalf of the Trustee by an Authenticating Agent
and a certificate of authentication executed on behalf of the Trustee by an
Authenticating Agent. Each Authenticating Agent shall be acceptable to the
Company and shall at all times be a corporation organized and doing business
under the laws of the United States of America, any State thereof or the
District of Columbia, authorized under such laws to act as Authenticating Agent,
having a combined capital and surplus of not less than $50,000,000 and subject
to
<PAGE> 86
supervision or examination by Federal or State authority. If such Authenticating
Agent publishes reports of condition at least annually, pursuant to law or to
the requirements of said supervising or examining authority, then for the
purposes of this Section, the combined capital and surplus of such
Authenticating Agent shall be deemed to be its combined capital and surplus as
set forth in its most recent report of condition so published. If at any time an
Authenticating Agent shall cease to be eligible in accordance with the
provisions of this Section, such Authenticating Agent shall resign immediately
in the manner and with the effect specified in this Section.
Any corporation into which an Authenticating Agent may be merged
or converted or with which it may be consolidated, or any corporation resulting
from any merger, conversion or consolidation to which such Authenticating Agent
shall be a party, or any corporation succeeding to the corporate agency or
corporate trust business of an Authenticating Agent, shall continue to be an
Authenticating Agent, provided such corporation shall be otherwise eligible
under this Section, without the execution or filing of any paper or any further
act on the part of the Trustee or the Authenticating Agent.
An Authenticating Agent may resign at any time by giving written
notice thereof to the Trustee and to the Company. The Trustee may at any time
terminate the agency of an Authenticating Agent by giving written notice thereof
to such Authenticating Agent and to the Company. Upon receiving such a notice of
resignation or upon such a termination, or in case at any time such
Authenticating Agent shall cease to be eligible in accordance with the
provisions of this Section, the Trustee may appoint a successor Authenticating
Agent which shall be acceptable to the Company and shall give notice of such
appointment in the manner provided in Section 106 to all Holders of Securities.
Any successor Authenticating Agent upon acceptance of its appointment hereunder
shall become vested with all the rights, powers and duties of its predecessor
hereunder, with like effect as if originally named as an Authenticating Agent.
No successor Authenticating Agent shall be appointed unless eligible under the
provisions of this Section.
The Trustee agrees to pay to each Authenticating Agent from time
to time reasonable compensation for its services under this Section, and the
Trustee shall be entitled to be reimbursed for such payments, subject to the
provisions of Section 607.
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If an appointment is made pursuant to this Section, the
Securities may have endorsed thereon, in lieu of the Trustee's certificate of
authentication, an alternative certificate of authentication in the following
form:
This is one of the Securities referred to in the within-mentioned
Indenture.
United States Trust Company of New York,
As Trustee
By_____________________,
As Authenticating Agent
By_______________________________________
Authorized Signatory
ARTICLE SEVEN
Holders' Lists and Reports by Trustee and the Company
SECTION 701. Company to Furnish Trustee Names and Addresses of Holders.
The Company will furnish or cause to be furnished to the Trustee
(a) semi-annually, not more than 15 days after each Regular
Record Date, a list, in such form as the Trustee may reasonably require,
of the names and addresses of the Holders as of such Regular Record
Date, and
(b) at such other times as the Trustee may request in writing,
within 30 days after the receipt by the Company of any such request, a
list of similar form and content as of a date not more than 15 days
prior to the time such list is furnished;
excluding from any such list names and addresses received by the Trustee in its
capacity as Security Registrar.
<PAGE> 88
SECTION 702. Preservation of Information; Communications to Holders.
(a) The Trustee shall preserve, in as current a form as is
reasonably practicable, the names and addresses of Holders contained in the most
recent list furnished to the Trustee as provided in Section 701 and the names
and addresses of Holders received by the Trustee in its capacity as Security
Registrar. The Trustee may destroy any list furnished to it as provided in
Section 701 upon receipt of a new list so furnished.
(b) The rights of Holders to communicate with other Holders with
respect to their rights under this Indenture or under the Securities, and the
corresponding rights and duties of the Trustee, shall be as provided by the
Trust Indenture Act.
(c) Every Holder of Securities, by receiving and holding the
same, agrees with the Company and the Trustee that none of the Company, the
Trustee or any agent of any of them shall be held accountable by reason of any
disclosure of information as to names and addresses of Holders made pursuant to
the Trust Indenture Act.
SECTION 703. Reports by Trustee.
(a) The Trustee shall transmit to Holders such reports concerning
the Trustee and its actions under this Indenture as may be required pursuant to
the Trust Indenture Act at the times and in the manner provided pursuant
thereto.
(b) A copy of each such report shall, at the time of such
transmission to Holders, be filed by the Trustee with each stock exchange upon
which the Securities are listed, with the Commission and with the Company. The
Company will notify the Trustee when the Securities are listed on any stock
exchange.
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SECTION 704. Reports by Company.
The Company shall file with the Trustee and the Commission, and
transmit to Holders, such information, documents and other reports, and such
summaries thereof, as may be required pursuant to the Trust Indenture Act at the
times and in the manner provided pursuant to such Act and in the manner set
forth in Section 1017; provided that any such information, documents or reports
required to be filed with the Commission pursuant to Section 13 or 15(d) of the
Exchange Act ("SEC Reports") shall be filed with the Trustee within 15 days
after the same is so required to be filed with the Commission. In the event the
Company shall cease to be required to file SEC Reports pursuant to the Exchange
Act, the Company will nonetheless continue to file such reports with the
Commission (unless the Commission will not accept such a filing) and the Trustee
and to furnish copies of such SEC Reports to the Holders of Securities at the
time the Company is required to file such reports with the Trustee and will make
such information available to investors who request it in writing.
SECTION 705. Officers' Certificate with Respect to Change in Interest Rates.
Within five days after any Step-Up, Subsequent Step-Up, Step-Down
Date or Subsequent Step-Down Date, the Company shall deliver an Officers'
Certificate to the Trustee stating the new interest rate and the date on which
it became effective.
<PAGE> 90
ARTICLE EIGHT
Merger, Consolidation, Etc.
SECTION 801. Mergers, Consolidations and Certain Sales of Assets.
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(a) The Company may not, in a single transaction or a series of
related transactions, (i) consolidate with or merge into any other Person or
permit any other Person to consolidate with or merge into the Company (other
than a consolidation or merger of a Wholly-Owned Restricted Subsidiary organized
under the laws of a State of the United States into the Company), or (ii)
directly or indirectly, transfer, sell, lease or otherwise dispose of all or
substantially all of its assets (determined on a consolidated basis for the
Company and its Restricted Subsidiaries taken as a whole and provided that the
creation of a Lien on or in any of its assets shall not in and of itself
constitute the transfer, sale, lease or disposition of the assets subject to the
Lien), unless: (1) in a transaction in which the Company does not survive or in
which the Company sells, leases or otherwise disposes of all or substantially
all of its assets to any other Person, the successor entity to the Company shall
be a corporation organized under the laws of the United States of America or any
State thereof or the District of Columbia and shall expressly assume, by a
supplemental indenture executed and delivered to the Trustee in form
satisfactory to the Trustee, all of the Company's obligations under this
Indenture; (2) immediately after giving pro forma effect to such transaction as
if such transaction had occurred at the beginning of the last full fiscal
quarter immediately prior to the consummation of such transaction with the
appropriate adjustments with respect to the transaction being included in such
pro forma calculation and treating any Debt which becomes an obligation of the
Company or a Subsidiary as a result of such transaction as having been Incurred
by the Company or such Subsidiary at the time of the transaction, no Default or
Event of Default shall have occurred and be continuing; (3) immediately after
giving effect to such transaction, the Consolidated Net Worth of the Company (or
other successor entity to the Company) is equal to or greater than that of the
Company immediately prior to the transaction; (4) if, as a result of any such
transaction, property or assets of the Company would become subject to a Lien
prohibited by the provisions of Section 1011, the Company or the successor
entity to the Company shall have secured the Securities as required by Section
1011;(5) the Company has delivered to the Trustee an Officer's Certificate and
an Opinion of Counsel, each in form and substance satisfactory to the Trustee
stating that such consolidation, merger, conveyance, transfer, lease or
acquisition and, if a supplemental indenture is required in connection with such
transaction, such supplemental indenture, complies with this Article and that
all conditions precedent herein provided for relating to such transaction have
been complied with, and, with respect to such Officer's Certificate, setting
forth the manner of determination of the Consolidated Net Worth in accordance
with Clause (3) of Section 801, of the Company or, if applicable, of the
Successor Company as required pursuant to the foregoing.
(b) In the event of any transaction (other than a lease)
described in and complying with the immediately preceding paragraph in which the
Company is not the surviving Person and the surviving Person assumes all the
obligations of the Company under the Securities and this Indenture pursuant
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to a supplemental indenture, such surviving Person shall succeed to, and be
substituted for, and may exercise every right and power of, the Company, and the
Company will be discharged from its obligations under this Indenture and the
Securities; provided that solely for the purpose of calculating amounts under
Section 1009(3), any such surviving Person shall only be deemed to have
succeeded to and be substituted for the Company with respect to the period
subsequent to the effective time of such transaction, and the Company (before
giving effect to such transaction) shall be deemed to be the "Company" for such
purposes for all prior periods.
SECTION 802. Successor Substituted.
Upon any consolidation of the Company with, or merger of the
Company with or into, any other Person or any conveyance, transfer or lease of
the properties and assets of the Company substantially as an entirety in
accordance with Section 801, the successor Person formed by such consolidation
or into which the Company is merged or to which such conveyance, transfer or
lease is made shall succeed to, and be substituted for, and may exercise every
right and power of, the Company under this Indenture with the same effect as if
such successor Person had been named as the Company herein, and thereafter,
except in the case of a lease, the predecessor Person shall be relieved of all
obligations and covenants under this Indenture and the Securities.
ARTICLE NINE
Supplemental Indentures
SECTION 901. Supplemental Indentures Without Consent of Holders.
Without the consent of any Holders, the Company, when authorized
by Board Resolution, and the Trustee, at any time and from time to time, may
enter into one or more indentures supplemental hereto, in form satisfactory to
the Trustee, for any of the following purposes:
(1) to evidence the succession of another Person to the Company
and the assumption by any such successor of the covenants of the Company
herein and in the Securities; or
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(2) to add to the covenants of the Company for the benefit of the
Holders, or to surrender any right or power herein conferred upon the
Company; or
(3) to secure the Securities pursuant to the requirements of
Section 1011 or otherwise; or
(4) to modify, eliminate or add to the provisions of this
Indenture to such extent as shall be necessary to comply with any
requirement of the Commission in order to effect qualification of this
Indenture under the Trust Indenture Act in connection with the issuance
of Exchange Securities or thereafter to maintain the qualification of
this Indenture under the Trust Indenture Act;
(5) to cure any ambiguity, to correct or supplement any provision
herein which may be inconsistent with any other provision herein, or to
make any other provisions with respect to matters or questions arising
under this Indenture which shall not be inconsistent with the provisions
of this Indenture, provided that such action pursuant to this Clause (5)
shall not adversely affect the legal rights of the Holders; or
(6) to provide for uncertificated Securities in addition to or in
place of certificated Securities.
SECTION 902. Supplemental Indentures with Consent of Holders.
With the consent of the Holders of not less than a majority in
aggregate principal amount of the Outstanding Securities, by Act of said Holders
delivered to the Company and the Trustee, and consistent with Section 513, the
Company, when authorized by Board Resolution, and the Trustee may enter into an
indenture or indentures supplemental hereto for the purpose of adding any
provisions to or changing in any manner or eliminating any of the provisions of
this Indenture or of modifying in any manner the rights of the Holders under
this Indenture; provided, however, that no such supplemental indenture shall,
without the consent of the Holder of each Outstanding Security affected thereby,
(1) change the Stated Maturity of the principal of, or any
installment of interest on, any Security, or reduce the principal amount
thereof or the rate of interest thereon or any premium payable thereon,
or change the place of payment where, or the coin or currency in which,
any Security or any premium or interest thereon is payable, or impair
the right to institute suit for the enforcement of any such payment on
or after the Stated Maturity thereof (or, in the case of redemption, on
or after the
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Redemption Date) or, in the case of an Offer to Purchase which has been
made, on or after the applicable Purchase Date, or
(2) reduce the percentage in principal amount of the Outstanding
Securities, the consent of whose Holders is required for any such
supplemental indenture, or the consent of whose Holders is required for
any waiver (of compliance with certain provisions of this Indenture or
certain defaults hereunder and their consequences) provided for in this
Indenture, or
(3) modify any of the provisions of this Section, Section 513 or
Section 1019, except to increase any such percentage or to provide that
certain other provisions of this Indenture cannot be modified or waived
without the consent of the Holder of each Outstanding Security affected
thereby, or
(4) following the mailing of an Offer with respect to an Offer to
Purchase pursuant to Section 1013 or 1016 and until the Expiration Date
of such Offer to Purchase, modify the provisions of this Indenture with
respect to such Offer to Purchase in a manner materially adverse to such
Holder.
It shall not be necessary for any Act of Holders under this
Section to approve the particular form of any proposed supplemental indenture,
but it shall be sufficient if such Act shall approve the substance thereof.
SECTION 903. Execution of Supplemental Indentures.
In executing, or accepting the additional trusts created by, any
supplemental indenture permitted by this Article or the modifications thereby of
the trusts created by this Indenture, the Trustee shall be entitled to receive,
and (subject to Section 601) shall be fully protected in relying upon, an
Opinion of Counsel stating that the execution of such supplemental indenture is
authorized or permitted by this Indenture. The Trustee may, but shall not be
obligated to, enter into any such supplemental indenture which affects the
Trustee's own rights, duties or immunities under this Indenture or otherwise.
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SECTION 904. Effect of Supplemental Indentures.
Upon the execution of any supplemental indenture under this
Article, this Indenture shall be modified in accordance therewith, and such
supplemental indenture shall form a part of this Indenture for all purposes; and
every Holder of Securities theretofore or thereafter authenticated and delivered
hereunder shall be bound thereby.
SECTION 905. Conformity with Trust Indenture Act.
Every supplemental indenture executed pursuant to this Article
shall conform to the requirements of the Trust Indenture Act.
SECTION 906. Reference in Securities to Supplemental Indentures.
Securities authenticated and delivered after the execution of any
supplemental indenture pursuant to this Article may, and shall if required by
the Trustee, bear a notation in form approved by the Trustee as to any matter
provided for in such supplemental indenture. If the Company shall so determine,
new Securities so modified as to conform, in the opinion of the Trustee and the
Company, to any such supplemental indenture may be prepared and executed by the
Company and authenticated and delivered by the Trustee in exchange for
Outstanding Securities.
ARTICLE TEN
Covenants
SECTION 1001. Payment of Principal, Premium and
Interest.
The Company will duly and punctually pay the principal of and
premium, if any, and interest on the Securities in accordance with the terms of
the Securities and this Indenture.
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SECTION 1002. Maintenance of Office or Agency.
The Company will maintain in the Borough of Manhattan, The City
of New York, New York, an office or agency where Securities may be presented or
surrendered for payment, where Securities may be surrendered for registration of
transfer or exchange and where notices and demands to or upon the Company in
respect of the Securities and this Indenture may be served. The Company will
give prompt written notice to the Trustee of the location, and any change in the
location, of such office or agency. If at any time the Company shall fail to
maintain any such required office or agency or shall fail to furnish the Trustee
with the address thereof, such presentations, surrenders, notices and demands
may be made or served at the Corporate Trust Office of the Trustee, and the
Company hereby appoints the Trustee as its agent to receive all such
presentations, surrenders, notices and demands.
The Company may also from time to time designate one or more
other offices or agencies (in or outside the Borough of Manhattan, The City of
New York, New York) where the Securities may be presented or surrendered for any
or all such purposes and may from time to time rescind such designations;
provided, however, that no such designation or rescission shall in any manner
relieve the Company of its obligation to maintain an office or agency in the
Borough of Manhattan, The City of New York, New York for such purposes. The
Company will give prompt written notice to the Trustee of any such designation
or rescission and of any change in the location of any such other office or
agency.
SECTION 1003. Money for Security Payments to be Held in Trust.
If the Company shall at any time act as its own Paying Agent, it
will, on or before each due date of the principal of (and premium, if any) or
interest on any of the Securities, segregate and hold in trust for the benefit
of the Persons entitled thereto a sum sufficient to pay the principal (and
premium, if any) or interest so becoming due until such sums shall be paid to
such Persons or otherwise disposed of as herein provided and will promptly
notify the Trustee in writing of its action or failure so to act. As provided in
Section 504, upon any bankruptcy or reorganization proceeding relative to the
Company, the Trustee shall serve as the Paying Agent for the Securities.
Whenever the Company shall have one or more Paying Agents, it
will, prior to each due date of the principal of (and premium, if any) or
interest on any Securities, deposit with a Paying Agent a sum sufficient to pay
the principal
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(and premium, if any) or interest so becoming due, such sum to be held in trust
for the benefit of the Persons entitled to such principal, premium or interest,
and (unless such Paying Agent is the Trustee) the Company will promptly notify
the Trustee in writing of its action or failure so to act. As provided in
Section 504, upon any bankruptcy or reorganization proceeding relative to the
Company the Trustee shall serve as the Paying Agent for the Securities.
The Company will cause each Paying Agent other than the Trustee
to execute and deliver to the Trustee an instrument in which such Paying Agent
shall agree with the Trustee, subject to the provisions of this Section, that
such Paying Agent will:
(1) hold all sums held by it for the payment of the principal of
(and premium, if any) or interest on Securities in trust for the benefit
of the Persons entitled thereto until such sums shall be paid to such
Persons or otherwise disposed of as herein provided;
(2) give the Trustee notice of any default by the Company (or any
other obligor upon the Securities) in the making of any payment of
principal (and premium, if any) or interest;
(3) at any time during the continuance of any such default, upon
the written request of the Trustee, forthwith pay to the Trustee all
sums so held in trust by such Paying Agent; and
(4) acknowledge, accept and agree to comply in all respects with
the provisions of this Indenture relating to the duties, rights and
obligations of such Paying Agent.
The Company may at any time, for the purpose of obtaining the
satisfaction and discharge of this Indenture or for any other purpose, pay, or
by Company Order direct any Paying Agent to pay, to the Trustee all sums held in
trust by the Company or such Paying Agent, such sums to be held by the Trustee
upon the same trusts as those upon which such sums were held by the Company or
such Paying Agent; and, upon such payment by any Paying Agent to the Trustee,
such Paying Agent shall be released from all further liability with respect to
such money.
Any money deposited with the Trustee or any Paying Agent, or then
held by the Company, in trust for the payment of the principal of (and premium,
if any) or interest on any Security and remaining unclaimed for two years after
such principal (and premium, if any) or interest has become due and payable
shall be paid to the Company on the Company Request, or (if then held by the
Company) shall be discharged from such trust; and the Holder of such Security
shall thereafter, as an unsecured general creditor, look only to the
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Company for payment thereof, and all liability of the Trustee or such Paying
Agent with respect to such trust money, and all liability of the Company as
trustee thereof, shall thereupon cease; provided, however, that the Trustee or
such Paying Agent, before being required to make any such repayment, may at the
expense of the Company cause to be published once, in a newspaper published in
the English language, customarily published on each Business Day and of general
circulation in the Borough of Manhattan, The City of New York, New York, notice
that such money remains unclaimed and that, after a date specified therein,
which shall not be less than 30 days from the date of such publication, any
unclaimed balance of such money then remaining will be repaid to the Company.
SECTION 1004. Existence.
Subject to Article Eight, the Company will do or cause to be done
all things necessary to preserve and keep in full force and effect its
existence, rights (charter and statutory) and franchises; provided, however,
that the Company shall not be required to preserve any such right or franchise
if the Board of Directors shall determine that the preservation thereof is no
longer desirable in the conduct of the business of the Company and that the loss
thereof is not disadvantageous in any material respect to the Holders.
SECTION 1005. Maintenance of Properties and Insurance.
The Company will cause all properties used or useful in the
conduct of its business or the business of any Subsidiary, to be maintained and
kept in good condition, repair and working order and supplied with all necessary
equipment and will cause to be made all necessary repairs, renewals,
replacements, betterments and improvements thereof, all as in the judgment of
the Company may be necessary so that the business carried on in connection
therewith may be properly and advantageously conducted at all times; provided,
however, that nothing in this Section shall prevent the Company from
discontinuing the operation or maintenance of any of such properties if such
discontinuance is, as determined in the good faith judgment of the Board of
Directors evidenced by a Board Resolution, desirable in the conduct of its
business or, in the case of the Company, the business of any Subsidiary, and not
disadvantageous in any material respect to the Holders.
The Company shall, and shall cause the Subsidiaries of the
Company to, keep at all times all of their properties which are of an insurable
nature insured against loss or damage with insurers believed by the Company to
be responsible to the extent that property of similar character is usually so
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insured by corporations similarly situated and owning like properties in
accordance with good business practice.
SECTION 1006. Payment of Taxes and Other Claims.
The Company will pay or discharge or cause to be paid or
discharged, before the same shall become delinquent, (1) all taxes, assessments
and governmental charges levied or imposed upon the Company or any Subsidiaries
of the Company or upon the income, profits or property of the Company or any
Subsidiaries, and (2) all lawful claims for labor, materials and supplies which,
if unpaid, might by law become a lien upon the property of the Company or any
Subsidiaries of the Company; provided, however, that the Company shall not be
required to pay or discharge or cause to be paid or discharged any such tax,
assessment, charge or claim whose amount, applicability or validity is being
contested in good faith by appropriate proceedings.
SECTION 1007. Limitation on Consolidated Debt.
The Company may not, and may not permit any Restricted Subsidiary
of the Company to, Incur any Debt unless either (a) the ratio of (i) the
aggregate consolidated principal amount of Debt of the Company outstanding as of
the most recent available quarterly or annual balance sheet, after giving pro
forma effect to the Incurrence of such Debt and any other Debt Incurred since
such balance sheet date and the receipt and application of the proceeds thereof
to (ii) Consolidated Cash Flow Available for Fixed Charges for the four full
fiscal quarters next preceding the Incurrence of such Debt for which
consolidated financial statements are available, determined on a pro forma basis
as if (x) any such Debt had been Incurred and the proceeds thereof had been
applied at the beginning of such four fiscal quarters, (y) the net income (or
loss) for such period of any Person or related to any assets disposed of by the
Company or a Restricted Subsidiary of the Company prior to the end of such
period had been excluded from Consolidated Net Income and (z) the net income (or
loss) for such period of any Person or related to any assets acquired by the
Company or any Restricted Subsidiary prior to the end of such period had been
included in Consolidated Net Income, would be less than 5.5 to 1 for such
four-quarter periods ending on or prior to December 31, 1999 and 5.0 to 1 for
such periods ending thereafter, or (b) the Company's Consolidated Capital Ratio
as of the most recent available quarterly or annual balance sheet, after giving
pro forma effect to the Incurrence of such Debt, any issuance of Capital Stock
(other than Disqualified Stock) since such balance sheet date, any increase in
paid in-capital (other than in respect of Disqualified Stock) since such balance
sheet date and the Incurrence of any other Debt since such balance sheet date
and the receipt and application of the proceeds thereof, is less than 2.0 to 1.
<PAGE> 100
Notwithstanding the foregoing limitation, the Company and any
Restricted Subsidiary may Incur the following:
(i) Debt under any one or more Bank Credit Agreements or Vendor
Financing Facilities in an aggregate principal amount at any one time
not to exceed the greater of (x) $175 million and (y) 85% of the
Eligible Receivables, and any renewal, extension, refinancing or
refunding thereof in an amount which, together with any principal amount
remaining outstanding or available under all Bank Credit Agreements and
Vendor Financing Facilities of the Company and its Restricted
Subsidiaries, plus the amount of any premium required to be paid in
connection with such refinancing pursuant to the terms of any Bank
Credit Agreement so refinanced plus the amount of expenses incurred in
connection with such refinancing, does not exceed the aggregate
principal amount outstanding or available under all such Bank Credit
Agreements and Vendor Financing Facilities of the Company and its
Restricted Subsidiaries immediately prior to such renewal, extension,
refinancing or refunding;
(ii) Purchase Money Debt Incurred to finance the construction,
acquisition or improvement of Telecommunications Assets, provided that
the net proceeds of such Purchase Money Debt do not exceed 100% of the
cost of construction, acquisition or improvement price of the applicable
Telecommunications Assets;
(iii) Debt owed by the Company to any Restricted Subsidiary of
the Company or Debt owed by a Restricted Subsidiary of the Company to
the Company or a Restricted Subsidiary of the Company; provided,
however, that upon either (x) the transfer or other disposition by such
Restricted Subsidiary or the Company of any Debt so permitted to a
Person other than the Company or another Restricted Subsidiary of the
Company or (y) the issuance (other than directors' qualifying shares),
sale, lease, transfer or other disposition of shares of Capital Stock
(including by consolidation or merger) of such Restricted Subsidiary as
a result of which the obligor of such Debt ceases to be a Restricted
Subsidiary, the provisions of this clause (iii) shall no longer be
applicable to such Debt and such Debt shall be deemed to have been
Incurred at the time of such transfer or other disposition;
(iv) Debt Incurred to renew, extend, refinance or refund (each, a
"refinancing") Debt outstanding at the date of this Indenture or
Incurred pursuant to the preceding paragraph or clause (ii) of this
paragraph or the Securities in an aggregate principal amount not to
exceed the aggregate principal amount of and accrued interest on the
Debt so refinanced plus the amount of any premium required to be paid in
connection with such
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refinancing pursuant to the terms of the Debt so refinanced or the
amount of any premium reasonably determined by the Company as necessary
to accomplish such refinancing by means of a tender offer or privately
negotiated repurchase, plus the amount of expenses of the Company
incurred in connection with such refinancing; provided, however, that
Debt the proceeds of which are used to refinance the Securities or Debt
which is pari passu to the Securities or debt which is subordinate in
right of payment to the Securities shall only be permitted if (A) in the
case of any refinancing of the Securities or Debt which is pari passu to
the Securities, the refinancing Debt is made pari passu to the
Securities or subordinated to the Securities, and, in the case of any
refinancing of Debt which is subordinated to the Securities, the
refinancing Debt constitutes Subordinated Debt and (B) in either case,
the refinancing Debt by its terms, or by the terms of any agreement or
instrument pursuant to which such Debt is issued, (x) does not provide
for payments of principal of such Debt at the stated maturity thereof or
by way of a sinking fund applicable thereto or by way of any mandatory
redemption, defeasance, retirement or repurchase thereof by the Company
(including any redemption, retirement or repurchase which is contingent
upon events or circumstances, but excluding any retirement required by
virtue of acceleration of such Debt upon any event of default
thereunder), in each case prior to the time the same are required by the
terms of the Debt being refinanced and (y) does not permit redemption or
other retirement (including pursuant to an offer to purchase made by the
Company) of such Debt at the option of the holder thereof prior to the
final stated maturity of the Debt being refinanced, other than a
redemption or other retirement at the option of the holder of such Debt
(including pursuant to an offer to purchase made by the Company) which
is conditioned upon a change substantially similar to the provisions of
Section 1016 or which is pursuant to provisions substantially similar to
the provisions of Section 1013;
(v) Debt consisting of Permitted Interest Rate and Currency
Protection Agreements;
(vi) Debt outstanding under the Securities;
(vii) Subordinated Debt invested by (a) a group of employees of
the Company, which includes the Chief Executive Officer of the Company,
who own, directly or indirectly, through an employee stock ownership
plan or arrangement, shares of the Company's Capital Stock or (b) any
other Person that controls the Company (i) on the Issue Date or (ii)
after a Change of Control, provided that the Company is not in default
with respect to its obligations under Section 1016;
<PAGE> 102
(viii) Debt consisting of performance and other similar bonds and
reimbursement obligations Incurred in the ordinary course of business
securing the performance of contractual, franchise or license
obligations of the Company or a Restricted Subsidiary, or in respect of
a letter of credit obtained to secure such performance; and
(ix) Debt not otherwise permitted to be Incurred pursuant to
clauses (i) through (viii) above, which, together with any other
outstanding Debt Incurred pursuant to this clause (ix), has an aggregate
principal amount (or, in the case of Debt issued at a discount, an
accreted amount (determined in accordance with generally accepted
accounting principles) at the time of Incurrence) not in excess of $10
million at any time outstanding.
For purposes of determining compliance with this Section 1007, in
the event that an item of Debt meets the criteria of more than one of the types
of Debt the Company is permitted to incur pursuant to the foregoing clauses (i)
through (ix) or the first paragraph of this Section 1007, the Company shall have
the right, in its sole discretion, to classify such item of Debt and shall only
be required to include the amount and type of such Debt under the clause or
paragraph permitting the Debt as so classified. For purposes of determining any
particular amount of Debt under such covenant, Guarantees or Liens with respect
to letters of credit supporting Debt otherwise included in the determination of
a particular amount shall not be included.
SECTION 1008. Limitation on Debt and Preferred Stock of Restricted
Subsidiaries.
The Company may not permit any Restricted Subsidiary of the
Company (other than a Restricted Subsidiary that has fully and unconditionally
Guaranteed the Securities on an unsubordinated basis) to Incur or suffer to
exist any Debt or issue any Preferred Stock except:
(i) Debt or Preferred Stock outstanding on the date of this
Indenture after giving effect to the application of the proceeds of the
Securities;
(ii) Debt Incurred or Preferred Stock issued to and held by the
Company or a Restricted Subsidiary of the Company (provided that such
Debt or Preferred Stock is at all times held by the Company or a
Restricted Subsidiary of the Company);
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(iii) Debt Incurred or Preferred Stock issued by a Person prior
to the time (A) such Person became a Restricted Subsidiary of the
Company, (B) such Person merges into or consolidates with a Restricted
Subsidiary of the Company or (C) another Restricted Subsidiary of the
Company merges into or consolidates with such Person (in a transaction
in which such Person becomes a Restricted Subsidiary of the Company),
which Debt or Preferred Stock was not Incurred or issued in anticipation
of such transaction and was outstanding prior to such transaction;
(iv) Debt consisting of Permitted Interest Rate and Currency
Protection Agreements;
(v) Debt or Preferred Stock of a Joint Venture;
(vi) Debt under any one or more Bank Credit Agreements or Vendor
Financing Facilities (and renewals, extensions, refinancings or
refundings thereof) which is permitted to be outstanding under clause
(i) of Section 1007;
(vii) Debt consisting of Guarantees of the Securities;
(viii) Debt or Preferred Stock which is exchanged for, or the
proceeds of which are used to refinance, refund or redeem, any Debt or
Preferred Stock permitted to be outstanding pursuant to clauses (i),
(iii) and (ix) hereof (or any extension or renewal thereof) (for
purposes hereof, a "refinancing"), in an aggregate principal amount, in
the case of Debt, or with an aggregate liquidation preference, in the
case of Preferred Stock, not to exceed the aggregate principal amount of
the Debt so refinanced or the aggregate liquidation preference of the
Preferred Stock so refinanced, plus the amount of any premium required
to be paid in connection with such refinancing pursuant to the terms of
the Debt or Preferred Stock so refinanced or the amount of any premium
reasonably determined by the Company as necessary to accomplish such
refinancing by means of a tender offer or privately negotiated
repurchase, plus the amount of expenses of the Company and the
Restricted Subsidiary incurred in connection therewith and provided the
Debt or Preferred Stock incurred or issued upon such refinancing by its
terms, or by the terms of any agreement or instrument pursuant to which
such Debt or Preferred Stock is Incurred or issued, (x) does not provide
for payments of principal or liquidation value at the stated maturity of
such Debt or Preferred Stock or by way of a sinking fund applicable to
such Debt or Preferred Stock or by way of any mandatory redemption,
defeasance, retirement or repurchase of such Debt or Preferred Stock by
the Company or any Restricted Subsidiary of the Company (including any
redemption, retirement or repurchase which is contingent upon events or
circumstances, but
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excluding any retirement required by virtue of acceleration of such Debt
upon an event of default thereunder), in each case prior to the time the
same are required by the terms of the Debt or Preferred Stock being
refinanced and (y) does not permit redemption or other retirement
(including pursuant to an offer to purchase made by the Company or a
Restricted Subsidiary of the Company) of such Debt or Preferred Stock at
the option of the holder thereof prior to the stated maturity of the
Debt or Preferred Stock being refinanced, other than a redemption or
other retirement at the option of the holder of such Debt or Preferred
Stock (including pursuant to an offer to purchase made by the Company or
a Restricted Subsidiary of the Company) which is conditioned upon the
change of control of the Company pursuant to provisions substantially
similar to the provisions of Section 1016 or which is pursuant to
provisions substantially similar to the provisions of Section 1013, and
provided, further, that in the case of any exchange or redemption of
Preferred Stock of a Restricted Subsidiary of the Company, such
Preferred Stock may only be exchanged for or redeemed with Preferred
Stock of such Restricted Subsidiary;
(ix) Purchase Money Debt Incurred to finance the construction,
acquisition or improvement of Telecommunications Assets, provided that
the net proceeds of such Purchase Money Debt do not exceed 100% of the
cost of construction, acquisition or improvement price of the applicable
Telecommunications Assets; and
(x) Debt consisting of performance and other similar bonds and
reimbursement obligations Incurred in the ordinary course of business
securing the performance of contractual, franchise or license
obligations of the Company or a Restricted Subsidiary, or in respect of
a letter of credit obtained to secure such performance; and
(xi) Debt not otherwise permitted to be incurred pursuant to
clauses (i) through (x) above, which, together with any other
outstanding Debt incurred pursuant to this clause (xi), has an aggregate
principal amount (or, in the case of Debt issued at a discount, an
accreted amount (determined in accordance with generally accepted
accounting principles) at the time of Incurrence) not in excess of $10
million at any time outstanding.
For purposes of determining compliance with this Section 1008, in the
event that an item of Debt meets the criteria of more than one of the types of
Debt a Restricted Subsidiary of the Company is permitted to incur pursuant to
the foregoing clauses (i) through (xi), the Company shall have the right, in its
sole discretion, to classify such item of Debt and shall be only required to
include
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the amount and type of such Debt under the clause permitting the Debt as so
classified. For purposes of determining any particular amount of Debt under such
covenant, Guarantees or Liens with respect to letters of credit supporting Debt
or otherwise included in the determination of a particular amount shall not be
included.
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SECTION 1009. Limitation on Restricted Payments.
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The Company (i) may not, directly or indirectly, declare or pay
any dividend, or make any distribution, in respect of its Capital Stock or to
the holders thereof (in their capacity as such), excluding any dividends or
distributions payable solely in shares of its Capital Stock (other than
Disqualified Stock) or in options, warrants or other rights to acquire its
Capital Stock (other than Disqualified Stock); (ii) may not, and may not permit
any Restricted Subsidiary to, purchase, redeem, or otherwise retire or acquire
for value (a) any Capital Stock of the Company or any Related Person of the
Company; or (b) any options, warrants or rights to purchase or acquire shares of
Capital Stock of the Company or any Related Person of the Company or any
securities convertible or exchangeable into shares of Capital Stock of the
Company or any Related Person of the Company; (iii) may not make, or permit any
Restricted Subsidiary to make, any Investment in, or payment on a Guarantee of
any obligation of, any Person, other than the Company or a Restricted Subsidiary
of the Company, except for Permitted Investments; and (iv) may not, and may not
permit any Restricted Subsidiary to, redeem, defease, repurchase, retire or
otherwise acquire or retire for value, prior to any scheduled maturity,
repayment or sinking fund payment, Debt of the Company which is subordinate in
right of payment to the Securities (each of clauses (i) through (iv) being a
"Restricted Payment") if: (1) a Default or an Event of Default shall have
occurred and is continuing; or (2) upon giving effect to such Restricted
Payment, the Company could not Incur at least $1.00 of additional Debt pursuant
to the provisions of the first paragraph of Section 1007; or (3) upon giving
effect to such Restricted Payment, the aggregate of all Restricted Payments from
April 25, 1996 exceeds the sum of: (a) 50% of cumulative Consolidated Net Income
(or, in the case Consolidated Net Income shall be negative, less 100% of such
deficit) since the end of the last full fiscal quarter prior to April 25, 1996
through the last day of the last full fiscal quarter ending immediately
preceding the date of such Restricted Payment; plus (b) $5 million; plus (c)
100% of the net reduction in Investments in any Unrestricted Subsidiary
resulting from payments of interest on Debt, dividends, repayments of loans or
advances, or other transfers of assets, in each case to the Company or any
Restricted Subsidiary of the Company from such Unrestricted Subsidiary (except
to the extent that any such payment is included in the calculation of
Consolidated Net Income) or from redesignations of Unrestricted Subsidiaries as
Restricted Subsidiaries; provided that the amount included in this clause (c)
shall not exceed the amount of Investments previously made by the Company and
its Restricted Subsidiaries in such Unrestricted Subsidiary; provided, further,
that the Company or a Restricted Subsidiary of the Company may make any
Restricted Payment with the aggregate net proceeds received after April 25,
1996, including the fair value of property other than cash (determined in good
faith by the Board of Directors, as conclusively evidenced by a Board Resolution
filed with the Trustee), as capital contributions to the Company or from the
issuance (other than to a Restricted Subsidiary) of Capital Stock (other than
Disqualified Stock) of the Company and warrants, rights or options on Capital
Stock (other than Disqualified Stock) of the Company and the
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principal amount of Debt of the Company that has been converted into Capital
Stock (other than Disqualified Stock and other than by a Restricted Subsidiary)
of the Company after April 25, 1996.
Notwithstanding the foregoing, the Company may (i) pay any
dividend on Capital Stock of any class within 60 days after the declaration
thereof if, on the date when the dividend was declared, the Company could have
paid such dividend in accordance with the foregoing provisions; (ii) repurchase
any shares of its Common Equity or options to acquire its Common Equity from
Persons who were formerly officers or employees of the Company, provided that
the aggregate amount of all such repurchases made pursuant to this clause (ii)
shall not exceed $2 million, plus the aggregate cash proceeds received by the
Company since April 25, 1996 from issuances of its Common Equity or options to
acquire its Common Equity to members, officers, managers, directors and
employees of the Company or any of its Subsidiaries; (iii) the Company and its
Restricted Subsidiaries may refinance any Debt otherwise permitted by clause
(iv) of the second paragraph of Section 1007; and (iv) the Company and its
Restricted Subsidiaries may retire or repurchase any Capital Stock or
Subordinated Debt of the Company in exchange for, or out of the proceeds of the
substantially concurrent sale (other than to a Restricted Subsidiary of the
Company) of, Capital Stock (other than Disqualified Stock) of the Company. If
the Company makes a Restricted Payment which, at the time of the making of such
Restricted Payment, would in the good faith determination of the Company be
permitted under this Indenture, such Restricted Payment shall be deemed to have
been made in compliance with this Indenture notwithstanding any subsequent
adjustments made in good faith to the Company financial statements affecting
Consolidated Net Income for any period.
In determining the aggregate amount expended or available for Restricted
Payments in accordance with clause (3) of the first paragraph above, (1) no
amounts expended under clauses (iii) or (iv) of the immediately preceding
paragraph shall be included, (2) 100% of the amounts expended under clauses (i)
and (ii) of the immediately preceding paragraph shall be included, and (3) no
amount shall be credited in respect of issuances of Capital Stock in
transactions under clause (iv) of the immediately preceding paragraph.
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SECTION 1010. Limitation on Dividend and Other Payment Restrictions Affecting
Restricted Subsidiaries.
<PAGE> 110
The Company may not, and may not permit any Restricted Subsidiary
to, directly or indirectly, create or otherwise cause or suffer to exist or
become effective any consensual encumbrance or restriction on the ability of any
Restricted Subsidiary of the Company (i) to pay dividends (in cash or otherwise)
or make any other distributions in respect of its Capital Stock owned by the
Company or any other Restricted Subsidiary of the Company or pay any Debt or
other obligation owed to the Company or any other Restricted Subsidiary; (ii) to
make loans or advances to the Company or any other Restricted Subsidiary; or
(iii) to transfer any of its property or assets to the Company or any other
Restricted Subsidiary. Notwithstanding the foregoing, the Company may, and may
permit any Restricted Subsidiary to, suffer to exist any such encumbrance or
restriction (a) pursuant to any agreement in effect on the Issue Date; (b)
pursuant to an agreement relating to any Acquired Debt, which encumbrance or
restriction is not applicable to any Person, or the properties or assets of any
Person, other than the Person so acquired and its Subsidiaries; (c) pursuant to
any one or more Bank Credit Agreements or Vendor Financing Facilities (and
renewals, extensions, refinancings or refundings thereof) which is permitted to
be outstanding under clause (i) of Section 1007, provided that such restriction
is consistent with, and not materially more restrictive (as conclusively
determined in good faith by the Chief Financial Officer of the Company), taken
as a whole, than, comparable provisions included in similar agreements or
facilities extended to comparable credits engaged in the Telecommunications
Business; (d) pursuant to an agreement effecting a renewal, refunding or
extension of Debt Incurred pursuant to an agreement referred to in clause (a) or
(b) above or (e) below, provided, however, that the provisions contained in such
renewal, refunding or extension agreement relating to such encumbrance or
restriction are not materially more restrictive (as conclusively determined in
good faith by the Chief Financial Officer of the Company), taken as a whole,
than the provisions contained in the agreement the subject thereof; (e) in the
case of clause (iii) above, restrictions contained in any security agreement
(including a Capital Lease Obligation) securing Debt of the Company or a
Restricted Subsidiary otherwise permitted under this Indenture, but only to the
extent such restrictions restrict the transfer of the property subject to such
security agreement; (f) in the case of clause (iii) above, customary
nonassignment provisions entered into in the ordinary course of business in
leases and other agreements; (g) any restriction with respect to a Restricted
Subsidiary of the Company imposed pursuant to an agreement which has been
entered into for the sale or disposition of all or substantially all of the
Capital Stock or assets of such Restricted Subsidiary, provided that
consummation of such transaction would not result in a Default or an Event of
Default, that such restriction terminates if such transaction is not consummated
and that such consummation or abandonment of such transaction occurs within one
year of the date such agreement was entered into; (h) pursuant to applicable law
or regulations; (i) pursuant to this Indenture and the Securities; or (j) any
restriction on the sale or other disposition of assets or
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property securing Debt as a result of a Permitted Lien on such assets or
property.
SECTION 1011. Limitation on Liens.
The Company may not, and may not permit any Restricted Subsidiary
of the Company to, Incur or suffer to exist any Lien on or with respect to any
property or assets now owned or hereafter acquired to secure any Debt without
making, or causing such Restricted Subsidiary to make, effective provision for
securing the Securities (x) equally and ratably with (or prior to) such Debt as
to such property for so long as such Debt will be so secured or (y) in the event
such Debt is Debt of the Company which is subordinate in right of payment to the
Securities, prior to such Debt as to such property for so long as such Debt will
be so secured.
The foregoing restrictions shall not apply to: (i) Liens existing
on the Issue Date and securing Debt outstanding on the Issue Date or securing
the Securities or Liens securing Debt Incurred pursuant to any Bank Credit
Agreement or Vendor Financing Facility (whether or not such Bank Credit
Agreement or Vendor Financing Facility was outstanding on the Issue Date); (ii)
Liens securing Debt in an amount which, together with the aggregate amount of
Debt then outstanding or available under the Bank Credit Agreement and Vendor
Financing Facility (or under refinancings or amendments of such agreements),
does not exceed 1.5 times the Company's Consolidated Cash Flow Available for
Fixed Charges for the four full fiscal quarters preceding the Incurrence of such
Lien for which consolidated financial statements are available, determined on a
pro forma basis as if such Debt had been Incurred and the proceeds thereof had
been applied at the beginning of such four fiscal quarters; (iii) Liens in favor
of the Company or any Wholly-Owned Restricted Subsidiary of the Company; (iv)
Liens on real or personal property of the Company or a Restricted Subsidiary of
the Company acquired, constructed or constituting improvements made after the
Issue Date to secure Purchase Money Debt which is Incurred for the construction,
acquisition and improvement of Telecommunications Assets and is otherwise
permitted under this Indenture, provided, however, that (a) the net proceeds of
any Debt secured by such a Lien does not exceed 100% of such purchase price or
cost of construction or improvement of the property subject to such Lien, (b)
such Lien attaches to such property prior to, at the time of or within 180 days
after the acquisition, completion of construction or commencement of operation
of such property and (c) such Lien does not extend to or cover any property
other than the property (or identifiable portions thereof) acquired, constructed
or constituting the improvements made with the proceeds of such Purchase Money
Debt (it being understood and agreed that all Debt owed to any single lender or
group of lenders or outstanding under any single credit facility shall be
considered a
<PAGE> 112
single Purchase Money Debt, whether drawn at one time or from time to time); (v)
Liens to secure Acquired Debt, provided, however, that (a) such Lien attaches to
the acquired asset prior to the time of the acquisition of such asset and (b)
such Lien does not extend to or cover any other asset; (vi) Liens to secure Debt
Incurred to extend, renew, refinance or refund (or successive extensions,
renewals, refinancings or refundings), in whole or in part, Debt secured by any
Lien referred to in the foregoing clauses (i), (ii), (iv) and (v) so long as
such Lien does not extend to any other property and the principal amount of Debt
so secured is not increased except as otherwise permitted under clause (iv) of
Section 1007; (vii) Liens securing Debt not otherwise permitted by the foregoing
clauses (i) through (vi) in an amount not to exceed 5% of the Company's
Consolidated Tangible Assets determined as of the most recent available
quarterly or annual balance sheet; and (viii) Permitted Liens.
SECTION 1012. Limitation on Sale and Leaseback Transactions.
The Company may not, and may not permit any Restricted Subsidiary
to, enter into any Sale and Leaseback Transaction unless (i) the Company or such
Restricted Subsidiary would be entitled to Incur a Lien to secure Debt by reason
of the provisions of Section 1011, equal in amount to the Attributable Value of
the Sale and Leaseback Transaction without equally and ratably securing the
Securities; or (ii) the Sale and Leaseback Transaction is treated as an Asset
Disposition and all of the conditions of Section 1013 (including the provisions
concerning the application of Net Available Proceeds) are satisfied with respect
to such Sale and Leaseback Transaction, treating all of the consideration
received in such Sale and Leaseback Transaction in the same manner as
consideration in respect of an Asset Disposition for purposes of such covenant.
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SECTION 1013. Limitation on Asset Dispositions.
(a) The Company may not, and may not permit any Restricted
Subsidiary to, make any Asset Disposition in one or more related transactions
occurring within any 12month period unless: (i) the Company or the Restricted
Subsidiary, as the case may be, receives consideration for such disposition at
least equal to the fair market value for the assets sold or disposed of as
determined by the Board of Directors in good faith and evidenced by a Board
Resolution filed with the Trustee, which determination shall be conclusive; (ii)
at least 75% of the consideration for such disposition consists of (1) cash or
readily marketable cash equivalents or the assumption of Debt of the Company
(other than Debt that is subordinated to the Securities) or of the Restricted
Subsidiary and release from all liability on the Debt assumed; (2)
Telecommunications Assets; or (3) shares of publicly-traded Voting Stock of any
Person engaged in the Telecommunications Business in the United States; and
(iii) all Net Available Proceeds, less any amounts invested in
Telecommunications Assets (within 180 days prior to and 360 days following such
disposition), are applied within 360 days of such disposition (1) first, to the
permanent repayment or reduction of Debt then outstanding under any Bank Credit
Agreement or Vendor Financing Facility, to the extent such agreements would
require such application or prohibit payments pursuant to clause (2) following,
(2) second, to the extent of remaining Net Available Proceeds, to make an Offer
to Purchase outstanding Securities at 100% of their Accreted Value (if such
Offer to Purchase is made on or before April 15, 2003) or 100% of their
principal amount plus accrued interest to the date of purchase (if such Offer to
Purchase is made thereafter) and, to the extent required by the terms thereof,
any other Debt of the Company that is pari passu with the Securities at a price
no greater than 100% of the principal amount thereof plus accrued interest to
the date of purchase (or 100% of the accreted value in the case of original
issue discount Debt) and (3) third, to the extent of any remaining Net Available
Proceeds following the completion of the Offer to Purchase, to the repayment of
other Debt of the Company or Debt of a Restricted Subsidiary of the Company, to
the extent permitted under the terms thereof. To the extent any Net Available
Proceeds remain after such uses, the Company and its Restricted Subsidiaries may
use such amounts for any purposes not prohibited by this Indenture.
(b) The Company will mail the Offer for an Offer to Purchase
required pursuant to Section 1013(a) not more than 360 days after consummation
of the disposition referred to in Section 1013(a). The aggregate principal
amount of the Securities to be offered to be purchased pursuant to the Offer to
Purchase shall equal the Net Available Proceeds available therefor pursuant to
Clause (iii)(2) of Section 1013(a) (rounded down to the next lowest integral
multiple of $1,000). Each Holder shall be entitled to tender all or any portion
of the Securities owned by such Holder pursuant to the Offer to
<PAGE> 114
Purchase, subject to the requirement that any portion of a Security tendered
must be tendered in an integral multiple of $1,000 principal amount.
The Company shall not be entitled to any credit against its
obligations under this Section 1013 for the principal amount of any Securities
acquired or redeemed by the Company otherwise than pursuant to the Offer to
Purchase pursuant to this Section 1013.
(c) Not later than the date of the Offer with respect to an Offer
to Purchase pursuant to this Section 1013, the Company shall deliver to the
Trustee an Officers' Certificate as to (i) the Purchase Amount, (ii) the
allocation of the Net Available Proceeds from the Asset Disposition pursuant to
which such Offer is being made, including, if amounts are invested in
Telecommunication Assets, the amount of the assets acquired and (iii) the
compliance of such allocation with the provisions of Section 1013(a).
The Company and the Trustee shall perform their respective
obligations specified in the Offer for the Offer to Purchase. On or prior to the
Purchase Date, the Company shall (i) accept for payment (on a pro rata basis, if
necessary) Securities or portions thereof tendered pursuant to the Offer, (ii)
deposit with the Paying Agent (or, if the Company is acting as its own Paying
Agent, segregate and hold in trust as provided in Section 1003) money sufficient
to pay the purchase price of all Securities or portions thereof so accepted and
(iii) deliver or cause to be delivered to the Trustee all Securities so accepted
together with an Officers' Certificate stating the Securities or portions
thereof accepted for payment by the Company. The Paying Agent (or the Company,
if so acting) shall promptly mail or deliver to Holders of Securities so
accepted payment in an amount equal to the purchase price, and the Trustee shall
promptly authenticate and mail or deliver to such Holders a new Security of like
tenor equal in principal amount to any unpurchased portion of the Security
surrendered. Any Security not accepted for payment shall be promptly mailed or
delivered by the Company to the Holder thereof.
(d) Notwithstanding the foregoing, this Section 1013 shall not
apply to any Asset Disposition which constitutes a transfer, conveyance, sale,
lease or other disposition of all or substantially all of the Company's
properties or assets within the meaning of Section 801 hereof.
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SECTION 1014. Limitation on Issuances and Sales of Capital Stock of Restricted
Subsidiaries.
The Company may not, and may not permit any Restricted Subsidiary
of the Company to, issue, transfer, convey, sell or otherwise dispose of any
shares of Capital Stock of a Restricted Subsidiary of the Company or securities
convertible or exchangeable into, or options, warrants, rights or any other
interest with respect to, Capital Stock of a Restricted Subsidiary of the
Company to any person other than the Company or a Wholly-Owned Restricted
Subsidiary of the Company except (i) in a transaction consisting of a sale of
Capital Stock of such Restricted Subsidiary owned by the Company or any
Restricted Subsidiary of the Company and that complies with the provisions of
Section 1013 to the extent such provisions apply; (ii) if required, the
issuance, transfer, conveyance, sale or other disposition of directors'
qualifying shares; (iii) in a transaction in which, or in connection with which,
the Company or a Restricted Subsidiary acquires at the same time sufficient
Capital Stock of such Restricted Subsidiary to at least maintain the same
percentage ownership interest it had prior to such transaction; (iv)
constituting the issuance of Preferred Stock permitted by the provisions of
Section 1008; and (v) Disqualified Stock issued in exchange for, or upon
conversion of, or the proceeds of the issuance of which are used to redeem,
refinance, replace or refund shares of Disqualified Stock of such Restricted
Subsidiary, provided that the amounts of the redemption obligations of such
Disqualified Stock shall not exceed the amounts of the redemption obligations
of, and such Disqualified Stock shall have redemption obligations no earlier
than those required by, the Disqualified Stock being exchanged, converted,
redeemed, refinanced, replaced or refunded.
<PAGE> 116
SECTION 1015. Transactions with Affiliates and Related Persons.
The Company may not, and may not permit any Restricted Subsidiary
of the Company to, enter into any transaction (or series of related
transactions) with an Affiliate or Related Person of the Company (other than the
Company or a Wholly-Owned Restricted Subsidiary of the Company), including any
Investment, but excluding transactions pursuant to employee compensation
arrangements approved by the Board of Directors, either directly or indirectly,
unless such transaction is on terms no less favorable to the Company or such
Restricted Subsidiary than those that could reasonably be obtained in a
comparable arm's-length transaction with an entity that is not an Affiliate or
Related Person and is in the best interests of such Company or such Restricted
Subsidiary. For any transaction that involves in excess of $1 million but less
than or equal to $15 million, the Chief Executive Officer of the Company shall
determine that the transaction satisfies the above criteria and shall evidence
such a determination by an Officer's Certificate filed with the Trustee. For any
transaction that involves in excess of $15 million, the Company shall also
obtain an opinion from a nationally recognized expert with experience in
appraising the terms and conditions, taken as a whole, of the type of
transaction (or series of related transactions) for which the opinion is
required stating that such transaction (or series of related transactions) is on
terms and conditions, taken as a whole, no less favorable to the Company or such
Restricted Subsidiary than those that could be obtained in a comparable
arm's-length transaction with an entity that is not an Affiliate or Related
Person of the Company, which opinion shall be filed with the Trustee. This
covenant shall not apply to Investments by an Affiliate or a Related Person of
the Company in the Capital Stock (other than Disqualified Stock) of the Company
or any Restricted Subsidiary of the Company.
SECTION 1016. Change of Control.
(a) Within 30 days of the occurrence of a Change of Control, the
Company will be required to make an Offer to Purchase all Outstanding Securities
at a purchase price equal to 101% of their Accreted Value (if such Offer to
Purchase is made on or prior to April 15, 2003) or 101% of their principal
amount plus accrued and unpaid interest to the date of purchase (if such Offer
to Purchase is consummated thereafter).
(b) The Company and Trustee shall perform their respective
obligations specified in the Offer for the Offer to Purchase. On or prior to the
Purchase Date, the Company shall (i) accept for payment Securities or portions
thereof tendered pursuant to the Offer, (ii) deposit with the Paying Agent (or,
if
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the Company is acting as its own Paying Agent, segregate and hold in trust as
provided in Section 1003) money sufficient to pay the purchase price of all
Securities or portions thereof so accepted and (iii) deliver or cause to be
delivered to the Trustee all Securities so accepted together with an Officers'
Certificate stating the Securities or portions thereof accepted for payment by
the Company. The Paying Agent shall promptly mail or deliver to Holders of
Securities so accepted payment in an amount equal to the purchase price, and the
Trustee shall promptly authenticate and mail or deliver to such Holders a new
Security or Securities equal in principal amount to any unpurchased portion of
the Security surrendered as requested by the Holder. Any Security not accepted
for payment shall be promptly mailed or delivered by the Company to the Holder
thereof.
(c) A "Change of Control" will be deemed to have occurred at such
time as either (a) any Person or any Persons acting together that would
constitute a "group" (a "Group") for purposes of Section 13(d) of the Exchange
Act, or any successor provision thereto (other than Eagle River, Mr. Craig O.
McCaw and their respective Affiliates or an underwriter engaged in a firm
commitment underwriting on behalf of the Company), shall beneficially own
(within the meaning of Rule 13d-3 under the Exchange Act, or any successor
provision thereto) more than 50% of the aggregate voting power of all classes of
Voting Stock of the Company; or (b) neither Mr. Craig O. McCaw nor any person
designated by him to the Company as acting on his behalf shall be a director of
the Company; or (c) during any period of two consecutive years, 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 shareholders of the Company was proposed by a
vote of a majority of the directors of the Company then still in office who were
either directors at the beginning of such period or whose election or nomination
for election was previously so approved) cease for any reason to constitute a
majority of the Board of Directors then in office.
(d) In the event that the Company makes an Offer to Purchase the
Securities, the Company intends to comply with any applicable securities laws
and regulations, including any applicable requirements of Section 14(e) of, and
Rule 14e-1 under, the Exchange Act.
(e) Unless the Company defaults in the payment of the Purchase
Price, any Security accepted for payment pursuant to an Offer to Purchase shall
cease to accrue interest after the Purchase Date.
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SECTION 1017. Provision of Financial Information.
The Company has agreed to file with the Trustee, within 15 days
after it files them with the Commission, copies of the SEC Reports. In the event
the Company shall cease to be required to file SEC Reports pursuant to the
Exchange Act, the Company will nevertheless continue to file such reports with
the Commission (unless the Commission will not accept such a filing) and the
Trustee. The Company will furnish copies of the SEC Reports to the Holders of
Securities at the time the Company is required to file the same with the Trustee
and will make such information available to investors who request it in writing.
SECTION 1018. Statement by Officers as to Default.
(a) The Company will deliver to the Trustee, within 90 days after
the end of each quarter of each fiscal year of the Company ending after the date
hereof, an Officers' Certificate, stating whether or not to the best knowledge
of the signers thereof the Company is in default in the performance and
observance of any of the terms, provisions and conditions of this Indenture and
if the Company shall be in default, specifying all such defaults and the nature
and status thereof of which they may have knowledge.
(b) The Company shall deliver to the Trustee, as soon as possible
and in any event within 10 days after the Company becomes aware of the
occurrence of a Default or an Event of Default, an Officers' Certificate setting
forth the details of such Default or Event of Default and the action which the
Company proposes to take with respect thereto.
SECTION 1019. Waiver of Certain Covenants.
The Company may omit in any particular instance to comply with
any covenant or condition set forth in Sections 1004 to 1017, inclusive, if
before or after the time for such compliance the Holders of at least a majority
in aggregate principal amount of the Outstanding Securities shall, by Act of
such Holders, either waive such compliance in such instance or generally waive
compliance with such covenant or condition, but no such waiver shall extend to
or affect such covenant or condition except to the extent so expressly waived,
and, until such waiver shall become effective, the obligations of the Company
and the duties of the Trustee in respect of any such covenant or condition shall
remain in full force and effect.
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ARTICLE ELEVEN
Redemption of Securities
SECTION 1101. Right of Redemption.
(a) The Securities may be redeemed prior to April 15, 2003 only
in the event that on or before April 15, 2001 the Company receives net proceeds
from a sale of its Common Equity, in which case the Company may, at its option,
use all or a portion of any such net proceeds to redeem Securities in a
principal amount of up to an aggregate amount equal to 33 % of the original
principal amount of the Securities provided, however, that Securities in an
amount equal to at least 66 % of the original aggregate principal amount of the
Notes remain outstanding after such redemption. Such redemption must occur on a
Redemption Date within 90 days of any such sale and upon not less than 30 nor
more than 60 days' notice by mail to each Holder of Securities to be redeemed at
such Holder's address appearing in the Security Register, in amounts of $1,000
or an integral multiple of $1,000 at a Redemption Price of 109.450% of the
Accreted Value of the Securities to but excluding the Redemption Date.
(b) The Securities further may be redeemed, as a whole or in
part, at the election of the Company, at any time on or after April 15, 2003 and
prior to maturity, upon not less than 30 nor more than 60 days' notice by mail
to each Holder of Securities to be redeemed at such Holder's address appearing
in the Security Register, in amounts of $1,000 or an integral multiple of
$1,000, at the Redemption Prices specified in the form of Security hereinbefore
set forth, together with accrued and unpaid interest to, but excluding, the
Redemption Date (subject to the right of Holders of record on the relevant
Regular Record Date to receive interest due on an Interest Payment Date that is
on or prior to the Redemption Date).
SECTION 1102. Applicability of Article.
Redemption of Securities at the election of the Company, as
permitted or required by any provision of this Indenture, shall be made in
accordance with such provision and this Article.
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SECTION 1103. Election to Redeem; Notice to Trustee.
The election of the Company to redeem any Securities pursuant to
Section 1101 shall be evidenced by Board Resolution. In case of any redemption
at the election of the Company of less than all the Securities, the Company
shall, at least 60 days prior to the Redemption Date fixed by the Company
(unless a shorter notice shall be satisfactory to the Trustee), notify the
Trustee in writing of such Redemption Date and of the principal amount of
Securities to be redeemed. In the case of any redemption of Securities prior to
the expiration of any restriction on such redemption provided in the terms of
such Securities or elsewhere in this Indenture, the Company shall furnish the
Trustee with an Officers' Certificate evidencing compliance with such
restriction.
SECTION 1104. Securities to Be Redeemed Pro Rata.
If less than all the Securities are to be redeemed in any
redemption, the Securities to be redeemed shall be selected by the Trustee by
prorating, as nearly as may be practicable, the principal amount of Securities
to be redeemed. In any proration pursuant to this Section, the Trustee shall
make such adjustments, reallocations and eliminations as it shall deem proper
(and in compliance with the requirements of the principal national securities
exchange, if any, on which the Securities are listed) to the end that the
principal amount of Securities so prorated shall be $1,000 or a multiple
thereof, by increasing or decreasing or eliminating the amount which would be
allocable to any Holder on the basis of exact proportion by an amount not
exceeding $1,000. The Trustee in its discretion may determine the particular
Securities (if there are more than one) registered in the name of any Holder
which are to be redeemed, in whole or in part.
The Trustee shall promptly notify the Company and each Security
Registrar (other than the Trustee) in writing of the Securities selected for
redemption and, in the case of any Securities selected for partial redemption,
the principal amount thereof to be redeemed.
For all purposes of this Indenture, unless the context otherwise
requires, all provisions relating to the redemption of Securities shall relate,
in the case of any Securities redeemed or to be redeemed only in part, to the
portion of the principal amount of such Securities which has been or is to be
redeemed.
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SECTION 1105. Notice of Redemption.
Notice of redemption shall be given by first-class mail, postage
prepaid, mailed not less than 30 nor more than 60 days prior to the Redemption
Date, to each Holder of Securities to be redeemed, at such Holder's address
appearing in the Security Register.
All notices of redemption shall state:
(1) the Redemption Date,
(2) the Redemption Price,
(3) whether the redemption is being made pursuant to Section
1101(a) or (b) and, if being made pursuant to Section 1101(a), a brief
statement setting forth the Company's right to effect such redemption
and the Company's basis therefor,
(4) if less than all the Outstanding Securities are to be
redeemed, the identification (and, in the case of partial redemption of
any Securities, the principal amounts) of the particular Securities to
be redeemed,
(5) that on the Redemption Date the Redemption Price will become
due and payable upon each such Security to be redeemed and that interest
thereon will cease to accrue on and after said date,
(6) the place or places where such Securities are to be
surrendered for payment of the Redemption Price,
(7) that in the case that a Security is only redeemed in part,
the Company shall execute and the Trustee shall authenticate and deliver
to the Holder of such Security without service charge, a new Security or
Securities in an aggregate amount equal to the unredeemed portion of the
Security,
(8) the aggregate principal amount of Securities being redeemed,
and
(9) the CUSIP number or numbers of the Securities being redeemed.
Notice of redemption of Securities to be redeemed at the election
of the Company shall be given by the Company or, if request is made to the
Trustee no less than 35 days prior to the Redemption Date, by the Trustee in the
name and at the expense of the Company.
<PAGE> 122
SECTION 1106. Deposit of Redemption Price.
Prior to any Redemption Date, the Company shall deposit with the
Trustee or with a Paying Agent (or, if the Company is acting as its own Paying
Agent, segregate and hold in trust as provided in Section 1003) an amount of
money sufficient to pay the Redemption Price of, and (except if the Redemption
Date shall be an Interest Payment Date) accrued and unpaid interest on, all the
Securities which are to be redeemed on that date.
SECTION 1107. Securities Payable on Redemption Date.
Notice of redemption having been given as aforesaid, the
Securities so to be redeemed shall, on the Redemption Date, become due and
payable at the Redemption Price therein specified, and from and after such date
(unless the Company shall default in the payment of the Redemption Price and
accrued and unpaid interest) such Securities shall cease to bear interest. Upon
surrender of any such Security for redemption in accordance with said notice,
such Security shall be paid by the Company at the Redemption Price, together
with accrued and unpaid interest to the Redemption Date; provided, however, that
installments of interest whose Stated Maturity is on or prior to the Redemption
Date shall be payable to the Holders of such Securities, or one or more
Predecessor Securities, registered as such at the close of business on the
relevant Record Dates according to their terms and the provisions of Section
307.
If any Security called for redemption shall not be so paid upon
surrender thereof for redemption, the principal (and premium, if any) shall,
until paid, bear interest from the Redemption Date at the rate provided by the
Security.
-111-
<PAGE> 123
SECTION 1108. Securities Redeemed in Part.
Any Security which is to be redeemed only in part shall be
surrendered at an office or agency of the Company designated for that purpose
pursuant to Section 1002 (with, if the Company or the Trustee so requires, due
endorsement by, or a written instrument of transfer in form satisfactory to the
Company and the Trustee duly executed by, the Holder thereof or his attorney
duly authorized in writing), and the Company shall execute, and the Trustee
shall authenticate and deliver to the Holder of such Security without service
charge, a new Security or Securities of like tenor, of any authorized
denomination as requested by such Holder, in aggregate principal amount equal to
and in exchange for the unredeemed portion of the principal of the Security so
surrendered. If a Global Security is so surrendered, such new Security shall
also be a Global Security.
ARTICLE TWELVE
Defeasance and Covenant Defeasance
SECTION 1201. Company's Option to Effect Defeasance or Covenant Defeasance.
The Company may, at its option by Board Resolution at any time
(subject to 10-day prior written notification to the Trustee), elect to have
either Section 1202 or Section 1203 applied to the Outstanding Securities upon
compliance with the conditions set forth below in this Article Twelve.
<PAGE> 124
SECTION 1202. Defeasance and Discharge.
Upon the Company's exercise of the option provided in Section
1201 applicable to this Section, the Company shall be deemed to have been
discharged from its obligations with respect to the Outstanding Securities on
the date the conditions set forth below are satisfied (hereinafter,
"defeasance"). For this purpose, such defeasance means that the Company shall be
deemed to have paid and discharged the entire indebtedness represented by the
Outstanding Securities and to have satisfied all its other obligations under
such Securities and this Indenture insofar as such Securities are concerned (and
the Trustee, at the expense of the Company, shall execute proper instruments
acknowledging the same), except for the following which shall survive until
otherwise terminated or discharged hereunder: (A) the rights of Holders of
Outstanding Securities to receive, solely from the trust fund described in
Section 1204 and as more fully set forth in such Section, payments in respect of
the principal of (and premium, if any) and interest on such Securities when such
payments are due, (B) the Company's obligations with respect to such Securities
under Sections 304, 305, 306, 1002 and 1003, (C) the rights, powers, trusts,
duties and immunities of the Trustee hereunder and (D) this Article Twelve.
Subject to compliance with this Article Twelve, the Company may exercise its
option under this Section 1202 notwithstanding the prior exercise of its option
under Section 1203.
SECTION 1203. Covenant Defeasance.
Upon the Company's exercise of the option provided in Section
1201 applicable to this Section (i) the Company shall be released from its
obligations under Sections 1005 through 1017, inclusive, and Clauses (3) and (4)
of Section 801, (ii) the occurrence of an event specified in Sections 501(3),
501(4) (with respect to Clauses (3) and (4) of Section 801), and 501 (5) (with
respect to Sections 1005 through 1017, inclusive) shall not be deemed to be an
Event of Default, on and after the date the conditions set forth below are
satisfied (hereinafter, "covenant defeasance"). For this purpose, such covenant
defeasance means that the Company may omit to comply with and shall have no
liability in respect of any term, condition or limitation set forth in any such
Section or Article, whether directly or indirectly by reason of any reference
elsewhere herein to any such Section or Article or by reason of any reference in
any such Section or Article to any other provision herein or in any other
document, but the remainder of this Indenture and such Securities shall be
unaffected thereby.
-113-
<PAGE> 125
SECTION 1204. Conditions to Defeasance or Covenant Defeasance.
The following shall be the conditions to application of either
Section 1202 or Section 1203 to the Outstanding Securities:
(1) The Company shall irrevocably have deposited or caused to be
deposited with the Trustee as trust funds in trust for the purpose of
making the following payments, specifically pledged as security for, and
dedicated solely to, the benefit of the Holders of such Securities, (A)
money in an amount, or (B) U.S. Government Obligations which through the
scheduled payment of principal and interest in respect thereof in
accordance with their terms will provide, not later than one day before
the due date of any payment, money in an amount, or (C) a combination
thereof, sufficient, in the opinion of a nationally recognized firm of
independent certified public accountants expressed in a written
certification thereof delivered to the Trustee, to pay and discharge,
and which shall be applied by the Trustee to pay and discharge, the
principal of, premium, if any, and each installment of interest on the
Securities on the Stated Maturity of such principal or installment of
interest on the day on which such payments are due and payable in
accordance with the terms of this Indenture and of such Securities. For
this purpose, "U.S. Government Obligations" means securities that are
(x) direct obligations of the United States of America for the payment
of which its full faith and credit is pledged or (y) obligations of a
Person controlled or supervised by and acting as an agency or
instrumentality of the United States of America the payment of which is
unconditionally guaranteed as a full faith and credit obligation by the
United States of America, which, in either case, are not callable or
redeemable at the option of the issuer thereof, and shall also include a
depositary receipt issued by a bank (as defined in Section 3(a)(2) of
the Securities Act) as custodian with respect to any such U.S.
Government Obligation or a specific payment of principal of or interest
on any such U.S. Government Obligation held by such custodian for the
account of the holder of such depositary receipt, provided that (except
as required by law) such custodian is not authorized to make any
deduction from the amount payable to the holder of such depositary
receipt from any amount received by the custodian in respect of the U.S.
Government Obligation or the specific payment of principal of or
interest on the U.S. Government Obligation evidenced by such depositary
receipt.
(2) No Default or Event of Default shall have occurred and be
continuing on the date of such deposit or, insofar as subsections 501(8)
and (9) are concerned, at any time during the period ending on the 91st
<PAGE> 126
day after the date of such deposit (it being understood that this
condition shall not be deemed satisfied until the expiration of such
period).
(3) Such defeasance or covenant defeasance shall not cause the
Trustee to have a conflicting interest as defined in Section 608 and for
purposes of the Trust Indenture Act with respect to any securities of
the Company.
(4) Such defeasance or covenant defeasance shall not result in a
breach or violation of, or constitute a default under, this Indenture or
any other agreement or instrument to which the Company is a party or by
which it is bound.
(5) The Company shall have delivered to the Trustee an Officers'
Certificate and an Opinion of Counsel, each stating that all conditions
precedent provided for relating to either the defeasance under Section
1202 or the covenant defeasance under Section 1203 (as the case may be)
have been complied with.
(6) In the case of an election under Section 1202, the Company
shall have delivered to the Trustee an Opinion of Counsel stating that
(x) the Company has received from, or there has been published by, the
Internal Revenue Service a ruling, or (y) since the date of this
Indenture there has been a change in the applicable Federal income tax
law, in either case to the effect that, and based thereon such opinion
shall confirm that, the Holders of the Outstanding Securities will not
recognize income, gain or loss for Federal income tax purposes as a
result of such deposit, defeasance and discharge and will be subject to
Federal income tax on the same amounts, in the same manner and at the
same times as would have been the case if such deposit, defeasance and
discharge had not occurred.
(7) In the case of an election under Section 1203, the Company
shall have delivered to the Trustee an Opinion of Counsel to the effect
that the Holders of the Outstanding Securities will not recognize
income, gain or loss for Federal income tax purposes as a result of such
deposit and covenant defeasance and will be subject to Federal income
tax on the same amounts, in the same manner and at the same times as
would have been the case if such covenant defeasance had not occurred.
(8) The Company shall have delivered to the Trustee an Opinion of
Counsel to the effect that such deposit and defeasance or covenant
defeasance shall not result in the trust arising from such deposit
constituting an investment company as defined in the Investment Company
Act of
-115-
<PAGE> 127
1940, as amended, or such trust shall be qualified under such act or
exempt from regulation thereunder.
SECTION 1205. Deposited Money and U.S. Government Obligations to Be Held in
Trust;
Other Miscellaneous Provisions.
Subject to the provisions of the last paragraph of Section 1003,
all money and U.S. Government Obligations (including the proceeds thereof)
deposited with the Trustee (or other qualifying trustee--collectively, for
purposes of this Section 1205, the "Trustee") pursuant to Section 1204 in
respect of the Securities shall be held in trust and applied by the Trustee, in
accordance with the provisions of such Securities and this Indenture, to the
payment, either directly or through any Paying Agent (including the Company
acting as its own Paying Agent) as the Trustee may determine, to the Holders of
such Securities, of all sums due and to become due thereon in respect of
principal (and premium, if any) and interest, but such money need not be
segregated from other funds except to the extent required by law.
The Company shall pay and indemnify the Trustee against any tax,
fee or other charge imposed on or assessed against the U.S. Government
Obligations deposited pursuant to Section 1204 or the principal and interest
received in respect thereof other than any such tax, fee or other charge which
by law is for the account of the Holders of the Outstanding Securities.
Anything in this Article Twelve to the contrary notwithstanding,
the Trustee shall deliver or pay to the Company from time to time upon Company
Request any money or U.S. Government Obligations held by it as provided in
Section 1204 which, in the opinion of a nationally recognized accounting firm
expressed in a written certification thereof delivered to the Trustee, are in
excess of the amount thereof which would then be required to be deposited to
effect an equivalent defeasance or covenant defeasance.
<PAGE> 128
SECTION 1206. Reinstatement.
If the Trustee or the Paying Agent is unable to apply any money
in accordance with Section 1202 or 1203 by reason of any order or judgment of
any court or governmental authority enjoining, restraining or otherwise
prohibiting such application, then the Company's obligations under this
Indenture and the Securities shall be revived and reinstated as though no
deposit had occurred pursuant to this Article Twelve until such time as the
Trustee or Paying Agent is permitted to apply all such money in accordance with
Section 1202 and 1203; provided, however, that if the Company makes any payment
of principal of (and premium, if any) any Security following the reinstatement
of its obligations, the Company shall be subrogated to the rights of the Holders
of such Securities to receive such payment from the money held by the Trustee or
the Paying Agent.
SECTION 1207. Repayment to Company.
Any money deposited with the Trustee or any Paying Agent, or then
held by the Company, in trust for the payment of the principal of, premium, if
any, or interest on any Security and remaining unclaimed for two years after
such principal, and premium, if any, or interest has become due and payable
shall be paid to the Company on its written request or (if then held by the
Company) shall be discharged from such trust; and the Holder of such security
shall thereafter, as a creditor, look only to the Company for payment thereof,
and all liability of the Trustee or such Paying Agent with respect to such trust
money, and all liability of the Company as trustee thereof, shall thereupon
cease; provided, however, that the Trustee or such Paying Agent, before being
required to make any such repayment, may at the expense of the Company cause to
be published once, in the New York Times and The Wall Street Journal (national
edition), notice that such money remains unclaimed and that, after a date
specified therein, which shall not be less than 30 days from the date of such
notification or publication, any unclaimed balance of such money then remaining
will be repaid to the Company.
This instrument may be executed in any number of counterparts,
each of which so executed shall be deemed to be an original, but all such
counterparts shall together constitute but one and the same instrument.
-117-
<PAGE> 129
IN WITNESS WHEREOF, the parties hereto have caused this Indenture
to be duly executed and attested, and the Trustee has caused its seal to be
hereunto affixed and attested, all as of the day and year first above written.
NEXTLINK Communications, Inc.
By /s/ R. BRUCE EASTER, JR.
---------------------------------
Name: R. Bruce Easter, Jr.
Title: Vice President, General
Counsel and Secretary
Attest:
/s/ DAVID GOESLING
- ------------------------------
Name: David Goesling
Title: Assistant Treasurer
UNITED STATES TRUST COMPANY
OF NEW YORK
By /s/ PATRICIA STERMER
---------------------------------
Name: Patricia Stermer
Title: Assistant Vice President
[SEAL]
Attest:
/s/ ROBERT F. LEE
- ------------------------------
Name: Robert F. Lee
Title: Assistant Secretary
<PAGE> 130
STATE OF WASHINGTON ) ss.:
COUNTY OF KING )
On this 1st day of April, 1998, before me personally appeared R.
Bruce Easter, Jr., to me known, who, being duly sworn, did depose and say that
he is the Vice President of NEXTLINK Communications, Inc., one of the
corporations described in and which executed the foregoing instrument, and duly
acknowledged to me that he executed the same by authority of the Board of
Directors of said corporation.
/S/ JULIA A. AVILES
------------------------------
[Seal] Notary Public
Julia A. Aviles
My Appointment Expires: 1-19-02
STATE OF NEW YORK ) ss.:
COUNTY OF NEW YORK )
On this 31st day of March, 1998, before me personally appeared
Patricia Stermer, to me known, who, being duly sworn, did depose and say that
she is the Assistant Vice President of United States Trust Company of New York,
one of the corporations described in and which executed the foregoing
instrument, and duly acknowledged to me that she executed the same by authority
of the Board of Directors of said corporation.
/S/ CHRISTINE C. COLLINS
------------------------------
Notary Public
Christine C. Collins
Notary Public, State of New York
No. 03-4624735
Qualified in Bronx County
Certificate filed in New York County
Commission Expires March 30, 2000
<PAGE> 131
ANNEX A -- Form of
Regulation S Certificate
REGULATION S CERTIFICATE
(For transfers pursuant to Section 305(b)(i), (iii) and (v)
of the Indenture)
United States Trust Company of New York,
as Trustee
114 West 47th Street, 25th Floor
New York, New York 10036
Attention: Corporate Trust Trustee Administration
Re: 9.45% Senior Discount Notes due April 15, 2008
of NEXTLINK Communications, Inc.
(the "Securities")
Reference is made to the Indenture, dated as of April 1, 1998
(the "Indenture"), between NEXTLINK Communications, Inc. (the "Company") and
United States Trust Company of New York, as Trustee. Terms used herein and
defined in the Indenture or in Regulation S or Rule 144 under the U.S.
Securities Act of 1933, as amended (the "Securities Act") are used herein as so
defined.
This certificate relates to U.S. $____________ principal amount
of Securities, which are evidenced by the following certificate(s) (the
"Specified Securities"):
CUSIP No(s). ___________________________
CERTIFICATE No(s). _____________________
The person in whose name this certificate is executed below (the "Undersigned")
hereby certifies that either (i) it is the sole beneficial owner of the
Specified Securities or (ii) it is acting on behalf of all the beneficial owners
of the Specified Securities and is duly authorized by them to do so. Such
beneficial owner or owners are referred to herein collectively as the "Owner".
If the Specified Securities are represented by a Global Security, they are held
through the Depositary or an Agent Member in the name of the Undersigned, as or
on behalf of the Owner. If the Specified Securities are not represented by a
Global Security, they are registered in the name of the Undersigned, as or on
behalf of the Owner.
The Owner has requested that the Specified Securities be
transferred to a person (the "Transferee") who will take delivery in the form of
a
A-1
<PAGE> 132
Regulation S Security. In connection with such transfer, the Owner hereby
certifies that, unless such transfer is being effected pursuant to an
<PAGE> 133
effective registration statement under the Securities Act, it is being effected
in accordance with Rule 904 or Rule 144 under the Securities Act and with all
applicable securities laws of the states of the United States and other
jurisdictions. Accordingly, the Owner hereby further certifies as follows:
(1) Rule 904 Transfers. If the transfer is being effected in
accordance with Rule 904:
(A) the Owner is not a distributor of the Securities, an
affiliate of the Company or any such distributor or a person
acting on behalf of any of the foregoing;
(B) the offer of the Specified Securities was not made to
a person in the United States;
(C) either:
(i) at the time the buy order was originated, the
Transferee was outside the United States or the Owner and
any person acting on its behalf reasonably believed that
the Transferee was outside the United States, or
(ii) the transaction is being executed in, on or
through the facilities of the Eurobond market, as
regulated by the Association of International Bond
Dealers, or another designated offshore securities market
and neither the Owner nor any person acting on its behalf
knows that the transaction has been prearranged with a
buyer in the United States;
(D) no directed selling efforts have been made in the
United States by or on behalf of the Owner or any affiliate
thereof;
(E) if the Owner is a dealer in securities or has received
a selling concession, fee or other remuneration in respect of the
Specified Securities, and the transfer is to occur during the
Restricted Period, then the requirements of Rule 904(c)(1) have
been satisfied; and
(F) the transaction is not part of a plan or scheme to
evade the registration requirements of the Securities Act.
(2) Rule 144 Transfers. If the transfer is being effected
pursuant to Rule 144:
A-3
<PAGE> 134
(A) the transfer is occurring after a holding period of at
least one year (computed in accordance with paragraph (d) of Rule
144) has elapsed since the Specified Securities were last
acquired from the Company or from an affiliate of the Company,
whichever is later, and is being effected in accordance with the
applicable amount, manner of sale and notice requirements of Rule
144; or
(B) the transfer is occurring after a holding period of at
least two years has elapsed since the Specified Securities were
last acquired from the Company or from an affiliate of the
Company, whichever is later, and the Owner is not, and during the
preceding three months has not been, an affiliate of the Company.
This certificate and the statements contained herein are made for
your benefit and the benefit of the Company and the Purchasers.
Dated: __________________________________________________________
(Print the name of the Undersigned, as such term is
defined in the second paragraph of this certificate.)
By:_______________________________________________________
Name:
Title:
(If the Undersigned is a corporation, partnership or
fiduciary, the title of the person signing on behalf of
the Undersigned must be stated.)
<PAGE> 135
ANNEX B -- Form of Restricted
Securities Certificate
RESTRICTED SECURITIES CERTIFICATE
(For transfers pursuant to Section 305(b)(ii), (iii), (iv) and (v)
of the Indenture)
United States Trust Company of New York,
as Trustee
114 West 47th Street, 25th Floor
New York, New York 10036
Attention: Corporate Trust Trustee Administration
Re: 9.45% Senior Discount Notes due April 15, 2008
of NEXTLINK Communications, Inc.
(the "Securities")
Reference is made to the Indenture, dated as of April 1, 1998
(the "Indenture"), between NEXTLINK Communications Inc. (the "Company") and
United States Trust Company of New York, as Trustee. Terms used herein and
defined in the Indenture or in Regulation S or Rule 144 under the U.S.
Securities Act of 1933, as amended (the "Securities Act") are used herein as so
defined.
This certificate relates to U.S. $_____________ principal amount
of Securities, which are evidenced by the following certificate(s) (the
"Specified Securities"):
CUSIP No(s). ___________________________
CERTIFICATE No(s). _____________________
The person in whose name this certificate is executed below (the "Undersigned")
hereby certifies that either (i) it is the sole beneficial owner of the
Specified Securities or (ii) it is acting on behalf of all the beneficial owners
of the Specified Securities and is duly authorized by them to do so. Such
beneficial owner or owners are referred to herein collectively as the "Owner".
If the Specified Securities are represented by a Global Security, they are held
through the Depositary or an Agent Member in the name of the Undersigned, as or
on behalf of the Owner. If the Specified Securities are not represented by a
Global Security, they are registered in the name of the Undersigned, as or on
behalf of the Owner.
B-1
<PAGE> 136
The Owner has requested that the Specified Securities be
transferred to a person (the "Transferee") who will take delivery in the form of
a Restricted Security. In
<PAGE> 137
connection with such transfer, the Owner hereby certifies that, unless such
transfer is being effected pursuant to an effective registration statement under
the Securities Act, it is being effected in accordance with Rule 144A or Rule
144 under the Securities Act and all applicable securities laws of the states of
the United States and other jurisdictions. Accordingly, the Owner hereby further
certifies as follows:
(1) Rule 144A Transfers. If the transfer is being effected in
accordance with Rule 144A:
(A) the Specified Securities are being transferred to a
person that the Owner and any person acting on its behalf
reasonably believe is a "qualified institutional buyer" within
the meaning of Rule 144A, acquiring for its own account or for
the account of a qualified institutional buyer; and
(B) the Owner and any person acting on its behalf have
taken reasonable steps to ensure that the Transferee is aware
that the Owner may be relying on Rule 144A in connection with the
transfer; and
(2) Rule 144 Transfers. If the transfer is being effected
pursuant to Rule 144:
(A) the transfer is occurring after a holding period of at
least one year (computed in accordance with paragraph (d) of Rule
144) has elapsed since the Specified Securities were last
acquired from the Company or from an affiliate of the Company,
whichever is later, and is being effected in accordance with the
applicable amount, manner of sale and notice requirements of Rule
144; or
(B) the transfer is occurring after a holding period of at
least two years has elapsed since the Specified Securities were
last acquired from the Company or from an affiliate of the
Company, whichever is later, and the Owner is not, and during the
preceding three months has not been, an affiliate of the Company.
This certificate and the statements contained herein are made for
your benefit and the benefit of the Company and the Purchasers.
Dated: __________________________________________________________
(Print the name of the Undersigned,
B-3
<PAGE> 138
as such term is defined in the second paragraph of this
certificate.)
By:_______________________________________________________
Name:
Title:
(If the Undersigned is a corporation, partnership or
fiduciary, the title of the person signing on behalf of
the Undersigned must be stated.)
<PAGE> 139
ANNEX C -- Form of Unrestricted
Securities Certificate
UNRESTRICTED SECURITIES CERTIFICATE
(For removal of Securities Act Legends pursuant to Section 305(c))
United States Trust Company of New York,
as Trustee
114 West 47th Street, 25th Floor
New York, New York 10036
Attention: Corporate Trust Trustee Administration
Re: 9.45% Senior Discount Notes due April 15, 2008
of NEXTLINK Communication, Inc.
(the "Securities")
Reference is made to the Indenture, dated as of April 1, 1998
(the "Indenture"), between NEXTLINK Communication, Inc. (the "Company") and
United States Trust Company of New York, as Trustee. Terms used herein and
defined in the Indenture or in Regulation S or Rule 144 under the U.S.
Securities Act of 1933, as amended (the "Securities Act") are used herein as so
defined.
This certificate relates to U.S. $_____________ principal amount
of Securities, which are evidenced by the following certificate(s) (the
"Specified Securities"):
CUSIP No(s). ___________________________
CERTIFICATE No(s). _____________________
The person in whose name this certificate is executed below (the "Undersigned")
hereby certifies that either (i) it is the sole beneficial owner of the
Specified Securities or (ii) it is acting on behalf of all the beneficial owners
of the Specified Securities and is duly authorized by them to do so. Such
beneficial owner or owners are referred to herein collectively as the "Owner".
If the Specified Securities are represented by a Global Security, they are held
through the Depositary or an Agent Member in the name of the Undersigned, as or
on behalf of the Owner. If the Specified Securities are not represented by a
Global Security, they are registered in the name of the Undersigned, as or on
behalf of the Owner.
C-1
<PAGE> 140
The Owner has requested that the Specified Securities be
exchanged for Securities bearing no Securities Act Legend pursuant to Section
305(c) of the Indenture. In connection with such exchange, the Owner hereby
certifies
<PAGE> 141
that the exchange is occurring after a holding period of at least two
years (computed in accordance with paragraph (d) of Rule 144) has elapsed since
the Specified Securities were last acquired from the Company or from an
affiliate of the Company, whichever is later, and the Owner is not, and during
the preceding three months has not been, an affiliate of the Company. The Owner
also acknowledges that any future transfers of the Specified Securities must
comply with all applicable securities laws of the states of the United States
and other jurisdictions.
This certificate and the statements contained herein are made for
your benefit and the benefit of the Company and the Purchasers.
Dated: __________________________________________________________
(Print the name of the Undersigned, as such term is
defined in the second paragraph of this certificate.)
By:_______________________________________________________
Name:
Title:
(If the Undersigned is a corporation, partnership or
fiduciary, the title of the person signing on behalf of
the Undersigned must be stated.)
C-3
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518,770
0
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