<PAGE>
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 September 30, 1999
Commission file number: 000-22939
NEXTLINK Communications, Inc.
NEXTLINK CAPITAL, INC.
(Exact name of registrant as specified in its charter)
Delaware 91-1738221
Washington 91-1716062
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
500 108TH AVENUE NE, SUITE 2200, 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 November 5, 1999, the number of shares of Class A and Class B common stock
of NEXTLINK Communications, Inc. issued and outstanding was 74,334,495 and
58,746,550 , 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>
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 SEPTEMBER 30, 1999 ARE UNAUDITED)
<TABLE>
<CAPTION>
SEPTEMBER 30, DECEMBER 31,
1999 1998
---------------- -----------------
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents..................................... $ 497,919 $ 319,496
Marketable securities......................................... 1,146,055 1,158,566
Accounts receivable, net...................................... 63,454 36,115
Other current assets.......................................... 30,621 16,480
Pledged securities............................................ -- 21,500
------------- -------------
Total current assets...................................... 1,738,049 1,552,157
Property and equipment, net........................................ 953,576 594,408
Investment in fixed wireless licenses.............................. 926,678 67,352
Other assets, net.................................................. 408,644 269,189
------------- -------------
Total assets.............................................. $ 4,026,947 $ 2,483,106
============= =============
LIABILITIES AND SHAREHOLDERS' EQUITY (DEFICIT)
Current liabilities:
Accounts payable.............................................. $ 44,907 $ 61,175
Accrued expenses.............................................. 69,975 45,056
Accrued interest payable...................................... 84,930 34,670
Current portion of long-term obligations...................... 1,988 2,755
------------- -------------
Total current liabilities................................. 201,800 143,656
Long-term debt..................................................... 3,057,067 2,013,192
Other long-term liabilities........................................ 38,087 16,553
------------- -------------
Total liabilities......................................... 3,296,954 2,173,401
Commitments and contingencies
Redeemable preferred stock, par value $0.01 per share, 25,000,000
shares authorized; 14% Preferred, aggregate liquidation preference
$411,555, 8,043,386 and 7,254,675 shares issued and outstanding in
1999 and 1998, respectively; 6 1/2% Convertible Preferred, aggregate
liquidation preference $200,000; 4,000,000 shares issued and
outstanding in 1999 and 1998, respectively...................... 597,597 556,168
Shareholders' equity (deficit):
Common Stock, par value $0.02 per share, stated at amounts paid
in; Class A, 400,000,000 shares authorized, 73,939,549 and
48,340,234 shares issued and outstanding in 1999 and 1998,
respectively; Class B, 60,000,000 shares authorized, 58,746,550
and 60,595,804 shares issued and outstanding in 1999 and 1998,
respectively................................................ 1,118,535 354,525
Deferred compensation......................................... (89,065) (11,370)
Accumulated other comprehensive income........................ 110,347 --
Accumulated deficit........................................... (1,007,421) (589,618)
------------- -------------
Total shareholders' equity (deficit)...................... 132,396 (246,463)
------------- -------------
Total liabilities and shareholders' equity (deficit)...... $ 4,026,947 $ 2,483,106
============= =============
</TABLE>
See accompanying notes to unaudited interim consolidated financial statements.
2
<PAGE>
NEXTLINK COMMUNICATIONS, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(DOLLARS IN THOUSANDS, EXCEPT PER SHARE AMOUNTS)
(UNAUDITED)
<TABLE>
<CAPTION>
THREE MONTHS ENDED NINE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
----------------------------- ---------------------------
1999 1998 1999 1998
----------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Revenue $ 75,059 $ 37,817 $ 184,302 $ 96,392
Costs and expenses:
Operating........................... 59,328 32,828 156,395 85,448
Selling, general and administrative. 71,322 41,565 182,755 109,599
Deferred compensation............... 2,535 1,720 4,711 3,104
Depreciation........................ 25,290 11,334 67,429 26,243
Amortization........................ 3,166 3,444 11,177 10,898
----------- ----------- ----------- -----------
Total costs and expenses........ 161,641 90,891 422,467 235,292
----------- ----------- ----------- -----------
Loss from operations..................... (86,582) (53,074) (238,165) (138,900)
Interest income.......................... 24,428 21,559 61,713 56,116
Interest expense......................... (79,419) (37,434) (190,172) (99,050)
----------- ----------- ----------- -----------
Net loss................................. $ (141,573) $ (68,949) $ (366,624) $ (181,834)
=========== =========== =========== ===========
Preferred stock dividends and accretion of
preferred stock redemption obligation,
including issue costs............... (17,525) (15,734) (51,179) (42,613)
----------- ----------- ----------- -----------
Net loss applicable to common shares..... $ (159,098) $ (84,683) $ (417,803) $ (224,447)
=========== =========== =========== ===========
Net loss per share (basic and diluted)... $ (1.27) $ (0.79) $ (3.41) $ (2.09)
=========== =========== =========== ===========
Shares used in computation of net loss per
share............................... 125,376,694 107,767,264 122,357,342 107,316,650
=========== =========== =========== ===========
</TABLE>
See accompanying notes to unaudited interim consolidated financial statements.
3
<PAGE>
NEXTLINK COMMUNICATIONS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(DOLLARS IN THOUSANDS)
(UNAUDITED)
<TABLE>
<CAPTION>
NINE MONTHS ENDED
SEPTEMBER 30,
--------------------------------------------
1999 1998
----------------- ------------------
<S> <C> <C>
OPERATING ACTIVITIES:
Net loss............................................................ $ (366,624) $ (181,834)
Adjustments to reconcile net loss to net cash used in operating
activities:
Deferred compensation expense.................................. 4,711 3,104
Equity in loss of affiliate.................................... 5,185 2,635
Depreciation and amortization.................................. 78,606 37,141
Accretion of interest on senior notes.......................... 43,875 18,940
Changes in assets and liabilities:
Accounts receivable............................................ (27,339) (6,570)
Other assets................................................... (16,708) (8,231)
Accounts payable............................................... (21,461) (8,016)
Accrued expenses and other liabilities......................... 17,951 18,683
Accrued interest payable....................................... 50,260 21,735
------------ ------------
Net cash used in operating activities............................... (231,544) (102,413)
INVESTING ACTIVITIES:
Purchase of property and equipment.................................. (395,953) (209,136)
Assets acquired in network lease agreement.......................... -- (92,000)
Investment in fixed wireless licenses (net of cash received)........ (488,490) (67,354)
Investment in unconsolidated affiliates............................. -- (13,337)
Maturity of pledged securities...................................... 21,135 19,636
Purchase of marketable securities................................... (2,545,574) (3,347,468)
Maturity of marketable securities................................... 2,521,135 2,916,258
------------ ------------
Net cash used in investing activities............................... (887,747) (793,401)
</TABLE>
-- Continued --
4
<PAGE>
NEXTLINK COMMUNICATIONS, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS (CONT'D)
(DOLLARS IN THOUSANDS)
(UNAUDITED)
<TABLE>
<CAPTION>
NINE MONTHS ENDED
SEPTEMBER 30,
--------------------------------------------
1999 1998
----------------- ------------------
<S> <C> <C>
FINANCING ACTIVITIES:
Net proceeds from issuance of redeemable preferred stock............ $ -- $ 193,824
Repayment of note payable and other obligations..................... (2,925) (7,346)
Proceeds from issuance of common stock upon exercise of stock options 20,356 2,021
Dividends paid on convertible preferred stock....................... (9,750) (6,500)
Proceeds from issuance of senior notes (net of discount)............ 1,000,000 734,323
Proceeds from sale of common stock.................................. 310,533 --
Costs incurred in connection with financing......................... (20,500) (17,232)
------------ ------------
Net cash provided by financing activities........................... 1,297,714 899,090
------------ ------------
Net increase in cash and cash equivalents........................... 178,423 3,276
Cash and cash equivalents, beginning of period...................... 319,496 389,074
------------ ------------
Cash and cash equivalents, end of period............................ $ 497,919 $ 392,350
============ ============
SUPPLEMENTAL CASH FLOW DISCLOSURES:
Noncash financing and investing activities:
Redeemable preferred stock dividends, paid in redeemable
preferred shares............................................. $ 39,436 $ 34,366
============ ============
Accrued redeemable preferred stock dividends, payable in
redeemable preferred shares, and accretion of preferred stock
redemption obligation and issue costs........................ $ 1,993 $ 1,747
============ ============
Common stock issued in acquisitions............................ $ 350,648 $ 5,727
============ ============
Cash paid for interest............................................ $ 100,683 $ 58,860
============ ============
</TABLE>
See accompanying notes to unaudited interim consolidated financial statements.
5
<PAGE>
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 Delaware 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 high-quality telecommunications services in selected
markets in the United States. The Company is a majority-owned subsidiary of
Eagle River Investments, L.L.C.
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 investments in unconsolidated
companies in which the Company has a 20% interest or more are accounted for on
the equity method. 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 1998 Annual Report on Form 10-K, as filed with the Securities and
Exchange Commission on March 29, 1999.
The financial information included herein reflects all adjustments
(consisting only of normal recurring adjustments) which are, in the opinion of
management, necessary for a fair presentation of the results for interim
periods. The results of operations for the three and nine-month periods ended
September 30, 1999 are not necessarily indicative of the results to be expected
for the full year.
(2) STRATEGIC AGREEMENTS
In January 1999, the Company entered into a strategic agreement with Covad
Communications Group, Inc. Pursuant to this agreement, the Company is a
preferred provider to Covad for local transport and colocation services for
Covad's regional data centers. The Company has also invested $20.0 million in
Covad under this agreement, and Covad is the Company's preferred provider of
Digital Subscriber Line, or DSL, services where the Company elects not to
provide its own such services. Covad is a leading provider of high-speed digital
communications services using DSL technology.
In July 1999, the Company purchased 150 MHz of broadband fixed wireless
spectrum in New York, New York held by SPEEDUS.com, Inc., a facilities based
high-speed Internet service provider, and 2,000,000 shares of SPEEDUS.com's
common stock for a total of $40.0 million. As part of this transaction,
NEXTLINK agreed to provide colocation, transport and access services to
SPEEDUS.com. Additionally, SPEEDUS.com will have access to the Company's
network testing facilities.
For the nine months ended September 30, 1999, the Company's net unrealized
gain on its equity investment in Covad and SPEEDUS.com was $113.3 million. The
net unrealized gain was reported as "other comprehensive income" in accordance
with SFAS No. 130,"Reporting Comprehensive Income".
(3) ACQUISITIONS
In April 1999, NEXTLINK acquired WNP Communications, Inc. for $698.2
million. Of this amount, $157.7 million was paid in cash to the FCC for
license fees, including interest. The remainder was paid to stockholders of
WNP, and consisted of $190.1 million in cash and 11,431,662 shares of Class A
common stock.
6
<PAGE>
In this transaction, the Company acquired 39 A block LMDS wireless licenses
covering an area where approximately 98 million people live or work and one B
block LMDS wireless license covering an area where approximately 16 million
people live or work. The Company plans to use the fixed wireless licenses
acquired in the WNP and NEXTBAND transactions to extend the reach of its fiber
networks and to connect additional customers directly to its fiber networks.
In June 1999, the Company acquired Nextel Communications, Inc.'s 50%
interest in NEXTBAND Communications L.L.C. for $137.7 million in cash. The
Company had already held a 50% interest in NEXTBAND, and as a result of this
acquisition, the Company now wholly owns NEXTBAND. NEXTBAND owns 13 A block LMDS
licenses and 29 B block LMDS licenses.
(4) FINANCINGS
DEBT
On June 1, 1999, the Company completed the sale of 10 3/4% Senior Notes and
12 1/4% Senior Discount Notes, both due June 1, 2009. Proceeds from the sale of
the 10 3/4% Notes and the 12 1/4% Notes, net of discounts, underwriting
commissions, advisory fees and expenses totaled approximately $979.5 million.
Interest payments on the 10 3/4% Notes are due semi-annually. The 10 3/4% Notes
are redeemable at the option of the Company, in whole or in part, beginning June
1, 2004 at established redemption prices which decline to 100% of the stated
principal amount thereof by June 1, 2007. The 12 1/4% Notes were issued at a
discount from their principal amount to generate gross proceeds to the Company
of approximately $325.0 million. The 12 1/4% Notes accrete at a rate of 12 1/4%
compounded semi-annually, to an aggregate principal amount of approximately
$588.9 million by June 1, 2004. No cash interest will accrue on the 12 1/4%
Notes until June 1, 2004. Interest will become payable in cash semi-annually
beginning December 1, 2004. The 12 1/4% Notes are redeemable at the option of
the Company, in whole or in part, at any time after June 1, 2004 at established
redemption prices which decline to 100% of the stated principal amount thereof
by June 1, 2007.
The indentures pursuant to which the 10 3/4% Notes and the 12 1/4% Notes
are issued contain certain covenants that, among other things, limit 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 or asset disposition of the Company as
defined in the indentures, holders of the Notes will have the right to require
the Company to purchase their Notes, in whole or in part, at a price equal to
101% of the principal amount thereof, plus accrued and unpaid interest, if any,
thereon to the date of purchase. The 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.
COMMON STOCK
On June 1, 1999, the Company completed the sale of 15,200,000 shares of
Class A common stock at $38.00 per share. Of the total shares sold, the Company
offered 8,464,100 and 6,735,900 were offered by certain shareholders who
previously owned interests in WNP. Gross proceeds to the Company from the
offering totaled $321.6 million, and proceeds net of underwriting discounts,
advisory fees and estimated expenses aggregated approximately $310.5 million.
(5) STOCK SPLIT
On July 15, 1999, the Company declared a two-for-one stock split of the
Company's Class A and Class B common stock, effective for shareholders of
record at the close of business on August 18, 1999. The split was effected in
the form of a stock dividend and was paid on August 27, 1999. The accompanying
consolidated financial statements have been restated to reflect the stock
split.
7
<PAGE>
(6) RELATED PARTY TRANSACTIONS
In June 1999, the Company acquired the assets of NEXTLINK, Inc., a company
owned by Craig O. McCaw, the Company's largest and controlling shareholder,
through a merger transaction. NEXTLINK, Inc. owned approximately 1% minority
interests in each of the following subsidiaries of the Company: NEXTLINK
California, Inc., NEXTLINK Ohio, Inc., NEXTLINK Pennsylvania, Inc., NEXTLINK
Tennessee, Inc., NEXTLINK Washington, Inc., NEXTLINK Solutions, Inc., NEXTLINK
Interactive, Inc., NEXTLINK Utah, Inc., Mindshare, LLC, and NEXTLINK New York,
Inc. The Company issued 537,806 shares of Class B common stock in exchange for
the minority interests. As part of this transaction, Mr. McCaw also received
532,932 shares of the Company's Class B common stock, the number of shares of
Class B common stock previously owned by NEXTLINK, Inc. The transaction was
accounted for as a purchase of minority interests between entities under common
control and, as such, the minority interests were recorded at NEXTLINK, Inc.'s
historical cost.
(7) RECLASSIFICATIONS
Certain reclassifications have been made to prior period amounts in order
to conform to the current presentation.
(8) REPORTABLE SEGMENTS
The Company's interactive voice response segment contributed 8.9% and
8.5%, respectively, of the company's total revenue for the three and nine
month periods ended September 30, 1999, compared to 15.5% and 15.9%,
respectively, for the corresponding periods in 1998. This segment had net
income, excluding corporate overhead, of $1.7 million for the third quarter
of 1999 compared to $0.4 million in the same period in 1998. Year to date net
loss relating to the interactive voice response segment, excluding corporate
overhead, was $2.7 million and $0.7 million in 1999 and 1998, respectively.
(9) SUBSEQUENT EVENT
In November, the Company entered into a hedge transaction in order to
reduce its risk of significant market declines on certain highly volatile
equity securities. The Company has pledged $40.0 million in marketable
securities as collateral against the hedge options.
8
<PAGE>
PART I. FINANCIAL INFORMATION
Item 1(b). FINANCIAL STATEMENTS
NEXTLINK CAPITAL, INC.
BALANCE SHEETS
(AMOUNTS AS OF SEPTEMBER 30, 1999 ARE UNAUDITED)
<TABLE>
<CAPTION>
SEPTEMBER 30, DECEMBER 31,
1999 1998
----------------- -----------------
<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 an 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 1998 Annual Report on Form 10-K, as filed with the Securities and
Exchange Commission on March 29, 1999.
9
<PAGE>
PART I. FINANCIAL INFORMATION
Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS
OVERVIEW
Since 1996, we have provided high-quality telecommunications services to
the rapidly growing business market. To serve our customers' broad and expanding
telecommunications needs, we have assembled a unique collection of
high-bandwidth, local and national network assets. We intend to integrate these
assets into a seamless network that will support the most advanced
communications technologies available, and make us the provider best positioned
to deliver the broad variety of data and voice applications our customers
require.
To accomplish this:
- we have built 30 high bandwidth, or broadband, local networks in 18
states, generally located in the central business districts of the
cities we serve, and we are continuing to build additional networks;
- we have become the nation's largest holder of broadband fixed wireless
spectrum with FCC licenses covering 95% of the population of the 30
largest U.S. cities, which we will use to extend the reach of our
networks to additional customers; and
- through a joint venture, INTERNEXT, we have acquired exclusive
interests in a national broadband network now being built to traverse
over 16,000 miles and to connect more than 50 cities, including all
of the largest cities that our current and planned local networks
serve.
We currently operate local networks in 47 cities. We serve larger cities,
such as New York, Los Angeles, Chicago, Atlanta, the San Francisco Bay Area,
Denver, Dallas and Miami, medium-sized markets, such as Salt Lake City and
Nashville, and clusters of smaller markets in Orange County, California and
central Pennsylvania. We are currently building additional local networks, and
plan to have operational networks in most of the 30 largest U.S. cities by the
end of 2000. We launched services in San Diego, Seattle, and Washington D.C.
during the first half of 1999, in Newark, Detroit and Houston during the third
quarter of 1999, and, most recently, in Phoenix and Boston.
Our networks typically encircle a city's central business district and
connect to our central offices. We build our own networks wherever possible,
which enables us to deliver higher quality services and will enable us to
deliver new services, which we expect will increase our operating margins.
Our goal is to provide our customers with complete voice and data network
solutions for all of their communications needs, using our own fiber, switches
and other facilities to the greatest extent possible. To reduce our reliance on
the physical connection for the short distance between our customers and our
fiber optic networks, which is currently often leased from the dominant carrier,
we intend to increase the number of customers connected directly to our
networks. In some cases, we will construct a new fiber optic extension from our
network to the customer's premises. In other cases, we will deploy a
high-bandwidth wireless connection between an antenna on the roof of the
customer's premises and an antenna attached to our fiber rings. These fixed
wireless connections offer high-quality broadband capacity and, in most cases,
we expect to cost less than fiber to install. We expect to deploy fixed
wireless extensions in 25 markets by the end of 2000.
Our networks support a variety of communications technologies, which
permits us to offer our customers a set of technology options to meet our
customers' changing needs, and introduce new technologies as they become
available. For example, we have begun to add new technologies to our networks
including Internet Protocol, or IP, routers and switches, and Asynchronous
Transfer Mode, or ATM, switches. ATM switches will enable us to meet the demands
of large, high-volume customers, while IP routers and switches will enable us to
carry Internet traffic more efficiently and to provide more services. However,
we intend to remain flexible in our technology choices, to serve our customers'
present needs and to take advantage of the future opportunities that
technological advances may bring.
10
<PAGE>
The table below provides selected key financial and operating data (dollars
are in thousands):
<TABLE>
<CAPTION>
AS OF AND
FOR THE THREE MONTHS ENDED
SEPTEMBER 30,
1999 1998
--------------- --------------
<S> <C> <C>
FINANCIAL DATA:
Gross property and equipment.............................. $1,102,123 $ 511,204
EBITDA (1) ............................................... $ (55,591) $ (36,576)
OPERATING DATA (2):
Route miles (3)........................................... 3,905 2,150
Fiber miles (4)........................................... 338,705 158,987
On-net buildings connected (5)............................ 1,163 736
Off-net buildings connected (6)........................... 20,047 9,688
Switches installed........................................ 28 18
Access lines in service (7)............................... 349,154 134,107
Employees................................................. 3,254 2,065
</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 our ability 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 we manage and in which we have a 40% membership
interest.
(3) Route miles refers to the number of miles of the telecommunications
path in which our 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 our estimate of the number of
fibers along that path.
(5) Represents buildings physically connected to our networks, excluding
those connected by unbundled incumbent local exchange carrier (ILEC)
facilities.
(6) Represents buildings connected to our 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 services. We serviced 1,916
resold access lines as of September 30, 1999. We define an access line
as a telephone connection between a customer purchasing local
telephone services and us. This connection does not include the
concept of access line equivalents (ALEs), and is a one-for-one
relationship with no multipliers used for trunk ratios, except for
those trunks over which primary rate interface (PRI) service is
provided, which are counted as 23 access lines.
In September 1999, we announced plans to move our corporate headquarters
from Bellevue, Washington to Northern Virginia. The move is expected to
primarily occur during the first half of 2000. We are currently in the
process of determining the personnel-related changes and corresponding costs
associated with our relocation.
11
<PAGE>
RESULTS OF OPERATIONS
Revenue increased 98% to $75.1 million during the third quarter of 1999,
from $37.8 million in the same period in 1998. Year to date revenue of $184.3
million represented a 91% increase from the $96.4 million reported for the
comparable period in 1998. Revenue reported consisted of the following
components (in thousands):
<TABLE>
<CAPTION>
THREE MONTHS ENDED NINE MONTHS ENDED
SEPTEMBER 30, SEPTEMBER 30,
1999 1998 1999 1998
------------ ------------ ------------- ------------
<S> <C> <C> <C> <C>
Bundled local and long distance, and
dedicated services......................... $ 59,537 $ 21,672 $ 142,216 $ 49,342
Shared tenant services..................... 3,478 3,091 9,639 9,577
Long distance telephone services........... 5,380 6,798 16,724 20,769
Enhanced services.......................... 6,664 6,256 15,723 16,704
----------- ----------- ---------- -----------
Total revenue.............................. $ 75,059 $ 37,817 $ 184,302 $ 96,392
=========== =========== ========== ===========
</TABLE>
The increase in total year to date revenue was driven by 188% growth in
revenues from bundled local and long distance services and dedicated services,
which corresponded to an increase in customer access lines installed. Our
quarterly installation rate of customer access lines increased from 31,220 in
the third quarter of 1998 to 65,133 during the third quarter of 1999. As of
September 30, 1999, we had 349,154 access lines in service, compared to 134,107
as of September 30, 1998. Revenue from our stand-alone long distance
telephone services continues to decline as we convert those customers onto
our local networks and begin servicing those customers with our bundled local
and long distance products. Enhanced services revenue consists primarily of
revenue generated from our interactive voice response (IVR) services.
We began offering switched local and long distance services in our first
seven markets in July 1996, 18 markets during 1997 and 12 additional markets
during 1998. We launched services in San Diego, Washington D.C. and Seattle
during the first half of 1999, Newark, Detroit and Houston during the third
quarter of 1999, and most recently, in Phoenix and Boston. In addition, since
January 1995, NEXTLINK has offered private leased line, or dedicated services.
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 81% during the third quarter of 1999 to $59.3
million, an increase of $26.5 million over the same period in 1998. For the nine
months ended September 30, 1999, operating expense rose $70.9 million or 83%
over the same period in 1998. These increases primarily resulted from:
- increased network costs related to provisioning higher volumes of
local, long distance and enhanced services;
- an increase in the number of our employees; and
- an increase in other related costs primarily to expand our local and
long distance service businesses in our existing and planned markets.
Selling, general and administrative expenses include salaries and related
personnel costs, facilities expenses, sales and marketing, information systems
costs, consulting and legal fees and equity in loss of affiliates. Selling,
general and administrative expenses increased 72% and 67%, respectively, for the
three and nine-month periods ended September 30, 1999 as compared to the
corresponding periods in 1998. The increase was primarily due to an increase in
the number of our employees, as well as other costs associated with the
expansion of our local and long distance service businesses in our existing and
planned markets.
12
<PAGE>
We record deferred compensation expense for compensatory stock options
issued under our Stock Option Plan over their vesting periods, based on the
excess of the fair value at the date of grant over their exercise prices. We
expect deferred compensation expense to increase in future periods as a result
of compensatory stock options issued during the third quarter of 1999.
Depreciation expense increased primarily due to placement in service of
additional telecommunications network assets, including switches, fiber optic
cable, network electronics and related equipment. We expect depreciation expense
to continue to increase as we expand our networks and install additional
equipment associated with voice and data technologies.
Interest expense increased 112% in the third quarter of 1999 over the same
period in the prior year due to an increase in our average outstanding
indebtedness over the respective periods. For more information, see "Liquidity
and Capital Resources." Pursuant to Statement of Financial Accounting Standards
No. 34, we capitalize a portion of our interest costs as part of the
construction cost of our communications networks. Capitalized interest during
the third quarter of 1999 totaled $2.8 million. Interest income results from
investment of excess cash and securities.
LIQUIDITY AND CAPITAL RESOURCES
Our business is capital intensive and, as such, has required and will
continue to require substantial capital investment. We build high capacity
networks with broad market coverage, a strategy that initially increases our
level of capital expenditures and operating losses and requires us to make a
substantial portion of our capital investments before we realize any revenue
from them. These capital expenditures, together with the associated early
operating expenses, will continue to result in negative cash flow unless and
until we are able to establish an adequate customer base. We believe, however,
that over the long term this strategy will enhance our financial performance by
increasing the traffic flow over our networks.
During the first nine months of 1999, we used $231.5 million in cash for
operating activities, compared to $102.4 million for the same period in the
prior year. The increase was primarily due to a substantial increase in our
activities associated with the continued development and expansion of local and
long distance service operations. In addition, during the first nine months of
1999, we invested $396.0 million in property and equipment and $522.5 million in
acquisitions of telecommunications assets and investments in telecommunications
businesses. During the same period in 1998, we invested $209.1 million in
property and equipment, and $172.7 million in acquisitions of telecommunications
assets and investments in telecommunications businesses.
We expect to make substantial capital expenditures in 1999 and beyond
relating to our existing and planned network development and operations. These
expenditures include:
- the purchase and installation of switches, routers, servers and other
data-related equipment and related electronics in existing networks
and in networks to be constructed or acquired in new or adjacent
markets;
- the purchase and installation of fiber optic cable and electronics to
expand existing networks and develop new networks, including the
connection of new buildings;
- the development of our comprehensive information technology platform;
- the purchase and installation of equipment associated with the
deployment of LMDS using our LMDS spectrum;
- funding of the INTERNEXT venture described below, and related expenses
we expect to incur in building our national network;
13
<PAGE>
- the purchase and installation of equipment associated with deployment
of Digital Subscriber Line, or DSL services; and
- the funding of operating losses and working capital.
Our strategic plan calls also for expansion into additional market areas.
This expansion will require significant additional capital for:
- potential acquisitions of businesses or assets;
- design, development and construction of new networks; and
- the funding of operating losses and working capital during the
start-up phase of each market.
As of September 30, 1999, we had unrestricted cash and investments of
approximately $1,644.0 million.
In July 1999, we purchased 150 MHz of broadband fixed wireless spectrum
in New York, New York held by SPEEDUS.com, Inc., a facilities based high-speed
Internet service provider and 2,000,000 shares of SPEEDUS.com's common stock
for a total of $40.0 million. Of this amount, $20.0 million was paid in cash
in July 1999. The remaining $20.0 million was paid upon closing in October
1999. As part of this transaction, we agreed to provide co-location, transport
and access services to SPEEDUS.com. Additionally, SPEEDUS.com will have access
to our network testing facility.
In June 1999, we acquired Nextel Communications Inc.'s 50% interest in
NEXTBAND, a joint venture formed in January 1998 by us and Nextel, for $137.7
million in cash. NEXTBAND owns LMDS licenses in 42 markets throughout the U.S.
The purchase price was determined based on a formula derived from the purchase
price paid in the WNP merger.
In April 1999, we acquired WNP Communications, Inc. for $698.2 million. Of
this amount, $157.7 million was paid in cash to the FCC for license fees,
including interest. The remainder was paid to stockholders of WNP, and consisted
of $190.1 million in cash and 11,431,662 shares of Class A common stock. In this
transaction, we acquired 39 A block local multipoint distribution services, or
LMDS, wireless licenses covering an area where approximately 98 million people
live or work and one B block LMDS wireless license covering an area where
approximately 16 million people live or work. We plan to use our fixed
wireless licenses to extend the reach of our fiber networks and to connect
additional customers directly to our fiber networks. Deploying the
technologies associated with our LMDS strategy will require additional
capital expenditures.
In January 1999, we entered into a strategic agreement with Covad
Communications Group, Inc., a leading provider of high-speed digital
communications services using DSL technology. Pursuant to this agreement, we are
a preferred provider to Covad for local transport and colocation services for
Covad's regional data centers. We also invested $20.0 million in Covad under
this agreement, and Covad is a preferred provider to us of DSL services, where
we elect not to provide such services ourselves.
In July 1998, we formed INTERNEXT L.L.C., which is beneficially owned 50%
each by us and Eagle River LLC. INTERNEXT entered into an agreement with
Level 3 Communications, Inc. Level 3 is constructing a national fiber optic
network that is expected to cover more than 16,000 route miles with six or more
conduits and connect 50 cities in the United States and Canada. Pursuant to this
agreement, INTERNEXT will receive an exclusive interest in 24 fibers in a
shared, filled conduit, one entire empty conduit and the right to 25% of the
fibers pulled through the sixth and any additional conduits in the network.
INTERNEXT will pay $700.0 million in exchange for these rights, the majority of
which will be payable as segments of the network are completed and accepted by
INTERNEXT, which is expected to occur substantially during 2000 and 2001.
NEXTLINK has guaranteed 50% of the financial obligations of INTERNEXT under this
agreement and, together with Eagle River, has also guaranteed the performance of
certain other obligations of INTERNEXT.
14
<PAGE>
On June 1, 1999, we completed the sale of 10 3/4% Senior Notes and 12 1/4%
Senior Discount Notes, both due June 1, 2009. We received proceeds from the sale
of the 10 3/4% Notes and the 12 1/4% Notes, net of discounts, underwriting
commissions, advisory fees and expenses totaling approximately $979.5 million.
Interest payments on the 10 3/4% Notes are due semi-annually. We have the option
to redeem the 10 3/4% Notes, in whole or in part, beginning after June 1, 2004
at established redemption prices which decline to 100% of the stated principal
amount thereof by June 1, 2007. The 12 1/4% Notes were issued at a discount from
their principal amount to generate aggregate gross proceeds of approximately
$325.0 million. The 12 1/4% Notes accrete at a rate of 12 1/4% compounded
semi-annually, to an aggregate principal amount of approximately $588.9 million
by June 1, 2004. No cash interest will accrue on the 12 1/4% Notes until June 1,
2004. Interest will become payable in cash semi-annually beginning December 1,
2004. We have the option to redeem the 12 1/4% Notes, in whole or in part, at
any time after June 1, 2004 at established redemption prices which decline to
100% of the stated principal amount thereof by June 1, 2007.
On June 1, 1999, we completed the sale of 15,200,000 shares of Class A
common stock at $38.00 per share. Of the total shares sold, we offered 8,464,100
and 6,735,900 were offered by certain shareholders who previously owned
interests in WNP. Gross proceeds from the offering totaled $321.6 million, and
our proceeds net of underwriting discounts, advisory fees and estimated expenses
aggregated approximately $310.5 million.
In addition, our operating flexibility with respect to certain business
matters is, and will continue to be, limited by covenants associated with our
outstanding senior notes. Among other things, these covenants limit the ability
of us and our 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. We are
required to use the proceeds from the sale of our 10 3/4% Senior Notes due 2008,
10 3/4% Senior Notes due 2009 and 12 1/4% Senior Discount Notes due 2009 to fund
80% of the expenditures for the construction, improvement and acquisition of new
and existing networks and services and direct and indirect investments in
certain joint ventures, including INTERNEXT, by covenants in the indentures
under which these and other of our notes were issued. Pending application of
these proceeds, we are permitted to invest them in marketable securities. We
expect to fund the remainder of these costs with the proceeds of other
offerings.
In addition, the terms of our 14% Senior Exchangeable Redeemable Preferred
Stock contain covenants that may limit our flexibility in incurring additional
indebtedness and issuing additional preferred shares. We were in compliance with
all covenants associated with our notes and the 14% preferred stock as of
September 30, 1999.
IMPACT OF YEAR 2000
Certain of our older computer systems and applications were written to
define a given year with abbreviated dates using the last two digits in a year
rather than the entire four digits. As a result, when computer systems attempt
to process dates both before and after January 1, 2000, two digit year fields
may create processing ambiguities that can cause errors and system failures. For
example, systems and applications may have time-sensitive software that
recognize an abbreviated year "00" as the year 1900 rather than the year 2000.
These errors or failures may have limited effects, or the effects may be
widespread, depending on the computer chip, system, or software, and its
location and function.
STATE OF READINESS
NEXTLINK has assessed the impact of the Year 2000, and has adopted a formal
Year 2000 plan, or the Plan. The purpose of the Plan is to develop and perform
reasonable steps intended to prevent our critical operational functions from
being impaired due to the Year 2000 problem.
Our definition of Year 2000 compliance is the ability of all computer
systems and hardware to perform as intended regardless of date, and that all
data, including date fields, can and will be accessed, processed, maintained,
and updated without interruption and with expected results.
15
<PAGE>
The Plan is divided into four major project areas: the portion of the
external Public Service Telephone Network, or PSTN, operated or controlled by
NEXTLINK Embedded Systems, which includes our internal network as well as our
telecommunications hardware and software; Enterprise Applications, which
includes our business operations programs, such as billing and provisioning;
and Facilities, which includes our buildings, utilities, security, and other
similar functions and systems. Implementation of the Plan is coordinated
throughout the Company by a Program Management Team, which is comprised of
cross-functional members and includes a business continuity/contingency
manager. This team meets regularly with executive management, and periodically
advises the Audit Committee and the Board of Directors on the status of the
Plan. We have also engaged a third party consulting firm to assist in the
completion of certain phases of the Plan.
Our Plan is comprised of three phases:
PHASE I
In the first phase, inventory and enterprise assessment, which we completed
in December 1998, we:
- produced an inventory of priority systems and equipment to determine
the extent of testing required for Year 2000 readiness (generally
defined as the ability of information systems to accurately process
data from, into and between the twentieth and twenty-first centuries,
including leap year calculations),
- designed a Company-wide Year 2000 communications plan,
- created a risk assessment and impact analysis from which Phase I and
Phase II of the Plan were developed,
- sent written requests for Year 2000 certification statements to our
vendors and suppliers, and
- began an ongoing program to provide Y2K information and documentation
to our customers, PUCs, regulatory agencies, and other service
providers through our company website and other means of
communications.
PHASE II
In the second phase, strategy development and confirmation, which we
completed in April 1999, we:
- conducted a mission critical assessment of date sensitive devices and
applications,
- developed detailed and comprehensive correction and remediation plans
for achieving Year 2000 compliance,
- identified and began installing upgrades for software applications
that we identified as not being Year 2000 compliant,
- substantially completed the inventory of our information technology,
networks, and embedded systems, and
- received responses to our certification statements from approximately
95% of our vendors and suppliers who provide components of our
information technology, networks and embedded systems.
We will continue to inventory systems and contact vendors and suppliers as
needed.
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<PAGE>
PHASE III
The third phase, which is the remediation phase, is scheduled to be
completed by November 30, 1999. This phase focuses on the remediation of
issues and execution of plans identified in Phase II. Based on our estimates
of remediation to be completed, the following is a summary of the estimated
percentage of remediation completed for each of the four major Plan project
areas:
<TABLE>
<CAPTION>
REMEDIATION PLAN
PROJECT PERCENT COMPLETED
------- --------------------
<S> <C>
PSTN.................................................. 99%
Embedded Systems...................................... 100%
Enterprise Applications............................... 95%
Facilities............................................ 73%
</TABLE>
One of our subsidiaries, NEXTLINK Interactive, Inc., operates over systems
and operating platforms that are independent of those related to our local and
long distance services. As such, NEXTLINK Interactive has developed its own Year
2000 Plan, or the Interactive Plan. Based on our estimates, Interactive is 74%
complete with the hardware portion of the Interactive Plan and 84% complete with
the applications portion of the Interactive Plan. Interactive expects to be Year
2000 ready by December 31, 1999.
The objective of this phase is to confirm that all mission critical systems
and applications will operate with minimal impact from the Year 2000 problem.
COSTS TO ADDRESS YEAR 2000 ISSUES
We have not incurred material historical costs for Year 2000 awareness,
inventory, assessment, analysis, conversion, or contingency planning. Further,
we anticipate that our future costs for these purposes will not be material.
Although management believes that its estimates are reasonable, we
cannot assure you that the actual costs of implementing the Plan will not
differ materially from the estimated costs or that we will not be materially
adversely affected by Year 2000 issues. Furthermore, the estimated costs of
implementing the Plan do not consider the costs, if any, that might be
incurred as a result of Year 2000-related failures that occur despite our
implementation of the Plan.
YEAR 2000 RISK FACTORS
Between now and the year 2000 there will be increased competition for
people with the technical and managerial skills necessary to deal with the Year
2000 problem. We believe that we employ an adequate number of personnel skilled
in dealing with the Year 2000 problem and have retained outside consultants who
bring additional skilled people to deal with the Year 2000 problem as it affects
us. Nevertheless, we could face shortages of skilled personnel or other
resources. These shortages might delay or otherwise impair our ability to
assure that our critical systems are Year 2000 compliant. Outside entities
could face similar problems that could materially affect us. We believe that
the possible impact of the shortage of skilled people and resources is not,
and will not be, unique to us.
We believe that our critical systems will be Year 2000 ready before January
1, 2000. However, there is no assurance that the Plan will succeed in
accomplishing its purposes and unforeseen circumstances may arise during
implementation of the Plan that would materially and adversely affect us.
We are taking reasonable steps to identify, assess, and, where appropriate,
replace devices that contain embedded chips. Despite these reasonable efforts,
we may not be able to find and remediate all
17
<PAGE>
embedded chips in all of our systems. Further, outside entities on which we
depend also may not be able to find and remediate all embedded chips in their
systems. Some chips that are not Year 2000 compliant may create system
disruptions or failures, which may, in turn, cause disruptions or failures in
other systems. These cascading problems could impair our ability to serve our
customers and otherwise fulfill contractual and legal obligations. We believe
that the possible adverse impact of the embedded chip problem is not, and will
not be, unique to us.
We cannot ensure that suppliers upon which we depend for essential supplies
and services will convert and test their critical systems and processes in a
timely manner. Failure or delay by all or some of these entities, including
federal, state, or local governments and other exchange carriers, to make their
systems and processes Year 2000 compliant could create substantial disruptions
having a material adverse effect on our operations.
In a recent Securities and Exchange Commission release regarding Year 2000
disclosure, the Securities and Exchange Commission stated that public companies
must disclose the most reasonably likely worst case Year 2000 scenario. Although
it is not possible to assess the likelihood of any of the following events, each
must be included in a consideration of worst case scenarios: widespread failure
of electrical, gas, and similar supplies serving us; widespread disruption of
the services provided by common communications carriers; similar disruption to
the means and modes of transportation for us and our employees, contractors,
suppliers, and customers; significant disruption our ability to gain access to,
and remain working in, office buildings and other facilities; the failure of
substantial numbers of our critical computer hardware and software systems,
including both internal business systems and systems controlling operational
facilities such as electrical generation, transmission, and distribution
systems; and the failure of outside entities' systems, including systems related
to banking and finance. Among other things, we could face substantial claims by
customers or loss of revenue due to service interruptions, inability to fulfill
contractual obligations or to bill customers accurately and on a timely basis,
and increased expenses associated with litigation, stabilization of operations
following critical system failures, and the execution of contingency plans. We
could also experience an inability by customers and others to pay, on a timely
basis or at all, obligations owed to us. Under these circumstances, the adverse
effects on us would be material, although not quantifiable at this time.
Further, the cumulative effect of these failures could have a substantial
adverse effect on the economy, domestically and internationally. The adverse
effect on us from a domestic or global recession or depression also could be
material, although not quantifiable at this time.
We will continue to monitor business conditions to assess and quantify
material adverse effects, if any, that may result from the Year 2000 problem.
CONTINGENCY PLANS
As part of the Plan, NEXTLINK has developed contingency plans that deal
with internal aspects of the Year 2000 problem. The Company's contingency plans
contemplate an assessment of all its critical internal information technology
systems and its internal operational systems that use computer-based controls.
In addition, the Company assessed any critical disruptions due to Year
2000-related failures that are external to the Company. These processes will
begin January 1, 2000, and will continue as long as circumstances require.
The Company's contingency plans include the creation of teams that will be
prepared to respond immediately and as necessary to critical Year 2000 problems
as soon as they become known. The composition of teams that are assigned to deal
with such problems vary according to the nature, significance, and location of
the problem.
INFORMATION REGARDING FORWARD LOOKING STATEMENTS
Some statements and information contained in the foregoing "Management's
Discussion and Analysis of Financial Condition and Results of Operations" are
not historical facts, but are "forward-looking statements", as such term is
defined in the Private Securities Litigation Reform Act of 1995. These
forward-looking statements can be identified by the use of forward-looking
terminology such as "believes", "expects", "plans", "may", "will", "would,"
"could," "should", or "anticipates" or the negative of these words or other
variations of these words or other comparable words, or by discussions of
strategy that involve risks and uncertainties. We wish to caution you that these
forward-looking statements are only predictions, and actual events or results
may differ materially as a
18
<PAGE>
result of risks that we face, including those set forth under "Outlook: Issues
and Uncertainties" in our Form 10-K filed with the SEC on March 29, 1999 and
other reports and filings made with the Securities and Exchange Commission,
including, but not limited to, the following:
- our ability to quickly and efficiently build networks, as well as the
ability of Level 3 to build the national network in which INTERNEXT
has an interest;
- the ability of equipment vendors to develop fixed wireless radios,
transceivers and related equipment designed to work at LMDS
frequencies, and our ability to deploy fixed wireless connections;
- the development of IP technology that can be integrated into
telecommunications networks;
- our ability to attract and retain customers;
- the quality and price of similar or comparable communications
services, and the downward pressure such competition may place on
prices for such services;
- our ability to raise additional capital to meet operating and
financing needs;
- our ability to negotiate and renegotiate interconnection agreements in
all of our markets on favorable terms, to obtain and maintain local
permits and rights-of-way, and to comply with federal, state and local
regulations;
- our ability to ensure that computer systems and applications will
function properly beyond 1999; and
- general economic conditions.
NEW ACCOUNTING STANDARD
In April 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 adoption of SOP 98-5 did not
have a material impact on the Company's financial position.
Item 3. QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK
NEXTLINK currently has instruments sensitive to market risk relating to
exposure to changing interest rates and market prices. There have been no
material changes in market risk since December 31, 1998.
19
<PAGE>
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
NEXTLINK filed a registration statement on Form S-1 (File No.
333-32001) which became effective on September 26, 1997, whereby
30,400,000 shares of Class A common stock, $0.02 par value per
share, were sold in an initial public offering at a price of
$8.50 per share. Of the 30,400,000 shares of Class A Common
Stock sold, 24,000,000 shares were sold by NEXTLINK and
6,400,000 shares were sold by a selling shareholder. NEXTLINK
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 4,560,000 additional shares of Class A Common Stock at
the same price per share. Net proceeds to NEXTLINK from the IPO
totaled approximately $226.8 million, after deducting
underwriting discounts, advisory fees and expenses aggregating
approximately $16.0 million. NEXTLINK intends to use
substantially all of the net proceeds from the IPO 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. None of the net proceeds from the IPO had been used by
NEXTLINK as of September 30, 1999.
Item 3. DEFAULTS UPON SENIOR SECURITIES
None.
Item 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
The Company held its annual meeting of shareholders on August
25, 1999. The following matters were voted upon at the meeting:
Proposal 1: The following directors were elected:
<TABLE>
<CAPTION>
NOMINEE Votes For Votes Withheld
------- ----------- --------------
<S> <C> <C>
William A. Hoglund.............. 327,036,898 96,306
Steven W. Hooper................ 327,037,087 96,117
Nicolas Kauser.................. 327,060,074 73,130
Craig O. McCaw.................. 325,191,947 1,941,257
Sharon L. Nelson................ 327,060,413 72,791
Gregory J. Parker............... 327,039,503 93,701
Wayne M. Perry.................. 327,037,373 95,831
Jeffrey S. Raikes............... 327,060,874 72,330
Dennis Weibling................. 327,037,373 95,831
</TABLE>
Proposal 2: The amendment to NEXTLINK's Certificate of
Incorporation to increase the authorized common stock from
154,467,600 to 460,000,000 shares, divided into two classes,
400,000,000 shares of Class A common stock and 60,000,000 shares
of Class B common stock, was approved, as follows:
20
<PAGE>
- by Class A common stock, voting as a separate class, with 29,693,421
votes for, 3,396,620 votes against, and 10,138 abstentions;
- by Class B common stock, voting as a separate class, with 294,032,750
votes for, no votes against, and no abstentions; and
- by both classes common stock, voting together as a single class, with
323,726,445 votes for, 3,396,620 votes against, and 10,138
abstentions.
Effective October 19, 1999, our Board of Directors approved amendments to
the NEXTLINK Communications, Inc. Stock Option Plan to authorize an
additional 5,000,000 shares of our Class A common stock to be issued under
the plan, increasing the maximum number of shares authorized for issuance
under the plan to 41,000,000, adjusted for NEXTLINK's recent 100% stock
dividend. The amendment also provides that the maximum number of shares of
Class A stock with respect to which options may be granted to any
individual in any calendar year is limited to the maximum number of shares
authorized under the plan. These amendments also have been approved by one
of our stockholders, Eagle River Investments, L.L.C. Eagle River holds
37,743,574 shares of our Class B common stock, which represents shares with
a majority of the total number of votes attributable to all shares of
outstanding common stock. Our common stock is the only outstanding class of
capital stock of NEXTLINK entitled to vote on this matter. Eagle River
approved the Board's action by a written consent in lieu of stockholder
meetings dated October 19, 1999, pursuant to Section 228(a) of the Delaware
General Corporation Law. Because we are a corporation organized under the
laws of the State of Delaware, our stockholders may take action by written
consent without a meeting. The Board has not solicited any proxies or
consents from any other stockholders in connection with this action. The
amendments will become effective 20 days after the date on which we mail
the information statement to stockholders of NEXTLINK in accordance with
rules of the Securities and Exchange Commission.
Item 5. OTHER INFORMATION
None.
Item 6. EXHIBITS AND REPORTS ON FORM 8-K
(a) Exhibits
3.1 Certificate of Incorporation of NEXTLINK Communications, Inc. (1)
3.2 Certificate of Amendment of Certificate of Incorporation of
NEXTLINK Communications, Inc.
3.3 By-laws of NEXTLINK Communications, Inc. (1)
3.4 Articles of Incorporation of NEXTLINK Capital, Inc. (2)
3.5 By-laws of NEXTLINK Capital, Inc. (2)
4.1 Certificate of Designations of the Powers, Preferences and
Relative, Participating, Optional and Other Special Rights of 14%
Senior Exchangeable
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Redeemable Preferred Shares and Qualifications, Limitations and
Restrictions Thereof. (1)
4.2 Form of stock certificate of 14% Senior Exchangeable Redeemable
Preferred Shares. (3)
4.3 Certificate of Designations 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. (1)
4.4 Form of stock certificate of 6 1/2% Cumulative Convertible
Preferred Stock. (12)
4.5 Form of Stock Certificate of Class A common stock. (9)
4.6 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. (2)
4.7 First Supplemental Indenture, dated as of 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. (3)
4.8 Second Supplemental Indenture, dated June 3, 1998, amending
Indenture dated April 25, 1996, by and among NEXTLINK
Communications, Inc., NEXTLINK Capital, Inc. and United States
Trust Company of New York, as Trustee. (1)
4.9 Indenture dated September 25, 1997, between United States Trust
Company, as Trustee and NEXTLINK Communications, Inc., relating
to the 9 5/8% Senior Notes due 2007. (12)
4.10 First Supplemental Indenture, dated June 3, 1998, amending
Indenture dated September 25, 1997, by and between NEXTLINK
Communications, Inc. and United States Trust Company of New York,
as Trustee. (1)
4.11 Indenture, dated March 3, 1998, between United States Trust
Company, as Trustee and NEXTLINK Communications, Inc., relating
to the 9% Senior Notes due 2008. (5)
4.12 First Supplemental Indenture, dated June 3, 1998, amending
Indenture dated March 3, 1998, by and between NEXTLINK
Communications, Inc. and United States Trust Company of New York
as Trustee. (1)
4.13 Indenture dated April 1, 1998 between United Trust Company, as
Trustee and NEXTLINK Communications, Inc. relating to the 9.45%
Senior Discount Notes due 2008. (5)
4.14 First Supplemental Indenture, dated June 3, 1998, amending
Indenture dated April 1, 1998, by and between NEXTLINK
Communications, Inc. and United States Trust Company of New York,
as Trustee. (1)
22
<PAGE>
4.15 Indenture dated November 12, 1998, by and among NEXTLINK
Communications, Inc. and United States Trust Company of New York,
as Trustee, relating to the 10 3/4% Senior Notes due 2008.(3)
4.16 Indenture dated June 1, 1999, between NEXTLINK Communications,
Inc. and Untied States Trust Company of New York, as Trustee,
relating to the 10 3/4% Senior Notes, due 2009.
4.17 Indenture dated June 1, 1999, between NEXTLINK Communications,
Inc. and U.S. Trust Company of Texas, as Trustee, relating to the
12 1/4% Senior Discount Notes, due 2009.
10.1 Stock Option Plan of NEXTLINK Communications, Inc., as amended
10.2 Employee Stock Purchase Plan of NEXTLINK Communications, Inc. (1)
10.3 Fiber Lease and Innerduct Use Agreement, dated as of February 23,
1998, by and between NEXTLINK Communications, Inc. and Metromedia
Fiber Network. (5)
10.4 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. (5)
10.5 Cost Sharing and IRU Agreement, dated July 18, 1998, between
Level 3 Communications, LLC and INTERNEXT LLC. (13)
10.6 Guaranty Agreement, dated July 18, 1998, between NEXTLINK
Communications, Inc. and Level 3 Communications, LLC. (13)
10.7 Registration Rights Agreement dated as of January 15, 1997,
between the predecessor of NEXTLINK Communications, Inc. and the
signatories listed therein. (3)
10.8 Registration Rights Agreement dated January 14, 1999, between
NEXTLINK Communications, Inc. and the Holders referred to
therein. (7)
10.9 Consent and Indemnity Agreement of Stockholders, dated January
14, 1999, by and among NEXTLINK Communications, Inc., WNP
Communications, Inc. and certain holders of non-voting and voting
common stock of WNP Communications, Inc. (10)
10.10 Consent and Indemnity Agreement of Preferred Stockholders, dated
January 14, 1999, by and among NEXTLINK Communications, Inc. and
WNP Communications, Inc. (11)
10.11 Employment Agreement, effective September 21, 1999, by and
between Daniel Akerson and NEXTLINK Communications, Inc.
27 Financial Data Schedule
- --------------------
(1) Incorporated herein by reference to the exhibit filed with the
Registration Statement on Form S-4 of NEXTLINK Communications, Inc.
(Commission File No. 333-53975).
23
<PAGE>
(2) 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).
(3) 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).
(4) 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).
(5) 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).
(6) Incorporated herein by reference to the exhibit filed with the quarterly
report on Form 10-Q for the quarterly period ended March 31, 1998 of
NEXTLINK Communications, Inc. and NEXTLINK Capital, Inc. (Commission File
No. 000-22939).
(7) Incorporated herein by reference to the exhibits filed with the current
report on form 8-K filed on January 19, 1999 (Commission File
No. 000-22939).
(8) Incorporated herein by reference to the exhibits filed with the
Registration Statement on Form S-4 of NEXTLINK Communications, Inc.
(Commission File No. 333-71749).
(9) Incorporated herein by reference to the exhibit filed with the
Registration Statement on Form S-1 of NEXTLINK Communications, Inc.
(Commission File No. 333-32001).
(10) Incorporated herein by reference to the exhibits filed the Registration
Statement on Form S-4 of NEXTLINK Communications, Inc. (Commission File
No. 333-75923).
(11) Incorporated herein by reference to the exhibits filed with the current
report on Form 8-K filed on April 1, 1999 (Commission File No. 000-22939).
(12) Incorporated herein by reference to the exhibits filed with the
Registrations Statement on Form S-3 of NEXTLINK Communications, Inc.
(Commission File No. 333-77577).
(13) Incorporated herein by reference to the exhibit filed with the quarterly
report on Form 10-Q for the quarterly period ended September 30, 1998 of
NEXTLINK Communications and NEXTLINK Capital, Inc. (Commission File
No. 000-22939).
(b) Reports on Form 8-K
None.
24
<PAGE>
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: November 15, 1999 By: /s/ KATHLEEN H. ISKRA
----------------------------------------
Kathleen H. Iskra
Vice President and Chief Financial Officer
(Principal financial and accounting officer)
NEXTLINK Capital, Inc.
Date: November 15, 1999 By: /s/ KATHLEEN H. ISKRA
---------------------------------------
Kathleen H. Iskra
Vice President and Chief Financial Officer
(Principal financial and accounting officer)
25
<PAGE>
NEXTLINK COMMUNICATIONS, INC.
EXHIBIT INDEX
EXHIBIT NO. DESCRIPTION
- ----------- -----------
3.1 Certificate of Incorporation of NEXTLINK Communications, Inc. (1)
3.2 Certificate of Amendment of Certificate of Incorporation of NEXTLINK
Communications, Inc.
3.3 By-laws of NEXTLINK Communications, Inc. (1)
3.4 Articles of Incorporation of NEXTLINK Capital, Inc. (2)
3.5 By-laws of NEXTLINK Capital, Inc. (2)
4.1 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. (1)
4.2 Form of stock certificate of 14% Senior Exchangeable Redeemable Preferred
Shares. (3)
4.3 Certificate of Designations 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. (1)
4.4 Form of stock certificate of 6 1/2% Cumulative Convertible Preferred Stock.
(12)
4.5 Form of Stock Certificate of Class A common stock. (9)
4.6 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. (2)
4.7 First Supplemental Indenture, dated as of 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. (3)
4.8 Second Supplemental Indenture, dated June 3, 1998, amending Indenture dated
April 25, 1996, by and among NEXTLINK Communications, Inc., NEXTLINK
Capital, Inc. and United States Trust Company of New York, as Trustee. (1)
4.9 Indenture dated September 25, 1997, between United States Trust Company, as
Trustee and NEXTLINK Communications, Inc., relating to the 9 5/8% Senior
Notes due 2007. (12)
4.10 First Supplemental Indenture, dated June 3, 1998, amending Indenture dated
September 25, 1997, by and between NEXTLINK Communications, Inc. and United
States Trust Company of New York, as Trustee. (1)
4.11 Indenture, dated March 3, 1998, between United States Trust Company, as
Trustee and NEXTLINK Communications, Inc., relating to the 9% Senior Notes
due 2008. (5)
4.12 First Supplemental Indenture, dated June 3, 1998, amending Indenture dated
March 3, 1998, by and between NEXTLINK Communications, Inc. and United
States Trust Company of New York as Trustee. (1)
26
<PAGE>
4.13 Indenture dated April 1, 1998 between United Trust Company, as Trustee and
NEXTLINK Communications, Inc. relating to the 9.45% Senior Discount Notes
due 2008. (5)
4.14 First Supplemental Indenture, dated June 3, 1998, amending Indenture dated
April 1, 1998, by and between NEXTLINK Communications, Inc. and United
States Trust Company of New York, as Trustee. (1)
4.15 Indenture dated November 12, 1998, by and among NEXTLINK Communications,
Inc. and United States Trust Company of New York, as Trustee, relating to
the 10 3/4% Senior Notes due 2008.(3)
4.16 Indenture dated June 1, 1999, between NEXTLINK Communications, Inc. and
Untied States Trust Company of New York, as Trustee, relating to the 10
3/4% Senior Notes, due 2009.
4.17 Indenture dated June 1, 1999, between NEXTLINK Communications, Inc. and
U.S. Trust Company of Texas, as Trustee, relating to the 12 1/4% Senior
Discount Notes, due 2009.
10.1 Stock Option Plan of NEXTLINK Communications, Inc., as amended. 10.2
Employee Stock Purchase Plan of NEXTLINK Communications, Inc. (1) 10.3
Fiber Lease and Innerduct Use Agreement, dated as of February 23, 1998, by
and between NEXTLINK Communications, Inc. and Metromedia Fiber Network. (5)
10.4 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. (5)
10.5 Cost Sharing and IRU Agreement, dated July 18, 1998, between Level 3
Communications, LLC and INTERNEXT LLC. (13)
10.6 Guaranty Agreement, dated July 18, 1998, between NEXTLINK Communications,
Inc. and Level 3 Communications, LLC. (13)
10.7 Registration Rights Agreement dated as of January 15, 1997, between the
predecessor of NEXTLINK Communications, Inc. and the signatories listed
therein. (3)
10.8 Registration Rights Agreement dated January 14, 1999, between the NEXTLINK
Communications, Inc. and the Holders referred to therein.(7)
10.9 Consent and Indemnity Agreement of Stockholders, dated January 14, 1999, by
and among NEXTLINK Communications, Inc., WNP Communications, Inc. and
certain holders of non-voting and voting common stock of WNP
Communications, Inc. (10)
10.10 Consent and Indemnity Agreement of Preferred Stockholders, dated January
14, 1999, by and among NEXTLINK Communications, Inc. and WNP
Communications, Inc. (11)
10.11 Employment Agreement, effective September 21, 1999, by and between Daniel
Akerson and NEXTLINK Communications, Inc.
27 Financial Data Schedule
- -----------
(1) Incorporated herein by reference to the exhibit filed with the
Registration Statement on Form S-4 of NEXTLINK Communications, Inc.
(Commission File No. 333-53975).
27
<PAGE>
(2) 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).
(3) 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).
(4) 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).
(5) 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).
(6) Incorporated herein by reference to the exhibit filed with the quarterly
report on Form 10-Q for the quarterly period ended March 31, 1998 of
NEXTLINK Communications, Inc. and NEXTLINK Capital, Inc. (Commission
File No. 000-22939).
(7) Incorporated herein by reference to the exhibits filed with the current
report on form 8-K filed on January 19, 1999 (Commission File
No. 000-22939).
(8) Incorporated herein by reference to the exhibits filed with the
Registration Statement on Form S-4 of NEXTLINK Communications, Inc.
(Commission File No. 333-71749).
(9) Incorporated herein by reference to the exhibit filed with the
Registration Statement on Form S-1 of NEXTLINK Communications, Inc.
(Commission File No. 333-32001).
(10) Incorporated herein by reference to the exhibits filed the Registration
Statement on Form S-4 of NEXTLINK Communications, Inc. (Commission File
No.333-75923)
(11) Incorporated herein by reference to the exhibits filed with the current
report on Form 8-K filed on April 1, 1999 (Commission File
No. 000-22939).
(12) Incorporated herein by reference to the exhibits filed with the
Registration Statement on Form S-3 of NEXTLINK Communications, Inc.
(Commission File No. 333-77577).
(13) Incorporated herein by reference to the exhibit filed with the quarterly
report on Form 10-Q for the quarterly period ended September 30, 1998
of NEXTLINK Communications, Inc. and NEXTLINK Capital, Inc.(Commission File
No. 000-22939).
28
<PAGE>
CERTIFICATE OF AMENDMENT
OF
CERTIFICATE OF INCORPORATION
OF
NEXTLINK COMMUNICATIONS, INC.
NEXTLINK COMMUNICATIONS, INC., a corporation organized and existing
under and by virtue of the General Corporation Law of the State of Delaware (the
"Corporation"), hereby certifies:
FIRST: That the Board of Directors, by a unanimous written consent
dated July 14, 1999, resolutions were duly adopted by the Board of Directors
of the Corporation setting forth a proposed amendment to the Certificate of
Incorporation of the Corporation, declaring said amendment to be advisable
and directing that the proposed amendment and the matter thereof be
considered at the Annual Meeting of Stockholders of the Corporation held on
August 25, 1999. The resolution setting forth the proposed amendment is as
follows:
WHERAS, the Company has determined to split its Class A and Class B
Common Stock on a two-for-one basis, to be effected in the form of a 100%
stock dividend, payable to stockholders of record on August 18, 1999, with a
payment date of August 27, 1999;
WHEREAS, as a condition to effecting the stock split, and to provide
the Company with flexibility to conduct financings, other stock splits and
stock dividends, and acquisitions, the Company has determined to amend the
first paragraph of Article 3 of its Certificate of Incorporation to increase
the number of authorized shares of common stock (with the authorized shares
of preferred stock remaining at 25,000,000), which such paragraph, as
amended, shall read as follows:
The Corporation shall have authority to issue Four Hundred
Sixty Million (460,000,000) shares of common stock (the "Common
Stock"), which shall be divided into two classes, Four Hundred Million
(400,000,000) shares of Class A Common Stock, par value $0.02 per share
(the "Class A Common Stock"), and Sixty Million (60,000,000) shares of
Class B Common Stock, par value $0.02 per share (the "Class B Common
Stock"). The Corporation shall have authority to issue Twenty-Five
Million (25,000,000) shares of preferred stock, par value $.01 per
share (the "Preferred Stock").
NOW, THEREFORE IT IS HEREBY RESOLVED, that the Board hereby
ratifies, approves, declares advisable, the stock split, as described above,
and the above-referenced amendment, subject to the proposed amendment
receiving the affirmative vote of a majority of the votes entitled to be cast
by holders of (i) Class A common stock, voting separately as a class, (ii)
Class B common stock, voting separately as a class, and (iii) both classes of
common stock, voting together as a single class, as required by the Delaware
General Corporation Law; and
FURTHER RESOLVED, the Board hereby recommends that above-referenced
amendment be submitted to the stockholders for approval at the annual
meeting, and that the officers of the Company take such appropriate action,
including the preparation of a proxy and proxy statement, as is necessary to
carry out such resolution.
SECOND: That thereafter, pursuant to resolutions of the Board of
Directors of the Corporation, the Annual Meeting of Stockholders of the
Corporation was duly called and held on August 25, 1999, upon notice in
accordance with Section 222 of the General Corporation Law of the State of
Delaware, at which meeting the necessary number of shares as required by
statute was voted in favor of the amendment.
THIRD: That said amendment was duly adopted in accordance with the
provisions of Section 242 of the General Corporation Law of the State of
Delaware.
<PAGE>
IN WITNESS WHEREOF, the Corporation has caused this Certificate to be
signed by R. Bruce Easter, Jr., its Vice President, General Counsel and
Secretary, this 25th day of August, 1999.
NEXTLINK COMMUNICATIONS, INC.
By: /s/ R. Bruce Easter, Jr.
----------------------------------------
Name: R. Bruce Easter, Jr.
Title: Vice President, General Counsel and
Secretary
<PAGE>
EXECUTION COPY
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
NEXTLINK COMMUNICATIONS, INC.
TO
UNITED STATES TRUST COMPANY OF NEW YORK
TRUSTEE
-------
_______________________________
Indenture
Dated as of June 1, 1999
_______________________________
$675,000,000
10 3/4% SENIOR NOTES
DUE 2009
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
<PAGE>
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
---------------
Note: This table of contents shall not, for any purpose, be deemed to be
a part of the Indenture.
i
<PAGE>
Trust Indenture Indenture
Act Section Section
--------------- ---------
(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>
-----------------
Note: This table of contents shall not, for any purpose, be deemed to be
a part of the Indenture.
ii
<PAGE>
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
Acquired Debt . . . . . . . . . . . . . . . . . . . . . . . . . . . .2
Affiliate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .2
Agent Member. . . . . . . . . . . . . . . . . . . . . . . . . . . . .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
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
Disqualified Stock. . . . . . . . . . . . . . . . . . . . . . . . . .9
DTC . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
-----------------
Note: This table of contents shall not, for any purpose, be deemed to be
a part of the Indenture.
iii
<PAGE>
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
Related Person. . . . . . . . . . . . . . . . . . . . . . . . . . . 23
Responsible Officer . . . . . . . . . . . . . . . . . . . . . . . . 23
Restricted Subsidiary . . . . . . . . . . . . . . . . . . . . . . . 24
----------------
Note: This table of contents shall not, for any purpose, be deemed to be
a part of the Indenture.
iv
<PAGE>
Sale and Leaseback Transaction. . . . . . . . . . . . . . . . . . . 24
SEC Reports . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
Securities. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
Securities Act. . . . . . . . . . . . . . . . . . . . . . . . . . . 25
Security Register . . . . . . . . . . . . . . . . . . . . . . . . . 25
Security Registrar. . . . . . . . . . . . . . . . . . . . . . . . . 25
Significant Subsidiary. . . . . . . . . . . . . . . . . . . . . . . 25
Special Record Date . . . . . . . . . . . . . . . . . . . . . . . . 25
Stated Maturity . . . . . . . . . . . . . . . . . . . . . . . . . . 25
Subordinated Debt . . . . . . . . . . . . . . . . . . . . . . . . . 25
Subsidiary. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
Successor Security. . . . . . . . . . . . . . . . . . . . . . . . . 27
Telecommunications Assets . . . . . . . . . . . . . . . . . . . . . 27
Telecommunications Business . . . . . . . . . . . . . . . . . . . . 27
Trustee . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
Trust Indenture Act . . . . . . . . . . . . . . . . . . . . . . . . 28
Unrestricted Subsidiary . . . . . . . . . . . . . . . . . . . . . . 28
Vendor Financing Facility . . . . . . . . . . . . . . . . . . . . . 29
Vice President. . . . . . . . . . . . . . . . . . . . . . . . . . . 29
Voting Stock. . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
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. Conflict with 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
----------------
Note: This table of contents shall not, for any purpose, be deemed to be
a part of the Indenture.
v
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ARTICLE THREE The Securities
SECTION 301. Title and Terms. . . . . . . . . . . . . . . . . . . . . . . 48
SECTION 302. Denominations. . . . . . . . . . . . . . . . . . . . . . . . 50
SECTION 303. Execution, Authentication, Delivery and Dating . . . . . . . 50
SECTION 304 Temporary Securities . . . . . . . . . . . . . . . . . . . . 51
SECTION 305. Registration, Registration of Transfer and Exchange. . . . . 52
SECTION 306. Mutilated, Destroyed, Lost and Stolen Securities . . . . . . 57
SECTION 307. Payment of Interest; Interest Rights Preserved. . . . . . . .58
SECTION 308. Persons Deemed Owners. . . . . . . . . . . . . . . . . . . . 60
SECTION 309. Cancellation . . . . . . . . . . . . . . . . . . . . . . . . 61
SECTION 310. Computation of Interest. . . . . . . . . . . . . . . . . . . 60
SECTION 311. CUSIP and ISIN Numbers . . . . . . . . . . . . . . . . . . . 60
ARTICLE FOUR Satisfaction and Discharge
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. . . . . . . . . . . . . . . .70
SECTION 509. Restoration of Rights and Remedies . . . . . . . . . . . . . 70
SECTION 510. Rights and Remedies Cumulative . . . . . . . . . . . . . . . 70
SECTION 511. Delay or Omission Not Waiver . . . . . . . . . . . . . . . . 71
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
----------------
Note: This table of contents shall not, for any purpose, be deemed to be
a part of the Indenture.
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ARTICLE SIX The Trustee
SECTION 601. Certain Duties and Responsibilities. . . . . . . . . . . . . 73
SECTION 602. Notice of Defaults . . . . . . . . . . . . . . . . . . . . . 73
SECTION 603. Certain Rights of Trustee. . . . . . . . . . . . . . . . . . 73
SECTION 604. Not Responsible for Recitals or Issuance of Securities . . . 75
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. . . . . . . . . . . 77
SECTION 610. Resignation and Removal; Appointment of Successor. . . . . . 77
SECTION 611. Acceptance of Appointment by Successor . . . . . . . . . . . 79
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. . . . . . . . . . . . . 80
ARTICLE SEVEN Holders' Lists and Reports by Trustee and the Company
SECTION 701. Company to Furnish Trustee Names and Addresses of Holders. . 82
SECTION 702. Preservation of Information; Communications to Holders . . . 82
SECTION 703. Reports by Trustee . . . . . . . . . . . . . . . . . . . . . 83
SECTION 704. Reports by Company . . . . . . . . . . . . . . . . . . . . . 83
ARTICLE EIGHT Merger, Consolidation, Etc.
SECTION 801. Mergers, Consolidations and Certain Sales of Assets. . . . . 84
SECTION 802. Successor Substituted. . . . . . . . . . . . . . . . . . . . 85
ARTICLE NINE Supplemental Indentures
SECTION 901. Supplemental Indentures Without Consent of Holders . . . . . 86
SECTION 902. Supplemental Indentures with Consent of Holders. . . . . . . 87
SECTION 903. Execution of Supplemental Indentures . . . . . . . . . . . . 88
----------------
Note: This table of contents shall not, for any purpose, be deemed to be
a part of the Indenture.
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SECTION 904. Effect of Supplemental Indentures. . . . . . . . . . . . . . 88
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 . . . . . . . . . 89
SECTION 1002. Maintenance of Office or Agency. . . . . . . . . . . . . . . 89
SECTION 1003. Money for Security Payments to be Held in Trust. . . . . . . 90
SECTION 1004. Existence. . . . . . . . . . . . . . . . . . . . . . . . . . 91
SECTION 1005. Maintenance of Properties and Insurance. . . . . . . . . . . 92
SECTION 1006. Payment of Taxes and Other Claims. . . . . . . . . . . . . . 92
SECTION 1007. Limitation on Consolidated Debt. . . . . . . . . . . . . . . 93
SECTION 1008. Limitation on Debt and Preferred Stock of Restricted
Subsidiaries. . . . . . . . . . . . . . . . . . . . . . 96
SECTION 1009. Limitation on Restricted Payments. . . . . . . . . . . . . . 99
SECTION 1010. Limitation on Dividend and Other Payment Restrictions
Affecting Restricted Subsidiaries . . . . . . . . . . . 101
SECTION 1011. Limitation on Liens. . . . . . . . . . . . . . . . . . . . . 103
SECTION 1012. Limitation on Sale and Leaseback Transactions. . . . . . . . 104
SECTION 1013. Limitation on Asset Dispositions . . . . . . . . . . . . . . 104
SECTION 1014. Limitation on Issuances and Sales of Capital Stock of
Restricted Subsidiaries . . . . . . . . . . . . . . . . 107
SECTION 1015. Transactions with Affiliates and Related Persons . . . . . . 107
SECTION 1016. Change of Control. . . . . . . . . . . . . . . . . . . . . . 108
SECTION 1017. Provision of Financial Information . . . . . . . . . . . . . 109
SECTION 1018. Statement by Officers as to Default. . . . . . . . . . . . . 110
SECTION 1019. Waiver of Certain Covenants. . . . . . . . . . . . . . . . . 110
SECTION 1020. Limitation on Use of Proceeds. . . . . . . . . . . . . . . . 110
ARTICLE ELEVEN Redemption of Securities
SECTION 1101. Right of Redemption. . . . . . . . . . . . . . . . . . . . . 111
SECTION 1102. Applicability of Article . . . . . . . . . . . . . . . . . . 112
SECTION 1103. Election to Redeem; Notice to Trustee. . . . . . . . . . . . 112
SECTION 1104. Securities to Be Redeemed Pro Rata . . . . . . . . . . . . . 112
SECTION 1105. Notice of Redemption . . . . . . . . . . . . . . . . . . . . 113
SECTION 1106. Deposit of Redemption Price. . . . . . . . . . . . . . . . . 114
SECTION 1107. Securities Payable on Redemption Date. . . . . . . . . . . . 114
SECTION 1108. Securities Redeemed in Part. . . . . . . . . . . . . . . . . 115
----------------
Note: This table of contents shall not, for any purpose, be deemed to be
a part of the Indenture.
viii
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ARTICLE TWELVE Defeasance and Covenant Defeasance
SECTION 1201. Company's Option to Effect Defeasance or Covenant
Defeasance. . . . . . . . . . . . . . . . . . . . . . . 115
SECTION 1202. Defeasance and Discharge . . . . . . . . . . . . . . . . . . 115
SECTION 1203. Covenant Defeasance. . . . . . . . . . . . . . . . . . . . . 116
SECTION 1204. Conditions to Defeasance or Covenant Defeasance. . . . . . . 116
SECTION 1205. Deposited Money and U.S. Government Obligations to Be
Held in Trust; Other Miscellaneous Provisions . . . . . 119
SECTION 1206. Reinstatement. . . . . . . . . . . . . . . . . . . . . . . . 120
SECTION 1207. Repayment to Company . . . . . . . . . . . . . . . . . . . . 120
</TABLE>
----------------
Note: This table of contents shall not, for any purpose, be deemed to be
a part of the Indenture.
ix
<PAGE>
INDENTURE, dated as of June 1, 1999, between NEXTLINK
Communications, Inc., a corporation organized under the laws of the
State of Delaware (the "Company"), having its principal office at 500
108th Avenue N.E., Suite 2200, 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 $675,000,000 aggregate principal amount of its 10 3/4% Senior Notes
due 2009 (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.
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;
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(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.
"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.
"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.
"Asset Disposition" by the Company or any Restricted
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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 (including the issuance of Capital Stock
by a Restricted Subsidiary), 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 12-month 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 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
3
<PAGE>
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.
"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 of Control" has the meaning specified in
4
<PAGE>
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
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
5
<PAGE>
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
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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 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
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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.
"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
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<PAGE>
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 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 (or, if
earlier, the date as of which the Securities have been paid in full);
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
9
<PAGE>
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 "A-3" 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.
"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.
"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.
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"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 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
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
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<PAGE>
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.
"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
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<PAGE>
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 "P-1" or higher according to Moody's
Investors Service, Inc., "A-1" or higher according to Standard & Poor's
Ratings Group or "A-1" 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 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
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<PAGE>
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 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
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<PAGE>
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");
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(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
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<PAGE>
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 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.
"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;
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(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,
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.
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"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 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
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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).
"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).
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"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 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
therewith, as the same may be amended, supplemented, modified or restated
from time to time.
"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., "A-1" or higher according to Standard &
Poor's Ratings Group or "A-1" 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
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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.
"Regular Record Date" for the interest payable on any Interest
Payment Date means the May 15 or November 15 (whether or not a Business Day),
as the case may be, next preceding such Interest Payment Date.
"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.
"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
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knowledge of and familiarity with the particular subject.
"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.
"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.
"Securities" has the meaning specified in the second paragraph
of this instrument.
"Securities Act" means the Securities Act of 1933 and any
statute successor thereto, in each case as amended from time to time.
"Security Register" and "Security Registrar" have the
respective meanings specified in Section 305.
"Significant Subsidiary" means a Restricted Subsidiary that is
a "significant subsidiary" as defined in Rule 1-02(w) of Regulation S-X 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.
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"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 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
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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.
"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.
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"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 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 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
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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 or other capital assets 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 or other capital assets 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.
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
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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 erroneous. Any opinion of counsel
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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
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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 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.
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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 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.
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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
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
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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. CONFLICT WITH TRUST INDENTURE ACT.
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.
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.
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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.
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.
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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.
SECTION 202. FORM OF FACE OF SECURITY.
[If the Security is a Global Security, insert the legends required by
Section 204 of the Indenture]
NEXTLINK Communications, Inc.
10 3/4% SENIOR NOTES DUE 2009
CUSIP NUMBER: 65333HAK9
No. ______ $____________
NEXTLINK Communications, Inc., a corporation organized under
the laws of the State of Delaware (herein called the "Company", which term
includes any successor Person under the Indenture hereinafter referred to),
for value received, hereby promises to pay to_____________, or registered
assigns, the principal sum of _____________ Dollars on June 1, 2009, and to
pay interest thereon from June 1, 1999 or from the most recent Interest
Payment Date to which interest has been paid or duly provided for,
semi-annually on June 1, and December 1 in each year, commencing December 1,
1999 at the rate of 10.75% per annum, until the principal hereof is paid or
made available for payment. 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 May 15 or November 15 (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 be paid to the Person in whose name this Security (or one or
more Predecessor Securities) is registered at the close of
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<PAGE>
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.
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 10.75% 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
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<PAGE>
obligatory for any purpose.
IN WITNESS WHEREOF, the Company has caused this instrument to
be duly executed.
Dated: June 1, 1999.
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 10 3/4% Senior Notes Due 2009 (the
"Securities") issued under an Indenture, dated as of June 1, 1999 (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 $675,000,000. 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
June 1, 2004 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
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<PAGE>
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 June 1, of each of
the years indicated below:
<TABLE>
<CAPTION>
Year Redemption
Price
---- ----------
<S> <C>
2004 105.375%
2005 103.583%
2006 101.792%
</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 on or prior to
June 1, 2002 only in the event that on or before June 1, 2002 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 1/3% of the original principal amount of the Securities, PROVIDED,
HOWEVER, that Securities in an amount equal to at least 66 2/3% 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 110.750% of their
principal amount plus accrued and unpaid interest of the Securities to be
redeemed to but excluding the Redemption Date (subject to the right of
Holders of record to receive interest due on an Interest Payment Date that is
on or prior to 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
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<PAGE>
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.
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 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.
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
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<PAGE>
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 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
40
<PAGE>
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.
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
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<PAGE>
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:
[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
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<PAGE>
By ____________________
Authorized Signatory
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 $675,000,000,
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 Securities shall be known and designated as the "10 3/4%
Senior Notes due 2009" of the Company. The Stated Maturity of the Securities
shall be June 1, 2009. The Securities shall bear interest at the rate of
10.75% per annum, from June 1, 1999 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 June 1 and December 1, commencing
December 1, 1999, until the principal thereof is paid or made available for
payment.
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 10.75% 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 the
Securities are issued in certificated form, the principal of and premium,
43
<PAGE>
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.
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 or Assistant
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
44
<PAGE>
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.
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.
SECTION 305. REGISTRATION, REGISTRATION OF
TRANSFER AND EXCHANGE.
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<PAGE>
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.
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, 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 the applicable legends set forth in
Section 202.
At the option of the Holder, Securities may be exchanged for
other Securities of any authorized denominations and of a like tenor and
aggregate principal amount and bearing the applicable legends set forth in
Section 202, 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 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.
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
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<PAGE>
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.
The provisions of Clauses (1), (2), (3) and (4) below shall
apply only to Global Securities:
(1) Each Global Security authenticated under this Indenture
shall be registered in the name of the Depositary designated for such
Global Security or a nominee thereof and delivered to such Depositary or
a nominee thereof or custodian therefor, and each such Global Security
shall constitute a single Security for all purposes of this Indenture.
(2) Notwithstanding any other provisions in this Indenture, no
Global Security may be exchanged in whole or in part for Securities
registered, and no transfer of a Global Security in whole or in part may
be registered, in the name of any Person other than the Depositary for
such Global Security or a nominee thereof unless (A) such Depositary (i)
has notified the Company that it is unwilling or unable to continue as
Depositary for such Global Security or (ii) has ceased to be a clearing
agency registered under the Exchange Act, or (B) there shall have
occurred and be continuing an Event of Default with respect to such
Global Security.
(3) Subject to Clause (2) above, any exchange of a Global
Security for other Securities may be made in whole or in part, and all
Securities issued in exchange for a Global Security or any portion
thereof shall be registered in such names as the Depositary for such
Global Security shall direct.
(4) Every Security authenticated and delivered upon
registration of transfer of, or in exchange for or
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<PAGE>
in lieu of, a Global Security or any portion thereof, whether pursuant
to this Section, Section 304, 306, 906 or 1108 or otherwise, shall be
authenticated and delivered in the form of, and shall be, a Global
Security, unless such Security is registered in the name of a Person
other than the Depositary for such Global Security or a nominee thereof.
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 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.
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<PAGE>
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 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 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
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<PAGE>
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 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
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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
360-day year of twelve 30-day months.
SECTION 311. CUSIP NUMBERS.
The Company shall in issuing the Securities use CUSIP numbers, and
the Trustee shall use the applicable CUSIP number in notices of redemption or
exchange as a convenience to the Holders; PROVIDED, that any such notice may
state that no representation is made as to the accuracy or correctness of the
CUSIP number or numbers printed in the notice or on the certificates
representing the Securities and that reliance
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may be placed only on the other identification numbers printed on the
certificates representing the Securities.
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 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
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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.
ARTICLE FIVE
Remedies
SECTION 501. EVENTS OF DEFAULT.
"Event of Default", wherever used herein, means
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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 resulted in such Debt becoming or being
declared due and payable prior
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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
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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 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 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
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(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 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,
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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.
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
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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.
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
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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;
(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 60-day 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
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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.
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
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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
(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
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(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.
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
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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.
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
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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;
(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
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(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.
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);
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(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 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
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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.
(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:
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(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 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
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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.
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.
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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 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
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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.
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
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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.
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.
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(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.
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.
ARTICLE EIGHT
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Merger, Consolidation, Etc.
SECTION 801. MERGERS, CONSOLIDATIONS AND CERTAIN
SALES OF ASSETS.
(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
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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 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.
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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
(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 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
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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 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
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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.
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.
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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.
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
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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 (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
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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 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.
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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
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.
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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
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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.
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) $250 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
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(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 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
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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;
(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
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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. The determination of any
particular amount of Debt under such covenant shall be made without duplication
for Guarantees or Liens supporting Debt otherwise included in the determination
of a particular amount.
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);
(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
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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 excluding any retirement required by
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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
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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 the amount and type of such
Debt under the clause permitting the Debt as so classified. The
determination of any particular amount of Debt under such covenant shall be
made without duplication for Guarantees or Liens supporting Debt otherwise
included in the determination of a particular amount.
SECTION 1009. LIMITATION ON RESTRICTED PAYMENTS.
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
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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 since the end of the last full fiscal quarter prior to
April 25, 1996 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
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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 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,
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(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.
SECTION 1010. LIMITATION ON DIVIDEND AND OTHER
PAYMENT RESTRICTIONS AFFECTING
RESTRICTED SUBSIDIARIES.
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) or (ii) of
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Section 1007 or clause (vi) or (ix) of Section 1008, 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 and PROVIDED FURTHER that, in the case of any such
Bank Credit Agreement or Vendor Financing Facility entered into by a Restricted
Subsidiary under clause (ii) of Section 1007 or clause (ix) of Section 1008,
such encumbrances or restrictions do not prohibit dividends, distributions,
loans or advances by such Restricted Subsidiary to the Company or another
Restricted Subsidiary to the extent that the failure to make such distribution,
loan or advance would result in the Company defaulting in the payment of
principal or interest on its indebtedness;
(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;
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(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
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;
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(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
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
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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.
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 12-month 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 or other obligations
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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 or other
obligations 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
principal amount plus accrued interest to the date of purchase 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
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Holder pursuant to the Offer to 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
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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.
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 that complies with the provisions of Section 1013;
(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.
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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
either
(x) obtain the approval of the transaction from the Board of Directors
including a majority of the disinterested members of the Board of Directors or
(y) obtain an opinion from a nationally recognized investment bank or
other 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.
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(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 principal amount plus
accrued and unpaid interest to the date of purchase.
(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 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
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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.
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
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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.
SECTION 1020. LIMITATION ON USE OF PROCEEDS.
The Company will apply the net proceeds received from the issuance
and sale of the Securities (the "Securities Net Proceeds") toward the
construction, improvement, and acquisition by the Company or one or more
Restricted Subsidiaries of the Company or Joint Ventures of Telecommunications
Assets of the Company, such Restricted Subsidiaries or Joint Ventures (or will
advance such net proceeds to such Restricted Subsidiaries of the Company or
Joint Ventures for such purpose); provided, however, pending such application,
the Securities Net Proceeds may be invested in Marketable Securities.
ARTICLE ELEVEN
Redemption of Securities
SECTION 1101. RIGHT OF REDEMPTION.
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(a) The Securities may be redeemed on or prior to June 1, 2002
only in the event that on or before June 1, 2002 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 1/3% of the original
principal amount of the Securities PROVIDED, HOWEVER, that Securities in an
amount equal to at least 66 2/3% 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 110.75% of
their principal amount plus accrued and unpaid interest, if any, 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).
(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 June 1, 2004 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.
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
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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.
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
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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.
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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.
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
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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.
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
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(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.
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
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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 day after the date of such
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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
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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 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.
SECTION 1206. REINSTATEMENT.
114
<PAGE>
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.
115
<PAGE>
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/ Kathleen H. Iskra
- --------------------------------
Name: Kathleen H. Iskra
Title: Vice President, Chief
Financial Officer and Treasurer
UNITED STATES TRUST COMPANY
OF NEW YORK
By /s/ Patricia Gallagher
--------------------------------
Name: Patricia Gallagher
Title: Assistant Vice President
[SEAL]
Attest:
/s/ Jason G. Gregory
- --------------------------------
Name: Jason G. Gregory
Title: Assistant Secretary
<PAGE>
STATE OF WASHINGTON ) ss.:
COUNTY OF )
On this 27th day of May, 1999, 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/ Stacy L. Ybarra
--------------------------------
Notary Public
STATE OF NEW YORK ) ss.:
COUNTY OF NEW YORK )
On this 1th day of June, 1999, before me personally
appeared Patricia Gallagher, to me known, who, being duly sworn, did
depose and say that she is the 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/ Garth A. Green
--------------------------------
Notary Public
<PAGE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
NEXTLINK COMMUNICATIONS, INC.
TO
U.S. TRUST COMPANY OF TEXAS
TRUSTEE
Indenture
Dated as of June 1, 1999
$588,926,000
12 1/4% SENIOR DISCOUNT NOTES
DUE 2009
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
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
- --------------------
Note: This reconciliation and tie shall not, for any purpose, be deemed to
be a part of the Indenture.
i
<PAGE>
(a)(1)(B). . . . . . . . . . . . . . . . . . . . . 512
(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>
- ----------------------
Note: This reconciliation and tie shall not, for any purpose, be deemed to
be a part of the Indenture.
ii
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
<S> <C>
RECITALS OF THE COMPANY . . . . . . . . . . . . . . . . . . . . . . . . . . 1
ARTICLE ONEDefinitions and Other Provisionsof General Application
SECTION 101. Definitions. . . . . . . . . . . . . . . . . . . . . . . . . 1
Accreted Value . . . . . . . . . . . . . . . . . . . . . . . 2
Acquired Debt. . . . . . . . . . . . . . . . . . . . . . . . 2
Act. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3
Affiliate. . . . . . . . . . . . . . . . . . . . . . . . . . 3
Agent Member . . . . . . . . . . . . . . . . . . . . . . . . 3
Asset Disposition. . . . . . . . . . . . . . . . . . . . . . 3
Attributable Value . . . . . . . . . . . . . . . . . . . . . 4
Bank Credit Agreement. . . . . . . . . . . . . . . . . . . . 4
Board of Directors . . . . . . . . . . . . . . . . . . . . . 4
Board Resolution . . . . . . . . . . . . . . . . . . . . . . 4
Business Day . . . . . . . . . . . . . . . . . . . . . . . . 5
Capital Lease Obligation . . . . . . . . . . . . . . . . . . 5
Capital Stock. . . . . . . . . . . . . . . . . . . . . . . . 5
Change of Control. . . . . . . . . . . . . . . . . . . . . . 5
Commission . . . . . . . . . . . . . . . . . . . . . . . . . 5
Common Equity. . . . . . . . . . . . . . . . . . . . . . . . 5
Company. . . . . . . . . . . . . . . . . . . . . . . . . . . 5
Company Request. . . . . . . . . . . . . . . . . . . . . . . 6
Company Order. . . . . . . . . . . . . . . . . . . . . . . . 6
Consolidated Capital Ratio . . . . . . . . . . . . . . . . . 6
Consolidated Cash Flow Available forFixed Charges. . . . . . 6
Consolidated Income Tax Expense. . . . . . . . . . . . . . . 7
Consolidated Interest Expense. . . . . . . . . . . . . . . . 7
Consolidated Net Income. . . . . . . . . . . . . . . . . . . 7
Consolidated Net Worth . . . . . . . . . . . . . . . . . . . 8
Consolidated Tangible Assets . . . . . . . . . . . . . . . . 8
Corporate Trust Office . . . . . . . . . . . . . . . . . . . 8
corporation. . . . . . . . . . . . . . . . . . . . . . . . . 9
Debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Default. . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Defaulted Interest . . . . . . . . . . . . . . . . . . . . . 10
Depositary . . . . . . . . . . . . . . . . . . . . . . . . . 10
Disqualified Stock . . . . . . . . . . . . . . . . . . . . . 10
DTC. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
- ----------------------------
Note: This reconciliation and tie shall not, for any purpose, be deemed to
be a part of the Indenture.
iii
<PAGE>
Eagle River. . . . . . . . . . . . . . . . . . . . . . . . . 11
Eligible Institution . . . . . . . . . . . . . . . . . . . . 11
Event of Default . . . . . . . . . . . . . . . . . . . . . . 11
Exchange Act . . . . . . . . . . . . . . . . . . . . . . . . 11
Eligible Receivables . . . . . . . . . . . . . . . . . . . . 11
Expiration Date. . . . . . . . . . . . . . . . . . . . . . . 11
Global Security. . . . . . . . . . . . . . . . . . . . . . . 11
Government Securities. . . . . . . . . . . . . . . . . . . . 11
Guarantee. . . . . . . . . . . . . . . . . . . . . . . . . . 12
Holder . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Incur. . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Indenture. . . . . . . . . . . . . . . . . . . . . . . . . . 13
Interest Payment Date. . . . . . . . . . . . . . . . . . . . 13
Interest Rate or Currency ProtectionAgreement. . . . . . . . 13
Investment . . . . . . . . . . . . . . . . . . . . . . . . . 13
Issue Date . . . . . . . . . . . . . . . . . . . . . . . . . 13
Joint Venture. . . . . . . . . . . . . . . . . . . . . . . . 13
Lien . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
Marketable Securities. . . . . . . . . . . . . . . . . . . . 14
Maturity . . . . . . . . . . . . . . . . . . . . . . . . . . 14
Net Available Proceeds . . . . . . . . . . . . . . . . . . . 15
Offer to Purchase. . . . . . . . . . . . . . . . . . . . . . 16
Officers' Certificate. . . . . . . . . . . . . . . . . . . . 18
Opinion of Counsel . . . . . . . . . . . . . . . . . . . . . 19
Outstanding. . . . . . . . . . . . . . . . . . . . . . . . . 19
Paying Agent . . . . . . . . . . . . . . . . . . . . . . . . 20
Permitted Interest Rate or CurrencyProtection Agreement. . . 20
Permitted Investment . . . . . . . . . . . . . . . . . . . . 20
Permitted Liens. . . . . . . . . . . . . . . . . . . . . . . 21
Person . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
Predecessor Security . . . . . . . . . . . . . . . . . . . . 22
Preferred Dividends. . . . . . . . . . . . . . . . . . . . . 22
Preferred Stock. . . . . . . . . . . . . . . . . . . . . . . 22
Purchase Date. . . . . . . . . . . . . . . . . . . . . . . . 22
Purchase Money Debt. . . . . . . . . . . . . . . . . . . . . 22
readily marketable cash equivalents. . . . . . . . . . . . . 23
Receivables. . . . . . . . . . . . . . . . . . . . . . . . . 23
Receivables Sale . . . . . . . . . . . . . . . . . . . . . . 23
Redemption Date. . . . . . . . . . . . . . . . . . . . . . . 24
Redemption Price . . . . . . . . . . . . . . . . . . . . . . 24
Regular Record Date. . . . . . . . . . . . . . . . . . . . . 24
Related Person . . . . . . . . . . . . . . . . . . . . . . . 24
Responsible Officer. . . . . . . . . . . . . . . . . . . . . 24
Restricted Subsidiary. . . . . . . . . . . . . . . . . . . . 24
- ----------------------------
Note: This reconciliation and tie shall not, for any purpose, be deemed to
be a part of the Indenture.
iv
<PAGE>
Sale and Leaseback Transaction . . . . . . . . . . . . . . . 24
SEC Reports. . . . . . . . . . . . . . . . . . . . . . . . . 25
Securities . . . . . . . . . . . . . . . . . . . . . . . . . 25
Securities Act . . . . . . . . . . . . . . . . . . . . . . . 25
Security Register. . . . . . . . . . . . . . . . . . . . . . 25
Security Registrar . . . . . . . . . . . . . . . . . . . . . 25
Significant Subsidiary . . . . . . . . . . . . . . . . . . . 25
Special Record Date. . . . . . . . . . . . . . . . . . . . . 25
Stated Maturity. . . . . . . . . . . . . . . . . . . . . . . 25
Subordinated Debt. . . . . . . . . . . . . . . . . . . . . . 25
Subsidiary . . . . . . . . . . . . . . . . . . . . . . . . . 27
Successor Security . . . . . . . . . . . . . . . . . . . . . 27
Telecommunications Assets. . . . . . . . . . . . . . . . . . 27
Telecommunications Business. . . . . . . . . . . . . . . . . 27
Trustee. . . . . . . . . . . . . . . . . . . . . . . . . . . 27
Trust Indenture Act. . . . . . . . . . . . . . . . . . . . . 28
Unrestricted Subsidiary. . . . . . . . . . . . . . . . . . . 28
Vendor Financing Facility. . . . . . . . . . . . . . . . . . 29
Vice President . . . . . . . . . . . . . . . . . . . . . . . 29
Voting Stock . . . . . . . . . . . . . . . . . . . . . . . . 29
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. Conflict with Trust Indenture Act. . . . . . . . . . . . . . 35
SECTION 108. Effect of Headings and Table of Contents . . . . . . . . . . 36
SECTION 109. Successors and Assigns . . . . . . . . . . . . . . . . . . . 36
SECTION 110. Separability Clause. . . . . . . . . . . . . . . . . . . . . 36
SECTION 111. Benefits of Indenture. . . . . . . . . . . . . . . . . . . . 36
SECTION 112. Governing Law. . . . . . . . . . . . . . . . . . . . . . . . 36
SECTION 113. Legal Holidays . . . . . . . . . . . . . . . . . . . . . . . 36
ARTICLE TWOSecurity Forms
SECTION 201. Forms Generally. . . . . . . . . . . . . . . . . . . . . . . 37
SECTION 202. Form of Face of Security . . . . . . . . . . . . . . . . . . 37
SECTION 203. Form of Reverse of Security. . . . . . . . . . . . . . . . . 40
SECTION 204. Additional Provisions Required inGlobal Security . . . . . . 45
SECTION 205. Form of Trustee's Certificate ofAuthentication . . . . . . . 46
ARTICLE THREEThe Securities
- ----------------------------
Note: This reconciliation and tie shall not, for any purpose, be deemed to
be a part of the Indenture.
v
<PAGE>
SECTION 301. Title and Terms. . . . . . . . . . . . . . . . . . . . . . . 46
SECTION 302. Denominations. . . . . . . . . . . . . . . . . . . . . . . . 48
SECTION 303. Execution, Authentication, Deliveryand Dating. . . . . . . . 48
SECTION 304 Temporary Securities . . . . . . . . . . . . . . . . . . . . 49
SECTION 305. Registration, Registration of Transferand Exchange . . . . . 49
SECTION 306. Mutilated, Destroyed, Lost andStolen Securities. . . . . . . 52
SECTION 307. Payment of Interest; Interest Rights Preserved . . . . . . . 53
SECTION 308. Persons Deemed Owners. . . . . . . . . . . . . . . . . . . . 55
SECTION 309. Cancellation . . . . . . . . . . . . . . . . . . . . . . . . 55
SECTION 310. Computation of Interest. . . . . . . . . . . . . . . . . . . 55
SECTION 311. CUSIP Numbers. . . . . . . . . . . . . . . . . . . . . . . . 55
ARTICLE FOURSatisfaction and Discharge
SECTION 401. Satisfaction and Discharge of Indenture. . . . . . . . . . . 56
SECTION 402. Application of Trust Money . . . . . . . . . . . . . . . . . 57
ARTICLE FIVERemedies
SECTION 501. Events of Default. . . . . . . . . . . . . . . . . . . . . . 58
SECTION 502. Acceleration of Maturity; Rescissionand Annulment. . . . . . 60
SECTION 503. Collection of Indebtedness and Suits for Enforcement
by Trustee . . . . . . . . . . . . . . . . . . . . . . . . 62
SECTION 504. Trustee May File Proofs of Claim . . . . . . . . . . . . . . 63
SECTION 505. Trustee May Enforce Claims WithoutPossession of Securities . 64
SECTION 506. Application of Money Collected . . . . . . . . . . . . . . . 64
SECTION 507. Limitation on Suits. . . . . . . . . . . . . . . . . . . . . 64
SECTION 508. Unconditional Right of Holders to Receive Principal,
Premium and Interest . . . . . . . . . . . . . . . . . . . 65
SECTION 509. Restoration of Rights and Remedies . . . . . . . . . . . . . 66
SECTION 510. Rights and Remedies Cumulative . . . . . . . . . . . . . . . 66
SECTION 511. Delay or Omission Not Waiver . . . . . . . . . . . . . . . . 66
SECTION 512. Control by Holders . . . . . . . . . . . . . . . . . . . . . 67
SECTION 513. Waiver of Past Defaults. . . . . . . . . . . . . . . . . . . 67
SECTION 514. Undertaking for Costs. . . . . . . . . . . . . . . . . . . . 68
SECTION 515. Waiver of Stay or Extension Laws . . . . . . . . . . . . . . 68
- ----------------------------
Note: This reconciliation and tie shall not, for any purpose, be deemed to
be a part of the Indenture.
vi
<PAGE>
ARTICLE SIXThe Trustee
SECTION 601. Certain Duties and Responsibilities. . . . . . . . . . . . . 69
SECTION 602. Notice of Defaults . . . . . . . . . . . . . . . . . . . . . 69
SECTION 603. Certain Rights of Trustee. . . . . . . . . . . . . . . . . . 69
SECTION 604. Not Responsible for Recitals or Issuance of Securities . . . 71
SECTION 605. May Hold Securities. . . . . . . . . . . . . . . . . . . . . 71
SECTION 606. Money Held in Trust. . . . . . . . . . . . . . . . . . . . . 71
SECTION 607. Compensation and Reimbursement . . . . . . . . . . . . . . . 72
SECTION 608. Disqualification; Conflicting Interests. . . . . . . . . . . 73
SECTION 609. Corporate Trustee Required; Eligibility. . . . . . . . . . . 73
SECTION 610. Resignation and Removal; Appointmentof Successor . . . . . . 73
SECTION 611. Acceptance of Appointment by Successor . . . . . . . . . . . 75
SECTION 612. Merger, Conversion, Consolidationor Succession to Business . 76
SECTION 613. Preferential Collection of Claims Againstthe Company . . . . 76
SECTION 614. Appointment of Authenticating Agent. . . . . . . . . . . . . 76
ARTICLE SEVENHolders' Lists and Reports byTrustee and the Company
SECTION 701. Company to Furnish Trustee Names andAddresses of Holders . . 78
SECTION 702. Preservation of Information; Communicationsto Holders. . . . 79
SECTION 703. Reports by Trustee . . . . . . . . . . . . . . . . . . . . . 79
SECTION 704. Reports by Company . . . . . . . . . . . . . . . . . . . . . 80
ARTICLE EIGHTMerger, Consolidation, Etc.
SECTION 801. Mergers, Consolidations and CertainSales of Assets . . . . . 80
SECTION 802. Successor Substituted. . . . . . . . . . . . . . . . . . . . 82
ARTICLE NINESupplemental Indentures
SECTION 901. Supplemental Indentures Without Consentof Holders. . . . . . 82
SECTION 902. Supplemental Indentures with Consentof Holders . . . . . . . 85
SECTION 903. Execution of Supplemental Indentures . . . . . . . . . . . . 85
- ----------------------------
Note: This reconciliation and tie shall not, for any purpose, be deemed to
be a part of the Indenture.
vii
<PAGE>
SECTION 904. Effect of Supplemental Indentures. . . . . . . . . . . . . . 85
SECTION 905. Conformity with Trust Indenture Act. . . . . . . . . . . . . 85
SECTION 906. Reference in Securities to SupplementalIndentures. . . . . . 85
ARTICLE TENCovenants
SECTION 1001. Payment of Principal, Premium and Interest . . . . . . . . . 86
SECTION 1002. Maintenance of Office or Agency. . . . . . . . . . . . . . . 86
SECTION 1003. Money for Security Payments to beHeld in Trust . . . . . . . 87
SECTION 1004. Existence. . . . . . . . . . . . . . . . . . . . . . . . . . 89
SECTION 1005. Maintenance of Properties and Insurance. . . . . . . . . . . 89
SECTION 1006. Payment of Taxes and Other Claims. . . . . . . . . . . . . . 89
SECTION 1007. Limitation on Consolidated Debt. . . . . . . . . . . . . . . 90
SECTION 1008. Limitation on Debt and Preferred Stock of Restricted
Subsidiaries. . . . . . . . . . . . . . . . . . . . . . . 94
SECTION 1009. Limitation on Restricted Payments. . . . . . . . . . . . . . 97
SECTION 1010. Limitation on Dividend and Other PaymentRestrictions
Affecting RestrictedSubsidiaries. . . . . . . . . . . . . 99
SECTION 1011. Limitation on Liens. . . . . . . . . . . . . . . . . . . . . 101
SECTION 1012. Limitation on Sale and LeasebackTransactions . . . . . . . . 102
SECTION 1013. Limitation on Asset Dispositions . . . . . . . . . . . . . . 103
SECTION 1014. Limitation on Issuances and Sales ofCapital Stock of
RestrictedSubsidiaries. . . . . . . . . . . . . . . . . . 105
SECTION 1015. Transactions with Affiliatesand Related Persons. . . . . . . 106
SECTION 1016. Change of Control. . . . . . . . . . . . . . . . . . . . . . 107
SECTION 1017. Provision of Financial Information . . . . . . . . . . . . . 108
SECTION 1018. Statement by Officers as to Default. . . . . . . . . . . . . 109
SECTION 1019. Waiver of Certain Covenants. . . . . . . . . . . . . . . . . 109
SECTION 1020. Limitation on Use of Proceeds. . . . . . . . . . . . . . . . 109
ARTICLE ELEVENRedemption 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. . . . . . . . . . . . . . . . . 114
- ----------------------------
Note: This reconciliation and tie shall not, for any purpose, be deemed to
be a part of the Indenture.
viii
<PAGE>
ARTICLE TWELVEDefeasance and Covenant Defeasance
SECTION 1201. Company's Option to Effect Defeasance orCovenant Defeasance. 114
SECTION 1202. Defeasance and Discharge . . . . . . . . . . . . . . . . . . 115
SECTION 1203. Covenant Defeasance. . . . . . . . . . . . . . . . . . . . . 115
SECTION 1204. Conditions to Defeasance orCovenant Defeasance . . . . . . . 116
SECTION 1205. Deposited Money and U.S. GovernmentObligations to Be Held in
Trust;Other Miscellaneous Provisions. . . . . . . . . . . 118
SECTION 1206. Reinstatement. . . . . . . . . . . . . . . . . . . . . . . . 119
SECTION 1207. Repayment to Company . . . . . . . . . . . . . . . . . . . . 119
</TABLE>
- ----------------------------
Note: This reconciliation and tie shall not, for any purpose, be deemed to
be a part of the Indenture.
ix
<PAGE>
INDENTURE, dated as of June 1, 1999, between NEXTLINK
Communications, Inc., a corporation organized under the laws of the State of
Delaware (the "Company"), having its principal office at 500 108th Avenue
N.E., Suite 2200, Bellevue, Washington 98004, and U.S. Trust Company of
Texas, duly organized and existing under the laws of the State of Texas, as
Trustee (herein called the "Trustee").
RECITALS OF THE COMPANY
The Company has duly authorized the creation of an issue of
$588,926,000 aggregate principal amount of its 12 1/4% Senior Discount Notes
due 2009 (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.
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;
(2) all other terms used herein which are defined in the
Trust Indenture Act, either directly or by reference therein, have
the
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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.
"Accreted Value" means, (x) as of any date prior to June 1,
2004, an amount per $1,000 principal amount at maturity of Securities that is
equal to the sum of
(a) the offering price ($551.85 per $1,000 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
June 1 and December 1 at the rate of 12 1/4% 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
(y) as of any date on or after June 1, 2004, 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
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Incurred in anticipation of, and was outstanding prior to, such merger,
consolidation or acquisition.
"Act", when used with respect to any Holder, has the meaning
specified in Section 104.
"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.
"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, (including the issuance of Capital
Stock by a Restricted Subsidiary) 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
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<PAGE>
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 12-month 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 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.
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<PAGE>
"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.
"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 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.
5
<PAGE>
"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 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
6
<PAGE>
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
7
<PAGE>
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 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
8
<PAGE>
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
United States Trust Company of New York 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.
"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,
9
<PAGE>
(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
10
<PAGE>
more Global Securities, 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 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 (or, if
earlier, the date as of which the Securities have been paid in full);
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 "A-3" 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
11
<PAGE>
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.
"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.
"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
12
<PAGE>
(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 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
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<PAGE>
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.
"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
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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 "P-1" or higher according to Moody's Investors Service, Inc., "A-1"
or higher according to Standard & Poor's Ratings Group or "A-1" 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 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
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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 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.
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"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
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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");
(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
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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 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.
"Outstanding", when used with respect to Securities, means, as of
the date of determination, all Securities theretofore authenticated and
delivered under
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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,
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
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"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 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
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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
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maintained to the extent required by generally accepted accounting
principles).
"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 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
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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 therewith, as the same may
be amended, supplemented, modified or restated from time to time.
"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., "A-1" or higher according to Standard &
Poor's Ratings Group or "A-1" 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.
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"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.
"Regular Record Date" for the interest payable on any Interest
Payment Date means the May 15 or November 15 (whether or not a Business Day),
as the case may be, next preceding such Interest Payment Date.
"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.
"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.
"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.
"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
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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.
"Securities" has the meaning specified in the second paragraph
of this instrument.
"Securities Act" means the Securities Act of 1933 and any
statute successor thereto, in each case as amended from time to time.
"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 1-02(w) of Regulation S-X 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.
"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
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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 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
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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.
"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
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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 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 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
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(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 or other capital assets 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 or other capital assets 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
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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.
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.
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<PAGE>
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 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.
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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 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
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<PAGE>
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 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.
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<PAGE>
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
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.
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<PAGE>
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. CONFLICT WITH TRUST INDENTURE ACT.
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.
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
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<PAGE>
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.
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<PAGE>
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.
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.
SECTION 202. FORM OF FACE OF SECURITY.
[If the Security is a Global Security, insert the legends required
by Section 204 of the Indenture]
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 PRICE OF THIS SECURITY IS 55.185%
OF ITS PRINCIPAL AMOUNT, THE AMOUNT OF ORIGINAL ISSUE DISCOUNT IS $448.15 PER
$1,000 OF STATED FACE AMOUNT, THE ISSUE DATE IS JUNE 1,1999 AND THE YIELD TO
MATURITY IS 12 1/4%.
NEXTLINK Communications, Inc.
12 1/4% SENIOR DISCOUNT NOTES DUE 2009
CUSIP NUMBER: 65333HAL7
38
<PAGE>
No. ______ $_______________
NEXTLINK Communications, Inc., a corporation organized under the
laws of the State of Delaware (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 on June 1, 2009, and to pay interest thereon
from June 1, 2004 or from the most recent Interest Payment Date to which
interest has been paid or duly provided for, semi-annually on June 1, and
December 1 in each year, commencing December 1, 2004 at the rate of 12 1/4% per
annum, until the principal hereof is paid or made available for payment. 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
May 15 or November 15 (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 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 until
June 1, 2004, 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 12.25% 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.
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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.
Dated: June 1, 1999.
NEXTLINK Communications, Inc.
By
-------------------------------------
Name:
Title:
Attest:
- ---------------------------------
Name:
Title:
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SECTION 203. FORM OF REVERSE OF SECURITY.
This Security is one of a duly authorized issue of Securities of
the Company designated as its 12 1/4% Senior Discount Notes Due 2009 (the
"Securities") issued under an Indenture, dated as of June 1, 1999 (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 $588,926,000. 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 June 1, 2004 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 June 1, of each of the years
indicated below:
<TABLE>
<CAPTION>
Redemption
Year Price
---- -----------
<S> <C>
2004 106.125%
2005 104.083%
2006 102.042%
</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
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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 on or prior to
June 1, 2002 only in the event that on or before June 1, 2002 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 1/3% of the Accreted Value of the Securities, PROVIDED, HOWEVER, that
Securities in an amount equal to at least 66 2/3% of the Accreted Value 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 112.25% of the Accreted Value of the Securities to be
redeemed to but excluding the Redemption Date (subject to the right of
Holders of record to receive interest due on an Interest Payment Date that is
on or prior to 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.
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 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
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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.
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
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
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<PAGE>
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.
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
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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:
[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
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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.
U.S. Trust Company of Texas,
as Trustee
By ____________________
Authorized Signatory
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 $588,926,000,
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.
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The Securities shall be known and designated as the "12 1/4%
Senior Discount Notes due 2009" of the Company. The Stated Maturity of the
Securities shall be June 1, 2009. The Securities shall bear interest at the
rate of 12 1/4% per annum, from June 1, 2004 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 June 1 and December 1,
commencing December 1, 2004, until the principal thereof is paid or made
available for payment.
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 12.25% 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 the
Securities are issued in certificated form, 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.
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The Securities shall be subject to defeasance at the option of the
Company as provided in Article Twelve.
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 or Assistant 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.
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.
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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.
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.
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, 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
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like tenor and aggregate principal amount and bearing the applicable legends
set forth in Section 202.
At the option of the Holder, Securities may be exchanged for other
Securities of any authorized denominations and of a like tenor and aggregate
principal amount and bearing the applicable legends set forth in Section 202,
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 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.
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.
The provisions of Clauses (1), (2), (3) and (4) below shall apply
only to Global Securities:
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(1) Each Global Security authenticated under this Indenture shall
be registered in the name of the Depositary designated for such Global
Security or a nominee thereof and delivered to such Depositary or a
nominee thereof or custodian therefor, and each such Global Security
shall constitute a single Security for all purposes of this Indenture.
(2) Notwithstanding any other provisions in this Indenture, no
Global Security may be exchanged in whole or in part for Securities
registered, and no transfer of a Global Security in whole or in part may
be registered, in the name of any Person other than the Depositary for
such Global Security or a nominee thereof unless (A) such Depositary (i)
has notified the Company that it is unwilling or unable to continue as
Depositary for such Global Security or (ii) has ceased to be a clearing
agency registered under the Exchange Act, or (B) there shall have
occurred and be continuing an Event of Default with respect to such
Global Security.
(3) Subject to Clause (2) above, any exchange of a Global
Security for other Securities may be made in whole or in part, and all
Securities issued in exchange for a Global Security or any portion
thereof shall be registered in such names as the Depositary for such
Global Security shall direct.
(4) Every Security authenticated and delivered upon registration
of transfer of, or in exchange for or in lieu of, a Global Security or
any portion thereof, whether pursuant to this Section, Section 304, 306,
906 or 1108 or otherwise, shall be authenticated and delivered in the
form of, and shall be, a Global Security, unless such Security is
registered in the name of a Person other than the Depositary for such
Global Security or a nominee thereof.
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
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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 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 on any Security which is payable, but is not
punctually paid or duly provided for, on any Interest
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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 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
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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 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
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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
360-day year of twelve 30-day months.
SECTION 311. CUSIP NUMBERS.
The Company shall in issuing the Securities use CUSIP numbers, and
the Trustee shall use the applicable CUSIP number in notices of redemption or
exchange as a convenience to the Holders; PROVIDED, that any such notice may
state that no representation is made as to the accuracy or correctness of the
CUSIP number or numbers printed in the notice or on the certificates
representing the Securities and that reliance may be placed only on the other
identification numbers printed on the certificates representing the Securities.
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
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(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 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.
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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.
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
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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 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
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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 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
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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 June 1, 2004 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 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-
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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.
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
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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.
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
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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;
(2) the Holders of at least 25% in aggregate principal amount of
the Outstanding Securities shall
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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 60-day 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.
SECTION 509. RESTORATION OF RIGHTS AND REMEDIES.
If the Trustee or any Holder has instituted any
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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.
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
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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.
SECTION 602. NOTICE OF DEFAULTS.
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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
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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;
(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
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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.
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
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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 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
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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.
(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.
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(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 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
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shall be qualified and eligible under this Article.
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
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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 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
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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.
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
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the time such list is furnished;
EXCLUDING from any such list names and addresses received by the Trustee in its
capacity as Security Registrar.
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.
SECTION 704. REPORTS BY COMPANY.
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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.
ARTICLE EIGHT
Merger, Consolidation, Etc.
SECTION 801. MERGERS, CONSOLIDATIONS AND CERTAIN
SALES OF ASSETS.
(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
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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 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
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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
(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
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of this Indenture to such extent as shall be necessary to comply with
any requirement of the Commission in order 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 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
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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.
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.
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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.
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
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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 (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
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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 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
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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
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to be responsible to the extent that property of similar character is usually
so 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
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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.
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) $250 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
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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 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
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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
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(ii) after a Change of Control, PROVIDED that the Company
is not in default with respect to its obligations under Section 1016;
(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. The
determination of any particular amount of Debt under such covenant shall be
made without duplication for Guarantees or Liens supporting Debt otherwise
included in the determination of a particular amount.
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;
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(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);
(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
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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 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
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(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 the amount and type of such Debt under the clause permitting the Debt as
so classified. The determination of any particular amount of Debt under such
covenant shall be made without duplication for Guarantees or Liens supporting
Debt otherwise included in the determination of a particular amount.
SECTION 1009. LIMITATION ON RESTRICTED PAYMENTS.
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:
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(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 since the end of the last
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full fiscal quarter prior to April 25, 1996 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 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
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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.
SECTION 1010. LIMITATION ON DIVIDEND AND OTHER
PAYMENT RESTRICTIONS AFFECTING
RESTRICTED SUBSIDIARIES.
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:
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(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) or (ii) of
Section 1007 or clause (vi) or (ix) of Section 1008, 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 and PROVIDED FURTHER that, in the case of any such
Bank Credit Agreement or Vendor Financing Facility entered into by a Restricted
Subsidiary under clause (ii) of Section 1007 or clause (ix) of Section 1008,
such encumbrances or restrictions do not prohibit dividends, distributions,
loans or advances by such Restricted Subsidiary to the Company or another
Restricted Subsidiary to the extent that the failure to make such distribution,
loan or advance would result in the Company defaulting in the payment of
principal or interest on its indebtedness;
(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;
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(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
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
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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
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
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(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.
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 12-month
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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 or other obligations 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 or other obligations 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 June 1, 2004) 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
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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 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,
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(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.
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 that complies with the provisions of Section 1013;
(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
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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.
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
either
(x) obtain the approval of the transaction from the Board of Directors
including a majority of the disinterested members of the Board of Directors or
(y) obtain an opinion from a nationally recognized investment bank or
other expert with experience in appraising the terms and conditions, taken as a
whole, of
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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 June 1, 2004) 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 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
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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.
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
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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.
SECTION 1020. LIMITATION ON USE OF PROCEEDS.
The Company will apply the net proceeds received
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from the issuance and sale of the Securities (the "Securities Net Proceeds")
toward the construction, improvement, and acquisition by the Company or one
or more Restricted Subsidiaries of the Company or Joint Ventures of
Telecommunications Assets of the Company, such Restricted Subsidiaries or
Joint Ventures (or will advance such net proceeds to such Restricted
Subsidiaries of the Company or Joint Ventures for such purpose); provided,
however, pending such application, the Securities Net Proceeds may be
invested in Marketable Securities.
ARTICLE ELEVEN
Redemption of Securities
SECTION 1101. RIGHT OF REDEMPTION.
(a) The Securities may be redeemed prior to June 1, 2004 only in
the event that on or before June 1, 2004 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 1/3% of the Accreted Value of
the Securities PROVIDED, HOWEVER, that Securities in an amount equal to at least
66 2/3% of the Accreted Value 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 112.25% 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 June 1, 2004 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).
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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.
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
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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.
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
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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.
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
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the Redemption Date at the rate provided by the Security.
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.
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
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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.
SECTION 1204. CONDITIONS TO DEFEASANCE OR
COVENANT DEFEASANCE.
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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
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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
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
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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 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.
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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.
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
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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.
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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/ Richard A. Montfort, Jr.
- ---------------------------------------
Name: Richard A. Montfort, Jr.
Title: Assistant Secretary
U.S. TRUST COMPANY OF TEXAS
By /s/ Patricia Gallagher
-----------------------------------------
Name: Patricia Gallagher
Title: Authorized Signatory
[SEAL]
Attest:
/s/ Sinqui Dindid
- -----------------------------
Name:
Title:
<PAGE>
STATE OF WASHINGTON ) ss.:
COUNTY OF )
On this __th day of ________, 1999, 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
----------------------------
Notary Public
STATE OF NEW YORK ) ss.:
COUNTY OF NEW YORK )
On this 1th day of June, 1999, before me personally appeared
Patricia Gallagher, to me known, who, being duly sworn, did depose and say that
she is the Vice President of U.S. Trust Company of Texas, 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/ Garth A. Green
----------------------------
Notary Public
<PAGE>
NEXTLINK COMMUNICATIONS, INC.
STOCK OPTION PLAN
(as amended on September 30, 1997, December 31, 1997, February 5, 1998,
February 4, 1999, May 3, 1999 and October 19, 1999)
SECTION 1. PURPOSE. The purpose of this Stock Option Plan (this "Plan")
is to provide a means whereby Nextlink Communications, Inc. (the "Company") or
any parent or subsidiary of the Company, as defined in Subsection 5.9 (the
"related entities"), may continue to attract, motivate and retain selected
employees, officers and independent contractors who can materially contribute to
the Company's growth and success, and to encourage stock ownership in the
Company through granting incentive stock options or nonqualified stock options,
or both, to purchase the Class A Common Stock of the Company (as defined in
Section 3), so that such key employees and other persons and entities will more
closely identify their interests with those of the Company and its shareholders.
In addition, options under this Plan may serve as replacement options for
options issued under the Equity Option Plan sponsored by the Company's
predecessor.
SECTION 2. ADMINISTRATION. This Plan shall be administered by the Board
of Directors of the Company (the "Board") or, in the event the Board shall
appoint or authorize a committee to administer this Plan, by such committee.
The administrator of this Plan shall hereinafter be referred to as the "Plan
Administrator."
2.1 PROCEDURES. The Board may designate one of the members of the
Plan Administrator as chairperson. The Plan Administrator may hold meetings at
such times and places as it shall determine. The acts of a majority of the
members of the Plan Administrator present at meetings at which a quorum exists,
or acts reduced to or approved in writing by all Plan Administrator members,
shall be valid acts of the Plan Administrator.
2.2 RESPONSIBILITIES. Except for the terms and conditions explicitly
required in this Plan, the Plan Administrator shall have the authority, in its
discretion, to determine all matters relating to the options to be granted under
this Plan, including selection of the individuals to be granted options, the
number of shares to be subject to each option, the exercise price, and all other
terms and conditions of the options. Grants under this Plan need not be
identical in any respect, even when made simultaneously. The interpretation and
construction by the Plan Administrator of any terms or provisions of this Plan
or any option issued under this Plan, or of any rule or regulation promulgated
in connection with this Plan, shall be conclusive and binding on all interested
parties, so long as such interpretation and construction with respect to
incentive stock options correspond to the requirements of Section 422 of the
Internal Revenue Code (the "Code"), as amended, and the regulations thereunder.
2.3 SECTION 16(b) COMPLIANCE AND BIFURCATION OF PLAN. In the event
the Company registers any of its equity securities pursuant to Section 12(b) or
12(g) of the Exchange Act, it is the intention of the Company that this Plan,
and options granted under this Plan, comply in all respects with Rule 16b-3
under the Exchange Act and, if any Plan provision is later found not to be in
compliance with such Section, the provision shall be deemed null and void, and
in all events this Plan shall be construed in favor of its meeting the
requirements of Rule 16b-3.
Page 1 - STOCK OPTION PLAN
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Notwithstanding anything in this Plan to the contrary, the Board, in its
absolute discretion, may bifurcate this Plan so as to restrict, limit or
condition the use of any provision of this Plan to participants who are
officers and directors subject to Section 16(b) of the Exchange Act without
so restricting, limiting or conditioning other Plan participants.
SECTION 3. STOCK SUBJECT TO THIS PLAN. The stock subject to this Plan
shall be the Company's Class A Common Stock (the "Class A Common Stock"),
presently authorized but unissued or now held or subsequently acquired by the
Company as treasury shares. Subject to adjustment as provided in Section 7 of
this Plan, the aggregate amount of Class A Common Stock to be delivered upon the
exercise of all options granted under this Plan shall not exceed 41,000,000
shares (the "Plan Maximum") as such Class A Common Stock was constituted on the
effective date of this Plan. If any option granted under this Plan expires or
is surrendered, canceled, terminated or exchanged for another option for any
reason without having been exercised in full, the unpurchased shares subject to
such option shall again be available for purposes of this Plan, including use as
replacement options that may be granted in exchange for such surrendered,
canceled or terminated options.
SECTION 4. ELIGIBILITY. An incentive stock option may be granted only to
an individual who, at the time the option is granted, is an employee of the
Company (or a corporate related entity, as described in Section 5.9) and who the
Board may from time to time select for participation in this Plan. Members of
the Board shall not be eligible for grants of incentive stock options unless
they are also employees of the Company. At the discretion of the Plan
Administrator, employees and independent contractors of the Company (including
nonemployee directors) or any related entity may receive nonqualified stock
options. Notwithstanding anything to the contrary herein, the maximum number of
shares of Class A Common Stock with respect to which options may be granted to
any individual in any calendar year shall not exceed the Plan Maximum, as such
number may change from time to time. Any party to whom an option is granted
under this Plan shall be referred to in this Plan as an "Optionee."
SECTION 5. TERMS AND CONDITIONS OF OPTIONS. Options granted under this
Plan shall be evidenced by written agreements that contain such terms,
conditions, limitations and restrictions as the Plan Administrator shall deem
advisable and which are not inconsistent with this Plan. Notwithstanding the
foregoing, options shall include or incorporate by reference the following terms
and conditions:
5.1 NUMBER OF SHARES. The maximum number of shares that may be
purchased pursuant to the exercise of each option, which number shall be as
established by the Plan Administrator.
5.2 PRICE OF SHARES. The price per share at which each option is
exercisable (the "exercise price") shall be as established by the Plan
Administrator, provided that the Plan Administrator shall act in good faith to
establish the exercise price as follows:
5.2.1 INCENTIVE STOCK OPTIONS AND NONQUALIFIED STOCK OPTIONS.
With respect to incentive stock options intended to qualify under Section 422 of
the Code, and subject to Subsection 5.2.2 below, the exercise price shall be not
less than the fair market value per share
Page 2 - STOCK OPTION PLAN
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of the Class A Common Stock at the time the option is granted, except with
respect to the substitution of a new option for an old option, or an
assumption of an old option, in accordance with Code Section 424(a). With
respect to nonqualified stock options, the exercise price shall be the amount
set by the Plan Administrator.
5.2.2 INCENTIVE STOCK OPTIONS TO GREATER THAN 10% SHAREHOLDERS.
With respect to incentive stock options granted to greater than 10% shareholders
of the Company, the exercise price shall be as required by Section 6.
5.2.3 FAIR MARKET VALUE. The fair market value per share of the
Class A Common Stock for the purpose of determining the exercise price under
this Section 5.2 shall be determined as follows:
(a) if the Common Stock is listed on any established stock
exchange or a national market system including without limitation the
National Market System of the National Association of Securities Dealers,
Inc. Automated Quotation ("NASDAQ") System, the fair market value shall be
the closing sales price for such stock (or the closing bid, if no sales were
reported), as quoted on such system or exchange for the last market trading
date prior to the time of determination as reported in The Wall Street
Journal or such other source as the Plan Administrator deems reliable;
(b) if the Common Stock is quoted on the NASDAQ System (but
not on the National Market System thereof) or regularly quoted by a
recognized securities dealer but selling prices are not reported, the fair
market value shall be the mean between the high and low asked prices for the
Common Stock on the last market trading date prior to the day of
determination, as reported in The Wall Street Journal or such other source as
the Plan Administrator deems reliable; or
(c) In the absence of an established market for the Common
Stock, fair market value shall be determined by the Plan Administrator in
good faith at the time the option is granted.
5.3 TERM AND MATURITY. Subject to the restrictions contained in
Section 6 with respect to granting incentive stock options to greater than 10%
shareholders of the Company, the term of each incentive stock option shall be 10
years from the date it is granted unless a shorter period of time is established
by the Plan Administrator, but in no event shall the term of any incentive stock
option exceed 10 years. The term of each nonqualified stock option shall be 15
years from the date it is granted, unless a shorter period of time is
established by the Plan Administrator in the individual option agreement. To
ensure that the Company or related entities will achieve the purpose and receive
the benefits contemplated in this Plan, any option granted under this Plan
shall, unless this condition is waived or modified by the Plan Administrator in
the agreement evidencing the option, or by subsequent resolution of the Plan
Administrator, be exercisable according to the following schedule:
Page 3 - STOCK OPTION PLAN
<PAGE>
<TABLE>
<CAPTION>
Period of Optionee's Continuous Portion of Total Option
Relationship With the Company or Which is Exercisable
Related Entity from the Date the
Option is Granted
<S> <C>
After one year 25%
After two years 50%
After three years 75%
After four years 100%
</TABLE>
5.4 EXERCISE. Subject to the vesting schedule described in
subsection 5.3 above, if any, and to any additional holding period required by
applicable law, each option may be exercised in whole or in part; provided,
however, that only whole shares will be issued pursuant to the exercise of any
option and that the exercise price shall not be less than the par value per
share of the Class A Common Stock at the time the option is exercised. During
an Optionee's lifetime, any stock options granted under this Plan are personal
to him or her and are exercisable solely by such Optionee, except as provided in
Section 5.8. Options shall be exercised by delivery to the Company of notice of
the number of shares with respect to which the option is exercised, together
with payment of the exercise price.
5.5 PAYMENT OF EXERCISE PRICE. Payment of the option exercise price
shall be made in full at the time the notice of exercise of the option is
delivered to the Company and shall be in cash, bank certified or cashier's check
or personal check (unless at the time of exercise the Plan Administrator in a
particular case determines not to accept a personal check) for the Class A
Common Stock being purchased.
The Plan Administrator can determine at the time the option is
granted for incentive stock options, or at any time before exercise for
nonqualified stock options, that additional forms of payment will be permitted,
including installment payments on such terms and over such period as the Plan
Administrator may determine in its discretion. To the extent permitted by the
Plan Administrator and applicable laws and regulations (including, but not
limited to, federal tax and securities laws and regulations and state corporate
law), an option may be exercised by:
(a) delivery of shares of stock of the Company held by an
Optionee having a fair market value equal to the exercise price, such fair
market value to be determined in good faith by the Plan Administrator;
(b) delivery of a full-recourse promissory note executed by the
Optionee, provided that (i) such note delivered in connection with an incentive
stock option shall, and such note delivered in connection with a nonqualified
stock option may, in the sole discretion of the Plan Administrator, bear
interest at a rate specified by the Plan Administrator but in no case less than
the rate required to avoid imputation of interest (taking into account any
exceptions to the imputed interest rules) for federal income tax purposes; (ii)
the Plan Administrator in its sole discretion shall specify the term and other
provisions of such note at the time an incentive stock
Page 4 - STOCK OPTION PLAN
<PAGE>
option is granted or at any time prior to exercise of a nonqualified stock
option; (iii) the Plan Administrator may require that the Optionee pledge the
Optionee's shares to the Company for the purpose of securing the payment of
such note and may require that the certificate representing such shares be
held in escrow in order to perfect the Company's security interest; (iv) the
note provides that 90 days following the Optionee's termination of employment
with the Company or a related entity, the entire outstanding balance under
the note shall become due and payable, if not previously due and payable; and
(v) the Plan Administrator in its sole discretion may at any time restrict or
rescind this right upon notification to the Optionee;
(c) delivery of a properly executed exercise notice, together
with irrevocable instructions to a broker, all in accordance with the
regulations of the Federal Reserve Board, to promptly deliver to the Company the
amount of sale or loan proceeds to pay the exercise price and any federal, state
or local withholding tax obligations that may arise in connection with the
exercise; provided, that the Plan Administrator, in its sole discretion, may at
any time determine that this Subparagraph (c), to the extent the instructions to
the broker call for an immediate sale of the shares, shall not be applicable to
any Optionee who is subject to Section 16(b) of the Exchange Act if such
transaction would result in a violation of Section 16(b), or is not an employee
at the time of exercise;
(d) delivery of a properly executed exercise notice, together
with a request by the Optionee for the Company to pay the exercise price by
withholding from the shares that would otherwise be issued that number of shares
having a fair market value equal to the option exercise price; provided, the
Plan Administrator retains complete discretion to honor or deny the Optionee's
request for such a method of exercise.
5.6 SHAREHOLDERS' AGREEMENT. To the extent required by the Plan
Administrator upon exercise of an option the Optionee shall agree to enter into
and be bound by the agreement then in effect, if any, between the Company and
its shareholders relating to the repurchase by the Company of its outstanding
Class A Common Stock.
5.7 WITHHOLDING TAX REQUIREMENT. The Company or any related entity
shall have the right to retain and withhold from any payment of cash or Class A
Common Stock under this Plan the amount of taxes required by any government to
be withheld or otherwise deducted and paid with respect to such payment. At its
discretion, the Company may require an Optionee receiving shares of Class A
Common Stock to reimburse the Company or a related entity for any such taxes
required to be withheld and may withhold any distribution in whole or in part
until the Company, or related entity, is so reimbursed. In lieu of such
withholding or reimbursement, the Company (or related entity) shall have the
right to withhold from any other cash amounts due or to become due from the
Company (or related entity) to the Optionee an amount equal to such taxes or to
retain and withhold a number of shares having a market value not less than the
amount of such taxes required to be withheld as reimbursement for any such taxes
and cancel (in whole or in part) any such shares so withheld.
5.8 NONTRANSFERABILITY OF OPTION. Options granted under this Plan
and the rights and privileges conferred by this Plan may not be transferred,
assigned, pledged or hypothecated in any manner (whether by operation of law or
otherwise) other than by will or by the applicable
Page 5 - STOCK OPTION PLAN
<PAGE>
laws of descent and distribution; provided, with respect to a non-qualified
stock option, an Optionee may transfer the option to a revocable trust
created by the Optionee for the benefit of his or her descendants, to an
immediate family member or to a partnership in which only immediate family
members or such trusts are partners. Options under this Plan shall not be
subject to execution, attachment or similar process. Any attempt to
transfer, assign, pledge, hypothecate or otherwise dispose of any option
under this Plan or of any right or privilege conferred by this Plan, contrary
to the Code or to the provisions of this Plan, or the sale or levy or any
attachment or similar process upon the rights and privileges conferred by
this Plan shall be null and void. Notwithstanding the foregoing, an Optionee
may during the Optionee's lifetime, designate a person who may exercise the
option after the Optionee's death by giving written notice of such
designation to the Plan Administrator. Such designation may be changed from
time to time by the Optionee by giving written notice to the Plan
Administrator revoking any earlier designation and making a new designation.
5.9 TERMINATION OF RELATIONSHIP. If the Optionee's employment
relationship with the Company or any related entity ceases for any reason other
than termination for cause, death or permanent and total disability, and unless
by its terms the option sooner terminates or expires, then the Optionee may
exercise, for a period of three months after such cessation, that portion of the
Optionee's option which is exercisable at the time of such cessation. The
Optionee's option, however, shall terminate at the end of the three month period
following such cessation as to all Shares for which it has not been exercised,
unless such provision is waived in the agreement evidencing the option or by
resolution adopted by the Plan Administrator. If, in the case of an incentive
stock option, an Optionee's relationship with the Company or related entity
changes (i.e., from employee to nonemployee, such as a consultant), such change
shall constitute a termination of an Optionee's employment with the Company or
related entity and the Optionee's incentive stock option shall terminate in
accordance with this subsection. Upon the expiration of the three month period
following cessation of employment, the Plan Administrator shall have sole
discretion in a particular circumstance to extend the exercise period following
such cessation beyond that specified above. If, however, in the case of an
incentive stock option, the Optionee does not exercise the Optionee's option
within three months after cessation of employment, the option will no longer
qualify as an incentive stock option under the Code.
Upon an Optionee's termination of employment for cause, all of
the optionee's outstanding (i.e., unexercised) options issued under this Plan
shall immediately expire and no longer be available for exercise. For purposes
of this Plan, a termination shall be considered for "cause" if the termination
is attributable to the Optionee's: (a) Embezzlement; (b) use of illegal drugs
or alcohol that materially impairs the Optionee's ability to fulfill his or her
duties as an employee or independent contractor; (c) willful disclosure of trade
secrets or confidential information of the Company; (d) dishonesty which results
in substantial harm to the Company; or (e) conviction or confession of a
criminal felony.
If an Optionee's relationship with the Company or any related
entity ceases because of a permanent and total disability, the Optionee's option
shall not terminate, and in the case of an incentive stock option, shall not
cease to be treated as an incentive stock option, until the end of the 12-month
period following such cessation (unless by its terms it sooner terminates
Page 6 - STOCK OPTION PLAN
<PAGE>
and expires). As used in this Plan, the term "permanent and total
disability" has the same meaning provided in Code Section 22(e)(3).
For purposes of this subsection 5.9, a transfer of relationship
between or among the Company and/or any related entity shall not be deemed to
constitute a cessation of relationship with the Company or any of its related
entities. For purposes of this subsection 5.9, with respect to incentive stock
options, employment shall be deemed to continue while the Optionee is on
military leave, sick leave or other bona fide leave of absence (as determined by
the Plan Administrator). The foregoing notwithstanding, employment shall not be
deemed to continue beyond the first 90 days of such leave, unless the Optionee's
reemployment rights are guaranteed by statute or by contract.
As used in this Plan, the term "related entity," when referring
to a subsidiary, shall mean any business entity (other than the Company) which,
at the time of the granting of the option, is in an unbroken chain of entities
ending with the Company, if stock or voting interests possessing 50% or more of
the total combined voting power of all classes of stock or other ownership
interests of each of the entities other than the Company is owned by one of the
other entities in such chain. When referring to a parent entity, the term
"related entity" shall mean any entity in an unbroken chain of entities ending
with the Company if, at the time of the granting of the option, each of the
entities other than the Company owns stock or other ownership interests
possessing 50% or more of the total combined voting power of all classes of
stock (or other ownership interests) in one of the other entities in such chain.
In addition, with respect to an incentive stock option, the definition of
"related entity" as used in this Plan shall apply by only considering entities
that are corporations.
5.10 DEATH OF OPTIONEE. If an Optionee dies while he or she has a
relationship with the Company or any related entity or dies within the three
month period (or 12-month period in the case of totally disabled Optionees)
following cessation of such relationship, any option held by such Optionee to
the extent that the Optionee would have been entitled to exercise such option,
may be exercised within one year after his or her death by the personal
representative of his or her estate or by the person or persons to whom the
Optionee's rights under the option shall pass by will or by the applicable laws
of descent and distribution.
5.11 STATUS OF SHAREHOLDER. Neither the Optionee nor any party to
which the Optionee's rights and privileges under the option may pass shall be,
or have any of the rights or privileges of, a shareholder of the Company with
respect to any of the shares issuable upon the exercise of any option granted
under this Plan unless and until such option has been exercised.
5.12 CONTINUATION OF EMPLOYMENT. Nothing in this Plan or in any
option granted pursuant to this Plan shall confer upon any Optionee any right to
continue in the employ of the Company or of a related entity, or to interfere in
any way with the right of the Company or of any related entity to terminate his
or her employment or other relationship with the Company or a related entity at
any time.
5.13 MODIFICATION AND AMENDMENT OF OPTION. Subject to the
requirements of Code Section 422 with respect to incentive stock options and to
the terms and conditions and within
Page 7 - STOCK OPTION PLAN
<PAGE>
the limitations of this Plan, the Plan Administrator may modify or amend
outstanding options granted under this Plan. The modification or amendment of
an outstanding option shall not, without the consent of the Optionee, impair
or diminish any of his or her rights or any of the obligations of the Company
under such option. Except as otherwise provided in this Plan, no outstanding
option shall be terminated without the consent of the Optionee. Unless the
Optionee agrees otherwise, any changes or adjustments made to outstanding
incentive stock options granted under this Plan shall be made in such a
manner so as not to constitute a "modification" as defined in Code Section
424(h) and so as not to cause any incentive stock option issued hereunder to
fail to continue to qualify as an incentive stock option as defined in Code
Section 422(b).
5.14 LIMITATION ON VALUE FOR INCENTIVE STOCK OPTIONS. As to all
incentive stock options granted under the terms of this Plan, to the extent that
the aggregate fair market value (determined at the time the incentive stock
option is granted) of the stock with respect to which incentive stock options
are exercisable for the first time by the Optionee during any calendar year
(under this Plan and all other incentive stock option plans of the Company, a
related entity or a predecessor corporation) exceeds $100,000, those options (or
the portion of an option) beyond the $100,000 threshold shall be treated as
nonqualified stock options. The previous sentence shall not apply if the
Internal Revenue Service publicly rules, issues a private ruling to the Company,
any Optionee, or any legatee, personal representative or distributee of an
Optionee or issues regulations changing or eliminating such annual limit.
SECTION 6. GREATER THAN 10% SHAREHOLDERS.
6.1 EXERCISE PRICE AND TERM OF INCENTIVE STOCK OPTIONS. If incentive
stock options are granted under this Plan to employees who own more than 10% of
the total combined voting power of all classes of stock of the Company or any
related entity, the term of such incentive stock options shall not exceed five
years and the exercise price shall be not less than 110% of the fair market
value of the Class A Common Stock at the time the incentive stock option is
granted. This provision shall control notwithstanding any contrary terms
contained in an option agreement or any other document.
6.2 ATTRIBUTION RULE. For purposes of subsection 6.1, in determining
stock ownership, an employee shall be deemed to own the stock owned, directly or
indirectly, by or for his brothers, sisters, spouse, ancestors and lineal
descendants. Stock owned, directly or indirectly, by or for a corporation,
partnership, estate or trust shall be deemed to be owned proportionately by or
for its shareholders, partners or beneficiaries. If an employee or a person
related to the employee owns an unexercised option or warrant to purchase stock
of the Company, the stock subject to that portion of the option or warrant which
is unexercised shall not be counted in determining stock ownership. For
purposes of this Section 6, stock owned by an employee shall include all stock
actually issued and outstanding immediately before the grant of the incentive
stock option to the employee.
SECTION 7. ADJUSTMENTS UPON CHANGES IN CAPITALIZATION. The aggregate
number and class of shares for which options may -be granted under this Plan,
the number and class of shares covered by each outstanding option and the
exercise price per share thereof (but not the total
Page 8 - STOCK OPTION PLAN
<PAGE>
price), and each such option, shall all be proportionately adjusted for any
increase or decrease in the number of issued shares of Class A Common Stock
of the Company resulting from a split-up or consolidation of shares or any
like capital adjustment, or the payment of any stock dividend.
7.1 EFFECT OF LIQUIDATION, REORGANIZATION OR CHANGE IN CONTROL.
7.1.1 CASH, STOCK OR OTHER PROPERTY FOR STOCK. Except as
provided in subsection 7.1.2, upon a merger (other than a merger of the
Company in which the holders of Class A Common Stock immediately prior to the
merger have the same proportionate ownership of Class A Common Stock in the
surviving corporation immediately after the merger), consolidation,
acquisition of property or stock, separation, reorganization (other than a
mere reincorporation or the creation of a holding company) or liquidation of
the Company, as a result of which the shareholders of the Company receive
cash, stock or other property in exchange for or in connection with their
shares of Class A Common Stock, any option granted under this Plan shall
terminate. Notwithstanding the foregoing, the Optionee shall have the right
immediately prior to any such merger, consolidation, acquisition of property
or stock, separation, reorganization or liquidation to exercise such option
in whole or in part, to the extent the vesting requirements set forth in this
Plan have been satisfied, unless stated otherwise in the Optionee's
individual option agreement.
7.1.2 CONVERSION OF OPTIONS ON STOCK FOR STOCK EXCHANGE. If
the shareholders of the Company receive capital stock of another corporation
("Exchange Stock") in exchange for their shares of Class A Common Stock in
any transaction involving a merger (other than a merger of the Company in
which the holders of Class A Common Stock immediately prior to the merger
have the same proportionate ownership of common stock in the surviving
corporation immediately after the merger), consolidation, acquisition of
property or stock, separation or reorganization (other than a mere
reincorporation or the creation of a holding company), all options granted
under this Plan shall be converted into options to purchase shares of
Exchange Stock unless the Company and the corporation issuing the Exchange
Stock, in their sole discretion, determine that any or all such options
granted under this Plan shall not be converted into options to purchase
shares of Exchange Stock, but instead shall terminate in accordance with the
provisions of subsection 7.1.1. The amount and price of converted options
shall be determined by adjusting the amount and price of the options granted
under this Plan in the same proportion as used for determining the number of
shares of Exchange Stock the holders of the Class A Common Stock receive in
such merger, consolidation, acquisition of property or stock, separation or
reorganization. Unless accelerated by the Board, the vesting schedule set
forth in the option agreement shall continue to apply for the Exchange Stock.
7.1.3 CHANGE IN CONTROL. In the event of a "Change in
Control," as defined in Section 7.1.4 below, of the Company after the Company
has registered any of its equity securities pursuant to Section 12(b) or
12(g) of the Exchange Act, unless otherwise determined by the Board prior to
the occurrence of such Change in Control, any options or portions of such
options outstanding as of the date such Change in Control is determined to
have occurred that are not yet fully vested shall not become fully vested
merely by the occurrence of a Change in Control.
Page 9 - STOCK OPTION PLAN
<PAGE>
7.1.4 DEFINITION OF "CHANGE IN CONTROL." For purposes of this
Plan, a "Change in Control" shall mean (a) the first approval by the Board or
by the stockholders of the Company of an Extraordinary Event, (b) a Purchase,
or (c) a Board Change.
For purposes of the Plan, an "Extraordinary Event" shall mean any
of the following actions:
(i) any consolidation or merger of the Company in which the
Company is not the continuing or surviving corporation or pursuant to which
shares of Class A Common Stock would be converted into cash, securities or
other property, other than a merger of the Company in which the holders of
common stock immediately prior to the merger have substantially the same
proportionate ownership of common stock of the surviving corporation
immediately after the merger;
(ii) any sale, lease, exchange or other transfer (in one
transaction or a series of related transactions) of all, or substantially
all, the assets of the Company; or
(iii) the adoption of any plan or proposal for liquidation or
dissolution of the Company.
For purposes of the Plan, a "Purchase" shall mean the acquisition
by any person (as such term is defined in Section 13(d) of the Exchange Act)
of any shares of Class A Common Stock or securities convertible into Class A
Common Stock) without the prior approval of a majority of the Continuing
Directors (as defined below) of the Company, if after making such acquisition
such person is the beneficial owner (as such term is defined in Rule 13d-3
under the Exchange Act) directly or indirectly of securities of the Company
representing 20% or more of the combined voting power of the Company's then
outstanding securities (calculated as provided in paragraph (d) of such Rule
13d-3).
For purposes of the Plan, a "Board Change" shall have occurred if
individuals who constitute the Board of the Company at the time of adoption
of this Plan (the "Continuing Directors") cease for any reason to constitute
at least a majority of the Board, provided that any person becoming a
Director subsequent to the date of adoption of this Plan whose nomination for
election was approved by a vote of at least a majority of the Continuing
Directors (other than a nomination of an individual whose initial assumption
of office is in connection with an actual threatened election contest
relating to the election of the Directors of the Company, as such terms are
used in Rule 14a-11 of Regulation 14A under the Exchange Act) shall be deemed
to be a Continuing Director.
7.2 FRACTIONAL SHARES. In the event of any adjustment in the number
of shares covered by any option, any fractional shares resulting from such
adjustment shall be disregarded and each such option shall cover only the number
of full shares resulting from such adjustment.
7.3 DETERMINATION OF BOARD TO BE FINAL. All Section 7 adjustments
shall be made by the Board, and its determination as to what adjustments shall
be made, and the extent of such adjustments, shall be final, binding and
conclusive. Unless an Optionee agrees otherwise, any
Page 10 - STOCK OPTION PLAN
<PAGE>
change or adjustment to an incentive stock option shall be made in such a
manner so as not to constitute a "modification" as defined in Code Section
424(h) and so as not to cause his or her incentive stock option issued under
this Plan to fail to continue to qualify as an incentive stock option as
defined in Code Section 422(b).
SECTION 8. SECURITIES REGULATION. Shares shall not be issued with
respect to an option granted under this Plan unless the exercise of such option
and the issuance and delivery of such shares pursuant to the exercise of such
option shall comply with all relevant provisions of law, including, without
limitation, any applicable state securities laws, the Securities Act of 1933, as
amended, the Exchange Act, the rules and regulations promulgated thereunder, and
the requirements of any stock exchange upon which the shares may then be listed,
and shall be further subject to the approval of counsel for the Company with
respect to such compliance, including the availability of an exemption from
registration for the issuance and sale of any shares under this Plan. Inability
of the Company to obtain from any regulatory body having jurisdiction, the
authority deemed by the Company's counsel to be necessary for the lawful
issuance and sale of any shares under this Plan or the unavailability of an
exemption from registration for the issuance and sale of any shares under this
Plan shall relieve the Company of any liability in respect of the nonissuance or
sale of such shares as to which such requisite authority shall not have been
obtained.
As a condition to the exercise of an option, the Company may
require the Optionee to represent and warrant at the time of any such exercise
that the shares are being purchased only for investment and without any present
intention to sell or distribute such shares if, in the opinion of counsel for
the Company, such a representation is required by any relevant provision of the
aforementioned laws. At the option of the Company, a stop-transfer order
against any shares of stock may be placed on the official stock books and
records of the Company, and a legend indicating that the stock may not be
pledged, sold or otherwise transferred unless an opinion of counsel is provided
(concurred in by counsel for the Company) stating that such transfer is not in
violation of any applicable law or regulation, may be stamped on stock
certificates in order to assure exemption from registration. The Plan
Administrator may also require such other action or agreement by the Optionees
as may from time to time be necessary to comply with the federal and state
securities laws. THIS PROVISION SHALL NOT OBLIGATE THE COMPANY TO UNDERTAKE
REGISTRATION OF THE OPTIONS OR STOCK HEREUNDER.
Should any of the Company's capital stock of the same class as
the stock subject to options granted under this Plan be listed on a national
securities exchange, all stock issued under this Plan if not previously listed
on such exchange shall be authorized by that exchange for listing on such
exchange prior to the issuance of such stock.
SECTION 9. AMENDMENT AND TERMINATION.
9.1 BOARD ACTION. The Board may at any time suspend, amend or
terminate this Plan, provided that except as set forth in Section 7, the
approval of the Company's shareholders is necessary within 12 months before or
after the adoption by the Board of any amendment which will:
Page 11 - STOCK OPTION PLAN
<PAGE>
(a) increase the number of shares which are to be reserved
for the issuance of options under this Plan;
(b) permit the granting of stock options to a class of
persons other than those presently permitted to receive stock options under this
Plan; or
(c) require shareholder approval under applicable law,
including Section 16(b) of the Exchange Act.
Any amendment to this Plan that would constitute a "modification"
to incentive stock options outstanding on the date of such amendment shall not
be applicable to outstanding incentive stock options, but shall have prospective
effect only, unless individual Optionees agree otherwise.
9.2 AUTOMATIC TERMINATION. Unless sooner terminated by the Board,
this Plan shall terminate ten years from the earlier of (a) the date on which
this Plan is adopted by the Board or (b) the date on which this Plan is approved
by the shareholders of the Company. No option may be granted after such
termination or during any suspension of this Plan. The amendment or termination
of this Plan shall not, without the consent of the option holder, alter or
impair any rights or obligations under any option previously granted under this
Plan.
SECTION 10. EFFECTIVENESS OF THIS PLAN. This Plan shall become effective
upon adoption by the Board so long as it is approved by the Company's
shareholders any time within 12 months before or after the adoption of this
Plan.
Page 12 - STOCK OPTION PLAN
<PAGE>
EMPLOYMENT AGREEMENT
This Employment Agreement is entered into by and between Daniel
Akerson ("Executive") and NEXTLINK Communications, Inc., a Delaware
corporation ("Employer" or the "Company"), to be effective on and as of
September 21, 1999.
WITNESSETH:
WHEREAS, Employer is engaged in the business of providing
high-quality, non-mobile telecommunications services to the rapidly growing
business market.
WHEREAS, Executive has skills and experience in telephony generally
and with the technology associated with NEXTLINK; and
WHEREAS, Employer desires to obtain Executive's services for the
conduct of its Business, and Executive desires to be employed in such
Business by and for Employer;
NOW, THEREFORE, in consideration of the premises and the mutual
covenants herein set forth, the parties hereto agree as follows:
1. EMPLOYMENT. Employer hereby employs Executive as Chief
Executive Officer, and agrees to appoint Executive Chairman of the
Board of Directors, and Executive hereby accepts such employment upon
the terms and conditions hereinafter set forth.
2. DUTIES.
a. Executive shall serve as Chief Executive Officer
and Chairman of the Board of Directors of Employer, and shall perform his
services as such within the framework of the policies, objectives and Bylaws
of Employer. In such capacity, Executive (i) shall exercise general
supervisory responsibility and management authority over Employer and all of
its controlled affiliates and (ii) shall perform such other duties
commensurate with his position as may be assigned to him from time to time by
the Board of Directors. Promptly following the effective date hereof,
Employer shall take or cause to be taken any and all corporate action
necessary or advisable to cause the appointment of Executive to a vacant
position on Employer's Board of Directors,. Executive shall continue to serve
as a member of the Board of Directors throughout the Employment Term.
b. Executive shall devote substantially all his
business time, attention and energies to the performance of his duties and
functions under this Employment Agreement and shall not during the term of
his employment hereunder be engaged in any other substantial business
activity for gain, profit or other pecuniary advantage. Executive shall
faithfully, loyally and diligently perform his assigned duties and functions
and shall not engage in any activities whatsoever which conflict with his
obligations to Employer during the term of his employment hereunder.
Notwithstanding the foregoing, (i) Executive may continue to serve as a
director of America Online, Inc., American Express Company, American Express
Bank Limited, and Nextel Communications, Inc.,
<PAGE>
(ii) Executive may serve as a director of other corporations with the consent
of the Board and (iii) nothing in the foregoing shall be construed so as to
limit or prohibit personal investments by Executive; provided that such
investments shall not amount to a controlling interest in any entity (other
than trusts, limited partnerships or other entities adopted by Employee for
estate planning purposes).
c. Employer shall furnish Executive with such
facilities at Employer's corporate headquarters location and services as are
suitable to his position and adequate for the performance of his duties and
functions hereunder.
3. TERM. The term of this Employment Agreement shall commence
on the date hereof (the "Commencement Date") and, unless terminated earlier
pursuant to paragraph 12 hereof, shall continue through September 20, 2002
(the "Initial Term"), and thereafter shall continue unless and until such
time as (i) either party hereto notifies the other, upon sixty (60) days
prior written notice, that this Employment Agreement will be terminated at
the end of the Initial Term or the later expiration of such sixty day notice
period, or (ii) Executive's employment is otherwise terminated pursuant to
paragraph 12 hereof (the "Extended Term") (the Initial Term, together with
the Extended Term, if any, being referred to herein as the "Employment Term").
4. COMPENSATION. Employer shall pay to Executive, in
consideration of and as compensation for the services agreed to be rendered
by Executive hereunder, the following:
a. BASE SALARY. During the Employment Term, the Company
shall pay to Executive a base salary of $500,000 per annum; PROVIDED THAT the
amount of such base salary shall be reviewed at least annually and may, in
Employer's sole discretion, be increased by Employer from time to time during
the Employment Term (with the first such review to occur during September,
2000) in light of the conditions then existing and the services then being
rendered by Executive, in which case Executive's base salary shall be such
higher amount as may be determined by Employer (such annual base salary, as
in effect from time to time, being referred to herein as the "Base Salary").
The Base Salary shall be payable in accordance with Employer's normal payroll
schedule, less appropriate deductions for federal, state and local income
taxes, FICA contributions and any other deductions required by law or
authorized by Executive.
b. ANNUAL PERFORMANCE BONUS. In addition to the Base
Salary, Executive shall be entitled to receive an annual performance bonus
(the "Annual Bonus") for each year of service (or any part thereof in the
event of termination of Executive's employment hereunder, in which case the
Annual Bonus shall be prorated for such partial year) during the Employment
Term (each such year or any partial such year being referred to as an "Annual
Bonus Period"), in an amount, if any, as may be determined by the
Compensation Committee and/or the Board of Directors in their complete
discretion, up to a maximum of 100% of the Base Salary payable during such
Annual Bonus Period, based on Executive's performance against objectives for
the prior year of service. Such objectives shall be determined by mutual
agreement of Executive and Employer. Notwithstanding the foregoing, the
Annual Bonus for 1999 may be paid, at Employer's discretion, on a full
calendar year basis rather than based on an Annual Bonus Period.
<PAGE>
Each Annual Bonus shall be payable in accordance with
Employer's normal annual bonus payment schedule, less
appropriate deductions for federal, state, and local
income taxes, FICA contributions and any other deductions
required by law or authorized by Executive.
c. OPTIONS.
(i) GRANT OF COMPENSATORY OPTIONS. Employer agrees to
grant to Executive, pursuant to Employer's Stock Option Plan ("Plan") and
subject to the terms and conditions set forth in this paragraph 4(c), an option
to acquire 1,500,000 shares (the "Compensatory Options") of Employer's Class A
voting common stock ("Common Stock") on the terms set forth in Annex A hereto.
The shares of Employer's Common Stock that will be issued on exercise of the
Compensatory Options are among the Shares covered by the Form S-8 Registration
Statement previously filed and currently in effect covering awards made under
the Plan, such that, upon issuance and distribution of such shares to Executive,
there are no restrictions under federal or state securities laws on the further
transfer of such shares, other than restrictions imposed by virtue of
Executive's status as an officer or director of the Company or as may otherwise
be imposed by law with respect to unrestricted shares. In addition, the Company
shall ensure that the provisions of Rule 16b-3 under the Securities Exchange Act
of 1934, as amended ("Exchange Act") are applicable to the grant and
distribution of the Compensatory Options, and that the distribution of the
Compensatory Options shall not constitute a "purchase" of the Common Stock
pursuant to Section 16(b) of the Exchange Act.
(ii) GRANT OF INDUCEMENT OPTIONS. At or prior to the
execution of this Agreement and subject to the terms and conditions set forth in
this paragraph 4(c), the Employer shall grant to Executive, pursuant to the
Plan, an option to acquire another 1,500,000 shares of Employer's Common Stock
on the terms set forth in Annex A hereto (the "Inducement Options"). The shares
of Employer's Common Stock that will be issued on exercise of the Inducement
Options are among the shares covered by the Form S-8 Registration Statement
previously filed and currently in effect covering awards made under the Plan,
such that, upon issuance and distribution of such shares to Executive, there are
no restrictions under federal or state securities laws or regulations on the
further transfer of such shares, other than restrictions imposed by virtue of
Executive's status as an officer or director of the Company or as otherwise may
be imposed by law with respect to unrestricted shares. In addition, the Employer
shall exercise its best efforts to ensure that the provisions of Rule 16b-3
under the Exchange Act are applicable to the grant of the Inducement Options and
any subsequent distribution of the shares issued upon exercise thereof, and that
the distribution of such shares to Executive shall not constitute a "purchase"
of Common Stock pursuant to Section 16(b) of the Exchange Act. The Compensatory
Options and the Inducement options are collectively referred to as the
"Options".
(iii) VESTING. The Options shall be subject to vesting s
chedules, as follows:
<PAGE>
------------------------------------------- ----------------------------------
NUMBER OF YEARS OF CONTINUOUS SHARES AVAILABLE
EMPLOYMENT FROM THE EFFECTIVE UPON EXERCISE OF THE
DATE OF THIS AGREEMENT COMPENSATORY OPTION
------------------------------------------- ----------------------------------
------------------------------------------- ----------------------------------
1 500,000
------------------------------------------- ----------------------------------
------------------------------------------- ----------------------------------
2 1,000,000
------------------------------------------- ----------------------------------
------------------------------------------- ----------------------------------
3 1,500,000
------------------------------------------- ----------------------------------
Executive may, in his sole discretion, elect to defer
vesting of the Compensatory Options by delivering to the Employer a written
notice of such election no later than December 31 of the calendar year
immediately preceding the calendar year in which such vesting would otherwise
occur. Any such election shall be irrevocable and shall set a specific date for
the vesting of such Compensatory Options; PROVIDED that Executive may also
specify that the applicable Compensatory Options shall vest on the earlier of
such specified date or the termination of Executive's employment hereunder. In
the event of such election, Executive shall indemnify and hold harmless Employer
from any and all withholding amounts and penalties and interest associated
therewith that may be assessed by the Internal Revenue Service or any relevant
state of local taxing authority in connection with any such deferral by
Executive in the vesting of any of the Compensatory Options and the recognition
of income associated therewith.
--------------------------------------- -------------------------------------
NUMBER OF YEARS OF CONTINUOUS SHARES AVAILABLE
EMPLOYMENT FROM THE EFFECTIVE UPON EXERCISE OF THE
DATE OF THIS AGREEMENT INDUCEMENT OPTIONS
--------------------------------------- -------------------------------------
--------------------------------------- -------------------------------------
1 375,000
--------------------------------------- -------------------------------------
--------------------------------------- -------------------------------------
2 750,000
--------------------------------------- -------------------------------------
--------------------------------------- -------------------------------------
3 1,125,000
--------------------------------------- -------------------------------------
--------------------------------------- -------------------------------------
4 1,500,000
--------------------------------------- -------------------------------------
(iv) TERMINATION. Upon termination of employment for any
reason other than (X) permanent disability (as defined below) or (y) death or
(z) by Executive upon establishment of Constructive Termination or upon a Change
in Control, the unvested portion (if any) of the Options shall immediately
expire and be forfeited. If termination of employment occurs because of
permanent disability or death, Executive shall be deemed to have one additional
year of continuous employment from the date of death or permanent disability for
purposes of applying the vesting schedules. If termination of employment occurs
upon establishment of Constructive Termination or upon a Change in Control,
vesting of the Options shall occur upon the consummation of such Change in
Control, or upon final effectiveness of such Constructive Termination.
(v) EXERCISE OF OPTIONS. The Compensatory Options may not be
exercised before the third anniversary of this Agreement unless the employment
of executive is terminated before that date. If employment is terminated before
that date, Executive shall have 90 days after the date of termination to
exercise any vested Compensatory Options. Except as modified by this
subparagraph (v), Executive's right to exercise the Options shall be governed by
the terms of the Employer's Stock Option Plan and the individual option letter
agreements issued to Executive.
<PAGE>
(vi) WITHHOLDING. Upon the vesting of any Compensatory
Options, or in connection with the exercise of any Inducement Options, Executive
shall pay to Employer an amount equal to such amount as Employer shall be
obligated to remit to the Internal Revenue Service or any relevant state or
local taxing authority as withholding attributable to the compensation evidenced
by the Compensatory Options that have vested. At the discretion of the
Compensation Committee, Executive may pay such amount either in cash or by
delivery to the Company of a number of shares of Common Stock (or proceeds from
the sale thereof) having a Fair Market Value equal to such withholding amount
(which delivery may be made by an instruction to the Company to retain a portion
of the shares available upon exercise of the Compensatory Options, or shares
available upon exercise of Inducement Options, otherwise distributable to
Executive or by an instruction to the selling broker to remit such sales
proceeds, otherwise distributable to Executive, to the Company).
(vii) ADJUSTMENTS. In the event that the Common Stock is
changed into or exchanged for a different number or kind of securities of
Employer or of another entity (by reason of merger, consolidation,
recapitalization, reclassification, stock split, stock dividend, stock
combination or otherwise), or if there is a distribution of cash, securities or
other property made to the holders of the Common Stock (other than cash
dividends made out of current earnings of Employer) then an appropriate and
equitable adjustment shall be made in the number and kind of securities issuable
upon exercise of the Options hereunder, with a view towards preserving the value
to Executive of the rights granted pursuant to this paragraph 4(c). Without
limiting the generality of the foregoing, in the event that an adjustment is
required pursuant to the terms of any options, warrants or convertible
securities of Employer pursuant to any event of the kind specified above, at
least an equivalent adjustment shall be required pursuant to this paragraph
4(c)(vii). In the event any adjustment is required under this paragraph
4(c)(vii), appropriate conforming adjustment shall be made to the exercise price
of the Inducement Options, as appropriate, to all references to numbers of
Compensatory Options and/or to the number of shares covered by the Inducement
Options, as appropriate, contained in this paragraph 4(c), to the definition of
Common Stock, and to any other provisions of this paragraph 4(c) as necessary to
accomplish the intent of this subparagraph (vii).
5. CERTAIN DEFINITIONS. For purposes of this
Agreement:
"CHANGE OF CONTROL" shall mean the occurrence of any of the
following events:
(A) The Company is merged or consolidated or
reorganized into or with another company or other legal entity, and as a result
of such merger, consolidation or reorganization less than a majority of the
combined voting power of the then-outstanding securities of such company or
person immediately after such transaction is held directly or indirectly in the
aggregate by the holders of voting securities of the Company immediately prior
to such sale or transfer, including voting securities issuable upon exercise or
conversion of options, warrants or other securities or rights, PROVIDED,
HOWEVER, that no change in control shall result from a merger, consolidation or
reorganization of the Company with any entity in which Eagle River Investments,
L.L.C. has invested at least $10,000,000 in equity;
<PAGE>
(B) The Company sells or otherwise transfers all or
substantially all of its assets to any other company or other legal entity, and
as a result of such sale or other transfer of assets, less than a majority of
the combined voting power of the then-outstanding securities of such company or
person immediately after such sale or transfer is held directly or indirectly in
the aggregate by the holders of voting securities of the Company immediately
prior to such sale or transfer, including voting securities issuable upon
exercise or conversion of options, warrants or other securities or rights;
(C) There is a report filed on Schedule 13D or
Schedule 14D-1 (or any successor schedule, form or report), each as promulgated
pursuant to the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), disclosing that any person (as the term "person" is used in Section
13(d)(3) or Section 14(d)(2) of the Exchange Act) other than Craig O. McCaw and
his affiliates has become the beneficial owner (as the term "beneficial owner"
is defined under Rule 13d-3 or any successor rule or regulation promulgated
under the Exchange Act) of securities representing 50% or more of the voting
securities of the Company, including voting securities issuable upon exercise or
conversion of options, warrants or other securities or rights;
(D) The Company files a report or proxy statement
with the Securities and Exchange Commission pursuant to the Exchange Act
disclosing in response to Form 8-K or Schedule 14A (or any successor schedule,
form or report or item therein) that a change in control of the Company has
occurred;
(E) Notwithstanding the foregoing provisions of
subparagraphs (C) and (D) hereof, a "Change of Control" shall not be deemed to
have occurred solely because (x) the Company, (y) an entity in which the Company
directly or indirectly beneficially owns 50% or more of the voting securities,
or (z) any Company-sponsored employee stock ownership plan or other employee
benefit plan of the Company, either files or becomes obligated to file a report
or proxy statement under or in response to Schedule 13D, Schedule 14D-1, Form
8-K or Schedule 14A (or any successor schedule, form or report or item therein)
under the Exchange Act, disclosing beneficial ownership by it of voting
securities, whether in excess of 50% or otherwise, or because the Company
reports that a change of control of the Company has or may have occurred or will
or may occur in the future by reason of such beneficial ownership.
"FAIR MARKET VALUE" of a share of Common Stock shall mean, as
of any given date, (i) the closing price of a share of Common Stock on the
principal exchange on which Common Stock then trades, if any, on the day
previous to such date, or, if shares were not traded on the day previous to such
date, then on the next preceding trading day during which a sale occurred; or
(ii) if such Common Stock is not traded on an exchange but is quoted on NASDAQ
or a successor quotation system, (1) the last sales price (if the Common Stock
is then listed as a National Market Issue under the NASDAQ National Market
System) or (2) the mean between the closing representative bid and asked prices
(in all other cases) for the Common Stock on the day previous to such date (or,
if shares were not traded on the day previous to such date, then on the next
preceding trading day during which a sale occurred), as reported by NASDAQ or
such successor quotation systems.
<PAGE>
"CAUSE" shall have the meaning ascribed in Paragraph
12(b) below.
"PERMANENT DISABILITY" shall have the same meaning as
"permanent and total disability," as defined in the Employer's Stock Option
Plan.
6. ADDITIONAL OPTIONS The Compensation Committee of the Board of
Directors of Employer may, in its discretion, grant to Executive, pursuant to
Employer's Stock Option Plan, additional options to acquire shares of Employer's
Common Stock ("Additional Options").Except as otherwise provided herein, the
terms and conditions of such Additional Options shall be as determined by
Employer in its sole discretion. Executive's rights with respect to any
Additional Options shall be separate from (and in addition to) the rights set
forth in paragraph 4(c) above with respect to the Compensatory Options and
Inducement Options.
7. BENEFITS. During the Employment Term, Executive shall be
entitled to participate in all group health, major medical, pension and profit
sharing, 401(k) and other benefit plans maintained by Employer and provided
generally to its executive officers, on the same terms as apply to participation
therein by management generally (except as otherwise provided herein). Further,
during the Employment Term, Executive shall be entitled to participate in all
fringe benefit programs and shall receive all perquisites if and to the extent
that Employer establishes and makes such benefits and perquisites available to
management generally, including, but not limited to, Employer-paid long-term
disability insurance and life insurance coverage.
8. EXPENSES. During the Employment Term, Employer shall
reimburse Executive for all reasonable travel, entertainment and other
business expenses incurred or paid by Executive in performing his duties and
functions hereunder. During the Employment Term, Employer shall reimburse
Executive, on an annual basis, for legal, accounting and other expenses
incurred for any investment, financial, estate and/or tax planning in
connection with this Agreement up to a maximum of $25,000.
9. VACATIONS. Executive shall be entitled to such holidays,
sick leave and personal time off as is allowed under the policies of Employer
to management generally (except as otherwise provided herein). In addition,
Executive shall be entitled to such vacations, taken at such time or times,
as Executive shall determine in his reasonable discretion, consistent with
the performance of Executive's obligations hereunder and the direction of the
Board of Directors.
10. NON-COMPETITION. During the Employment Term and (except as
provided in paragraph 12 herein) for a period of two years thereafter,
Executive shall not enter into or participate in any business competitive to
the Business carried on by Employer. The provisions of this paragraph 10
shall survive the expiration and/or termination of this Employment Agreement.
11. CONFIDENTIAL INFORMATION. During the Employment Term and
for a period of two years thereafter, Executive will not use for his own
advantage or disclose any
<PAGE>
proprietary or confidential information relating to the business operations
or properties of Employer, any affiliate of Employer or any of their
respective customers, suppliers, landlords, licensors or licensees. Upon the
expiration or termination of the Employment Term, upon Employer's request,
Executive will surrender and deliver to Employer all documents and
information of every kind relating to or connected with Employer and its
affiliates and their respective businesses, customers, suppliers, landlord,
licensors and licensees. The foregoing confidential information provisions
shall not apply to information which: (i) is or becomes publicly known
through no wrongful act of the Executive, (ii) is rightfully received from
any third party without restriction and without breach by Executive of this
Employment Agreement; or (iii) is independently developed by Executive after
the term of his employment hereunder or is independently developed by a
competitor of Employer at any time. The provisions of this paragraph 11 shall
survive the expiration and/or termination of this Employment Agreement.
12. TERMINATION.
A. AUTOMATIC TERMINATION UPON DEATH. In the event of
Executive's death during the Employment Term, Executive's employment
hereunder shall be automatically terminated upon the date of death. As soon
as reasonably practicable following Executive's death, Employer shall pay to
Executive's Representative (defined below in paragraph 22)(i) Executive's
accrued but unpaid Base Salary and Annual Bonus, through the last day of the
month of his death, and (ii) any amount due hereunder for accrued but unused
vacation time as of the date of death. In addition, Executive's
Representative shall be entitled to exercise Executive's rights with respect
to the Compensatory Options and/or the Inducement Options, as appropriate, as
set forth in Paragraph 4(c) above, and Executive's rights with respect to the
Options (other than the Inducement Options), as provided herein and in the
stock option agreement(s) pertaining thereto.
B. TERMINATION BY EMPLOYER. During the Initial Term,
Employer shall be entitled to terminate Executive's employment hereunder only
upon the establishment of "Cause" or the "Permanent Disability" of Executive
(as those terms are defined below) by giving written notice to that effect to
Executive. During any Extended Term, Employer shall be entitled to terminate
Executive's employment hereunder (i) upon the establishment of Cause or the
Permanent Disability of Executive, by giving written notice to that effect to
Executive or (ii) for any other reason or for no reason upon 60 days prior
written notice to Executive.
For purposes hereof, the term "Cause" means either
(1) Executive's failure to substantially perform his duties and functions as
contemplated hereunder, if such failure constitutes gross neglect or willful
malfeasance; (2) Executive's committing fraud or embezzlement or otherwise
engaging in conduct that results in Executive being convicted of a felony
from which all appeals have been exhausted; (3) Executive's intentionally
acting in a manner which is materially detrimental or damaging to Employer's
reputation, business, operations or relations with its employees, suppliers
or customers, without taking reasonable steps to remedy such actions promptly
after receiving written notice thereof from Employer; (4) Executive's chronic
or habitual abuse of alcohol or prescription drugs or controlled substances;
or (5) Executive's committing
<PAGE>
any other material breach of this Employment Agreement without taking
reasonable steps to cease or remedy such breach within thirty (30) days after
Executive's receipt of written notice from Employer specifically identifying
the nature of and circumstances relevant to any such claimed material breach
by Executive.
For purposes hereof the term "Permanent
Disability" means: (i) Executive's failure to devote full normal working time
as required herein to his employment hereunder for a period of at least 90
consecutive normal business days (or for at least a majority of the normal
business days in any consecutive 180-day period); and (ii) the existence of
an illness or incapacity (either physical or mental) affecting Executive
which, in the reasonable opinion of a Qualified Physician, is likely to be of
such character or severity that Executive would be unable to resume devoting
his full normal working time, as required herein, to his employment hereunder
for a period of at least nine consecutive months; the term "Qualified
Physical" means an impartial physician competent to diagnose and treat the
illness or condition which Executive is believed to be suffering, selected by
Employer and reasonably acceptable to Executive (or if Executive is then
incapable of acting for himself, Executive's Representative), who shall have
personally examined Executive and shall have personally reviewed Executive's
relevant medical records; provided Employer shall bear the costs of such
Qualified Physician's services and Executive agrees to submit to an
examination by such Qualified Physician and to the disclosure of Executive's
relevant medical records to such Qualified Physician.
The date upon which any termination effected
pursuant to this subparagraph 12(b) shall be effective is set forth in
subparagraph 12(d), and the effect of any such termination shall be as
described in subparagraphs 12(e) and (f).
C. TERMINATION BY EXECUTIVE. During the Initial Term,
Executive shall be entitled to terminate his employment hereunder only upon
the establishment of "Constructive Termination" (as that term is defined
below) or upon a Change of Control, by giving written notice to that effect
to Employer. During any Extended Term, Executive shall be entitled to
terminate his employment hereunder (i) upon the establishment of Constructive
Termination or upon a Change of Control, by giving notice to that effect to
Employer or (ii) for any other reason or for no reason upon twelve months
prior written notice to Employer.
For purposes hereof, "Constructive Termination"
shall mean Executive's termination of his employment hereunder as a direct
result of (i) a reduction in Executive's initial Base Salary or in the
maximum permitted Annual Bonus percentage, (ii) a material change in the
nature or extent of Executive's responsibilities that is inconsistent with
Executive's intended position and status hereunder, or (iii) the material
breach by the Employer of any provision of this Agreement which continues
without reasonable steps being taken to cure such breach for a period of 30
days after written notice thereof by Executive to Employer.
The date upon which any termination effected
pursuant to this subparagraph 12(c) shall be effective is set forth in
subparagraph 12(d), and the effect of any such termination shall be as
described in subparagraphs 12(f) and (g).
<PAGE>
D. TERMINATION DATE. In the event Executive's employment
hereunder is terminated for circumstances constituting Cause, Permanent
Disability, Change of Control or Constructive Termination, such termination
shall take effect upon the termination date set forth in the written notice
to that effect given by Executive to Employer or by Employer to Executive, as
the case may be (PROVIDED THAT if either party disputes the propriety of such
termination, the effective date of termination shall be as established by
final resolution of such dispute, whether by agreement of the parties or
award of an arbitrator as contemplated herein, in favor of the propriety of
such termination), and in any other case termination of Executive's
employment hereunder shall take effect on the date specified in the written
notice thereof delivered by Executive to Employer or by Employer to
Executive, as the case may be (the date on which any such termination takes
effect being referred to herein as the "Termination Date"). Employer, at its
option, may require Executive to continue to perform his duties hereunder
until the Termination Date or pay to Executive such amount of compensation
and benefits otherwise due hereunder in accordance with Employer's then
existing salary payment schedule or in one lump sum payment.
E. EFFECT OF TERMINATION BY EMPLOYER FOR CAUSE. In the
event Executive's employment is terminated by Employer for Cause at any time
during the Employment Term, then (i) Employer shall pay to Executive
Executive's accrued but unpaid Base Salary and Annual Bonus through the
Termination Date; (ii) notwithstanding any of the provisions of Employer's
Stock Option Plan or of any option agreement with respect thereto to the
contrary, any and all of the Options (other than the Inducement Options) that
theretofore have vested may be exercised at any time on or before the
thirtieth day following such Termination Date and, if not so exercised,
thereupon automatically shall be canceled; and (iii) Executive's rights with
respect to the Compensatory Options and/or the Inducement Options, as
appropriate, shall be as stated in paragraph 4(c) above.
F. EFFECT OF TERMINATION UPON PERMANENT DISABILITY. In the
event Executive's employment is terminated by Employer upon the permanent
disability of Executive at any time during the Employment Term, then:
(i) Employer shall pay to Executive (x)
Executive's accrued but unpaid Base Salary and Annual Bonus through the
Termination Date, (y) Executive's then existing Base Salary for 12 months
from the date written notice of the termination of Executive's employment is
given by Employer, and (z) any amount due hereunder for accrued but unused
vacation time as of the Termination Date.
(ii) Employer, at its expense, shall make all
benefit payments, on behalf of Executive and Executive's dependents, for such
benefits Executive otherwise would have been entitled to receive hereunder,
for 12 months following the date written notice of the termination of
Executive's employment is given by Employer.
(iii) With respect to any of the Options (other
than the Inducement Options) which remain unvested upon such Termination
Date, notwithstanding any provision to the contrary in Employer's Stock
Option Plan and/or any
<PAGE>
stock option agreement with respect thereto, there shall be immediate vesting
of that portion of such unvested Options which would have vested within 12
months of the date written notice of the termination of Executive's
employment is given by Employer. After giving effect to the foregoing
sentence, any Options (other than the Inducement Options) which remain
unvested shall automatically terminate.
(iv) Executive's rights with respect to the
Compensatory Options and/or the Inducement Options, as appropriate, shall be as
stated in paragraph 4(c) above.
G. EFFECT OF WRONGFUL OR CONSTRUCTIVE TERMINATION OR
TERMINATION UPON A CHANGE OF CONTROL.
(i) In the event Executive's employment is
terminated during the Employment Term by Executive in circumstances constituting
Constructive Termination or upon a Change of Control, then, from and after such
Termination Date:
(A) Executive shall not be subject to
the non-competition provisions set forth in paragraph 10 hereof.
(B) Executive shall be entitled to
receive the Base Salary, Annual Bonus, and benefits, which Executive
reasonably would have expected to receive in the period from the termination
Date to the expiration of the Initial Term (if such Termination Date occurs
more than 60 days prior to the expiration of the Initial Term) or during the
60 days following the date written notice of the termination of Executive's
employment is given by Employer or executive, as the case may be, (if such
Termination Date occurs after the Initial Term or 60 days prior to the
expiration of the Initial Term), all of which shall become effective upon the
Termination Date. The treatment of any Options other than the Inducement
Options shall be governed by the terms of the applicable granting documents.
(C) Executive's rights with respect
to the Compensatory Options and/or the Inducement Options, as appropriate,
shall be as stated in paragraph 4(c) above.
The foregoing shall be Executive's sole and exclusive remedy for any such
termination of his employment under this subparagraph 12(g).
H. EXCESS PARACHUTE PAYMENT. In the event that Employer
treats any portion of Executive's payments or benefits hereunder (including,
without limitation, under the foregoing subparagraphs 12(f) and (g)) as an
"excess parachute payment" within the meaning of Section 280G of the Internal
Revenue Code ("Code") or any comparable provision of state or local tax law,
or it is otherwise asserted (including on an audit of either Employer or
Executive) that any portion of such payments or benefits is such an "excess
parachute payment," Employer shall prior to the date on which any amount of
excise tax (or penalty or interest) must be paid in respect thereof, promptly
make an additional lump sum payment in cash to Executive in an amount
sufficient, after giving effect to all federal, state and other taxes and
charges (including interest and penalties, if
<PAGE>
any) with respect to such payment to make Executive whole
for all taxes (including withholding and social security
taxes) imposed under Section 4999 of the Code, or any
comparable provision of state or local tax law, with
respect to the "excess parachute payment" and all
associated interest and penalty amounts. Executive
shall cooperate in all reasonable respects with Employer
to attempt to minimize any such tax liability.
I. MISCELLANEOUS. In the event of any termination or
attempted termination hereof: (i) if multiple events, occurrences or
circumstances are asserted as bases for such termination or attempted
termination, the event, occurrence or circumstance that is earliest in time,
and any termination or attempted termination found to be proper hereunder
based thereon, shall take precedence over the others; (ii) no termination of
this Employment Agreement shall relieve or release either party from
liability hereunder based on any breach of the terms hereof by such party
occurring prior to the Termination Date; (iii) the terms of this Employment
Agreement relevant to performance or satisfaction of any obligation hereunder
expressly remaining to be performed or satisfied in whole or in part at the
Termination Date shall continue in force until such full performance or
satisfaction has been accomplished and otherwise neither party hereto shall
have any other or further remaining obligations to other party hereunder; and
(iv) the vesting and exercise provisions set forth in Employer's Stock Option
Plan and/or any option agreement with respect to the Options (other than the
Inducement Options) shall continue to apply except to the extent otherwise
expressly provided in this paragraph 12 .
J. NO SET-OFF; NO DUTY OF MITIGATION. There shall be no
right of setoff or counterclaim, in respect of any actual or alleged claim,
debt or obligation, against any payments or benefits required to be made or
provided to Executive hereunder (including, without limitation, pursuant to
subparagraphs 12(f) and (g) above). In the event of any termination of
Executive's employment under this paragraph 12, Executive shall be under no
obligation to seek other employment and shall be entitled to all payments or
benefits required to be made or provided to Executive hereunder, without any
duty of mitigation of damages and regardless of any other employment obtained
by Executive.
13. INJUNCTIVE RELIEF. It is agreed that the services of
Executive are unique and that any breach or threatened breach by Executive of
any provision of this Employment Agreement cannot be remedied solely by
damages. Accordingly, in the event of a breach by Executive of his
obligations under this Employment Agreement, Employer shall be entitled to
seek and obtain interim restraints and permanent injunctive relief without
proving the inadequacy of damages as a remedy, restraining Executive and any
business, firm, partnership, individual, corporation or entity participating
in such breach or attempted breach. Nothing herein, however, shall be
construed as prohibiting Employer from pursuing any other remedies available
at law or in equity for such breach or threatened breach, including the
recovery of damages and the termination of the services of Executive.
14. ARBITRATION. Any dispute or controversy arising out of or
relating to this Employment Agreement or any claimed breach hereof shall be
settled, at the request of
<PAGE>
either party, by an arbitration proceeding conducted in accordance with the
rules of the American Arbitration Association ("AAA"), with the award
determined to be appropriate by the arbitrator therein to be final,
non-appealable and binding on the parties hereto, and with judgment upon such
award as is rendered in any such arbitration proceeding available for entry
and enforcement in any court having jurisdiction of the parties hereto. The
arbitrator shall be an impartial arbitrator qualified to serve in accordance
with the rules of the AAA and shall be reasonably acceptable to each of the
Employer and the Executive. If no such acceptable arbitrator is so appointed
within 15 days after the initial request for arbitration of such disputed
matter, each of the parties promptly shall designate a person qualified to
serve as an arbitrator in accordance with the rules of the AAA, and the two
persons so designated promptly shall select the arbitrator from among those
persons qualified to serve in accordance with the rules of the AAA. The
arbitration shall be held in the greater Seattle metropolitan area, or in
such other place as may be agreed upon at the time by the parties. The
expenses of the arbitration proceeding shall be borne by Employer, but the
arbitrator's award may provide that Executive shall reimburse Employer for an
equitable share of such expenses if Executive is not the prevailing party on
any of the issues involved in such arbitration. The Employer shall pay for
and bear the cost of its own and Executive's experts, evidence and counsel in
such arbitration proceeding, but the arbitrator's award may provide that, in
addition to any other amounts or relief due to Employer, Executive shall
reimburse Employer on demand for all of such costs of Executive's experts,
evidence and counsel initially incurred by Employer, to the extent the award
finds such costs properly allocable to any issue(s) in dispute as to which
the award indicates the Employer to be the prevailing party.
15. INDEMNIFICATION.
a. Employer shall indemnify Executive to the fullest extent
permitted by Delaware law as in effect on the date hereof against all costs,
expenses, liabilities and losses (including, without limitation, attorneys'
fees, judgments, penalties and amounts paid in settlement) reasonably
incurred by Executive in connection with any action, suit or proceeding,
whether civil, criminal, administrative or investigative in which Executive
is made, or is threatened to be made, a party to or a witness in such action,
suit or proceeding by reason of the fact that he is or was an officer,
director, consultant, agent or Executive of the Employer or of any of
Employer's controlled affiliates or is or was serving as an officer,
consultant director, member, Executive, trustee, agent or fiduciary of any
other entity at the request of the Employer (a "Proceeding").
b. Employer shall advance to Executive all reasonable costs
and expenses incurred by him in connection with a proceeding within 20 days
after receipt by Employer of a written request for such advance, accompanied
by an itemized list of the costs and expenses and Executive's written
undertaking to repay to Employer on demand the amount of such advance if it
shall ultimately be determined that Executive is not entitled to be
indemnified against such costs and expenses.
c. The indemnification provided to Executive hereunder is
in addition to, and not in lieu of, any additional indemnification to which
he may be entitled pursuant to Employer's Certificate of Incorporation or
Bylaws, any insurance maintained by Employer from time to time providing
coverage to Executive and other officers and directors of
<PAGE>
Employer, or any separate written agreement with Executive.
The provisions of this paragraph 15 shall survive any
termination of this Employment Agreement.
16. AMENDMENT AND MODIFICATION. This Employment Agreement
contains the entire agreement between the parties with respect to the subject
matter hereof, and supersedes any and all prior agreements, arrangements or
understandings between the parties hereto with respect to the subject matter
hereof, whether written or oral Subject to applicable law and upon the
consent of the Board of Directors of Employer, this Employment Agreement may
be amended, modified and supplemented by written agreement of Employer and
Executive with respect to any of the terms contained herein.
17. WAIVER OF COMPLIANCE. Any failure of either party to comply
with any obligation, covenant, agreement or condition on its part contained
herein may be expressly waived in writing by the other party, but such waiver
or failure to insist upon strict compliance shall not operate as a waiver of,
or estoppel with respect to, any subsequent or other failure. Whenever this
Employment Agreement requires or permits consent by or on behalf of any
party, such consent shall be given in writing.
18. NOTICES. All notices, requests, demands and other
communications required or permitted hereunder shall be in writing and shall
be deemed to have been duly given if delivered by hand, sent by registered or
certified U.S. Mail, postage prepaid, commercial overnight courier service or
transmitted by facsimile and shall be deemed served or delivered to the
addressee at the address for such notice specified below when hand delivered,
upon confirmation of sending when sent by fax, on the day after being sent
when sent by overnight delivery or five (5) days after having been mailed,
certified or registered, with postage prepaid:
IF TO EMPLOYER IF TO EXECUTIVE:
NEXTLINK Communications, Inc. Daniel Akerson
City Center Office 1100 Mill Ridge
500 108th Avenue NE, Suite 2200 McLean, VA 22102
Bellevue, WA 98004 Facsimile: (703) 442-0217
Facsimile: (425) 519-7978
Attention: General Counsel
or, in the case of either such party, to such substitute address as such
party may designate from time to time for purposes of notices to be given to
such party hereunder, which substitute address shall be designated as such in
a written notice given to the other party addressed as aforesaid.
19. ASSIGNMENT. This Employment Agreement shall inure to the
benefit of Executive and Employer and be binding upon the successors and
general assigns of Employer. This Employment Agreement shall not be
assignable, except to the extent set forth in paragraph 22.
20. ENFORCEABILITY. In the event it is determined that this
Employment Agreement is unenforceable in any respect, it is the mutual intent
of the parties that it be
<PAGE>
construed to apply and be enforceable to the maximum extent permitted by
applicable law.
21. APPLICABLE LAW. This Employment Agreement shall be
construed and enforced in accordance with the laws applicable to contracts
executed, delivered and fully to be performed in the State of Washington.
22. BENEFICIARIES: EXECUTIVE'S REPRESENTATIVE. Executive shall
be entitled to select (and to change, from time to time, except to the extent
prohibited under any applicable law) a beneficiary or beneficiaries to
receive any payments, distributions or benefits to be made or distributed
hereunder upon or following Executive's death. Any such designation shall be
made by written notice to Employer. In the event of Executive's death or of a
judicial determination of Executive's incompetence, references in this
Agreement to Executive shall be deemed, as appropriate, to refer to his
designated beneficiary, to his estate or to his executor or personal
representative ("Executive's Representative") solely for the purpose of
providing a clear mechanism for the exercise of Executive's rights hereunder
in the case of Executive's death or Permanent Disability.
IN WITNESS WHEREOF, the parties have executed this Employment
Agreement to be effective on and as of the day and year first above written.
NEXTLINK COMMUNICATIONS, INC.
By: /s/ Dennis Weibling
---------------------------------
Name: Dennis Weibling
---------------------------------
Title: Director
---------------------------------
/s/ Daniel Akerson
---------------------------------
Daniel Akerson
<PAGE>
ANNEX A
TO
EMPLOYMENT AGREEMENT
BETWEEN
NEXTLINK COMMUNICATIONS, INC.
AND
DANIEL AKERSON
DATED: SEPTEMBER 21, 1999
The Compensatory Options shall be granted as follows:
Non-qualified Options to acquire 1,500,000 shares for Employer Class A
Common Stock awarded on September 21, 1999. The Compensatory Options
shall vest annually in three equal amounts on the first, second and
third anniversary dates of the effective date of the Employment
Agreement. The exercise price of the Compensatory Options is $.01 per
share.
The Inducement Options shall be granted as follows:
Non-qualified options to acquire 1,500,000 shares of Employer Class A
Common Stock awarded on September 21, 1999. The Inducement Options
shall vest annually in four equal amounts on the first, second, third
and fourth anniversary dates of the effective date of the Employment
Agreement. The exercise price of the Inducement Options is the closing
sale price on September 21, 1999, as reported by NASDAQ.
All Options shall, to the extent not theretofore vested in
accordance with their normal terms, vest on an automatic and accelerated
basis (i) in the circumstances set forth in paragraphs 12(f) and (g) of the
Employment Agreement, or (ii) upon the occurrence of a Change of Control
Event.
All Options (upon vesting) will have an exercise period of ten (10)
years after the relevant grant date subject to earlier termination of the
exercise period in the event of termination of Executive's employment either
(i) by Employer in circumstances constituting Cause or (ii) by Executive
other than in circumstances constituting Constructive Termination; in either
of which case, the Options shall be canceled if not exercised within 90 days
following the Termination Date with respect to such termination.
All Options (and all shares issued on exercise of such Options) will
be subject to an effective Form S-8 (or other appropriate form) registration
statement and will be qualified for the treatment afforded under Rule 16b-3.
To the extent not otherwise provided above, or in the Employment
Agreement of which this Annex A forms a part, the terms applicable to all of
the Options (and of any option agreement entered into in connection
therewith) shall be the standard terms
<PAGE>
normally applicable to a grant of "non-qualified" stock options granted
pursuant to the NEXTLINK Communications, Inc. Stock Option Plan.
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-END> SEP-30-1999
<CASH> 497,919
<SECURITIES> 1,146,055
<RECEIVABLES> 63,454
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 1,738,049
<PP&E> 1,102,123
<DEPRECIATION> 148,547
<TOTAL-ASSETS> 4,026,947
<CURRENT-LIABILITIES> 201,800
<BONDS> 3,057,067
597,597
0
<COMMON> 1,118,535
<OTHER-SE> (986,139)
<TOTAL-LIABILITY-AND-EQUITY> 4,026,947
<SALES> 0
<TOTAL-REVENUES> 184,302
<CGS> 0
<TOTAL-COSTS> 422,467
<OTHER-EXPENSES> 0
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<INTEREST-EXPENSE> 190,172
<INCOME-PRETAX> (366,624)
<INCOME-TAX> 0
<INCOME-CONTINUING> (366,624)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (366,624)
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