AS FILED WITH THE SECURITIES AND EXCHANGE CaOMMISSION ON February 2, 1999
REGISTRATION NO. 333-_____
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- -------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
---------------
FORM S-4
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
---------------
QWEST COMMUNICATIONS INTERNATIONAL INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
DELAWARE 4813 84-1339282
(STATE OR OTHER (PRIMARY STANDARD (I.R.S. EMPLOYER
JURISDICTION OF INDUSTRIAL IDENTIFICATION NO.)
INCORPORATION OR CLASSIFICATION CODE
ORGANIZATION) NUMBER)
700 QWEST TOWER
555 SEVENTEENTH STREET
DENVER, COLORADO 80202
(303) 992-1400
(ADDRESS, INCLUDING ZIP CODE AND TELEPHONE NUMBER, INCLUDING AREA CODE, OF
REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)
---------------
ROBERT S. WOODRUFF
EXECUTIVE VICE PRESIDENT--FINANCE
QWEST COMMUNICATIONS INTERNATIONAL INC.
700 QWEST TOWER
555 SEVENTEENTH STREET
DENVER, COLORADO 80202
(303) 992-1400
(NAME, ADDRESS, INCLUDING ZIP CODE AND TELEPHONE NUMBER, INCLUDING
AREA CODE, OF AGENT FOR SERVICE FOR THE REGISTRANT)
---------------
COPIES TO:
NICK NIMMO, ESQ.
HOLME ROBERTS & OWEN LLP
1700 LINCOLN STREET, SUITE 4100
DENVER, COLORADO 80203
(303) 861-7000
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APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE OF THE SECURITIES TO THE
PUBLIC: As soon as practicable after this Registration Statement becomes
effective.
---------------
If the securities being registered on this form are being offered in connection
with the formation of a holding company and there is compliance with
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General Instruction G, check the following box. [ ]
If this form is filed to register additional securities for an offering pursuant
to Rule 462(b) under the Securities Act, check the following box and list the
Securities Act registration statement number of the earlier effective
registration statement for the same offering. [ ]
- ------------------
If this form is a post-effective amendment filed pursuant to Rule 462(d) under
the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. [ ]
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CALCULATION OF REGISTRATION FEE
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PROPOSED PROPOSED
TITLE OF EACH CLASS AMOUNT OFFERING MAXIMUM MAXIMUM
OF SECURITIES TO TO BE PRICE AGGREGATE AMOUNT OF
BE REGISTERED REGISTERED PER UNIT(1) OFFERING PRICE(1) REGISTRATION
FEE(2)
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7.50% Senior
Notes Due 2008.... $750,000,000 99.324% $744,930,000 $212,192
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(1) Estimated solely for the purpose of calculating the registration fee in
accordance with Rule 457 of the Securities Act of 1933, as amended.
(2) Calculated pursuant to Rule 457(f)(2) based on the book value on
January 29, 1999 of the notes to be received by the Registrant in the
exchange described herein.
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR DATES
AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL FILE
A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION STATEMENT
SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF THE
SECURITIES ACT OF 1933, AS AMENDED, OR UNTIL THIS REGISTRATION STATEMENT SHALL
BECOME EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION
8(A), MAY DETERMINE.
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<PAGE>
THIS PROSPECTUS, DATED JANUARY 29, 1999, IS SUBJECT TO COMPLETION AND
AMENDMENT.
PROSPECTUS
OFFER TO EXCHANGE ALL OUTSTANDING
7.50% NOTES DUE 2008
FOR
7.50% SERIES B NOTES DUE 2008
OF
QWEST COMMUNICATIONS INTERNATIONAL INC.
We are offering, on the terms and conditions described in this Prospectus, to
exchange all of our outstanding 7.50% Senior Notes due 2008 ("Old Notes") for
our registered 7.50% Series B Senior Notes due 2008 ("New Notes"). We issued the
Old Notes on November 4, 1998 and a total principal amount of $750.0 million is
outstanding. The terms of the New Notes are identical to the terms of the Old
Notes except that the New Notes are registered under the Securities Act of 1933,
as amended, and will not contain any legends restricting their transfer. We
sometimes collectively refer to the New Notes and the Old Notes as the "7.50%
Notes."
INFORMATION ABOUT THE 7.50% NOTES:
-----------------------------------------------
* PLEASE CONSIDER THE FOLLOWING:
- - The 7.50% Notes will mature on November 1, 2008.
- - We will pay interest on the 7.50% Notes semi-annually on May 1 and November
1 of each year beginning May 1, 1999, at the rate of 7.50% per annum.
- - We have the option to redeem all or a portion of the 7.50% Notes at any
time at the redemption price set forth on page of this Prospectus.
- - You should carefully review the Risk Factors beginning on page 25 of this
Prospectus.
- - Our offer to exchange Old Notes for New Notes will be open until 5:00 p.m.,
New York City time, on , 1999, unless we extend the offer.
- - You should also carefully review the procedures for tendering the Old Notes
beginning on page of this Prospectus.
- - The 7.50% Notes are senior unsecured obligations and are of equal ranking
in right of payment to our existing future senior debt and rank senior in
right of payment to our existing and future subordinated debt. Please be
advised that, as of September 30, 1998, we had $1,301.2 million of senior
debt of equal ranking in right of payment to the 7.50% Notes and
- - If you fail to tender your Old Notes, you will continue to hold
unregistered securities and your ability to transfer them could be
adversely affected.
- - No public market currently exists for the 7.50% Notes.
We do not intend to list the New Notes on any securities exchange and,
therefore, no active public market is anticipated.
--------------------------------------------------
NEITHER THE SECURITIES AND EXCHANGE COMMISSION NOR ANY STATE SECURITIES
COMMISSION HAS APPROVED OR DISAPPROVED OF THESE SECURITIES OR PASSED UPON THE
ADEQUACY OR ACCURACY OF THIS PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
------------------------------
THE DATE OF THIS PROSPECTUS IS , 1999
THE INFORMATION IN THIS PROSPECTUS IS NOT COMPLETE AND MAY BE CHANGED. WE MAY
NOT SELL THESE SECURITIES UNTIL THE REGISTRATION STATEMENT FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION IS EFFECTIVE. THIS PROSPECTUS IS NOT AN OFFER
TO BUY THESE SECURITIES IN ANY STATE WHERE THE OFFER OR SALE IS NOT PERMITTED.
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3
<PAGE>
TABLE OF CONTENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
Where You Can Find More Information..........................................7
Incorporation of Certain Documents by Reference..............................8
Cautionary Statement Regarding Forward-looking Statements....................9
Prospectus Summary..........................................................10
Risk Factors................................................................25
The Exchange Offer..........................................................35
Use of Proceeds.............................................................44
Capitalization..............................................................45
Description of the 7.50% Notes..............................................47
Description of Certain Indebtedness.........................................86
Certain United States Federal Income Tax Considerations.....................90
Plan of Distribution........................................................90
Legal Matters...............................................................96
Experts.....................................................................97
------------------------
</TABLE>
WHERE YOU CAN FIND MORE INFORMATION
We file annual, quarterly and special reports, proxy statements and other
information with the Securities and Exchange Commission (the "Commission"). You
may read and copy any reports, statements and other information we file at the
Commission's public reference rooms in Washington, D.C., New York, New York, and
Chicago, Illinois. Please call 1-800-SEC-0330 for further information on the
public reference rooms. Our filings are also available to the public from
commercial document retrieval services and at the web site maintained by the
Commission at http://www.sec.gov.
We have filed a Registration Statement on Form S-4 to register with the
Commission the New Notes to be issued in exchange for the Old Notes. This
Prospectus is part of that Registration Statement. As allowed by the
Commission's rules, this Prospectus does not contain all of the information you
can find in the Registration Statement or the exhibits to the Registration
Statement.
WE HAVE NOT AUTHORIZED ANYONE TO GIVE YOU ANY INFORMATION OR TO MAKE ANY
REPRESENTATIONS ABOUT THE TRANSACTIONS WE DISCUSS IN THIS PROSPECTUS OTHER THAN
THOSE CONTAINED HEREIN OR IN THE DOCUMENTS WE INCORPORATE HEREIN BY REFERENCE.
IF YOU ARE GIVEN ANY INFORMATION OR REPRESENTATIONS ABOUT THESE MATTERS THAT IS
NOT DISCUSSED OR INCORPORATED IN THIS PROSPECTUS, YOU MUST NOT RELY ON THAT
INFORMATION. THIS PROSPECTUS IS NOT AN OFFER TO SELL OR A SOLICITATION OF AN
OFFER TO BUY SECURITIES ANYWHERE OR TO ANYONE WHERE OR TO WHOM WE ARE NOT
PERMITTED TO OFFER OR SELL SECURITIES UNDER APPLICABLE LAW. THE DELIVERY OF THIS
PROSPECTUS DOES NOT, UNDER ANY CIRCUMSTANCES, MEAN THAT THERE HAS NOT BEEN A
CHANGE IN OUR AFFAIRS SINCE THE DATE OF THIS PROSPECTUS. IT ALSO DOES NOT MEAN
THAT THE INFORMATION IN THIS PROSPECTUS OR IN THE DOCUMENTS WE INCORPORATE
HEREIN BY REFERENCE IS CORRECT AFTER THIS DATE.
4
<PAGE>
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The Commission allows us to "incorporate by reference" information into this
Prospectus. This means that we can disclose important information to you by
referring you to another document filed separately with the Commission. The
information incorporated by reference is considered to be part of this
Prospectus, except for any information that is superseded by information that is
included directly in this document.
This Prospectus includes by reference the documents listed below that we
have previously filed with the Commission and that are not included in or
delivered with this document. They contain important information about our
company and its financial condition.
FILING PERIOD
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Annual Report on Form 10-K Year ended December 31, 1997
Quarterly Reports on Form 10-Q Quarter ended September 30, 1998,
as amended on Form 10-Q/A filed
December 9, 1998
Quarter ended June 30, 1998,
1998, as amended on Form
10-Q/A filed December 9, 1998
Quarter ended March 31, 1998, as
amended on Form 10-Q/A filed
May 7, 1998
Current Reports on Form 8-K Filed January 14, 1999
Filed December 16, 1998
Filed December 7, 1998
Filed November 25, 1998
Filed November 19, 1998
Filed October 29, 1998
Filed September 16, 1998
Filed July 8, 1998, as
amended on Form 8-K/A filed
July 10, 1998
Filed June 12, 1998, as
amended on Form 8-K/A filed
October 13, 1998
Filed April 21, 1998
Filed April 3, 1998
Filed March 27, 1998
Filed March 20, 1998
Filed March 9, 1998
Filed January 29, 1998
Filed January 12, 1998
<PAGE>
5
Amendment No. 3 to Registration Statement
on Form S-3 (File No. 333-58617)
filed December 9, 1998;
Amendment No.1 to Registration Statement
on Form S-4 (File No. 333-49915)
filed May 13, 1998;
The historical financial statements
of SuperNet, Inc. at pages F-31 to
F-41 of Registration Statement on
Form S-4 (File No. 333-46145)
filed February 12, 1998;
The description of our common stock set forth in the Form 8-A filed by us on May
28, 1997, including any amendment or report filed with the Commission for
purposes of updating such description.
We incorporate by reference additional documents that we may file with
the Commission between the date of this Prospectus and the date of the closing
of this offering. These documents include periodic reports, such as Annual
Reports on Form 10-K, Quarterly Reports on Form 10-Q and Current Reports on Form
8-K, as well as proxy statements.
You can obtain any of the documents incorporated by reference in this
document without charge, excluding any exhibits to those documents unless the
exhibit is specifically incorporated by reference as an exhibit to this
Prospectus. You can obtain documents incorporated by reference in this
Prospectus by requesting them in writing or by telephone from the appropriate
company at the following address:
Investor Relations
Qwest Communications International Inc.
700 Qwest Tower
555 Seventeenth Street
Denver, Colorado 80202 TELEPHONE NUMBER 800-567-7296.
CAUTIONARY STATEMENT REGARDING
FORWARD-LOOKING STATEMENTS
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<PAGE>
This Prospectus contains or incorporates by reference certain "forward-looking
statements" as that term is used in Section 27A of the Securities Act of 1933,
as amended (the "Securities Act") and Section 21E of the Exchange Act about our
financial condition, results of operations and business. These statements
include, among others:
(i) statements concerning the benefits that we expect will result from our
business activities and certain transactions we have completed, such as
synergies in the form of increased revenues, decreased expenses and avoided
expenses and expenditures,
(ii) our plans to complete our communications network and
(iii) other statements of our expectations, beliefs, future plans and
strategies, anticipated developments and other matters that are not historical
facts.
These statements may be made expressly in this document, or may be incorporated
by reference to other documents we have filed with the Commission. You can find
many of these statements by looking for words such as "believes," "expects,"
"anticipates," "estimates," or similar expressions used in this Prospectus or
incorporated by reference in this Prospectus.
These forward-looking statements are subject to numerous assumptions, risks and
uncertainties that may cause our actual results, performance or achievements to
be materially different from any future results, performance or achievements
expressed or implied by us in those statements. The risks and uncertainties
include those risks, uncertainties and risk factors identified, among other
places, under "Risk Factors" in this Prospectus, beginning on page 25, and under
"Risk Factors" and "Management's Discussion and Analysis of Financial Condition
and Results of Operations" in the documents incorporated by reference in this
Prospectus.
The most important factors that could prevent us from achieving our stated goals
include, but are not limited to, the following:
- - our failure to construct our communications network on schedule and on
budget;
- - operating and financial risks related to managing rapid growth, integrating
acquired businesses and sustaining operating cash flow to meet our debt service
requirements, make capital expenditures and fund operations;
- - potential fluctuation in quarterly results;
- - volatility of stock price;
- - intense competition in the communications services market;
- - dependence on new product development;
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- - our ability to achieve year 2000 compliance;
- - rapid and significant changes in technology and markets;
- - adverse changes in the regulatory or legislative environment affecting our
business;
- - failure to maintain necessary rights of way; and
- - satisfactory negotiation and execution of certain definitive documentation.
Because such statements are subject to risks and uncertainties, actual results
may differ materially from those expressed or implied by the forward-looking
statements. You are cautioned not to place undue reliance on such statements,
which speak only as of the date of this Prospectus or, in the case of documents
incorporated by reference, the date of such document.
The cautionary statements contained or referred to in this section should be
considered in connection with any subsequent written or oral forward-looking
statements that we or persons acting on our behalf may issue. We undertake no
obligation to review or confirm analysts' expectations or estimates or to
release publicly any revisions to any forward-looking statements to reflect
events or circumstances after the date of this Prospectus or to reflect the
occurrence of unanticipated events.
8
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PROSPECTUS SUMMARY
This brief summary highlights selected information from the Prospectus. It does
not contain all of the information that is important to you. We urge you to
carefully read and review the entire Prospectus and the other documents to which
it refers to fully understand the terms of the New Notes and the exchange offer.
Qwest Communications International Inc. is sometimes referred to in this
Prospectus as "Qwest" and, together with its subsidiaries, including Qwest
Communications Corporation ("QCC"), as the "Company."
THE COMPANY
We offer a full range of multimedia communications services through two core
businesses: Communications Services and Construction Services.
Communications Services includes Retail Services and Wholesale Services. Retail
Services provides voice, data, video and related services to both business and
residential customers. Wholesale Services provides high-volume and conventional
private line services to other communications providers, as well as to Internet
service providers and other data service companies. We are developing these
services in partnership with leading information technology companies, including
Microsoft (business applications and services) and Netscape (one-stop access for
various communications services accessed over the Internet).
Construction Services constructs and installs fiber optic systems for other
communications providers, as well as for our own use.
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Our Macro Capacity (SM) Fiber Network, an approximately 18,450 route-mile
coast-to-coast fiber-optic communications system, is central to our strategies.
The technologically advanced network uses a self-healing SONET ring architecture
that prevents interruption of service to our customers by instantaneously
rerouting traffic in the event of a fiber cut. The network is equipped with the
most advanced commercially available fiber, manufactured by Lucent Technologies,
and the most advanced transmission electronics, manufactured by Northern
Telecom. At full capacity, our network will transmit two trillion bits of
multimedia information per second. Our state-of-the-art Internet Protocol ("IP")
architecture supports ATM (asynchronous transfer mode)and Frame Relay services ,
as well as circuit switched services.
In April, 1998, we became the first network service provider to complete a
transcontinental IP fiber network when we activated our network from Los Angeles
to San Francisco to New York. We expect our network to be fully activated in
1999.
In addition to significant advantages in service speed and sophistication, our
network's advanced technologies should also provide a cost advantage over older
fiber systems generally in commercial use today. We expect an additional cost
benefit from the sale of dark fiber along the network, which will reduce the
cost per fiber mile we retain for our own use.
Under our current plan, the network will serve more than 130 cities and 80
percent of the data and voice traffic originating in the United States. Leased
digital fiber optic facilities and more than 15 switches throughout the United
States connect our network to metropolitan areas that account for more than 95
percent of U.S. call volume.
We are also moving aggressively to expand the network beyond the U.S. We plan to
complete an extension of the U.S. network into Mexico in early 1999. We own
capacity on three undersea systems linking the network to Europe and are part of
a consortium of companies building a submarine cable system connecting the U.S.
to Japan, a project scheduled for completion in the year 2000.
We believe that the technological advantages and growing reach of our network
will put us in an excellent position to capture market share and take full
advantage of the rapidly growing demand for voice and data transmission capacity
and services.
RECENT DEVELOPMENTS
Credit Facility Commitment. On November 5, 1998, we signed a commitment letter
with our three lead banks to syndicate an unsecured credit facility of between
$500 million and $750 million. Each of the lead banks agreed to commit up to
$100.0 million, with a minimum aggregate commitment of $250.0 million.
Subsequent to this, the Company obtained other financing through the issuance of
$300.0 million of 7.25% Senior Notes due 2008 (the "7.25% Notes Due 2008"), as
discussed below, and through an investment in the Company of $200.0 million by
Microsoft Corporation. As a result of entering into these transactions, the
closing of the credit facility was postponed. We are currently in the process
10
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of obtaining a new unsecured $750.0 million to $1.0 billion credit facility
through a syndicate of banks. Closing of the new credit facility is conditioned,
among other things, on the execution of a mutually satisfactory credit
agreement. We are working with the syndicate of banks toward closing in the
first quarter of 1999.
Issuances of Notes. On November 27, 1998, we issued and sold $300.0 million in
principal amount of our 7.25% Senior Notes due 2008. The net proceeds from the
offering was approximately $297.5 million, after deducting offering costs.
Interest on the 7.25% Notes Due 2008 is payable semiannually in arrears on May 1
and November 1 of each year, commencing May 1, 1999. The 7.25% Notes Due 2008
are subject to redemption at our option, in whole or in part, at any time at
specified redemption prices.
In connection with the sale of the 7.25% Notes Due 2008, we agreed to make an
offer to exchange new notes, registered under the Securities Act and with terms
identical in all material respects to the original notes, for the original notes
or, alternatively, to file a shelf registration statement under the Securities
Act with respect to the original notes.
Redemption of Notes. On December 31, 1998, we redeemed $87.5 million of our 10
7/8% Senior Notes Due 2007 ("10 7/8% Notes"). Bankers Trust Company, the Trustee
for the 10 7/8% Notes, issued the required notice to affected noteholders on
December 1, 1998. Under the terms of the Indenture for the 10 7/8% Notes, dated
August 28, 1997, we may redeem up to 35%, or $87.5 million, of the $250 million
principal amount of the 10 7/8% Notes.
Equipment Credit Facility. In December 1998, we repaid the outstanding balance
of our equipment credit facility. The balance of the facility was $57.3 million
at September 30, 1998.
Our principal executive offices are located at 700 Qwest Tower, 555 Seventeenth
Street, Denver, Colorado 80202, and our telephone number is (303) 992-1400.
11
<PAGE>
THE EXCHANGE OFFER
SECURITIES TO BE EXCHANGED...
On November 4, 1998, we issued $750.0 million aggregate principal amount of
Old Notes to the initial purchaser in a transaction exempt from the
registration requirements of the Securities Act of 1933, as amended (the
"Securities Act"). The terms of the New Notes and the Old Notes are
substantially identical in all material respects, except that the New Notes
will be freely transferable by the holders thereof except as otherwise
provided in this Prospectus. See "Description of the 7.50% Notes."
THE EXCHANGE OFFER...........
$1,000 principal amount of New Notes in exchange for each $1,000 principal
amount of Old Notes. As of the date of this Prospectus, Old Notes
representing $750.0 million aggregate principal amount are outstanding.
Based on interpretations by the staff of the Commission, as set forth in
no-action letters issued to certain third parties unrelated to us, we
believe that New Notes issued pursuant to the exchange offer in exchange
for Old Notes may be offered for resale, resold or otherwise transferred by
holders thereof (other than any holder which is an "affiliate" of the
Company within the meaning of Rule 405 promulgated under the Securities
Act, or a broker-dealer who purchased Old Notes directly from us to resell
pursuant to Rule 144A or any other available exemption promulgated under
the Securities Act), without compliance with the registration and
prospectus delivery requirements of the Securities Act, provided that such
New Notes are acquired in the ordinary course of such holders' business and
such holders have no arrangement with any person to engage in a
distribution of New Notes.
However, the Commission has not considered the exchange offer in the
context of a no-action letter and we cannot be sure that the staff of the
Commission would make a similar determination with respect to the exchange
offer as in such other circumstances. Furthermore, each holder, other than
a broker-dealer, must acknowledge that it is not engaged in, and does not
intend to engage in, a distribution of such New Notes and has no
arrangement or understanding to participate in a distribution of New Notes.
Each broker-dealer that receives New Notes for its own account pursuant to
the exchange offer must acknowledge that it will comply with the prospectus
delivery requirements of the Securities Act in connection with any resale
of such New Notes. Broker-dealers who acquired Old Notes directly from us
and not as a result of market-making activities or other trading activities
may not rely on the staff's interpretations discussed above or participate
in the exchange offer and must comply with the prospectus delivery
requirements of the Securities Act in order to resell the Old Notes.
REGISTRATION RIGHTS
AGREEMENT..................
We sold the Old Notes on November 4, 1998, in a private placement in
reliance on Section 4(2) of
12
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the Securities Act. The Old Notes were immediately resold by the initial
purchaser in reliance on Rule 144A promulgated under the Securities Act. In
connection with the sale, we entered into a Registration Rights Agreement
with the initial purchaser (the "Registration Rights Agreement") requiring
us to make the exchange offer. The Registration Rights Agreement further
provides that we must use our reasonable best efforts to (i) cause the
Registration Statement with respect to the exchange offer to be declared
effective within 150 days of the date on which we issued the Old Notes and
(ii) consummate the exchange offer on or before the 180th day following the
date on which we issued the Old Notes. See "The Exchange Offer -- Purpose
and Effect."
EXPIRATION DATE..............
The exchange offer will expire at 5:00 p.m., New York City time, , 1999 or
such later date and time to which it is extended.
WITHDRAWAL...................
The tender of the Old Notes pursuant to the exchange offer may be withdrawn
at any time prior to 5:00 p.m., New York City time, on , 1999, or such
later date and time to which we extend the offer. Any Old Notes not
accepted for exchange for any reason will be returned without expense to
the tendering holder thereof as soon as practicable after the expiration or
termination of the exchange offer.
INTEREST ON THE NEW NOTES AND
THE OLD NOTES..............
Interest on the New Notes will accrue from the date of the original
issuance of the Old Notes or from the date of the last periodic payment of
interest on the Old Notes, whichever is later. No additional interest will
be paid on Old Notes tendered and accepted for exchange.
CONDITIONS TO THE EXCHANGE
OFFER......................
The exchange offer is subject to certain customary conditions, certain of
which may be waived by us. See "The Exchange Offer -- Certain Conditions to
Exchange Offer."
PROCEDURES FOR TENDERING OLD
NOTES......................
Each holder of the Old Notes wishing to accept the exchange offer must
complete, sign and date the letter of transmittal, or a copy thereof, in
accordance with the instructions contained in this Prospectus and in the
letter of transmittal, and
13
<PAGE>
mail or otherwise deliver the letter of transmittal, or the copy, together
with the Old Notes and any other required documentation, to the exchange
agent at the address set forth in this Prospectus. Persons holding the Old
Notes through the Depository Trust Company ("DTC") and wishing to accept
the exchange offer must do so pursuant to the DTC's Automated Tender Offer
Program, by which each tendering participant will agree to be bound by the
letter of transmittal. By executing or agreeing to be bound by the letter
of transmittal, each holder will represent to us that, among other things,
(i) the New Notes acquired pursuant to the exchange offer are being
obtained in the ordinary course of business of the person receiving such
New Notes, whether or not such person is the registered holder of the Old
Notes, (ii) the holder is not engaging in and does not intend to engage in
a distribution of such New Notes, (iii) the holder does not have an
arrangement or understanding with any person to participate in the
distribution of such New Notes, and (iv) the holder is not an "affiliate,"
as defined under Rule 405 promulgated under the Securities Act, of the
Company.
We will accept for exchange any and all Old Notes which are properly
tendered (and not withdrawn) in the exchange offer prior to 5:00 p.m., New
York City time, on , 1999. The New Notes issued pursuant to the exchange
offer will be delivered promptly following the expiration date. See "The
Exchange Offer -- Terms of the Exchange Offer."
EXCHANGE AGENT...............
The Bank of New York is serving as Exchange Agent (the "Exchange Agent") in
connection with the exchange offer.
FEDERAL INCOME TAX
CONSIDERATIONS.............
In the opinion of our counsel, the exchange of Old Notes for New Notes
pursuant to the exchange offer should not constitute a taxable exchange for
United States federal income tax purposes. See "Certain United States
Federal Income Tax Considerations."
EFFECT OF NOT TENDERING......
Old Notes that are not tendered or that are tendered but not accepted will,
following the completion of the exchange offer, continue to be subject to
the existing restrictions upon transfer thereof. We will have no further
obligation to
14
<PAGE>
provide for the registration under the Securities Act of such Old Notes.
THE NEW NOTES
The summary below describes the principal terms of the New Notes. Certain of the
terms and conditions described below are subject to important limitations and
exceptions. The "Description of the 7.50% Notes" section of this Prospectus
beginning on page 47 contains a more detailed description of the terms and
conditions of the New Notes.
Issuer.......................
Qwest Communications International Inc.
Securities Offered...........
$750,000,000 principal amount of 7.50% Series B Senior Notes Due 2008
Maturity.....................
November 1, 2008
Interest Rate................
7.50% per year (calculated using a 360-day year)
Ranking......................
The New Notes will be senior unsecured obligations of Qwest and will rank
equal in right of payment to our existing and future senior debt and senior
in right of payment to all of Qwest's existing and future subordinated
debt. The New Notes are not secured by any assets and are effectively
subordinated to our future secured indebtedness to the extent of the value
of the assets securing the indebtedness. As of September 30, 1998, on a pro
forma basis after giving effect to the acquisition of Icon CMT Corp.
("Icon"), the redemption of $87.5 million of 10 7/8% Notes, the repayment
of $57.3 million of our equipment credit facility, the offering of the Old
Notes, the offering of our 7.25% Senior Notes Due 2008 ("7.25% Notes Due
2008") and the use of the proceeds from these offerings, Qwest would have
had approximately $1,912.0 million of indebtedness outstanding, none of
which was secured. The New Notes are effectively subordinated to all of the
present and future indebtedness and other liabilities of our subsidiaries
(including trade payables). The total liabilities of our subsidiaries
(after the elimination of loans and advances by us to our subsidiaries)
would have been approximately $1,893.7 million, of which approximately
$32.0 million was secured. Any rights we and our creditors, including the
holders of New Notes, to participate in the assets of any of our
subsidiaries upon any liquidation or reorganization of any such subsidiary
will be
15
<PAGE>
subject to the prior claims of that subsidiary's creditors (including trade
creditors).
Optional Redemption..........
We can redeem the 7.50% Notes at any time at a price of 100% of the
principal amount plus the Applicable Premium (as defined).
Change of Control Offer......
If a "Change of Control" of the Company occurs (as defined), we must give
holders of the 7.50% Notes an opportunity to sell us their 7.50% Notes at
101% of their face amount, plus accrued interest.
We might not be able to pay you the required price for New Notes you
request us to purchase at the time of a Change of Control because we may
also have to repay our senior credit facility and may not have enough funds
to repay all of our senior debt at that time.
Asset Sale Proceeds..........
If we engage in certain asset sales, we must generally use the proceeds (1)
first, to the repayment of debt then outstanding under any credit facility,
to the extent such agreements would require such application or prohibit
Note repurchases; (2) second, to offer to purchase outstanding 7.50% Notes
at 100% of their face amount, plus accrued interest; (3) third, to the
repayment of other debt; and (4) fourth, to any other Company use.
Certain Indenture
Provisions...................
The indenture governing the 7.50% Notes contains covenants limiting our
(and most of our subsidiaries') ability to:
- borrow additional money,
- pay dividends or other distributions to stockholders,
- allow subsidiaries to guarantee our debt,
- limit the ability of subsidiaries to make payments to us,
- make certain investments,
- create certain liens on our assets,
- sell certain assets,
- enter into transactions with affiliates, and - engage in certain mergers
or consolidations.
These covenants are subject to a number of important limitations and
exceptions and are more
16
<PAGE>
fully described under "Description of the 7.50% Notes" beginning on page
47.
Under the terms of the indenture for the 7.50% Notes, we have no obligation
to comply with most of the covenants during any period when the 7.50% Notes
have been assigned investment grade ratings. If the 7.50% Notes later lose
an investment grade rating, the covenants will again apply, but actions
taken during such period generally cannot cause us to be in default if the
covenants again become effective. Consequently, the protection afforded by
the covenants could be weakened if the 7.50% Notes are assigned investment
grade ratings and subsequently downgraded to non-investment grade.
Use of Proceeds..............
The Company will not receive any cash proceeds from the issuance of the New
Notes pursuant to this Prospectus.
RISK FACTORS
We urge you to carefully review the Risk Factors beginning on page 25for a
discussion of factors you should consider before exchanging your Old Notes for
New Notes.
17
<PAGE>
SELECTED HISTORICAL AND UNAUDITED PRO FORMA
CONDENSED COMBINED FINANCIAL DATA
The selected unaudited pro forma condensed combined statement of operations data
for the year ended December 31, 1997 and for the nine months ended September 30,
1998 gives effect to the acquisitions of SuperNet, Inc., Phoenix Network, Inc.,
LCI International, Inc. and subsidiary ("LCI") and Icon as if the acquisitions
had occurred on January 1, 1997. The unaudited pro forma condensed combined
balance sheet data as of September 30, 1998 set forth below gives effect to the
proposed acquisition by Qwest of all the issued and outstanding shares of
capital stock of Icon and the assumption of the Icon stock options and warrants
as if the acquisition had occurred on September 30, 1998. The selected unaudited
pro forma condensed combined financial data does not give effect to Qwest's
acquisition of EUnet International Ltd. and the joint venture with KPN Telecom
B.V. because such disclosure is not required under Rule 3-05 of Securities and
Exchange Commission Regulation S-X.
The selected unaudited pro forma condensed combined financial data give effect
to the acquisitions described above under the purchase method of accounting and
are based on the assumptions and adjustments described in the notes to the
Unaudited Pro Forma Condensed Combined Financial Statements incorporated by
reference in this Prospectus. The fair value of the consideration will be
allocated to the assets and liabilities acquired based upon the fair values of
such assets and liabilities at the date of each respective acquisition and may
be revised for a period of up to one year from the date of each respective
acquisition. The preliminary estimates and assumptions as to the value of the
assets and liabilities of LCI and Icon to the combined company are based upon
information available at the date of preparation of the Unaudited Pro Forma
Condensed Combined Financial Statements, and will be adjusted upon the final
determination of such fair values. The items awaiting final allocation include
LCI network asset valuation and final determination of the costs to sell these
assets. It is anticipated that final allocation of the LCI purchase price will
not differ materially from the preliminary allocation.
Qwest has undertaken a study to determine the allocation of the Icon purchase
price to the various assets acquired, including in-process research and
development projects, and the liabilities assumed. Based on Qwest's
consideration of the study's preliminary findings as of this date, Qwest has
allocated a portion of purchase price to certain intangible assets, including
in-process R&D. See the footnotes to the pro forma condensed combined financial
statements for further information on the preliminary allocation of purchase
price.
The selected historical financial data as of the end of, and for each of the
years in, the five year period ended December 31, 1997 and as of September 30,
1998 and 1997 and for the nine months ended September 30, 1998 and 1997 have
been taken or derived from the respective historical consolidated financial
statements of Qwest.
18
<PAGE>
SELECTED PRO FORMA CONDENSED COMBINED FINANCIAL DATA (UNAUDITED)
(AMOUNTS IN MILLIONS, EXCEPT PER SHARE INFORMATION)
<TABLE>
<CAPTION>
NINE MONTHS
YEAR ENDED ENDED
DECEMBER 31, SEPTEMBER 30,
1997 1998
------------ -------------
<S> <C> <C>
STATEMENT OF OPERATIONS DATA:
Revenue............................................ $2,473 $2,199
Operating expenses................................. 2,211 1,934
Depreciation and amortization...................... 261 231
------ ------
Earnings from operations........................... 1 34
Other expense, net................................. 39 64
------ ------
Earnings before income taxes....................... (38) (30)
Income tax expense................................. 39 35
------ ------
Net loss........................................... $ (77) $ (65)
====== ======
Loss per share--basic and diluted.................. $(0.24) $(0.20)
Shares used in calculating basic and diluted loss
per share......................................... 326 329
</TABLE>
<TABLE>
<CAPTION>
AS OF
SEPTEMBER 30,
1998
-------------
<S> <C>
BALANCE SHEET DATA:
Current assets.................................................... $1,157
Property and equipment, net....................................... $2,058
Total assets...................................................... $7,126
Debt.............................................................. $1,623
Total liabilities................................................. $3,133
Total stockholders' equity........................................ $3,993
</TABLE>
19
<PAGE>
SELECTED HISTORICAL FINANCIAL DATA
<TABLE>
<CAPTION>
NINE MONTHS
ENDED
YEAR ENDED DECEMBER 31, SEPTEMBER 30,
------------------------------------ --------------
1993 1994 1995 1996 1997 1997 1998(1)
----- ------ ------ ------ ----- ----- -------
(IN MILLIONS, EXCEPT PER SHARE DATA)
<S> <C> <C> <C> <C> <C> <C> <C>
STATEMENT OF OPERATIONS AND
OTHER FINANCIAL DATA:
Total revenue............ $ 69 $ 71 $ 125 $ 231 $ 697 $ 490 $1,378
Total operating
expenses................ 80 82 161 243 673 490 2,164
Earnings (loss) from
operations.............. (11) (11) (36) (12) 24 -- (786)
Other (income)
expense(2).............. (123) -- 2 (2) -- (5) 51
Earnings (loss) before
income taxes............ 112 (11) (38) (10) 24 5 (837)
Net earnings (loss)...... $ 69 $ (7) $ (25) $ (7) $ 15 $ 2 $ (823)
===== ====== ====== ====== ===== ===== ======
Earnings (loss) per
share--basic............ $0.40 $(0.04) $(0.15) $(0.04) $0.08 $0.01 $(3.17)
Earnings (loss) per
share--diluted.......... $0.40 $(0.04) $(0.15) $(0.04) $0.07 $0.01 $(3.17)
EBITDA(3)................ $ (1) $ (6) $ (26) $ 7 $ 42 $ 13 $ 214
Net cash provided by
(used in)
operating activities.... $ (7) $ 3 $ (57) $ 33 $ (36) $ (60) $ 106
Net cash provided by
(used in)
investing activities.... $ 107 $ (42) $ (59) $ (53) $(357) $(196) $ (778)
Net cash provided by
(used in)
financing activities.... $ (96) $ 34 $ 114 $ 26 $ 766 $ 436 $ 518
Capital expenditures(4).. $ 4 $ 41 $ 49 $ 86 $ 445 $ 213 $ 751
Ratio of earnings to
fixed charges(5)....... 5.67 -- -- -- 1.15 -- --
</TABLE>
<TABLE>
<CAPTION>
AS OF DECEMBER 31, AS OF SEPTEMBER 30,
-------------------------- --------------------
1993 1994 1995 1996 1997 1997 1998(2)
---- ---- ---- ---- ------ -------- -----------
(IN MILLIONS)
<S> <C> <C> <C> <C> <C> <C> <C>
SUMMARY BALANCE SHEET DATA:
20
<PAGE>
Total assets................... $61 $89 $184 $263 $1,398 $ 908 $ 6,834
Long-term debt................. $ 2 $27 $ 69 $109 $ 630 269 1,387
Total stockholders' equity(6).. $12 $25 $ 26 $ 9 $ 382 369 3,752
</TABLE>
<TABLE>
<CAPTION>
AS OF DECEMBER 31, AS OF SEPTEMBER 30,
------------------------------ -------------------
1995 1996 1997 1997 1998
------ ------ ------ ------ ------
<S> <C> <C> <C> <C> <C>
OPERATING DATA:
Route miles of conduit
installed.............. 3,200 3,650 9,500 7,900 15,979
Route miles of lit fiber
installed.............. 580 900 3,400 2,800 9,052
Total minutes of use.... 237,000,000 382,000,000 669,000,000 433,000,000 6,252,000,000
</TABLE>
- --------
(1) On June 5, 1998, Qwest acquired LCI. The acquisition was accounted for
as a purchase and the results of LCI's operations are included with
Qwest's for the period subsequent to the acquisition.
(2) In November 1993, Qwest sold substantially all of its then owned fiber
optic network capacity and related equipment and assets to a
third-party purchaser for $185.0 million (the "1993 Capacity Sale").
After deducting the carrying value of the assets sold and direct costs
associated with the 1993 Capacity Sale, Qwest recognized a gain of
approximately $126.5 million.
(3) EBITDA represents net earnings (loss) before interest, income taxes,
depreciation and amortization, a nonrecurring expense of $2.6 million
in the year ended December 30, 1996 to restructure operations, the gain
on sale of telecommunications agreements of $6.1 million (which is
non-recurring) in the year ended December 31, 1996, the gain on sale of
contract rights of approximately $9.3 million (which is non-recurring)
in the year ended December 31, 1997 and non-recurring expenses of $813
million in the nine months ended September 30, 1998 related to the LCI
merger. EBITDA includes earnings from the construction contracts for
the sale of dark fiber that Qwest will use to provide cash for the
construction cost of the Qwest Network. EBITDA does not represent cash
flow for the periods presented and should not be considered as an
alternative to net earnings (loss) as an indicator of Qwest's operating
performance or as an alternative to cash flows as a source of
liquidity,
21
<PAGE>
and may not be comparable with EBITDA as defined by other companies.
Qwest believes that EBITDA is commonly used by financial analysts and
others in the telecommunications industry. Without the effect of
Qwest's growth share plan expense, EBITDA would have been $115.2
million, $20.0 million, and $1.8 million for the years ended December
31, 1997, 1996 and 1993, respectively, and $153.4 million and $80.6
million for the nine months ended September 30, 1998 and 1997,
respectively.
(4) Capital expenditures include expenditures for property and equipment,
accrued capital expenditures, capital expenditures financed with the
equipment credit facility and initial obligations under capital leases.
(5) Earnings were insufficient to cover fixed charges by $864.0 million and
$6.7 million for the nine month periods ended September 30, 1998 and
1997, respectively, and $12.6 million, $40.4 million and $11.0 million
for the years ended December 31, 1996, 1995 and 1994.
(6) Qwest has not declared or paid cash dividends on the Qwest common stock
since becoming a public company in June 1997.
22
<PAGE>
RISK FACTORS
In addition to the other information in this Prospectus, the following risk
factors should be considered carefully in evaluating us and our business before
participating in the Exchange Offer.
Effect of Not Tendering
Holders of Old Notes who do not exchange their Old Notes for New Notes will
continue to be subject to the restrictions on transfer of the Old Notes as set
forth in the legends on the Old Notes. In general, the Old Notes may not be
offered or sold, unless they are registered under the Securities Act or are
exempt from registration. See "The Exchange Offer--Consequences of Failure to
Exchange."
Holding Company Structure; Subordination of the 7.50% Notes to Indebtedness of
Subsidiaries
The 7.50% Notes are obligations only of Qwest, which is a holding company with
no material assets other than the stock of its subsidiaries. Our subsidiaries
conduct substantially all of our operations and own substantially all of our
assets. As a result, our cash flow and our ability to meet our debt service
obligations, including payments on the 7.50% Notes, depends on the cash flow of
our subsidiaries and the payment of funds by them to us in the form of loans,
dividends or otherwise. Our subsidiaries generally are not obligated to make
funds available to us for payment on the 7.50% Notes or for other purposes.
Existing debt agreements of our subsidiaries impose, and future debt instruments
of our subsidiaries may impose, significant restrictions on the ability of our
subsidiaries to pay dividends or make other distributions or loans and advances
to us. In addition, the ability of our subsidiaries to make any payments to us
will depend on their earnings, business and tax considerations and legal
restrictions.
As a result, the 7.50% Notes effectively will rank junior to all existing and
future indebtedness, trade payables and other liabilities of our subsidiaries.
In the event of a bankruptcy or dissolution of a subsidiary, our rights and the
rights of our creditors, including the holders of the 7.50% Notes, to share in
the assets of the subsidiary will be subject to the prior claims of the
subsidiary's creditors. After the payment of the subsidiary's liabilities, the
subsidiary may not have enough assets remaining to pay us and our creditors. On
a pro forma basis after giving effect to the acquisition of Icon, the redemption
of $87.5 million of 10 7/8% Notes, the repayment of $57.3 million of our
equipment credit facility, the offering of the 7.25% Notes Due 2008, the
offering of the Old Notes and the use of the proceeds from these offerings, at
September 30, 1998, our subsidiaries would have had approximately $1,893.7
million of outstanding liabilities. All of these liabilities would effectively
rank senior to the 7.50% Notes. We expect that our subsidiaries will incur
additional indebtedness in the future.
23
<PAGE>
The 7.50% Notes are Unsecured; Subordination of the 7.50% Notes to Secured
Indebtedness
The 7.50% Notes will be general unsecured obligations of Qwest. As a result,
the 7.50% Notes will rank junior in right of payment to the claims of all of our
secured creditors to the extent of the value of the secured assets. If a default
or acceleration of our debt occurs, the holders of the debt could seize the
assets securing the debt and sell the assets to satisfy all or a part of what is
owed. On a pro forma basis, after giving effect to the acquisition of Icon, the
redemption of $87.5 million of 10 7/8% Notes, the repayment of $57.3 million of
our equipment credit facility, the offering of the Old Notes, the offering of
the 7.25% Notes Due 2008 and the use of the proceeds from these offerings, at
September 30, 1998, we would have had approximately $32.0 million of secured
indebtedness. Future indebtedness incurred by us also may be secured.
The value of a substantial portion of our fixed assets is derived from
employing such assets in a communications business. These assets are highly
specialized and, taken individually, can be expected to have limited
marketability. Consequently, in the event of a realization by secured creditors
on the assets of our subsidiaries, creditors would likely seek to sell the
business as a going concern in order to maximize the proceeds realized. The
price obtained upon a sale could be adversely affected by the necessity to
obtain approval of the sale from the applicable regulatory authorities and
compliance with other applicable governmental regulations.
Substantial Indebtedness; Ability to Incur Additional Debt
We have a significant amount of debt outstanding. As of September 30, 1998, on
a pro forma basis, after giving effect to the acquisition of Icon, the
redemption of $87.5 million of 10 7/8% Notes, the repayment of $57.3 million of
our equipment credit facility, the offering of the Old Notes, the offering of
the 7.25% Notes Due 2008 and the use of proceeds from these offerings, we would
have had approximately $2,295.7 million of long-term debt (including the current
portion), and a debt-to-equity ratio of 0.6 to 1.0. You should be aware that
this significant amount of debt could have important consequences to you as a
holder of the 7.50% Notes. For example, a significant portion of our cash flow
from operations must be dedicated to the repayment of the indebtedness, thereby
reducing the amount of cash we have available for other purposes.
The indenture governing the 7.50% Notes limits, but does not prohibit, us and
our subsidiaries from incurring additional debt. We expect that we and our
subsidiaries may incur substantial additional debt in the future. On November 5,
1998, we signed a commitment letter with our three lead banks to syndicate an
unsecured credit facility of between $500 million and $750 million. The lead
banks agreed to a minimum aggregate commitment of $250.0 million with the
remainder expected to be provided by other banks to be added to the syndicate.
Subsequent to this, the Company obtained other financing through the issuance of
$300.0 million of 7.25% Senior Notes due 2008 and through an investment in the
Company of $200.0 million by Microsoft Corporation. As a result of entering into
these transactions, the closing of the credit facility was postponed. We are
currently in the process of obtaining a new unsecured $750.0 million to
24
<PAGE>
$1.0 billion credit facility through a syndicate of banks. Closing of the new
credit facility is conditioned, among other things, on the execution of a
mutually satisfactory credit agreement. We are working with the syndicate of
banks toward closing in the first quarter of 1999.
Our ability to pay the principal of and interest on our debt will depend upon
our future performance, which is subject to several uncertainties, many of which
are beyond our control. We cannot assure you that we will have enough cash flow
in the future to let us meet our anticipated debt service requirements
(including those with respect to the 7.50% Notes). Although we currently
anticipate that we will pay the principal and interest on the 7.50% Notes with
cash flow from operations, we cannot assure you in this regard. Failure to
generate sufficient cash flow may impair our ability to obtain additional equity
or debt financing or to meet our debt service requirements, including the
payment of principal and interest on the 7.50% Notes. In such circumstances, we
may be required to renegotiate the terms of our long-term debt or to refinance
all or a portion of our long-term debt. We cannot assure you that we would be
able to renegotiate successfully those terms or refinance our debt when required
or that the terms of the refinancing would be acceptable to management. If we
were unable to refinance our debt or obtain new financing under these
circumstances, we would have to consider other options such as the sale of
certain assets to meet our debt service obligations, the sale of equity,
negotiations with our lenders to restructure debt or other options.
Restrictive Debt Covenants
The indentures for the 7.50% Notes and our other outstanding senior notes (the
"Senior Note Indentures") and our senior credit facilities impose significant
operating and financial restrictions on us and our subsidiaries. These
restrictions may significantly limit or prohibit us from engaging in certain
transactions, including the following:
o borrowing additional money,
o paying dividends or other distributions to stockholders, o allowing
subsidiaries to guarantee our debt, o limiting the ability of subsidiaries to
make payments to us, o making certain investments, o creating certain liens on
our assets, o selling certain assets, o entering into transactions with
affiliates, and o engaging in certain mergers or consolidations.
These restrictions could limit our ability to obtain future financing, make
needed capital expenditures, withstand a future downturn in our business or in
the economy or otherwise conduct necessary corporate activities. Under the terms
of the indenture for the 7.50% Notes, we have no obligation to comply with most
of the covenants during any period when the 7.50% Notes have been assigned
investment grade ratings. If the 7.50% Notes later lose an investment grade
rating, the covenants will again apply, but actions taken during such period
generally cannot cause us to be in default if the covenants again become
effective. As a result, the protection afforded by the covenants could be
25
<PAGE>
weakened if the 7.50% Notes are assigned investment grade ratings and
subsequently downgraded to non-investment grade.
Our failure to comply with the restrictions in the Senior Note Indentures and
our senior credit facilities could lead to a default under the terms of those
documents. Our senior credit facilities also require us and certain of our
subsidiaries to maintain specified financial ratios and satisfy certain
financial tests. Our ability to meet these financial ratios and tests may be
affected by events beyond our control and, as a result, there can be no
assurance that we will be able to meet such tests. In the event of a default
under any of our senior credit facilities, the applicable lenders could
terminate their commitments to lend to us or accelerate the loans and declare
all amounts borrowed due and payable. Borrowings under other debt instruments
that contain cross-acceleration or cross-default provisions may also be
accelerated and become due and payable. If any of these events occurs, we cannot
assure you that we would be able to make the necessary payments to the lenders
and cannot assure you that we would be able to find alternate financing. Even if
we could obtain alternate financing, we cannot assure you that it would be on
terms that are favorable or acceptable to us.
Completing the Qwest Network and Increasing Traffic Volume
Our objective is to become a leading facilities-based provider of multi-media
communications services to businesses, consumers and other communications
providers. Our ability to achieve this objective will depend largely on
completion of our 18,450 route-mile fiber optic communications network on
schedule and within budget, on maintaining the rights of way for our network and
on achieving substantial volumes on the Qwest Network. The construction of our
network will be affected by many factors, such as weather and regulatory
approvals, that are beyond our control. We cannot assure you that our entire
network will be completed on schedule and within budget. Although we believe
that our cost estimates and build-out schedule are reasonable, the actual
construction costs or time required to complete our network could exceed current
estimates. In addition, we must substantially increase our current traffic
volume in order to realize the anticipated cash flow, operating efficiencies and
cost benefits of the network. We cannot assure you that we will be able to
achieve this increased traffic volume.
Operating Losses and Working Capital Deficits
We have had operating losses and have not had enough cash flow from operations
to allow us to meet our debt service requirements, capital expenditures and
other cash needs. We had a net loss of $822.6 million for the nine months ended
September 30, 1998 (or $30.9 million excluding non-recurring costs associated
with recent acquisitions and provisions for in-process research and
development). We had an accumulated deficit of approximately $854.5 million at
September 30, 1998.
We had a working capital deficit of approximately $49.5 million at September
30, 1998 and working capital deficits for each of the four fiscal years before
1998. We expect total capital expenditures for the year ending December 31, 1999
26
<PAGE>
to be approximately $1.3 billion to $1.4 billion. Working capital deficits could
limit our cash resources, resulting in reduced liquidity. We cannot assure you
that our operations will be profitable in the future. We may require additional
capital in order to offset operating losses and working capital deficits and to
support our objectives. Certain debt instruments to which we and our
subsidiaries are parties limit but do not prohibit the incurrence of additional
indebtedness, and we expect additional indebtedness to be incurred by us or our
subsidiaries in the future. We cannot assure you that we will be successful in
obtaining additional borrowings when required, or that the terms of future
indebtedness will not impair our ability to develop our business.
Competition
The communications industry is highly competitive. Many of our existing and
potential competitors have financial, personnel, marketing and other resources
that are significantly greater than ours, as well as other competitive
advantages. Increased consolidation and strategic alliances in the
telecommunications industry resulting from the Telecommunications Act of 1996
(the "Telecommunications Act") also could give rise to significant new
competitors.
The success of our business plan depends on our ability to increase
significantly our share of the communications services market in the medium and
long term. Our primary competitors in this market are other communications
service providers, including large and small facilities-based interexchange
carriers. For high-volume capacity services, we compete primarily with other
coast-to-coast and regional fiber optic network providers. AT&T, MCI WorldCom
and Sprint currently are the three principal facilities-based long distance
fiber optic networks. We are aware that others are planning additional networks
that, if constructed, could employ similar advanced technology as our network.
In addition, we have sold dark fiber along major portions of our network to
Frontier Corporation and GTE Corporation. Upon completion of our network,
Frontier and GTE will each have a fiber network smaller than ours in geographic
scope with potential operating capability equal to ours. Another competitor is
constructing, and has already obtained a significant portion of the financing
for, a fiber optic network. As publicly announced, the scope of this
competitor's network is less than ours. Nevertheless, we expect that this
competitor's network will compete directly with ours for many of the same
customers where their and our routes overlap. A carrier's carrier announced in
January 1998 that it plans to sell wholesale capacity on its fiber optic network
and that it has entered into an agreement with one of the local telephone
companies established as a result of the AT&T divestiture in 1984 (the "Regional
Bell Operating Companies") to be the primary user of its network. We believe
that this network, although potentially competitive, is different in operating
capability from ours. Another potential competitor, a new telecommunications
company, has announced its intention to create a telecommunications network
based on Internet technology.
In the switched services segment of the communications services market, we sell
switched services to businesses, consumers and other communications carriers. In
this market, we compete with facilities-based carriers such as AT&T, MCI
27
<PAGE>
WorldCom and Sprint, all of which have extensive experience in the long distance
market, and some of the regional carriers. We compete in the switched services
market on the basis of price, transmission quality, network reliability,
customer service and support. Our ability to compete effectively in this market
depends on our ability to maintain high quality services at prices equal to or
below those charged by our major competitors. The Telecommunications Act will
allow the Regional Bell Operating Companies and others to enter the long
distance market. We cannot assure you that we will be able to compete
successfully with existing or new competitors in our communications services
markets. Our failure to do so would have a material adverse effect on our
business, financial condition and results of operations.
Dependence on Significant Customers
We have substantial business relationships with a few large customers,
primarily for the sale of dark fiber. Frontier, GTE and WorldCom (prior to its
merger with MCI) accounted for approximately 9%, 10% and 2%, respectively, of
total revenues for the nine months ended September 30, 1998, approximately 31%,
37% and 6%, respectively, of total revenues in 1997 and approximately 26%, 0%
and 28%, respectively, of total revenues in 1996. Revenues from these large
customers were attributable primarily to construction contracts for the sale of
dark fiber that extend through 1998 or into 1999. In 1997, we entered into two
large construction contracts for the sale of dark fiber to GTE. Our contracts
with Frontier and GTE provide for reduced payments and varying penalties if we
make late deliveries of route segments. These contracts also allow the
purchaser, after grace periods ranging generally from 12 to 18 months, to drop
the non-delivered segments from the system route to be delivered. In such cases,
the purchaser would not pay us for that portion of the contract purchase price
allocated to the non-delivered segments. A failure by any of our dark fiber
purchasers to pay the full contract purchase price due to either the purchaser's
breach or our failure to deliver certain segments on time would require us to
seek alternative funding sources for capital expenditures. A significant
reduction in the level of services we provide for any of our large customers
could have a material adverse effect on our results of operations or financial
condition.
We have generated substantial revenues from dark fiber sales. However, as our
network is completed, we anticipate that revenues from dark fiber sales will
substantially decrease in the future. Our business plan assumes that we will
increase our revenue from communications services operations to fund the
expansion of our network. We are aware that certain interexchange carriers are
constructing or considering new networks. Accordingly, we cannot assure you that
any of our customers will increase their use of our services, or will not reduce
or cease their use of our services which could have a material adverse effect on
our ability to fund the completion of our network.
Managing Rapid Growth
Part of our strategy is to achieve rapid growth by using our network to
exploit opportunities that we expect will result from regulatory and
technological changes and other industry developments. Our growth strategy also
28
<PAGE>
includes exploring opportunities for strategic acquisitions. We have completed
five acquisitions since our initial public offering, including the acquisition
of LCI in June 1998 for approximately $3,930.5 million and Icon for
approximately $254.1 million in our common stock. As result of our strategy, we
are experiencing rapid expansion that we expect will continue for the
foreseeable future. This growth has increased our operating complexity. To
manage our expansion effectively we must:
o expand, train and manage our employee base, and attract and retain highly
skilled personnel;
o expand and improve our systems for serving and communicating with our
customers;
o continue to develop and market new products and services; o integrate
acquired operations with our existing operations; and o control expenses
related to the expansion of our business.
We cannot assure you that we will be able to satisfy these requirements, or
otherwise manage our growth effectively, and any failure to do so could have a
material adverse effect on our business, financial condition and results of
operations.
Pricing Pressures and Industry Capacity
The long distance transmission industry generally has had overcapacity and
falling prices since shortly after the AT&T divestiture in 1984. We believe that
increasing demand in the last several years has resulted in a shortage of
capacity and slowed the decline in prices. However, we also expect that prices
for communications services will continue to fall over the next several years.
This is due primarily to:
(1) recent technological advances that permit large increases in the
transmission capacity of both new and existing fiber; and
(2) strategic alliances or similar transactions, such as purchasing alliances
for long distance capacity among Regional Bell Operating Companies that increase
the parties' purchasing power.
Also, our existing and future construction contracts for the sale of dark
fiber with other carriers will increase supply of capacity and may lower prices
for traffic on our network. These downward pressures on prices could have a
material adverse effect on our business and on our financial condition and
results of operations, including our ability to fund future operations.
Year 2000 Risks
Many existing computer systems, including hardware and software, use only the
last two digits to identify a year. As a result, as the year 2000 approaches,
such systems will not recognize the difference in a year that begins with "20"
rather than "19." As a result of the date change in the year 2000, if any of our
computer systems use only two digits to define the year, these defective systems
may cause disruptions in the network operations through which we provide
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communications services to customers and in our internal operations.
Additionally, we are dependent on outside sources to provide communications
services to customers and to bill customers for such services. The greatest risk
to our ability to provide communications services is the failure of third-party
service providers to be year 2000 compliant, especially those third-party
service providers that provide local access and certain of the billing systems
that we rely on in providing long distance telecommunications service.
We have established a year 2000 compliance group. The objective of the year
2000 compliance group is to eliminate disruptions as a result of the date change
in the year 2000. The compliance group has developed a five-step plan to
identify and repair year 2000 affected systems:
(i) identify potentially date-sensitive systems, including third-party
products;
(ii) assess such systems for year 2000 compliance; (iii) modify, upgrade or
replace non-compliant systems; (iv) test the corrected systems; and (v) deploy
the corrected systems.
The year 2000 compliance group has focused mainly on our domestic operations
and, to a lesser extent, on our international operations.
In addition to reviewing our own systems, the year 2000 compliance group is
submitting requests to third-party service providers to obtain information as to
their compliance efforts.
Inventory, assessment and remediation of software applications is complete.
Testing and deployment of corrected software systems is scheduled for completion
by June 30, 1999.
Inventory and assessment of hardware systems, including network computing,
network systems engineering and corporate facilities, is scheduled for
completion by January 31, 1999. Upgrades necessary to complete remediation of
these systems are expected to be in place by April 30, 1999. Testing of these
system upgrades is scheduled to be completed by May 31, 1999. Deployment of
these system upgrades is scheduled for completion by June 30, 1999.
The Company's ability to meet the target dates discussed above depends on
third parties for operational testing, as well as the Company's overall efforts
to integrate the operations of recently acquired businesses, including LCI.
Thus, various factors, including the compliance efforts of third parties, over
which the Company has no control, may affect these target dates.
We are developing contingency plans in the event that we fail to be year 2000
compliant. We expect the contingency plans to be completed by June 1999.
We estimate the SG&A expenses of implementing our year 2000 plan will be
approximately $5.0 million to $7.0 million for the year ending December 31,
1998. During the nine months ended September 30, 1998, we incurred approximately
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$3.0 million for year 2000 compliance costs, included in SG&A expense. We expect
to incur an additional approximately $15.0 million to $20.0 million in SG&A
expense in 1999 to implement our year 2000 plan.
Rapid Technological Changes
The telecommunications industry is subject to rapid and significant changes in
technology. For instance, recent technological advances permit large increases
in the transmission capacity of both new and existing fiber. The introduction of
new products or emergence of new technologies also may reduce the cost and
increase the supply of certain services similar to those provided by us. We
believe that for the foreseeable future technology changes will neither
materially affect the continued use of fiber optic cable nor materially hinder
our ability to acquire necessary technologies. However, the effect of
technological changes on our operations cannot be predicted and could have a
material adverse effect on our business, financial condition and results of
operations.
Regulation Risks
Our operations are subject to extensive federal and state regulation.
Communications services are subject to the provisions of the Communications Act
of 1934, as amended (the "Communications Act"), including the Telecommunications
Act and the FCC regulations under the Communications Act. Communications
services also are covered by laws and regulations of the states, including
regulation by public utility commissions ("PUCs") and other state agencies.
Generally, we must obtain and maintain certificates of authority from regulatory
bodies in most states where we offer intrastate services. We also must obtain
prior regulatory approval of tariffs for our intrastate services in most of
these jurisdictions.
Regulation of the telecommunications industry is changing rapidly, and the
regulatory environment varies substantially from state to state. As deregulation
at the federal level occurs, some states are reassessing the level and scope of
regulation that may be applicable to us. Some of our operations are also subject
to various environmental, safety, health and other governmental regulations.
Future regulatory, judicial or legislative activities could have a material
adverse effect on us.
The Telecommunications Act may have potentially significant effects on our
operations. The Telecommunications Act allows the Regional Bell Operating
Companies to enter the long distance business and enables other entities,
including entities affiliated with power utilities and ventures between local
exchange carriers and cable television companies, to provide an expanded range
of telecommunications services. Entry of these companies into the long distance
business would result in substantial additional competition in communications
services. This may have a material adverse effect on us and our customers that
are communications services providers themselves. However, we believe that entry
by the Regional Bell Operating Companies and other companies into the market
will create opportunities for us to sell fiber or lease long distance
high-volume capacity.
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We monitor compliance with federal, state and local regulations governing the
discharge and disposal of hazardous and environmentally sensitive materials,
including the emission of electromagnetic radiation. We believe that we are in
compliance with these regulations; however, any discharge, disposal or emission
could have a material adverse effect on us.
Reliance on Key Personnel
Our operations are managed by key executive officers. The loss of any of these
executive officers could have a material adverse effect on us. We believe that
our growth and future success will depend in large part on our continued ability
to attract and retain highly skilled and qualified personnel. The competition
for qualified personnel in the telecommunications industry is intense. We cannot
assure you that we will be able to hire or retain necessary personnel. The loss
of certain key members of senior management or the failure to recruit additional
qualified personnel in the future could significantly impede our ability to
complete the integration of acquired businesses and to attain our financial,
expansion, marketing and other objectives.
Concentration of Voting Power; Potential Conflicts of Interest
Philip F. Anschutz, a director and Chairman of Qwest, beneficially owned
approximately 46.1% of the issued and outstanding shares of Common Stock at
December 31, 1998. Mr. Anschutz continues to have the power to elect all the
directors of Qwest and to control the vote on all other matters, including
significant corporate actions. Also, Mr. Anschutz is a director and holds
approximately 5% of the stock of Union Pacific Railroad Company. Subsidiaries of
that company own railroad rights of way on which a significant portion of our
network has been and will be built.
Liquid Trading Market for the 7.50% Notes May Not Develop
There is no established trading market for the 7.50% Notes. The initial
purchaser of the 7.50% Notes has informed us that it currently intends to make a
market in the New Notes. However, the initial purchaser has no obligation to do
so and may discontinue making a market at any time without notice. In addition,
the liquidity of any trading market in the 7.50% Notes will depend upon a number
of factors including:
- - the number of holders of the 7.50% Notes;
- - the overall market for similar securities;
- - our financial performance and prospects; and
- - prospects for companies in our industry generally.
As a result, we cannot assure you that an active trading market will develop for
the 7.50% Notes.
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THE EXCHANGE OFFER
PURPOSE OF THE EXCHANGE OFFER
The Old Notes were originally issued and sold on November 4, 1998 in an
offering that was exempt from registration under the Securities Act in reliance
upon the exemptions provided by Section 4(2), Rule 144A and Regulation S of the
Securities Act. Accordingly, the Old Notes may not be reoffered, resold or
otherwise pledged, hypothecated or transferred in the United States unless so
registered or unless an exemption from the registration requirements of the
Securities Act and applicable state securities laws is available.
As a condition to the sale of the Old Notes, the Company and the initial
purchaser of the Old Notes entered into the Registration Agreement as of
November 4, 1998. Pursuant to the Registration Agreement, the Company agreed
that it would (i) file with the Commission a Registration Statement under the
Securities Act with respect to the New Notes by February 2, 1999; (ii) use its
best efforts to cause such Registration Statement to be declared effective under
the Securities Act by March 3, 1999; and (iii) consummate an offer of the New
Notes in exchange for surrender of the Old Notes by April 2, 1999. A copy of the
Registration Agreement has been filed as an exhibit to the Registration
Statement of which this Prospectus is a part. The Registration Statement of
which this Prospectus is a part is intended to satisfy certain of the Company's
obligations under the Registration Agreement and the Purchase Agreement.
RESALE OF THE NEW NOTES
Based upon no-action letters issued by the staff of the Commission to third
parties, the Company believes that the New Notes issued pursuant to the Exchange
Offer in exchange for Old Notes would in general be freely transferable after
the Exchange Offer without further registration under the Securities Act if the
holder of the New Notes represents (i) that it is not an "affiliate," as defined
in Rule 405 of the Securities Act, of the Company, (ii) that it is acquiring the
New Notes in the ordinary course of its business and (iii) that it has no
arrangement or understanding with any person to participate in the distribution
(within the meaning of the Securities Act) of the New Notes; provided that, in
the case of broker-dealers, a prospectus meeting the requirements of the
Securities Act be delivered as required. However, the Commission has not
considered the Exchange Offer in the context of a no-action letter and there can
be no assurance that the staff of the Commission would make a similar
determination with respect to the Exchange Offer as in such other circumstances.
Holders of Old Notes wishing to accept the Exchange Offer must represent to the
Company that such conditions have been met. Each broker-dealer that receives New
Notes for its own account pursuant to the Exchange Offer, where it acquired the
Old Notes exchanged for such New Notes for its own account as a result of
market-making or other trading activities, may be deemed to be an "underwriter"
within the meaning of the Securities Act and must acknowledge that it will
deliver a prospectus in connection with the resale of such New Notes. The Letter
of Transmittal states that by so acknowledging and by delivering a prospectus, a
broker-dealer will not be deemed to admit that it is an "underwriter" within the
meaning of the Securities Act. This Prospectus, as it may be amended or
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supplemented from time to time, may be used by a broker-dealer in connection
with resales of New Notes received in exchange for Old Notes where such Old
Notes were acquired by such broker-dealer as a result of market-making
activities or other trading activities. The Company has agreed that, for a
period of one year after consummation of the Exchange Offer, it will make this
Prospectus available to any broker-dealer for use in connection with any such
resale. A broker-dealer that delivers such a prospectus to purchasers in
connection with such resales will be subject to certain of the civil liability
provisions under the Securities Act, and will be bound by the provisions of the
Registration Agreement (including certain indemnification and contribution
rights and obligations). See "Plan of Distribution."
TERMS OF THE EXCHANGE OFFER; PERIOD FOR TENDERING OLD NOTES
Upon the terms and subject to the conditions set forth in this Prospectus and
in the accompanying Letter of Transmittal (which together constitute the
Exchange Offer), the Company will accept for exchange any and all Old Notes
which are properly tendered on or prior to the Expiration Date and not withdrawn
as permitted below. The Company will issue $1,000 principal amount at maturity
of New Notes in exchange for each $1,000 principal amount at maturity of
outstanding Old Notes surrendered pursuant to the Exchange Offer. Old Notes may
be tendered only in integral multiples of $1,000.
The form and terms of the New Notes are the same as the form and terms of the
Old Notes except that (i) the exchange will be registered under the Securities
Act and hence the New Notes will not bear legends restricting their transfer,
(ii) the interest, interest rate step-up, original issue discount and cash
interest provisions will be modified or eliminated as appropriate and (iii)
holders of the New Notes will not be entitled to certain rights of holders of
Old Notes under the Registration Agreement, which rights with respect to Old
Notes will terminate upon the consummation of the Exchange Offer. The New Notes
will evidence the same debt as the Old Notes (which they replace) and will be
issued under, and be entitled to the benefits of, the same indenture.
As of the date of this Prospectus, an aggregate of $750,000,000 in principal
amount at maturity of the Old Notes is outstanding. This Prospectus, together
with the Letter of Transmittal, is first being sent on or about January __,
1999, to all holders of Old Notes known to the Company.
Holders of the Old Notes do not have any appraisal or dissenters' rights under
the indenture in connection with the Exchange Offer. The Company intends to
conduct the Exchange Offer in accordance with the provisions of the Registration
Agreement and the applicable requirements of the Securities Act, the Exchange
Act and the rules and regulations of the Commission thereunder. See "Description
of the 7.50% Notes--Exchange Offer; Registration Rights."
The Company expressly reserves the right, at any time or from time to time, to
extend the period of time during which the Exchange Offer is open, and thereby
delay acceptance for exchange of any Old Notes, by giving written notice of such
extension to the holders thereof as described below. During any such extension,
all Old Notes previously tendered will remain subject to the Exchange Offer and
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may be accepted for exchange by the Company. Any Old Notes not accepted for
exchange for any reason will be returned without expense to the tendering holder
thereof as promptly as practicable after the expiration of the Exchange Offer.
The Company expressly reserves the right to amend or terminate the Exchange
Offer upon the occurrence of any of the conditions of the Exchange Offer
specified below under "--Certain Conditions of the Exchange Offer." The Company
will give written notice of any extension, amendment, nonacceptance or
termination to the holders of the Old Notes as promptly as practicable, such
notice in the case of any extension to be issued by means of a press release or
other public announcement no later than 9:00 a.m., New York City time, on the
next business day after the previously scheduled Expiration Date.
PROCEDURES FOR TENDERING OLD NOTES
The tender to the Company of Old Notes by a holder thereof as set forth below
and the acceptance thereof by the Company will constitute a binding agreement
between the tendering holder and the Company upon the terms and subject to the
conditions set forth in this Prospectus and in the accompanying Letter of
Transmittal. Except as set forth below, a holder who wishes to tender Old Notes
for exchange pursuant to the Exchange Offer must transmit a properly completed
and duly executed Letter of Transmittal, including all other documents required
by such Letter of Transmittal, to the Exchange Agent at one of the addresses set
forth below under "--Exchange Agent" on or prior to the Expiration Date. In
addition, either (i) certificates for such Old Notes must be received by the
Exchange Agent along with the Letter of Transmittal, or (ii) a timely
confirmation of a book-entry transfer including an Agent's Message (a
"Book-Entry Confirmation") of such Old Notes, if such procedure is available,
into the Exchange Agent's account at The Depository Trust Company (the
"Book-Entry Transfer Facility") pursuant to the procedure for book-entry
transfer described below, must be received by the Exchange Agent prior to the
Expiration Date, or (iii) the holder must comply with the guaranteed delivery
procedures described below.
THE METHOD OF DELIVERY OF OLD NOTES, LETTERS OF TRANSMITTAL AND ALL OTHER
REQUIRED DOCUMENTS IS AT THE ELECTION AND RISK OF THE HOLDERS. IF SUCH DELIVERY
IS BY MAIL, IT IS RECOMMENDED THAT REGISTERED MAIL, PROPERLY INSURED, WITH
RETURN RECEIPT REQUESTED, BE USED. IN ALL CASES, SUFFICIENT TIME SHOULD BE
ALLOWED TO ASSURE TIMELY DELIVERY. NO LETTERS OF TRANSMITTAL OR OLD NOTES SHOULD
BE SENT TO THE COMPANY.
Any beneficial owner whose Old Notes are registered in the name of a broker,
dealer, commercial bank, trustee or other nominee and who wishes to tender
should contact such registered holder of Old Notes promptly and instruct such
registered holder of Old Notes to tender on behalf of the beneficial owner. If
such beneficial owner wishes to tender on its own behalf, such beneficial owner
must, prior to completing and executing the Letter of Transmittal and delivering
its Old Notes, either make appropriate arrangements to register ownership of the
Old Notes in such beneficial owner's name or obtain a properly completed power
of attorney from the registered holder of Old Notes. The transfer of record
ownership may take considerable time. If the Letter of Transmittal is signed by
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a person or persons other than the registered holder or holders of Old Notes,
such Old Notes must be endorsed or accompanied by appropriate powers of
attorney, in either case signed exactly as the name or names of the registered
holder or holders that appear on the Old Notes.
Signatures on a Letter of Transmittal or a notice of withdrawal, as the case
may be, must be guaranteed unless the Old Notes surrendered for exchange
pursuant thereto are tendered (i) by a registered holder of the Old Notes who
has not completed the box entitled "Special Issuance Instructions" or "Special
Delivery Instructions" on the Letter of Transmittal or (ii) for the account of
an Eligible Institution (as defined herein below). In the event that signatures
on a Letter of Transmittal or a notice of withdrawal, as the case may be, are
required to be guaranteed, such guarantees must be by a firm which is a member
of a registered national securities exchange or a member of the National
Association of Securities Dealers, Inc. or by a commercial bank or trustee
having an office or correspondent in the United States (collectively, "Eligible
Institutions"). If Old Notes are registered in the name of a person other than a
signer of the Letter of Transmittal, the Old Notes surrendered for exchange must
be endorsed by, or be accompanied by a written instrument or instruments of
transfer or exchange, in satisfactory form as determined by the Company in its
sole discretion, duly executed by the registered holder with the signature
thereon guaranteed by an Eligible Institution.
All questions as to the validity, form, eligibility (including time of
receipt) and acceptance of Old Notes tendered for exchange will be determined by
the Company in its sole discretion, which determination shall be final and
binding. The Company reserves the absolute right to reject any and all tenders
of any particular Old Notes not properly tendered or not to accept any
particular Old Notes whose acceptance might, in the judgment of the Company or
its counsel, be unlawful. The Company also reserves the absolute right to waive
any defects or irregularities or conditions of the Exchange Offer as to any
particular Old Notes either before or after the Expiration Date (including the
right to waive the ineligibility of any holder who seeks to tender Old Notes in
the Exchange Offer). The interpretation of the terms and conditions of the
Exchange Offer as to any particular Old Notes either before or after the
Expiration Date (including the Letter of Transmittal and the instructions
thereto) by the Company shall be final and binding on all parties. Unless
waived, any defects or irregularities in connection with tenders of Old Notes
for exchange must be cured within such reasonable period of time as the Company
shall determine. Neither the Company, the Exchange Agent nor any other person
shall be under any duty to give notification of any defect or irregularity with
respect to any tender of Old Notes for exchange, nor shall any of them incur any
liability for failure to give such notification.
If the Letter of Transmittal or any Old Notes or powers of attorney are signed
by trustees, executors, administrators, guardians, attorneys-in-fact, officers
of corporations or others acting in a fiduciary or representative capacity, such
persons should so indicate when signing, and, unless waived by the Company,
proper evidence satisfactory to the Company of their authority to so act must be
submitted.
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By tendering, each holder will represent to the Company, among other things,
(i) that it is not an "affiliate," as defined in Rule 405 of the Securities Act,
of the Company, or if it is an affiliate, it will comply with the registration
and prospectus delivery requirements of the Securities Act to the extent
applicable, (ii) that it is acquiring the New Notes in the ordinary course of
its business and (iii) at the time of the consummation of the Exchange Offer it
has no arrangement or understanding with any person to participate in the
distribution (within the meaning of the Securities Act) of the New Notes. If the
holder is a broker-dealer that will receive New Notes for its own account in
exchange for Old Notes that were acquired as a result of market-making
activities or other trading activities, the holder may be deemed to be an
"underwriter" within the meaning of the Securities Act and is required to
acknowledge in the Letter of Transmittal that it will deliver a prospectus in
connection with any resale of such New Notes; however, by so acknowledging and
by delivering a prospectus, the holder will not be deemed to admit that it is an
"underwriter" within the meaning of the Securities Act.
ACCEPTANCE OF OLD NOTES FOR EXCHANGE; DELIVERY OF NEW NOTES
Upon satisfaction or waiver of all of the conditions to the Exchange Offer,
the Company will accept, promptly after the Expiration Date, all Old Notes
properly tendered and will issue the New Notes promptly after acceptance of the
Old Notes. See "--Certain Conditions of the Exchange Offer" below. For purposes
of the Exchange Offer, the Company shall be deemed to have accepted properly
tendered Old Notes for exchange when, as and if the Company has given oral or
written notice thereof to the Exchange Agent, with written confirmation of any
oral notice to be given promptly thereafter.
The New Notes will bear interest at the same rate and on the same terms as the
Old Notes. Consequently, cash interest on the New Notes will accrue at a rate of
7.50% per annum and will be payable semiannually in arrears commencing on May 1,
1999 and thereafter on November 1 and May 1 of each year. Interest, if any, on
each New Note will accrue from the last interest payment date on which interest
was paid on the surrendered Old Note or, if no interest has been paid on such
Old Note, from the date on which cash interest on such Old Note would begin to
accrue. Consequently, holders whose Old Notes are accepted for exchange will be
deemed to have waived the right to receive any accrued but unpaid interest on
the Old Notes.
In all cases, the issuance of New Notes for Old Notes that are accepted for
exchange pursuant to the Exchange Offer will be made only after timely receipt
by the Exchange Agent of certificates for such Old Notes or a timely Book-Entry
Confirmation of such Old Notes into the Exchange Agent's account at the
Book-Entry Transfer Facility, a properly completed and duly executed Letter of
Transmittal and all other required documents. If any tendered Old Notes are not
accepted for any reason set forth in the terms and conditions of the Exchange
Offer, or if Old Notes are submitted for a greater amount than the holder
desires to exchange, such unaccepted or non-exchanged Old Notes will be returned
without expense to the tendering holder thereof (or, in the case of Old Notes
tendered by book-entry procedures described below, such non exchanged Old Notes
will be credited to an account maintained with such Book-Entry Transfer
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Facility) designated by the tendering holder as promptly as practicable after
the expiration or termination of the Exchange Offer.
CERTAIN CONDITIONS OF THE EXCHANGE OFFER
Notwithstanding any other term of the Exchange Offer, the Company will not be
required to accept for exchange, or to issue New Notes in exchange for, any Old
Notes and may terminate or amend the Exchange Offer as provided herein prior to
the Expiration Date, if because of any changes in law, or applicable
interpretations thereof by the Commission, or because any action or proceeding
is instituted or threatened in any court or governmental agency with respect to
the Exchange Offer, the Company determines that it is not permitted to effect
the Exchange Offer.
Holders may have certain rights and remedies against the Company under the
Registration Agreement should the Company fail to consummate the Exchange Offer,
notwithstanding a failure of the conditions stated above. Such conditions are
not intended to modify those rights or remedies in any respect.
BOOK-ENTRY TRANSFER
The Exchange Agent will make a request to establish an account with respect to
the Old Notes at the Book-Entry Transfer Facility for purposes of the Exchange
Offer within two business days after the date of this Prospectus, and any
financial institution that is a participant in the Book-Entry Transfer
Facility's systems may make book-entry delivery of Old Notes by causing the
Book-Entry Transfer Facility to transfer such Old Notes into the Exchange
Agent's account at the Book-Entry Transfer Facility in accordance with such
Book-Entry Transfer Facility's procedures for transfer. However, although
delivery of Old Notes may be effected through book-entry transfer at the Book-
Entry Transfer Facility, the Letter of Transmittal or facsimile thereof, or an
Agent's Message, with any required signature guarantees and any other required
documents, must, in any case, be transmitted to and received by the Exchange
Agent at one of the addresses set forth below under "--Exchange Agent" on or
prior to the Expiration Date or the guaranteed delivery procedures described
below must be complied with.
The term "Agent's Message" means a message, transmitted by DTC to, and
received by, the Exchange Agent and forming a part of a book-entry confirmation,
which states that DTC has received an express acknowledgment from the tendering
participant, which acknowledgment states that such participant has received and
agrees to be bound by the terms of the Letter of Transmittal, and the
Corporation may enforce the Letter of Transmittal against such participant.
GUARANTEED DELIVERY PROCEDURES
If a registered holder of the Old Notes desires to tender such Old Notes and
the Old Notes are not immediately available, or time will not permit such
holder's Old Notes or other required documents to reach the Exchange Agent
before the Expiration Date, or the procedure for book-entry transfer cannot be
completed on a timely basis, a tender may be effected if (i) the tender is made
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through an Eligible Institution, (ii) prior to the Expiration Date, the Exchange
Agent has received from such Eligible Institution a properly completed and duly
executed Letter of Transmittal (or a facsimile thereof) and Notice of Guaranteed
Delivery, substantially in the form provided by the Company (by telegram, telex,
facsimile transmission, mail or hand delivery), setting forth the name and
address of the holder of the Old Notes and the amount of Old Notes, stating that
the tender is being made thereby and guaranteeing that within five trading days
(on the Nasdaq Stock Market's National Market (the "Nasdaq National Market"))
after the date of execution of the Notice of Guaranteed Delivery, the
certificates for all physically tendered Old Notes, in proper form for transfer,
or a Book-Entry Confirmation, as the case may be, and any other documents
required by the Letter of Transmittal will be deposited by the Eligible
Institution with the Exchange Agent, and (iii) the certificates for all
physically tendered Old Notes, in proper form for transfer, or a Book-Entry
Confirmation, as the case may be, and all other documents required by the Letter
of Transmittal, are received by the Exchange Agent within five Nasdaq National
Market trading days after the date of execution of the Notice of Guaranteed
Delivery.
WITHDRAWAL RIGHTS
Tenders of Old Notes may be withdrawn at any time prior to the Expiration
Date.
For a withdrawal to be effective, a written notice of withdrawal must be
received by the Exchange Agent at one of the addresses set forth below under
"--Exchange Agent." Any such notice of withdrawal must specify the name of the
person having tendered the Old Notes to be withdrawn, identify the Old Notes to
be withdrawn (including the amount of such Old Notes), and (where certificates
for Old Notes have been transmitted) specify the name in which such Old Notes
are registered, if different from that of the withdrawing holder. If
certificates for Old Notes have been delivered or otherwise identified to the
Exchange Agent, then, prior to the release of such certificates the withdrawing
holder must also submit the serial numbers of the particular certificates to be
withdrawn and a signed notice of withdrawal with signatures guaranteed by an
Eligible Institution unless such holder is an Eligible Institution. If Old Notes
have been tendered pursuant to the procedure for book-entry transfer described
above, any notice of withdrawal must specify the name and number of the account
at the Book-Entry Transfer Facility to be credited with the withdrawn Old Notes
and otherwise comply with the procedures of such facility. All questions as to
the validity, form and eligibility (including time of receipt) of such notices
will be determined by the Company whose determination shall be final and binding
on all parties. Any Old Notes so withdrawn will be deemed not to have been
validly tendered for exchange for purposes of the Exchange Offer. Any Old Notes
which have been tendered for exchange but which are not exchanged for any reason
will be returned to the holder thereof without cost to such holder (or, in the
case of Old Notes tendered by book-entry transfer into the Exchange Agent's
account at the Book-Entry Transfer Facility pursuant to the book-entry transfer
procedures described above, such Old Notes will be credited to an account with
such Book-Entry Transfer Facility specified by the holder) as soon as
practicable after withdrawal, rejection of tender or termination of the Exchange
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Offer. Properly withdrawn Old Notes may be retendered by following one of the
procedures described under "--Procedures for Tendering Old Notes" above at any
time on or prior to the Expiration Date.
EXCHANGE AGENT
Bankers Trust Company has been appointed as the Exchange Agent for the
Exchange Offer. All executed Letters of Transmittal should be directed to the
Exchange Agent at the addresses set forth below. Questions and requests for
assistance, requests for additional copies of this Prospectus or of the Letter
of Transmittal and requests for Notices of Guaranteed Delivery should be
directed to the Exchange Agent addressed as follows:
Delivery To: Bankers Trust Company, Exchange Agent
BY MAIL: BY HAND:
BT Services Tennessee, Inc. Bankers Trust Company
Reorganization Unit Corporate Trust and Agency Group
P.O. Box 292737 Receipt & Delivery Window
Nashville, TN 37229-2737 123 Washington Street, 1st Floor
New York, NY 10006
For information, call:
(800) 735-7777
Confirm: (615) 835-3572
Fax: (615) 835-3701
BY OVERNIGHT MAIL OR COURIER:
BT Services Tennessee, Inc.
Corporate Trust and Agency Group
Reorganization Unit
648 Grassmere Park Road
Nashville, TN 37211
DELIVERY OF A LETTER OF TRANSMITTAL TO AN ADDRESS OTHER THAN AS SET FORTH
ABOVE OR TRANSMISSION OF INSTRUCTIONS VIA FACSIMILE OTHER THAN AS SET FORTH
ABOVE DOES NOT CONSTITUTE A VALID DELIVERY OF SUCH LETTER OF TRANSMITTAL.
FEES AND EXPENSES
The Company will not make any payment to brokers, dealers or others soliciting
acceptances of the Exchange Offer.
The estimated cash expenses to be incurred in connection with the Exchange
Offer of approximately $245,000 will be paid by the Company.
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ACCOUNTING TREATMENT
For accounting purposes, the Company will recognize no gain or loss as a
result of the Exchange Offer. The expenses of the Exchange Offer will be
amortized over the term of the New Notes.
TRANSFER TAXES
Holders who tender their Old Notes for exchange will not be obligated to pay
any transfer taxes in connection therewith, except that holders who instruct the
Company to register New Notes in the name of, or request that Old Notes not
tendered or not accepted in the Exchange Offer be returned to, a person other
than the registered tendering holder will be responsible for the payment of any
applicable transfer tax thereon.
REGULATORY MATTERS
The Company is not aware of any governmental or regulatory approvals that are
required in order to consummate the Exchange Offer.
CONSEQUENCES OF FAILURE TO EXCHANGE
Participation in the Exchange Offer is voluntary. Holders of the Old Notes
are urged to consult their financial and tax advisors in making their own
decisions on what action to take. See "Certain United States Federal Income Tax
Considerations."
The Old Notes that are not exchanged for the New Notes pursuant to the
Exchange Offer will remain restricted securities. Accordingly, such Old Notes
may only be offered, sold, pledged or otherwise transferred (A)(i) to a person
whom the seller reasonably believes is a qualified institutional buyer within
the meaning of Rule 144A in a transaction meeting the requirements of Rule 144A,
(ii) in an offshore transaction meeting the requirements of Rule 903 or Rule 904
of Regulation S under the Securities Act, or (iii) pursuant to an exemption from
registration under the Securities Act provided by Rule 144 thereunder (if
available) and (B) in accordance with all applicable securities laws of the
states of the United States. Under certain circumstances, the Company is
required to file a Shelf Registration Statement. See "Description of the 7.50%
Notes--Exchange Offer; Registration Rights."
PAYMENT OF ADDITIONAL INTEREST UPON REGISTRATION DEFAULT
In the event of a Registration Default (as hereinafter defined), additional
interest ("Liquidated Interest") will accrue on the 7.50% Notes (in addition to
the stated interest on the 7.50% Notes) from and including the date on which any
such Registration Default shall occur to but excluding the date on which all
Registration Defaults have been cured. Liquidated Interest will be payable in
cash semiannually in arrears each November 1 and May 1, at a rate per annum
equal to 0.50% of the principal amount at maturity of the 7.50% Notes during the
90-day period immediately following the occurrence of any Registration Default
and shall increase by 0.25% per annum of the principal amount at maturity of the
7.50% Notes at the end of each subsequent 90-day period, but in no event shall
such rates exceed 2.0% per annum in the aggregate regardless of the number of
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Registration Defaults. See "Description of the 7.50% Notes--Exchange Offer;
Registration Rights."
USE OF PROCEEDS
The Company will not receive any proceeds from the issuance of the New Notes
or the consummation of the Exchange Offer or any sale of New Notes to any
broker-dealer.
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CAPITALIZATION
The following table sets forth as of September 30, 1998 (i) the historical
consolidated capitalization of the Company, (ii) the pro forma capitalization of
the Company assuming the acquisition of Icon had occurred on September 30, 1998,
and (iii) the pro forma capitalization of the Company, as adjusted to give
effect to the redemption of $87.5 million of 10 7/8% Notes, the repayment of
$57.3 million of our equipment credit facility, the offering of the 7.25% Notes
Due 2008, the offering of the Old Notes and the use of the proceeds from these
offerings. All share and per share information with respect to Qwest included
herein gives effect to the Qwest two-for-one stock split effected in February
1998 in the form of a stock dividend. This table should be read in conjunction
with "Management's Discussion and Analysis of Financial Condition and Results of
Operations" and the Historical Consolidated Financial Statements and the notes
thereto, incorporated by reference into this Prospectus.
Sept. 30, 1998
Pro Forma as
Actual Pro Forma Adjusted(1)
(in millions)
Current portion of long-term debt(2) $ 235.9 $ 235.9 $ 3.4
======= ======== ========
10 7/8% Notes $ 250.0 $ 250.0 $ 162.5
9.47% Notes 382.6 382.6 382.6
8.29% Notes 316.9 316.9 316.9
7.25% Notes Due 2007 351.7 351.7 351.7
7.50% Notes - - 750.0
7.25% Notes - - 300.0
Other long-term debt 85.9 85.9 28.6
------- ------- -------
Total long-term debt (excluding current
portion) 1,387.1 1,387.1 2,292.3
------- ------- -------
Stockholders' equity
Preferred stock, $.01 par value; 25.0
million shares authorized; no - - -
shares issued and outstanding. .
Common stock, $.01 par value; 600.0 million
shares authorized; 332.7 3.3 3.4 3.4
million shares issued and outstanding(3)
.
Additional paid-in capital 4,603.2 4,853.8 4,853.8
Accumulated deficit .
(854.5) (864.5) (864.5)
------- ------- -------
Total stockholders' equity .
3,752.0 3,992.7 3,992.7
Total capitalization $5,139.1 $5,379.8 $6,285.0
======== ======== ========
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(1) The current portion of long-term debt was adjusted for the pay-down of
the Company's existing credit facility and lines of credit from the
proceeds of the 7.50% Notes in November 1998.
(2) The existing credit facility which expires December 31, 1998 and the
lines of credit are current liabilities and are included in current
portion of long-term debt.
(3) 35.0 million of the authorized shares of Common Stock are reserved for
issuance under the Equity Incentive Plan, 0.9 million of the authorized
shares of Common Stock are reserved for issuance under the Growth Share
Plan, 2.5 million of the authorized shares of Common Stock are reserved
for issuance under various 401(k) Plans of the Company, 0.8 million of
the authorized shares of Common Stock are reserved for issuance under
the Employee Stock Purchase Plan and 8.6 million of the authorized
shares of Common Stock are reserved for issuance under the warrant
issued to Anschutz Family Investment Company LLC. See
"Management-Equity Incentive Plan," "Management-Growth Share Plan" and
"Certain Transactions" in the documents incorporated by reference
herein.
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DESCRIPTION OF THE 7.50% NOTES
GENERAL
The New Notes will be issued under an Indenture (the "Indenture") between the
Company and Bankers Trust Company, as trustee under the Indenture (the
"Trustee"). Copies of the Indenture are available from the Company on request.
For purposes of this description of the 7.50% Notes, the term "Company" refers
to Qwest Communications International Inc. and does not include its subsidiaries
except for purposes of financial data determined on a consolidated basis. For
purposes of this description of the 7.50% Notes, the term "7.50% Notes" refers
to the New Notes and the Old Notes collectively. The New Notes and the Old Notes
are considered collectively to be a single class for all purposes under the
Indenture, including, without limitation, waivers, amendments, redemptions and
Offers to Purchase.
The following summary of certain provisions of the Indenture does not purport
to be complete and is subject to, and is qualified in its entirety by reference
to, the Trust Indenture Act of 1939, as amended (the "Trust Indenture Act"), and
to all of the provisions of the Indenture, including the definitions of certain
terms therein and those terms made a part of the Indenture by reference to the
Trust Indenture Act, as in effect on the date of the Indenture. The definitions
of certain capitalized terms used in the following summary are set forth below
under "--Certain Definitions."
The New Notes will be senior unsecured obligations of the Company, ranking
pari passu in right of payment with all existing and future senior unsecured
indebtedness of the Company, including the 10 7/8% Notes, the 9.47% Notes, the
8.29% Notes, the 7.25% Notes Due 2008 and the 7.25% Notes Due 2007, and will be
senior in right of payment to all existing and future indebtedness of the
Company expressly subordinated in right of payment to the 7.50% Notes. As of
September 30, 1998, the Company had $1,912.0 million of indebtedness
outstanding, none of which constituted secured indebtedness or subordinated
indebtedness.
The operations of the Company are conducted through its subsidiaries and,
therefore, the Company is dependent upon cash flow from those entities to meet
its obligations. The Company's subsidiaries will have no direct obligation to
pay amounts due on the 7.50% Notes and currently have no obligation to guarantee
the 7.50% Notes. As a result, the 7.50% Notes effectively will be subordinated
to all existing and future third-party indebtedness and other liabilities of the
Company's subsidiaries (including trade payables). As of September 30, 1998, on
a pro forma basis, after giving effect to the acquisition of Icon, the
redemption of $87.5 million of 10 7/8% Notes, the repayment of $57.3 million of
the equipment credit facility, the offering of the 7.25% Notes Due 2008, this
offering of the 7.50% Notes and the use of the proceeds therefrom, the total
liabilities of the Company's subsidiaries (after the elimination of loans and
advances by the Company to its subsidiaries) would have been approximately
$1,893.7 million, of which approximately $32.0 million in indebtedness was
secured by the assets of the borrowing subsidiaries. See "Description of Certain
Indebtedness." The Company expects that it or its subsidiaries will incur
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substantial additional indebtedness in the future. Any rights of the Company and
its creditors, including the holders of 7.50% Notes, to participate in the
assets of any of the Company's subsidiaries upon any liquidation or
reorganization of any such subsidiary will be subject to the prior claims of
that subsidiary's creditors (including trade creditors). In addition, the
Company's operations have generated operating losses in recent years, and there
can be no assurance that the Company will be able to achieve or sustain
operating profitability, or generate sufficient positive cash flow to pay the
principal of and interest on the 7.50% Notes. See "Risk Factors--Holding Company
Structure; Subordination of the 7.50% Notes to Indebtedness of Subsidiaries,"
"Risk Factors--Substantial Indebtedness; Ability to Incur Additional Debt," and
"Risk Factors--Operating Losses and Working Capital Deficits."
Principal, Maturity and Interest
The 7.50% Notes will be limited in aggregate principal amount to $750,000,000
and will mature on November 1, 2008. Interest on the 7.50% Notes will accrue at
a rate of 7.50% per annum and will be payable semiannually in arrears on May 1
and November 1 of each year, commencing May 1, 1999 to the holders of record on
the immediately preceding April 15 and October 15. Interest will be computed on
the basis of a 360-day year comprised of twelve 30-day months. Principal of,
premium, if any, and interest on the 7.50% Notes will be payable, and the 7.50%
Notes may be exchanged or transferred, at the office or agency of the Company,
which, unless otherwise provided by the Company, will be the offices of the
Trustee. At the option of the Company, interest may be paid by check mailed to
the registered holders at their registered addresses. The 7.50% Notes will be
issued without coupons and in fully registered form only, in minimum
denominations of $1,000 and integral multiples thereof. The 7.50% Notes will be
issued only against payment in immediately available funds. No service charge
will be made for any registration of transfer or exchange of the 7.50% Notes,
but the Company may require payment of a sum sufficient to cover any transfer
tax or other similar governmental charge payable in connection therewith. The
interest rate on the 7.50% Notes is subject to increase in the circumstances
(such additional interest being referred to as "Liquidated Interest") described
under "Exchange Offer; Registration Rights." All references herein to interest
on the 7.50% Notes shall include such Liquidated Interest, if appropriate.
Book-Entry System
The New Notes will initially be issued in the form of Global Securities (as
defined in the Indenture) held in book-entry form. The New Notes will be
deposited with the Trustee as custodian for the Depository, and the Depository
or its nominee will initially be the sole registered holder of the New Notes for
all purposes under the Indenture. Except as set forth below, a Global Security
may not be transferred except as a whole by the Depository to a nominee of the
Depository or by a nominee of the Depository to the Depository. Upon the
issuance of a Global Security, the Depository or its nominee will credit, on its
internal system, the accounts of persons holding through it with the respective
principal amounts of the individual beneficial interest represented by such
Global Security purchased by such persons in the offering of the New Notes. Such
accounts shall initially be designated by the initial purchaser of the New Notes
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<PAGE>
with respect to New Notes placed by the initial purchaser for the Company.
Ownership of beneficial interests in a Global Security will be limited to
persons that have accounts with the Depository ("participants") or persons that
may hold interests through participants. Ownership of beneficial interests by
participants in a Global Security will be shown on, and the transfer of that
ownership interest will be effected only through, records maintained by the
Depository or its nominee for such Global Security. Ownership of beneficial
interests in such Global Security by persons that hold through participants will
be shown on, and the transfer of that ownership interest within such participant
will be effected only through, records maintained by such participant. The laws
of some jurisdictions require that certain purchasers of securities take
physical delivery of such securities in definitive form. Such limits and such
laws may impair the ability to transfer beneficial interests in a Global
Security. Payment of principal of, premium, if any, and interest on New Notes
represented by any such Global Security will be made to the Depository or its
nominee, as the case may be, as the sole registered owner and the sole holder of
the New Notes represented thereby for all purposes under the Indenture. None of
the Company, the Trustee, any agent of the Company or the initial purchaser will
have any responsibility or liability for any aspect of the Depository's reports
relating to or payments made on account of beneficial ownership interests in a
Global Security representing any New Notes or for maintaining, supervising or
reviewing any of the Depository's records relating to such beneficial ownership
interests. The Company has been advised by the Depository that upon receipt of
any payment of principal of, premium, if any, or interest on any Global
Security, the Depository will immediately credit, on its book-entry registration
and transfer system, the accounts of participants with payments in amounts
proportionate to their respective beneficial interests in the principal or face
amount of such Global Security, as shown on the records of the Depository. The
Company expects that payments by participants to owners of beneficial interests
in a Global Security held through such participants will be governed by standing
instructions and customary practices as is now the case with securities held for
customer accounts registered in "street name" and will be the sole
responsibility of such participants. So long as the Depository or its nominee is
the registered owner or holder of such Global Security, the Depository or such
nominee, as the case may be, will be considered the sole owner or holder of the
New Notes represented by such Global Security for the purposes of receiving
payment on the New Notes, receiving notices and for all other purposes under the
Indenture and the New Notes. Beneficial interests in the New Notes will be
evidenced only by, and transfers thereof will be effected only through, records
maintained by the Depository and its participants. Except as provided above,
owners of beneficial interests in a Global Security will not be entitled to and
will not be considered the holders of such Global Security for any purposes
under the Indenture. Accordingly, each person owning a beneficial interest in a
Global Security must rely on the procedures of the Depository and, if such
person is not a participant, on the procedures of the participant through which
such person owns its interest, to exercise any rights of a holder under the
Indenture. The Company understands that under existing industry practices, in
the event that the Company requests any action of holders or that an owner of a
beneficial interest in a Global Security desires to give or take any action that
a holder is entitled to give or take under the Indenture, the Depository would
authorize the participants holding the relevant beneficial interest to give or
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<PAGE>
take such action, and such participants would authorize beneficial owners owning
through such participants to give or take such action or would otherwise act
upon the instructions of beneficial owners owning through them. The Depository
has advised the Company that it will take any action permitted to be taken by a
holder of New Notes (including the presentation of New Notes for exchange as
described below) only at the direction of one or more participants to whose
account with the Depository interests in the Global Security are credited and
only in respect of such portion of the aggregate principal amount of the New
Notes as to which such participant or participants has or have given such
direction. The Depository has advised the Company that the Depository is a
limited-purpose trust company organized under the Banking Law of the State of
New York, a "banking organization" within the meaning of New York Banking Law, a
member of the Federal Reserve System, a "clearing corporation" within the
meaning of the New York Uniform Commercial Code and a "clearing agency"
registered under the Exchange Act. The Depository was created to hold the
securities of its participants and to facilitate the clearance and settlement of
securities transactions among its participants in such securities through
electronic book-entry changes in accounts of the participants, thereby
eliminating the need for physical movement of securities certificates. The
Depository's participants include securities brokers and dealers (including the
initial purchaser), banks, trust companies, clearing corporations and certain
other organizations, some of whom (and/or their representatives) own the
Depository. Access to the Depository's book-entry system is also available to
others, such as banks, brokers, dealers and trust companies that clear through
or maintain a custodial relationship with a participant, either directly or
indirectly.
Certificated New Notes
New Notes represented by a Global Security are exchangeable for certificated
New Notes only if (i) the Depository notifies the Company that it is unwilling
or unable to continue as a depository for such Global Security or if at any time
the Depository ceases to be a clearing agency registered under the Exchange Act,
and a successor depository is not appointed by the Company within 90 days, (ii)
the Company executes and delivers to the Trustee a notice that such Global
Security shall be so transferable, registrable and exchangeable, and such
transfer shall be registrable or (iii) there shall have occurred and be
continuing an Event of Default or an event which, with the giving of notice or
lapse of time or both, would constitute an Event of Default with respect to the
New Notes represented by such Global Security. Any Global Security that is
exchangeable for certificated New Notes pursuant to the preceding sentence will
be transferred to, and registered and exchanged for, certificated New Notes in
authorized denominations and registered in such names as the Depository or its
nominee holding such Global Security may direct. Subject to the foregoing, a
Global Security is not exchangeable, except for a Global Security of like
denomination to be registered in the name of the Depository or its nominee. In
the event that a Global Security becomes exchangeable for certificated New
Notes, (i) certificated New Notes will be issued only in fully registered form
in denominations of $1,000 or integral multiples thereof, (ii) payment of
principal, any repurchase price, and interest on the certificated New Notes will
be payable, and the transfer of the certificated New Notes will be registrable,
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<PAGE>
at the office or agency of the Company maintained for such purposes and (iii) no
service charge will be made for any issuance of the certificated New Notes,
although the Company may require payment of a sum sufficient to cover any tax or
governmental charge imposed in connection therewith. In addition, such
certificates will bear the legend referred to under "Notice to Investors--Rule
144A" (unless the Company determines otherwise in accordance with applicable
law) subject, with respect to such New Notes, to the provisions of such legend.
Optional Redemption
The 7.50% Notes will be subject to redemption at the option of the Company, in
whole or in part, at any time upon not less than 30 and not more than 60 days'
prior notice at a redemption price equal to the principal amount thereof, plus
accrued and unpaid interest thereon (if any) to the redemption date plus the
Applicable Make-Whole Premium. For purposes of this "Optional Redemption"
provision, the following definitions shall apply: "Applicable Make-Whole
Premium" means, with respect to any Note, the excess of (A) the present value at
the redemption date of the required interest and principal payments due on such
Note, computed using a discount rate equal to the Treasury Rate plus 37.5 basis
points, over (B) the then outstanding principal amount of such Note. "Treasury
Rate" means, with respect to any redemption date, the rate per annum equal to
the semiannual equivalent yield to maturity of the Comparable Treasury Issue (as
defined below), assuming a price for the Comparable Treasury Issue (expressed as
a percentage of its principal amount) equal to the Comparable Treasury Price (as
defined below) for such redemption date. "Comparable Treasury Issue" means the
United States Treasury security selected by a Reference Treasury Dealer (as
defined below) appointed by the Company as having a maturity comparable to the
remaining term of the 7.50% Notes to be redeemed that would be utilized, at the
time of selection and in accordance with customary financial practice, in
pricing new issues of corporate debt securities of comparable maturity to the
remaining term of such 7.50% Notes. "Comparable Treasury Price" means, with
respect to any redemption date, (i) the average of the bid and asked prices for
the Comparable Treasury Issue (expressed in each case as a percentage of its
principal amount) on the third business day preceding such redemption date, as
set forth in the daily statistical release (or any successor release) published
by the Federal Reserve Bank of New York and designated "Composite 3:30 p.m.
Quotations for U.S. Government Securities" or (ii) if such release (or any
successor release) is not published or does not contain such prices on such
business day, (A) the average of the Reference Treasury Dealer Quotations (as
defined below) for such redemption date, after excluding the highest and lowest
such Reference Treasury Dealer Quotations, or (B) if the Company obtains fewer
than four such Reference Treasury Dealer Quotations, the average of all such
Quotations. "Reference Treasury Dealer Quotations" means, with respect to each
Reference Treasury Dealer and any redemption date, the average, as determined by
the Company, of the bid and asked prices for the Comparable Treasury Issue
(expressed in each case as a percentage of its principal amount) quoted in
writing to the Company by such Reference Treasury Dealer at 5:00 p.m. on the
third business day preceding such redemption date. "Reference Treasury Dealer"
means each of Salomon Smith Barney Inc., Merrill Lynch, Pierce, Fenner & Smith
Incorporated, Donaldson Lufkin & Jenrette Securities Corporation and Lehman
Brothers Inc. and their respective successors; provided, however, that if any of
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the foregoing shall cease to be a primary U.S. Government securities dealer in
The City of New York (a "Primary Treasury Dealer"), the Company shall substitute
therefor another Primary Treasury Dealer.
Mandatory Redemption
Except as set forth under "--Certain Covenants--Change of Control" and
"--Certain Covenants-- Limitation on Asset Dispositions," the Company is not
required to make mandatory redemption payments or sinking fund payments with
respect to the 7.50% Notes.
Certain Covenants
Suspended Covenants
During any period of time (a "Suspension Period") that (i) the ratings
assigned to the 7.50% Notes by both the Rating Agencies are Investment Grade
Ratings and (ii) no Default has occurred and is continuing under the Indentures,
the Company and its Restricted Subsidiaries will not be subject to the
provisions of the Indenture described below under "--Limitation on Consolidated
Debt," "--Limitation on Debt and Preferred Stock of Restricted Subsidiaries,"
"--Limitation on Restricted Payments," "--Limitation on Dividend and Other
Payment Restrictions Affecting Restricted Subsidiaries," "--Limitation on
Issuances of Certain Guarantees by, and Debt Securities of, Restricted
Subsidiaries," "--Limitation on Asset Dispositions," "--Limitation on Issuances
and Sales of Capital Stock of Restricted Subsidiaries," "--Transactions with
Affiliates and other Related Persons," clause (ii) of "--Limitation on Sale and
Leaseback Transactions" and clause (d) of "--Mergers, Consolidations and Certain
Sales of Assets" (collectively, the "Suspended Covenants"). In the event that
the Company and its Restricted Subsidiaries are not subject to the Suspended
Covenants with respect to the 7.50% Notes for any period of time as a result of
the preceding sentence and, subsequently, one or both Rating Agencies withdraws
or downgrades the ratings assigned to such 7.50% Notes below the required
Investment Grade Ratings, then the Company and its Restricted Subsidiaries will
thereafter again be subject to the Suspended Covenants and compliance with
respect to Restricted Payments made after the time of such withdrawal or
downgrade will be calculated in accordance with the terms of the covenant
described below under "Limitation on Restricted Payments" as if such covenant
had been in effect since the date of the Indenture. Notwithstanding the
foregoing, neither (a) the continued existence, after the date of such
withdrawal or downgrade, of facts and circumstances or obligations that were
Incurred or otherwise came into existence during a Suspension Period nor (b) the
performance of any such obligations, shall constitute a breach of any covenant
set forth in the Indenture or cause a Default or Event of Default thereunder;
provided that (1) the Company and its Restricted Subsidiaries did not Incur or
otherwise cause such facts and circumstances or obligations to exist in
anticipation of a withdrawal or downgrade below investment grade and (2) the
Company reasonably believed that such Incurrence or actions would not result in
such a withdrawal or downgrade. For purposes of clauses (1) and (2) in the
preceding sentence, anticipation and reasonable belief may be determined by the
Company and shall be conclusively evidenced by a board resolution to such effect
adopted in good faith by the
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Board of Directors of the Company. The Indenture contains, among others, the
following covenants:
Limitation on Consolidated Debt. (a) The Company may not, and may not permit any
Restricted Subsidiary to, Incur any Debt, unless, after giving effect to the
application of the proceeds thereof, no Default or Event of Default would occur
as a consequence of such Incurrence or be continuing following such Incurrence
and either (i) the ratio of (A) 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 or repaid since such balance sheet date and the
receipt and application of the proceeds thereof, to (B) 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 any such Debt had been Incurred
and the proceeds thereof had been applied at the beginning of such four fiscal
quarters, would be less than 5.5 to 1.0 for Debt Incurred on or prior to April
1, 2000 and 5.0 to 1.0 for Debt Incurred thereafter, or (ii) 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 and
any other Debt Incurred or repaid since such balance sheet date and the receipt
and application of the proceeds thereof, is less than 2.0 to 1.0. As of
September 30, 1998, on a pro forma basis after giving effect to the acquisition
of Icon, the offering of the Old Notes, the offering of the 7.25% Notes and the
use of proceeds therefrom, the Company's Consolidated Capital Ratio would have
been approximately 0.6 to 1.0. (b) Notwithstanding the foregoing limitation, the
Company and any Restricted Subsidiary may Incur any and all of the following
(each of which shall be given independent effect): (i) Debt under the 7.50%
Notes, the Indenture and any Restricted Subsidiary Guarantee; (ii) (A) Debt
Incurred subsequent to March 31, 1997 under Credit Facilities in an aggregate
principal amount at any time outstanding not to exceed $150 million plus (B)
Debt Incurred subsequent to March 31, 1997 under one or more Credit Facilities
that are revolving credit facilities in an aggregate principal amount at any
time outstanding not to exceed the greater of (x) $100 million or (y) 85% of
Eligible Receivables; (iii) Purchase Money Debt, provided that the amount of
such Purchase Money Debt does not exceed 100% of the cost of the construction,
installation, acquisition or improvement of the applicable Telecommunications
Assets; (iv) 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 to a Person other than the Company or another such Restricted
Subsidiary, the provisions of this clause (iv) shall no longer be applicable to
such Debt and such Debt shall be deemed to have been Incurred by the issuer
thereof at the time of such transfer or other disposition; (v) Debt Incurred to
renew, extend, refinance, defease or refund (each, a "refinancing") the 7.50%
Notes, the notes issued under the Senior Note Indentures or Debt of the Company
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Incurred pursuant to clause (iii) of this paragraph (b), 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 board of
directors of the Company as necessary to accomplish such refinancing by means of
a tender offer or privately negotiated repurchase, plus the expenses of the
Company Incurred in connection with such refinancing; provided, however, that
Debt the proceeds of which are used to refinance the 7.50% Notes or Debt which
is pari passu to the 7.50% Notes or Debt which is subordinate in right of
payment to the 7.50% Notes shall only be permitted under this clause (v) if (A)
in the case of any refinancing of the 7.50% Notes or Debt which is pari passu to
the 7.50% Notes, the refinancing Debt is made pari passu to the 7.50% Notes or
constitutes Subordinated Debt, and, in the case of any refinancing of
Subordinated Debt, the refinancing Debt constitutes Subordinated Debt and (B) in
any 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 stated maturity 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 the acceleration of any payment
with respect to 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 time the same are required by the terms 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 of control pursuant to
provisions substantially similar to those described under "--Change of Control";
(vi) Debt consisting of Permitted Interest Rate and Currency Protection
Agreements; (vii) Debt secured by Receivables originated by the Company or any
Restricted Subsidiary and related assets, provided that such Debt is nonrecourse
to the Company and any of its other Restricted Subsidiaries and provided further
that Receivables shall not be available at any time to secure Debt of the
Company under this clause (vii) to the extent that they are used at such time as
the basis for the Incurrence of Debt in excess of $100 million pursuant to
clause (ii)(B)(y) of this paragraph (b); and (viii) Debt not otherwise permitted
to be Incurred pursuant to clauses (i) through (vii) above, which, together with
any other outstanding Debt Incurred pursuant to this clause (viii), has an
aggregate principal amount not in excess of $25 million at any time outstanding.
Limitation on Debt and Preferred Stock of Restricted Subsidiaries. The Company
may not permit any Restricted Subsidiary that is not a Guarantor to Incur any
Debt or issue any Preferred Stock except any and all of the following (each of
which shall be given independent effect): (i) Restricted Subsidiary Guarantees;
(ii) Debt of Restricted Subsidiaries under Credit Facilities permitted to be
Incurred pursuant to clause (ii) of paragraph (b) of "--Limitation on
Consolidated Debt"; (iii) Purchase Money Debt of Restricted Subsidiaries
permitted to be Incurred pursuant to clause (iii) of paragraph (b) of
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"--Limitation on Consolidated Debt"; (iv) Debt owed by a Restricted Subsidiary
of the Company to the Company or a Restricted Subsidiary of the Company
permitted to be Incurred pursuant to clause (iv) of paragraph (b) of
"--Limitation on Consolidated Debt"; (v) Debt of Restricted Subsidiaries
consisting of Permitted Interest Rate and Currency Protection Agreements
permitted to be Incurred pursuant to clause (vi) of paragraph (b) of
"--Limitation on Consolidated Debt"; (vi) Debt of Restricted Subsidiaries
secured by Receivables originated by the Company or any Restricted Subsidiary
and related assets permitted to be Incurred pursuant to clause (vii) of
paragraph (b) of "--Limitation on Consolidated Debt"; (vii) Debt of Restricted
Subsidiaries permitted to be Incurred pursuant to clause (viii) of paragraph (b)
of "--Limitation on Consolidated Debt"; (viii) Preferred Stock issued to and
held by the Company or a Restricted Subsidiary; (ix) Debt Incurred or Preferred
Stock issued by a Person prior to the time (A) such Person became a Restricted
Subsidiary, (B) such Person merges into or consolidates with a Restricted
Subsidiary or (C) another Restricted Subsidiary merges into or consolidates with
such Person (in a transaction in which such Person becomes a Restricted
Subsidiary), which Debt or Preferred Stock was not Incurred or issued in
anticipation of such transaction and was outstanding prior to such transaction;
and (x) Debt or Preferred Stock which is exchanged for, or the proceeds of which
are used to renew, extend, refinance, defease, refund or redeem any Debt of a
Restricted Subsidiary permitted to be Incurred pursuant to clause (iii) of this
paragraph or any Debt or Preferred Stock of a Restricted Subsidiary permitted to
be Incurred pursuant to clause (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
applicable 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 (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 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
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or a Restricted Subsidiary) which is conditioned upon the change of control of
the Company pursuant to provisions substantially similar to those contained in
the Indenture described under "--Change of Control," and provided further that
in the case of any exchange or redemption of Preferred Stock of a Restricted
Subsidiary, such Preferred Stock may only be exchanged for or redeemed with
Preferred Stock of such Restricted Subsidiary.
Limitation on Restricted Payments. The Company (i) may not, and may not permit
any Restricted Subsidiary to, directly or indirectly, declare or pay any
dividend, or make any distribution, in respect of its Capital Stock or to the
holders thereof, excluding any dividends or distributions which are made solely
to the Company or a Restricted Subsidiary (and, if such Restricted Subsidiary is
not a Wholly Owned Subsidiary, to the other stockholders of such Restricted
Subsidiary on a pro rata basis) or 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 (x) any Capital Stock of the
Company, any Restricted Subsidiary or any Related Person of the Company (other
than a permitted refinancing) or (y) any options, warrants or rights to purchase
or acquire shares of Capital Stock of the Company, any Restricted Subsidiary or
any Related Person of the Company or any securities convertible or exchangeable
into shares of Capital Stock of the Company, any Restricted Subsidiary or any
Related Person of the Company (other than a permitted refinancing), except, in
any such case, any such purchase, redemption or retirement or acquisition for
value paid to the Company or a Restricted Subsidiary (or, in the case of any
such purchase, redemption or other retirement or acquisition for value with
respect to a Restricted Subsidiary that is not a Wholly Owned Subsidiary, paid
to the Company or a Restricted Subsidiary, or to the other stockholders of such
Restricted Subsidiary that is not a Wholly Owned Subsidiary, on a pro rata
basis); (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; 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 7.50% Notes (other than a permitted refinancing) (each
of clauses (i) through (iv) being a "Restricted Payment") if: (1) an Event of
Default, or an event that with the passing of time or the giving of notice, or
both, would constitute an Event of Default, shall have occurred and be
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 terms of the
Indenture described in paragraph (a) of "--Limitation on Consolidated Debt"
above, or (3) upon giving effect to such Restricted Payment, the aggregate of
all Restricted Payments from March 31, 1997 exceeds the sum of: (a) 50% of
cumulative Consolidated Net Income (or, in the case that Consolidated Net Income
shall be negative, 100% of such negative amount) since the end of the last full
fiscal quarter prior to March 31, 1997 through the last day of the last full
fiscal quarter ending at least 45 days prior to the date of such Restricted
Payment, (b) plus $5 million, (c) less, in the case of any Designation with
respect to a Restricted Subsidiary that was made after March 31, 1997, an amount
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equal to the Designation Amount with respect to such Restricted Subsidiary, (d)
plus, in the case of any Revocation made after March 31, 1997, an amount equal
to the lesser of the Designation Amount with respect to the Subsidiary with
respect to which such Designation was made or the Fair Market Value of the
Investment of the Company and its Restricted Subsidiaries in such Subsidiary at
the time of Revocation; provided, however, that the Company or a Restricted
Subsidiary of the Company may make any Restricted Payment with the aggregate net
cash proceeds received after March 31, 1997 as capital contributions to the
Company or from the issuance (other than to a 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 Subsidiary) of the
Company after March 31, 1997. Notwithstanding the foregoing limitation, (i) the
Company and any Restricted Subsidiary may make Permitted Investments; (ii) the
Company may pay any dividend on Capital Stock of any class of the Company 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; (iii) the Company may repurchase any shares of its Common
Stock or options to acquire its Common Stock from Persons who were formerly
directors, officers or employees of the Company or any of its Subsidiaries or
Affiliates, provided that the aggregate amount of all such repurchases made
pursuant to this clause (iii) shall not exceed $1 million in any twelve-month
period; (iv) the Company and any Restricted Subsidiary may refinance any Debt
otherwise permitted by clause (v) of paragraph (b) under "--Limitation on
Consolidated Debt" above or clause (x) under "--Limitation on Debt and Preferred
Stock of Restricted Subsidiaries" above; and (v) the Company and any Restricted
Subsidiary may retire or repurchase any Capital Stock of the Company or of any
Restricted Subsidiary in exchange for, or out of the proceeds of the
substantially concurrent sale (other than to a Subsidiary of the Company) of,
Capital Stock (other than Disqualified Stock) of the Company.
Limitation on Dividend and Other Payment Restrictions Affecting Restricted
Subsidiaries. (a) 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 (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 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.
(b) Notwithstanding the foregoing limitation, the Company may, and may permit
any Restricted Subsidiary to, create or otherwise cause or suffer to exist any
such encumbrance or restriction (i) pursuant to any agreement in effect on March
31, 1997; (ii) any customary encumbrance or restriction applicable to a
Restricted Subsidiary that is contained in an agreement or instrument governing
or relating to Debt contained in any Credit Facilities or Purchase Money Debt,
provided that the provisions of such agreement permit the payment of interest
and mandatory payment or prepayment of principal pursuant to the terms of the
Indenture and the 7.50% Notes and other Debt that is solely an obligation of the
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Company, but provided further that such agreement may nevertheless contain
customary net worth, leverage, invested capital and other financial covenants,
customary covenants regarding the merger of or sale of all or any substantial
part of the assets of the Company or any Restricted Subsidiary, customary
restrictions on transactions with Affiliates, and customary subordination
provisions governing Debt owed to the Company or any Restricted Subsidiary;
(iii) 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; (iv) pursuant to an agreement
effecting a renewal, refunding, permitted refinancing or extension of Debt
Incurred pursuant to an agreement referred to in clause (i), (ii) or (iii) of
this paragraph (b), provided, however, that the provisions contained in such
renewal, refunding or extension agreement relating to such encumbrance or
restriction are no more restrictive in any material respect than the provisions
contained in the agreement the subject thereof; (v) in the case of clause (iii)
of paragraph (a) above, restrictions contained in any security agreement
(including a Capital Lease Obligation) securing Debt of the Company or a
Restricted Subsidiary otherwise permitted under the Indenture, but only to the
extent such restrictions restrict the transfer of the property subject to such
security agreement; (vi) in the case of clause (iii) of paragraph (a) above,
customary nonassignment provisions entered into in the ordinary course of
business in leases and other agreements and customary restrictions contained in
asset sale agreements limiting the transfer of such property or assets pending
the closing of such sale; (vii) any restriction with respect to a Restricted
Subsidiary 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 the 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 the
consummation or abandonment of such transaction occurs within one year of the
date such agreement was entered into; (viii) pursuant to applicable law; and
(ix) pursuant to the Indenture, the 7.50% Notes, the Senior Note Indentures and
the notes outstanding under the Senior Note Indentures.
Limitation on Liens. The Company may not, and may not permit any Restricted
Subsidiary to, Incur or suffer to exist any Lien on or with respect to any
property or assets now owned or acquired after March 31, 1997 to secure any Debt
without making, or causing such Restricted Subsidiary to make, effective
provision for securing the 7.50% Notes (x) equally and ratably with 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
7.50% Notes, 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 March 31, 1997 and securing Debt outstanding on March 31, 1997; (ii)
Liens in favor of the Company or any Restricted Subsidiary; (iii) Liens to
secure the 7.50% Notes; (iv) Liens to secure Restricted Subsidiary Guarantees;
(v) Liens to secure Debt under Credit Facilities permitted to be Incurred
pursuant to clause (ii) of paragraph (b) of "--Limitation on Consolidated Debt";
(vi) Liens on real or personal property of the Company or a Restricted
Subsidiary constructed, installed, acquired or constituting improvements made
after the date of original issuance of the 7.50% Notes to secure Purchase Money
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Debt permitted to be Incurred pursuant to clause (iii) of paragraph (b) of
"--Limitation on Consolidated Debt"; provided, however, that (a) the principal
amount of any Debt secured by such a Lien does not exceed 100% of such purchase
price or cost of construction, installation or improvement of the property
subject to such Lien, (b) such Lien attaches to such property prior to, at the
time of or within 270 days after the acquisition, the completion of
construction, installation or improvement or the commencement of operation of
such property and (c) such Lien does not extend to or cover any property other
than the specific item of property (or portion thereof) acquired, constructed,
installed or constituting the improvements financed by the proceeds of such
Purchase Money Debt; (vii) 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; (viii) 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), (iii), (iv), (v), (vi) and (vii) 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 (v) of paragraph (b) under
"--Limitation on Consolidated Debt" above or clause (x) under "--Limitation on
Debt and Preferred Stock of Restricted Subsidiaries" above; (ix) Liens to secure
debt consisting of Permitted Interest Rate and Currency Protection Agreements
permitted to be Incurred pursuant to clause (vi) of paragraph (b) under
"--Limitation on Consolidated Debt"; (x) Liens to secure Debt secured by
Receivables permitted to be Incurred pursuant to clause (vii) of paragraph (b)
under "--Limitation on Consolidated Debt"; (xi) Liens to secure Debt of
Restricted Subsidiaries permitted to be Incurred pursuant to clause (viii) of
paragraph (b) under "--Limitation on Consolidated Debt"; (xii) Liens not
otherwise permitted by the foregoing clauses (i) through (xi) in an amount not
to exceed 5% of the Company's Consolidated Tangible Assets; and (xiii) Permitted
Liens.
Limitation on Issuances of Certain Guarantees by, and Debt Securities of,
Restricted Subsidiaries. The Company may not (i) permit any Restricted
Subsidiary to, directly or indirectly, guarantee any Debt Securities of the
Company or (ii) permit any Restricted Subsidiary to issue any Debt Securities
unless, in either such case, such Restricted Subsidiary simultaneously executes
and delivers Restricted Subsidiary Guarantees providing for a Guarantee of
payment of the 7.50% Notes.
Limitation on Sale and Leaseback Transactions. The Company may not, and may not
permit any Restricted Subsidiary to, directly or indirectly, enter into, assume,
Guarantee or otherwise become liable with respect to any Sale and Leaseback
Transaction, other than a Sale and Leaseback Transaction between the Company or
a Restricted Subsidiary on the one hand and a Restricted Subsidiary or the
Company on the other hand, unless (i) the Company or such Restricted Subsidiary
would be entitled to Incur a Lien to secure Debt by reason of the provisions
described under "--Limitation on Liens" above, equal in amount to the
Attributable Value of the Sale and Leaseback Transaction without equally and
ratably securing the 7.50% Notes and (ii) the Sale and Leaseback Transaction is
treated as an Asset Disposition and all of the conditions of the Indenture
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described under "--Limitation on Asset Dispositions" below (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 as Net Available
Proceeds for purposes of such covenant.
Limitation on Asset Dispositions. The Company may not, and may not permit any
Restricted Subsidiary to, make any Asset Disposition 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 of the Company in good faith
and evidenced by a resolution of the board of directors of the Company filed
with the Trustee; and (ii) at least 75% of the consideration for such
disposition consists of cash or Cash Equivalents or the assumption of Debt of
the Company (other than Debt that is subordinated to the 7.50% Notes) or of the
Restricted Subsidiary and release from all liability on the Debt assumed. If the
aggregate amount of Net Available Proceeds within any 12-month period exceeds $5
million, then all such Net Available Proceeds shall be applied within 360 days
of the last such Asset Disposition (1) first, to the permanent repayment or
reduction of Debt then outstanding under any Credit 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 7.50% Notes at a price in
cash equal to 100% of the principal amount thereof plus accrued and unpaid
interest to the purchase date and, to the extent required by the terms thereof,
any other Debt of the Company that is pari passu with the Notes at a price no
greater than 100% of the principal amount thereof plus accrued and unpaid
interest to the purchase date (or 100% of the accreted value plus accrued and
unpaid interest and premium, if any, to the purchase date in the case of
original issue discount Debt); (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, to
the extent permitted under the terms thereof; and (4) fourth, to the extent of
any remaining Net Available Proceeds, to any other use as determined by the
Company which is not otherwise prohibited by the Indenture.
Limitation on Issuances and Sales of Capital Stock of Restricted Subsidiaries.
The Company may not, and may not permit any Restricted Subsidiary to, issue,
transfer, convey, sell or otherwise dispose of any shares of Capital Stock of a
Restricted Subsidiary or securities convertible or exchangeable into, or
options, warrants, rights or any other interest with respect to, Capital Stock
of a Restricted Subsidiary to any Person other than the Company or a Restricted
Subsidiary except (i) a sale of all of the Capital Stock of such Restricted
Subsidiary owned by the Company and any Restricted Subsidiary that complies with
the provisions described under "--Limitation on Asset Dispositions" above to the
extent such provisions apply, (ii) in a transaction that results in such
Restricted Subsidiary becoming a Permitted Joint Venture, provided (x) such
transaction complies with the provisions described under "--Limitation on Asset
Dispositions" above to the extent such provisions apply and (y) the Company's
remaining Investment in such Permitted Joint Venture would have been permitted
as a new Investment under the provisions of "--Limitation on Restricted
Payments"
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above, (iii) the transfer, conveyance, sale or other disposition of shares
required by applicable law or regulation, (iv) if required, the issuance,
transfer, conveyance, sale or other disposition of directors' qualifying shares,
or (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.
Transactions with Affiliates and Related Persons. The Company may not, and may
not permit any Restricted Subsidiary 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 Restricted Subsidiary), including any Investment,
unless such transaction is on terms 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 and
is in the best interests of the Company or such Restricted Subsidiary, provided
that the Company or any Restricted Subsidiary may enter into (i) transactions
pursuant to the Company's existing tax sharing agreement entered into with
Anschutz Company described under the caption "Certain Relationships and Related
Transactions" in the Company's annual report on Form 10-K for the year ended
December 31, 1997, provided that any amendment of, supplement to or substitute
for such agreement is on terms that are no less favorable to the Company or such
Restricted Subsidiary than such existing agreement, (ii) transactions pursuant
to employee compensation arrangements approved by the board of directors of the
Company, either directly or indirectly, and (iii) Receivables Sales between the
Company or a Restricted Subsidiary and an Affiliate of the Company or such
Restricted Subsidiary, provided that such Receivables Sales satisfy the
provisions of clauses (i) and (ii) of "--Limitation on Asset Dispositions." For
any transaction that involves in excess of $10 million but less than or equal to
$15 million, the Company shall deliver to the Trustee an Officers' Certificate
stating that the transaction satisfies the above criteria. For any transaction
that involves in excess of $15 million, a majority of the disinterested members
of the board of directors of the Company shall determine that the transaction
satisfies the above criteria and shall evidence such a determination by a board
resolution filed with the Trustee or, in the event that there shall not be
disinterested members of the board of directors with respect to the transaction,
the Company shall file with the Trustee a written opinion stating that the
transaction satisfies the above criteria from an investment banking firm of
national standing in the United States which, in the good faith judgment of the
board of directors of the Company, is independent with respect to the Company
and its Affiliates and qualified to perform such task.
Change of Control. Within 30 days of the occurrence of a Change of Control, the
Company will be required to make an Offer to Purchase all outstanding 7.50%
Notes at a price in cash equal to 101% of the principal amount of the 7.50%
Notes plus any accrued and unpaid interest thereon, if any, to such purchase
date. A "Change of Control" will be deemed to have occurred at such time as (x)
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a Rating Decline shall have occurred and (y) either (A) the sale, conveyance,
transfer or lease of all or substantially all of the assets of the Company to
any Person or any Persons acting together that would constitute a "group" (a
"Group") for purposes of Section 13(d) of the Exchange Act, together with any
Affiliates or Related Persons thereof, other than any Permitted Holder or any
Restricted Subsidiary, shall have occurred; (B) any Person or Group, together
with any Affiliates or Related Persons thereof, other than any Permitted Holder
or any Restricted Subsidiary, shall beneficially own (within the meaning of Rule
13d-3 under the Exchange Act, except that a Person will be deemed to have
beneficial ownership of all shares that such Person has the right to acquire,
whether such right is exercisable immediately or only after the passage of time)
at least 50% of the aggregate voting power of all classes of Voting Stock of the
Company at a time when Permitted Holders own less than or equal to 25% of the
aggregate voting power of all classes of Voting Stock of the Company; or (C)
during any period of two consecutive years, Continuing Directors cease for any
reason to constitute a majority of the Company's board of directors then in
office. In the event that the Company makes an Offer to Purchase the 7.50%
Notes, 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. The existence of the holders' right to require,
subject to certain conditions, the Company to repurchase 7.50% Notes upon a
Change of Control may deter a third party from acquiring the Company in a
transaction that constitutes a Change of Control. If an Offer to Purchase is
made, there can be no assurance that the Company will have sufficient funds to
pay the Purchase Price for all 7.50% Notes tendered by holders seeking to accept
the Offer to Purchase. In addition, instruments governing other Debt of the
Company may prohibit the Company from purchasing any 7.50% Notes prior to their
Stated Maturity, including pursuant to an Offer to Purchase. See "Description of
Certain Indebtedness." In the event that an Offer to Purchase occurs at a time
when the Company does not have sufficient available funds to pay the Purchase
Price for all 7.50% Notes tendered pursuant to such Offer to Purchase or a time
when the Company is prohibited from purchasing the 7.50% Notes (and the Company
is unable either to obtain the consent of the holders of the relevant Debt or to
repay such Debt), an Event of Default would occur under the Indenture. In
addition, one of the events that constitutes a Change of Control under the
Indenture is a sale, conveyance, transfer or lease of all or substantially all
of the property of the Company. The Indenture will be governed by New York law,
and there is no established definition under New York law of "substantially all"
of the assets of a corporation. Accordingly, if the Company were to engage in a
transaction in which it disposed of less than all of its assets, a question of
interpretation could arise as to whether such disposition was of "substantially
all" of its assets and whether the Company was required to make an Offer to
Purchase. Except as described herein with respect to a Change of Control, the
Indenture does not contain any other provisions that permit holders of 7.50%
Notes to require that the Company repurchase or redeem 7.50% Notes in the event
of a takeover, recapitalization or similar restructuring.
Reports. The Company will file with the Trustee on the date on which it files
them with the Commission copies of the annual and quarterly reports and the
information, documents, and other reports that the Company is required to file
with the Commission pursuant to Section 13(a) or 15(d) of the Exchange Act ("SEC
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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 7.50% Notes 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.
Limitation on Designations of Unrestricted Subsidiaries. The Indenture will
provide that the Company will not designate any Subsidiary of the Company (other
than a newly created Subsidiary in which no Investment has previously been made)
as an "Unrestricted Subsidiary" under the Indenture (a "Designation") unless:
(a) no Default or Event of Default shall have occurred and be continuing at the
time of or after giving effect to such Designation; (b) immediately after giving
effect to such Designation, the Company would be able to Incur $1.00 of Debt
under paragraph (a) of "--Limitation on Consolidated Debt"; and (c) the Company
would not be prohibited under the Indenture from making an Investment at the
time of Designation (assuming the effectiveness of such Designation) in an
amount (the "Designation Amount") equal to the Fair Market Value of the net
Investment of the Company or any other Restricted Subsidiary in such Restricted
Subsidiary on such date. In the event of any such Designation, the Company shall
be deemed to have made an Investment constituting a Restricted Payment pursuant
to the covenant "--Limitation on Restricted Payments" for all purposes of the
Indenture in the Designation Amount. The Indenture will further provide that
neither the Company nor any Restricted Subsidiary shall at any time (x) provide
credit support for, or a guarantee of, any Debt of any Unrestricted Subsidiary
(including any undertaking, agreement or instrument evidencing such Debt);
provided that the Company or a Restricted Subsidiary may pledge Capital Stock or
Debt of any Unrestricted Subsidiary on a nonrecourse basis such that the pledgee
has no claim whatsoever against the Company other than to obtain such pledged
property, (y) be directly or indirectly liable for any Debt of any Unrestricted
Subsidiary or (z) be directly or indirectly liable for any Debt which provides
that the holder thereof may (upon notice, lapse of time or both) declare a
default thereon or cause the payment thereof to be accelerated or payable prior
to its final scheduled maturity upon the occurrence of a default with respect to
any Debt of any Unrestricted Subsidiary (including any right to take enforcement
action against such Unrestricted Subsidiary), except in the case of clause (x)
or (y) to the extent permitted under "--Limitation on Restricted Payments" and
"--Transactions with Affiliates and Related Persons." The Indenture will further
provide that a Designation may be revoked (a "Revocation") by a resolution of
the board of directors of the Company delivered to the Trustee, provided that
the Company will not make any Revocation unless: (a) no Default or Event of
Default shall have occurred and be continuing at the time of and after giving
effect to such Revocation; and (b) all Liens and Debt of such Unrestricted
Subsidiary outstanding immediately following such Revocation would, if Incurred
at such time, have been permitted to be Incurred at such time for all purposes
of the Indenture. All Designations and Revocations must be evidenced by
resolutions of the board of directors of the Company delivered to the Trustee
certifying compliance with the foregoing provisions.
Mergers, Consolidations and Certain Sales of Assets
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The Company may not, in a single transaction or a series of related
transactions, (i) consolidate with or merge into any other Person or Persons or
permit any other Person to consolidate with or merge into the Company (other
than a merger of Qwest Corporation into the Company in which the Company shall
be the surviving Person) or (ii) directly or indirectly, transfer, sell, lease
or otherwise dispose of all or substantially all of its assets to any other
Person or Persons unless: (a) in a transaction in which the Company is not the
surviving Person or in which the Company sells, leases or otherwise disposes of
all or substantially all of its assets to any other Person, the resulting
surviving or transferee Person (the "successor entity") is 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 respective obligations under the Indenture; (b) immediately before and
after giving effect to such transaction and treating any Debt which becomes an
obligation of the Company or a Restricted Subsidiary as a result of such
transaction as having been Incurred by the Company or such Restricted Subsidiary
at the time of the transaction, no Default or Event of Default shall have
occurred and be continuing; (c) 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; (d) immediately after giving effect to
such transaction and treating any Debt which becomes an obligation of the
Company or a Restricted Subsidiary as a result of such transaction as having
been Incurred by the Company or such Restricted Subsidiary at the time of the
transaction, the Company (including any successor entity to the Company) could
Incur at least $1.00 of additional Debt pursuant to the provisions of the
Indenture described in paragraph (a) under "--Limitation on Consolidated Debt"
above; (e) 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 the
Indenture described under "--Limitation on Liens" above, the Company or the
successor entity to the Company shall have secured the 7.50% Notes as required
by said covenant; and (f) certain other conditions are met.
Certain Definitions
Set forth below is a summary of certain of the defined terms used in the
Indenture. Reference is made to the Indenture for the full definition of all
such terms, as well as any other terms used herein for which no definition is
provided.
"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 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 Person means any other Person directly or indirectly
controlling or controlled by or under direct or indirect common control with
such Person. For the purposes of this definition, "control" when used with
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respect to any Person means the power to direct the management and policies of
such Person, directly or indirectly, whether through the ownership of voting
securities, by contract or otherwise; and the terms "controlling" and
"controlled" have meanings correlative to the foregoing.
"Asset Disposition" means any transfer, conveyance, sale, lease or other
disposition by the Company or any Restricted Subsidiary in one or more related
transactions occurring within any 12-month period (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 to the Company or a Restricted Subsidiary or by the
Company to a Restricted Subsidiary) of (i) shares of Capital Stock or other
ownership interests of a Restricted Subsidiary (other than as permitted by the
provisions of the Indenture described in clauses (iii), (iv) and (v) under the
caption "--Limitation on Issuances and Sales of Capital Stock of Restricted
Subsidiaries"), (ii) substantially all of the assets of the Company or any
Restricted Subsidiary representing a division or line of business or (iii) other
assets or rights of the Company or any Restricted Subsidiary outside of the
ordinary course of business (excluding any transfer, conveyance, sale, lease or
other disposition of equipment that is obsolete or no longer used by or useful
to the Company, provided that the Company has delivered to the Trustee an
Officers' Certificate stating that such criteria are satisfied); provided in
each case that the aggregate consideration for such transfer, conveyance, sale,
lease or other disposition is equal to $500,000 or more in any 12-month period
and provided further that the following shall not be Asset Dispositions: (x)
Permitted Telecommunications Capital Asset Dispositions, (y) exchanges of
Telecommunications Assets for other Telecommunications Assets where the Fair
Market Value of the Telecommunications Assets received is at least equal to the
Fair Market Value of the Telecommunications Assets disposed of or, if less, the
difference is received in cash and such cash is Net Available Proceeds and (z)
Liens permitted to be Incurred pursuant to the second paragraph under
"--Limitation on Liens."
"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
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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.
"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.
"Cash Equivalents" means (i) any Debt with a maturity of 365 days or less issued
or directly and fully guaranteed as insured by the United States or any agency
or instrumentality thereof (provided that the full faith and credit of the
United States is pledged in support thereof or such Debt constitutes a general
obligation of such country); (ii) deposits, certificates of deposit or
acceptances with a maturity of 365 days or less of any financial institution
that is a member of the Federal Reserve System, in each case having combined
capital and surplus and undivided profits (or any similar capital concept) of
not less than $500 million and whose senior unsecured debt is rated at least "A-
1" by Standard & Poor's Corporation or "P-1" by Moody's Investors Service, Inc.;
(iii) commercial paper with a maturity of 365 days or less issued by a
corporation (other than an Affiliate of the Company) organized under the laws of
the United States or any State thereof and rated at least "A-1" by Standard &
Poor's Corporation or "P-1" by Moody's Investors Service, Inc.; and (iv)
repurchase agreements and reverse repurchase agreements relating to marketable
direct obligations issued or unconditionally guaranteed by the United States or
issued by any agency or instrumentality thereof and backed by the full faith and
credit of the United States maturing within 365 days from the date of
acquisition.
"Common Stock" of any Person means Capital Stock of such Person that does not
rank 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.
"Consolidated Capital Ratio" of any Person as of any date means the ratio of (i)
the aggregate consolidated principal amount of Debt of such Person then
outstanding to (ii) the greater of either (a) the aggregate consolidated paid-in
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capital of such Person as of such date or (b) the stockholders' equity as of
such date as shown on the consolidated balance sheet of such Person in
accordance with generally accepted accounting principles.
"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 Subsidiaries for such period, plus (iii) the
consolidated depreciation and amortization expense or other non-cash write-offs
of assets included in the income statement of the Company and its Restricted
Subsidiaries for such period, plus (iv) 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 (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 to the extent of
such restriction.
"Consolidated Income Tax Expense" for any period means the aggregate amounts of
the provisions for income taxes of the Company and its Subsidiaries for such
period calculated on a consolidated basis in accordance with generally accepted
accounting principles.
"Consolidated Interest Expense" means for any period the interest expense
included in a consolidated income statement (excluding interest income) of the
Company and its Restricted Subsidiaries for such period 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 Stock dividends of the Company
and its 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 during such period that is allocable to interest expense.
"Consolidated Net Income" for any period means the net income (or loss) of the
Company and its Restricted Subsidiaries for such period determined on a
consolidated basis in accordance with generally accepted accounting principles;
provided that there shall be excluded therefrom (a) the net income (or loss) of
any Person acquired by the Company or a Restricted Subsidiary 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 except to the extent of the amount of dividends or other
distributions actually paid to the Company or a Restricted Subsidiary by such
Person during such
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period, (c) gains or losses on Asset Dispositions by the Company or its
Restricted Subsidiaries, (d) all extraordinary gains and extraordinary losses,
determined in accordance with generally accepted accounting principles, (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
expense related to the issuance to employees or directors of the Company or any
Restricted Subsidiary or any Affiliate of the Company of (i) options to purchase
Capital Stock of the Company or such Restricted Subsidiary or (ii) other
compensatory rights (including under the Company's Growth Share Plan), provided,
in either case, that such options or rights, by their terms, can be redeemed
only for Capital Stock, (h) with respect to a Restricted Subsidiary that is not
a Wholly Owned Subsidiary, any aggregate net income (or loss) in excess of the
Company's or any Restricted Subsidiary's pro rata share of the net income (or
loss) of such Restricted Subsidiary that is not a Wholly Owned Subsidiary shall
be excluded and (i) the tax effect of any of the items described in clauses (a)
through (h) above; provided further that for purposes of any determination
pursuant to the provisions described under "--Limitation on Restricted
Payments," there shall further be excluded therefrom the net income (but not net
loss) of any Restricted Subsidiary that is subject to a restriction which
prevents the payment of dividends or the making of distributions to the Company
or another Restricted Subsidiary to the extent of such restriction.
"Consolidated Net Worth" of any Person means the 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 March
31, 1997 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 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.
"Continuing Director" means, as of any date of determination, any member of the
board of directors of the Company who (i) was a member of such board of
directors of the Company on March 31, 1997, or (ii) was nominated for election
or elected to the board of directors of the Company with the affirmative vote of
a majority of the Continuing Directors who were members of the board of
directors of the Company at the time of such nomination or election or the
affirmative vote of Permitted Holders.
"Credit Facilities" means one or more credit agreements, loan agreements or
similar facilities, secured or unsecured, entered into from time to time by the
Company and its Restricted Subsidiaries, and including any related notes,
Guarantees, collateral documents, instruments and agreements executed in
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connection therewith, as the same may be amended, supplemented, modified,
restated or replaced from time to time.
"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 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), (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 and 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 Subsidiary of the Company) thereof, excluding amounts
representative of yield or interest earned on such investment or (c) any
Disqualified Stock shall be the maximum fixed redemption or repurchase price in
respect thereof. "Debt Securities" means any debt securities (including any
guarantee of such securities) issued by the Company or any Restricted Subsidiary
of the Company in connection with a public offering or a private placement
(excluding Debt permitted to be Incurred under paragraph (b) of "--Limitation on
Consolidated Debt").
"Default" means any event, act or condition the occurrence of which is, or after
notice or the passage of time or both would be, an Event of Default.
"Disqualified Stock" of any Person means any Capital Stock of such Person which,
by its terms (or by the terms of any security into which it is convertible or
for which it is exchangeable), or upon the happening of any event, matures or is
mandatorily redeemable, pursuant to a sinking fund obligation or otherwise, or
is redeemable at the option of such Person, any Subsidiary of such Person or the
holder thereof, in whole or in part, on or prior to the final Stated Maturity of
the 7.50% Notes; 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 a Change of Control occurring prior to the final Stated
Maturity of the 7.50% Notes shall not constitute Disqualified Stock if the
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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 7.50% Notes contained in the covenant described under "--Change of
Control" 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 7.50% Notes as are required to be repurchased
pursuant to the covenant described under "--Change of Control."
"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" (or higher) according to Standard & Poor's
Ratings Service, a division of McGraw Hill, Inc. (or any successor to the rating
agency business thereof) or Moody's Investors Service, Inc. (or any successor to
the rating agency business thereof) 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,
less Receivables of the Company or any Restricted Subsidiary employed to secure
Debt Incurred under clause (vii) of paragraph (b) of "--Limitation on
Consolidated Debt."
"Event of Default" has the meaning set forth under "Events of Default" below.
"Exchange Act" means the Securities Exchange Act of 1934, as amended (or any
successor act), and the rules and regulations thereunder (or respective
successors thereto).
"Fair Market Value" means, with respect to any asset or property, the price that
could be negotiated in an arm's-length free market transaction, for cash,
between a willing seller and a willing buyer, neither of whom is under pressure
or compulsion to complete the transaction. Unless otherwise specified in the
Indenture, Fair Market Value shall be determined by the board of directors of
the Company acting in good faith and shall be evidenced by a resolution of the
board of directors of the Company delivered to the Trustee.
"Government Securities" means direct obligations of, or obligations guaranteed
by, the United States of America for the payment of which guarantee or
obligations the full faith and credit of the United States is pledged and which
have a remaining weighted average life to maturity of not less than one year
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
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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.
"Guarantor" means a Restricted Subsidiary of the Company that has executed a
Restricted Subsidiary Guarantee.
"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.
"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.
"Investment Grade Rating" means a rating equal to or higher than Baa3 (or the
equivalent) and BBB- (or the equivalent) by Moody's Investors Service, Inc. (or
any successor to the rating agency business thereof) and Standard & Poor's
Ratings Service, a division of McGraw Hill, Inc. (or any successor to the rating
agency business thereof), respectively.
"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), 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
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same economic effect as any of the foregoing). For purposes of this definition
the sale, lease, conveyance or other transfer by the Company or any Subsidiary
of, including the grant of indefeasible rights of use or equivalent arrangements
with respect to, dark or lit communications fiber capacity or communications
conduit shall not constitute a Lien.
"Net Available Proceeds" from any Asset Disposition by any Person means cash or
cash equivalents received (including amounts received by way of sale or
discounting of any 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) any portion thereof Invested within 360
days of such Asset Disposition in Telecommunications Assets, (ii) all legal,
title and recording tax expenses, commissions and other fees and expenses
Incurred and all federal, state, provincial, foreign and local taxes required to
be accrued as a liability as a consequence of such Asset Disposition, (iii) all
payments made by such Person or its 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, (iv) all distributions and other
payments made to minority interest holders in Subsidiaries of such Person or
Permitted Joint Ventures as a result of such Asset Disposition and (v)
appropriate amounts to be provided by such Person or any 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 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 of such Person, in its reasonable good faith judgment evidenced by
a resolution of the board of directors filed with the Trustee; provided,
however, that any reduction in such reserve within twelve months following the
consummation of such Asset Disposition will be for all purposes of the Indenture
and the 7.50% Notes as a new Asset Disposition at the time of such reduction
with Net Available Proceeds equal to the amount of such reduction.
"Offer to Purchase" means a written offer (the "Offer") sent by the Company by
first class mail, postage prepaid, to each holder of 7.50% Notes at its address
appearing in the Note Register on the date of the Offer offering to purchase up
to the principal amount of 7.50% Notes specified in such Offer at the purchase
price specified in such Offer (as determined pursuant to the 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 7.50% Notes 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
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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 the 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 7.50% Notes pursuant to
the Offer to Purchase. The Offer shall also state: a. the Section of the
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 7.50% Notes 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 the section hereof requiring the Offer to Purchase)
(the "Purchase Amount"); d. the purchase price to be paid by the Company for
each $1,000 aggregate principal amount of 7.50% Notes accepted for payment (as
specified pursuant to the Indenture) (the "Purchase Price"); e. that the holder
may tender all or any portion of the 7.50% Notes registered in the name of such
holder and that any portion of a Note tendered must be tendered in an integral
multiple of $1,000 principal amount; f. the place or places where 7.50% Notes
are to be surrendered for tender pursuant to the Offer to Purchase; g. that any
7.50% Notes not tendered or tendered but not purchased by the Company will
continue to accrue interest; h. that on the Purchase Date the Purchase Price
will become due and payable upon each Note being accepted for payment pursuant
to the Offer to Purchase and that interest thereon, if any, shall cease to
accrue on and after the Purchase Date; i. that each holder electing to tender a
Note pursuant to the Offer to Purchase will be required to surrender such Note
at the place or places specified in the Offer prior to the close of business on
the Expiration Date (such Note 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 7.50% Notes tendered if the Company (or their
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 Note the holder tendered, the
certificate number of the Note the holder tendered and a statement that such
holder is withdrawing all or a portion of his tender; k. that (a) if 7.50% Notes
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 7.50% Notes and (b) if 7.50% Notes in an aggregate
principal amount at maturity in excess of the Purchase Amount are tendered and
not withdrawn pursuant to the Offer to Purchase, the Company shall purchase
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7.50% Notes 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 7.50% Notes in denominations of $1,000 or integral multiples thereof shall
be purchased); and l. that in the case of any holder whose Note is purchased
only in part, the Company shall execute, and the Trustee shall authenticate and
deliver to the holder of such Note without service charge, a new 7.50% Note or
7.50% Notes, of any authorized denomination as requested by such holder, in an
aggregate principal amount at maturity equal to and in exchange for the
unpurchased portion of the Note so tendered. 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 the Chairman of the board
of directors of the Company, a Vice Chairman of the board of directors of the
Company, the President or a Vice President, and by the Chief Financial Officer,
the Chief Accounting Officer, the Treasurer, an Assistant Treasurer, the
Secretary or an Assistant Secretary of the Company and delivered to the Trustee,
which shall comply with the Indenture.
"Opinion of Counsel" means an opinion of counsel acceptable to the Trustee (who
may be counsel to the Company, including an employee of the Company).
"Permitted Holders" means any Person who was the beneficial owner (within the
meaning of Rule 13d-3 under the Exchange Act) of stock of the Company on March
31, 1997 and any Affiliates of such Person (i) who were Affiliates of such
Person on March 31, 1997 or (ii) who were formed, directly or indirectly, by any
such Person after March 31, 1997 provided, however, that Persons who were
beneficial owners (within the meaning of Rule 13d-3 under the Exchange Act) of
such Person on March 31, 1997 continued to be beneficial owners (within the
meaning of Rule 13d-3 under the Exchange Act) at the time of formation of such
Affiliate.
"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 Investments" means (a) Cash Equivalents; (b) Investments in prepaid
expenses, negotiable instruments held for collection and lease, utility and
workers' compensation, performance and other similar deposits; (c) loans,
advances or extensions of credit to employees and directors made in the ordinary
course of business and consistent with past practice; (d) obligations under
Interest Rate or Currency Protection Agreements; (e) bonds, notes, debentures
and other securities received as a result of Asset Dispositions pursuant to and
in compliance with "--Limitation on Asset Dispositions"; (f) Investments made in
the ordinary course of business as partial payment for constructing a network
relating to a Telecommunications Business; (g) commercially reasonable
extensions of trade credit; (h) Investments in any Person as a result of which
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such Person becomes a Restricted Subsidiary; (i) Investments in Permitted Joint
Ventures in an aggregate amount not to exceed $25 million; (j) Investments in
Affiliates or Related Persons in an aggregate amount not to exceed $11 million,
provided that the making of such Investments is permitted under "--Transactions
with Affiliates and Related Persons"; and (k) Investments in an aggregate amount
not to exceed $15 million consisting of the contribution by the Company or any
Restricted Subsidiary of assets located in Mexico to joint ventures in which the
Company or a Restricted Subsidiary has an interest.
"Permitted Joint Venture" means a corporation, partnership or other entity other
than a Restricted Subsidiary engaged in one or more Telecommunications
Businesses over which the Company and/or one or more Strategic Investors have,
directly or indirectly, the power to direct the policies, management and
affairs.
"Permitted Liens" means (a) Liens for taxes, assessments, governmental charges,
levies 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' businesses 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 or a Restricted Subsidiary to secure Debt owing to the Company or
such Restricted Subsidiary; (d) Liens, pledges and deposits made in the ordinary
course of business in connection with workers' compensation, unemployment
insurance and other types of statutory obligations; (e) Liens, pledges or
deposits made to secure the performance of tenders, bids, leases, public or
statutory obligations, sureties, stays, appeals, indemnities, performance or
other similar bonds 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 materially interfere with the ordinary
conduct of the business of the Company or its Restricted Subsidiaries; (g) Liens
arising out of judgments or awards against or other court proceedings concerning
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; and (h) any interest
or title of a lessor in the property subject to any lease other than a Capital
Lease.
"Permitted Telecommunications Capital Asset Disposition" means the transfer,
conveyance, sale, lease or other disposition of a capital asset that is a
Telecommunications Asset (including fiber, conduit and related equipment), (i)
the proceeds of which are treated as revenues by the Company in accordance with
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generally accepted accounting principles and (ii) that, in the case of the sale
of fiber, would not result in the Company retaining less than 24 fibers per
route mile on any segment of the Company's network.
"Person" means any individual, corporation, partnership, joint venture,
association, joint stock company, trust, unincorporated organization, government
or agency or political subdivision thereof or any other entity.
"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.
"Public Equity Offering" means an underwritten public offering of common stock
made on a primary basis by the Company pursuant to a registration statement
filed with, and declared effective by, the Commission in accordance with the
Securities Act.
"Purchase Money Debt" means Debt Incurred at any time within 270 days of, and
for the purposes of financing all or any part of the cost of, the construction,
installation, acquisition or improvement by the Company or any Restricted
Subsidiary of the Company of any new Telecommunications Assets constructed,
installed, acquired or improved after March 31, 1997, provided that the proceeds
of such Debt are expended for such purposes within such 270-day period.
"Rating Agencies" means Moody's Investors Service, Inc. (or any successor to the
rating agency business thereof) and Standard & Poor's Ratings Service, a
division of McGraw Hill, Inc. (or any successor to the rating agency business
thereof).
"Rating Decline" means the 7.50% Notes cease to be rated B` (or the equivalent
thereof) or better by Standard & Poor's Corporation or B2 (or the equivalent
thereof) or better by Moody's Investors Service, Inc.
"Receivables" means receivables, chattel paper, instruments, documents or
intangibles evidencing or relating to the right to payment of money, excluding
allowances for doubtful accounts.
"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 purposes of collection and not as a
financing arrangement.
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"Related Person" of any Person means any other Person directly or indirectly
owning (a) 5% or more of the outstanding Common Stock of such Person (or, in the
case of a Person that is not a corporation, 5% or more of the outstanding equity
interest in such Person) or (b) 5% or more of the combined outstanding voting
power of the Voting Stock of such Person.
"Restricted Subsidiary" means a Subsidiary of the Company, or of a Restricted
Subsidiary that is a Wholly Owned Subsidiary of the Company, that has not been
designated by the board of directors of the Company (by a board resolution
delivered to the Trustee) as an Unrestricted Subsidiary pursuant to and in
compliance with "--Limitations on Designations of Unrestricted Subsidiaries."
"Restricted Subsidiary Guarantee" means a supplemental indenture to the
Indenture in form satisfactory to the Trustee, providing for an unconditional
Guarantee of payment in full of the principal of, premium, if any, and interest
on the 7.50% Notes. Any such Restricted Subsidiary Guarantee shall not be
subordinate in right of payment to any Debt of the Restricted Subsidiary
providing the Restricted Subsidiary Guarantee.
"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.
"Senior Note Indentures" means (i) the Indenture dated as of March 31, 1997
between the Company and Bankers Trust Company, as trustee thereunder, relating
to the Company's 10 7/8% Senior Notes Due 2007 (which were subsequently
exchanged for the Company's 10 7/8% Series B Senior Notes Due 2007) and the
Indenture dated as of August 28, 1997, pursuant to which such 10 7/8% Series B
Senior Notes Due 2007 were issued, (ii) the Indenture dated as of October 15,
1997 between the Company and Bankers Trust Company, as trustee thereunder,
relating to the Company's 9.47% Series B Senior Discount Notes Due 2007 and
(iii) the Indenture dated as of January 29, 1998 between the Company and Bankers
Trust Company, as trustee thereunder, relating to the Company's 8.29% Series B
Senior Discount Notes Due 2008.
"Stated Maturity," when used with respect to a Note or any installment of
interest thereon, means the date specified in such Note as the fixed date on
which the principal of such Note or such installment of interest is due and
payable.
"Strategic Investor" means a corporation, partnership or other entity engaged in
one or more Telecommunications Businesses that has, or 80% or more of the Voting
Stock of which is owned by a Person that has, an equity market capitalization,
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at the time of its initial Investment in the Company or in a Permitted Joint
Venture with the Company, in excess of $2 billion.
"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
7.50% Notes 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 7.50% Notes exists; (ii) in the event that any other
Default exists with respect to the 7.50% Notes, upon notice by 25% or more in
principal amount of the 7.50% Notes 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; 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 7.50% Notes 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 7.50% Notes, 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
described under "--Change of Control" (and which shall provide that such Debt
will not be repurchased pursuant to such provisions prior to the Company's
repurchase of the 7.50% Notes required to be repurchased by the Company pursuant
to the provisions described under "--Change of Control").
"Subsidiary" of any Person means (i) a corporation more than 50% of the combined
voting power of the outstanding Voting Stock of which is owned, directly or
indirectly, by such Person or by one or more other Subsidiaries of such Person
or by such Person and one or more Subsidiaries thereof or (ii) any other Person
(other than a corporation) in which such Person, or one or more other
Subsidiaries of such Person or such Person and one or more other Subsidiaries
thereof, directly or indirectly, has at least a majority ownership and power to
direct the policies, management and affairs thereof.
"Telecommunications Assets" means all assets, rights (contractual or otherwise)
and properties, whether tangible or intangible, used or intended for use in
connection with a Telecommunications Business.
"Telecommunications Business" means the business of (i) transmitting, or
providing services relating to the transmission of, voice, video or data through
owned or leased transmission facilities, (ii) constructing, creating, developing
or marketing communications related network equipment, software and other
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devices foruse in a telecommunications business or (iii) evaluating,
participating or pursuing any other activity or opportunity that is primarily
related to those identified in (i) or (ii) above; provided that the
determination of what constitutes a Telecommunications Business shall be made in
good faith by the board of directors of the Company.
"Unrestricted Subsidiary" means any Subsidiary of the Company designated as such
pursuant to and in compliance with "--Limitation on Designations of Unrestricted
Subsidiaries."
"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 for so long as no senior
class of securities has such voting power by reason of any contingency.
"Wholly Owned Subsidiary" of any Person means a Subsidiary of such Person all of
the outstanding Voting Stock or other ownership interests (other than directors'
qualifying shares) of which shall at the time be owned by such Person or by one
or more Wholly Owned Subsidiaries of such Person or by such Person and one or
more Wholly Owned Subsidiaries of such Person.
Events of Default
The following will be Events of Default under the Indenture:
(a) failure to pay principal of (or premium, if any, on) any Note when due;
(b) failure to pay any interest on any Note when due, continued for 30 days;
(c) default in the payment of principal and interest on 7.50% Notes required to
be purchased pursuant to an Offer to Purchase as described under "--Change of
Control" when due and payable;
(d) failure to perform or comply with the provisions described under "--Mergers,
Consolidations and Certain Sales of Assets" and "--Limitation on Asset
Dispositions";
(e) failure to perform any other covenant or agreement of the Company under the
Indenture or the 7.50% Notes continued for 60 days after written notice to the
Company by the Trustee or holders of at least 25% in aggregate principal amount
of the outstanding 7.50% Notes;
(f) default under the terms of any instrument evidencing or securing Debt of the
Company or any Restricted Subsidiary having an outstanding principal amount of
$10 million individually or in the aggregate which default results in the
acceleration of the payment of such indebtedness or constitutes the failure to
pay such indebtedness when due (after expiration of any applicable grace
period);
(g) the rendering of a final judgment or judgments (not subject to appeal)
against the Company or any Restricted Subsidiary in an amount in excess of $10
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million which remains undischarged or unstayed for a period of 45 days after the
date on which the right to appeal has expired; and
(h) certain events of bankruptcy, insolvency or reorganization affecting the
Company or any Restricted Subsidiary.
Subject to the provisions of the Indenture relating to the duties of the
Trustee in case an Event of Default (as defined) shall occur and be continuing,
the Trustee will not be under any obligation to exercise any of its rights or
powers under the Indenture at the request or direction of any of the holders of
7.50% Notes, unless such holders shall have offered to the Trustee reasonable
indemnity. Subject to such provisions for the indemnification of the Trustee,
the holders of a majority in aggregate principal amount of the outstanding 7.50%
Notes will 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.
If any Event of Default (other than an Event of Default described in clause
(h) above) shall occur and be continuing, either the Trustee or the holders of
at least 25% in aggregate principal amount at maturity of the outstanding 7.50%
Notes may accelerate the maturity of all 7.50% Notes; provided, however, that
after such acceleration, but before a judgment or decree based on acceleration,
the holders of a majority in aggregate principal amount of the outstanding 7.50%
Notes may, under certain circumstances, rescind and annul such acceleration if
all Events of Default, other than the non-payment of accelerated principal, have
been cured or waived as provided in the Indenture. If an Event of Default
specified in clause (h) above occurs, the outstanding 7.50% Notes will ipso
facto become immediately due and payable without any declaration or other act on
the part of the Trustee or any holder. For information as to waiver of defaults,
see "--Amendment, Supplement and Waiver."
No holder of any Note will have any right to institute any proceeding with
respect to the Indenture or for any remedy thereunder, unless such holder shall
have previously given to the Trustee written notice of a continuing Event of
Default (as defined) and unless also the holders of at least 25% in aggregate
principal amount of the outstanding 7.50% Notes shall have made written request
and offered reasonable indemnity to the Trustee to institute such proceeding as
trustee, and the Trustee shall not have received from the holders of a majority
in aggregate principal amount of the outstanding 7.50% Notes a direction
inconsistent with such request and shall have failed to institute such
proceeding within 60 days. However, such limitations do not apply to a suit
instituted by a holder of a Note for enforcement of payment of the principal of
and premium, if any, or interest on such Note on or after the respective due
dates expressed in such Note. The Company will be required to furnish to the
Trustee quarterly a statement as to the performance by the Company of certain of
its obligations under the Indenture and as to any default in such performance.
Amendment, Supplement and Waiver
The Company and the Trustee may, at any time and from time to time, without
notice to or consent of any holder of 7.50% Notes, enter into one or more
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indentures supplemental to the Indenture (1) to evidence the succession of
another Person to the Company and the assumption by such successor of the
covenants of the Company in the Indenture and the 7.50% Notes; (2) to add to the
covenants of the Company, for the benefit of the holders, or to surrender any
right or power conferred upon the Company by the Indenture; (3) to add any
additional Events of Default; (4) to provide for uncertificated 7.50% Notes in
addition to or in place of certificated 7.50% Notes; (5) to evidence and provide
for the acceptance of appointment under the Indenture of a successor Trustee;
(6) to secure the 7.50% Notes; or (7) to cure any ambiguity in the Indenture to
correct or supplement any provision in the Indenture which may be inconsistent
with any other provision therein or to add any other provisions with respect to
matters or questions arising under the Indenture; provided such actions shall
not adversely affect the interests of the holders in any material respect. With
the consent of the holders of not less than a majority in principal amount of
the outstanding 7.50% Notes, the Company and the Trustee may enter into one or
more indentures supplemental to the Indenture for the purpose of adding any
provisions to or changing in any manner or eliminating any of the provisions of
the Indenture or modifying in any manner the rights of the holders, provided
that no such supplemental indenture shall, without the consent of the holder of
each outstanding Note (1) change the Stated Maturity of the principal of, or any
installment of interest on, any Note, or alter the redemption provisions
thereof, or reduce the principal amount thereof (or premium, if any), or the
interest thereon that would be due and payable upon maturity thereof, or change
the place of payment where, or the coin or currency in which, any Note 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 maturity thereof; (2)
reduce the percentage in principal amount of the outstanding 7.50% Notes, the
consent of whose holders is necessary for any such supplemental indenture or
required for any waiver of compliance with certain provisions of the Indenture
or certain Defaults thereunder; (3) subordinate in right of payment, or
otherwise subordinate, the 7.50% Notes to any other Debt; or (4) modify any
provision of this paragraph (except to increase any percentage set forth
herein). The holders of not less than a majority in principal amount of the
outstanding 7.50% Notes may, on behalf of the holders of all the 7.50% Notes,
waive any past Default under the Indenture and its consequences, except Default
(1) in the payment of the principal of (or premium, if any) or interest on any
Note, or (2) in respect of a covenant or provision hereof which under the
proviso to the prior paragraph cannot be modified or amended without the consent
of the holder of each outstanding Note affected.
Satisfaction and Discharge of the Indenture, Defeasance
The Company may terminate its obligations under the Indenture when (i) either
(A) all outstanding 7.50% Notes have been delivered to the Trustee for
cancellation or (B) all such 7.50% Notes not theretofore delivered to the
Trustee for cancellation have become due and payable, will become due and
payable within one year or are to be called for redemption within one year under
irrevocable arrangements satisfactory to the Trustee for the giving of notice of
redemption by the Trustee in the name and at the expense of the Company, and the
Company has irrevocably deposited or caused to be deposited with the Trustee
funds in an amount sufficient to pay and discharge the entire indebtedness on
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the 7.50% Notes not theretofore delivered to the Trustee for cancellation, for
principal of (or premium, if any, on) and interest to the date of deposit or
maturity or date of redemption on such 7.50% Notes; (ii) the Company has paid or
caused to be paid all other sums payable by the Company under the Indenture; and
(iii) the Company has delivered an Officers' Certificate and an Opinion of
Counsel relating to compliance with the conditions set forth in the Indenture.
The Company, at its election, shall (a) be deemed to have paid and discharged
its debt on the 7.50% Notes and the Indenture shall cease to be of further
effect as to all outstanding 7.50% Notes (except as to (i) rights of
registration of transfer, substitution and exchange of 7.50% Notes and the
Company's right of optional redemption, (ii) rights of holders to receive
payments of principal of, premium, if any, and interest on such 7.50% Notes (but
not the Purchase Price referred to under "--Change of Control") and any rights
of the holders with respect to such amounts, (iii) the rights, obligations and
immunities of the Trustee under the Indenture and (iv) certain other specified
provisions in the Indenture) or (b) cease to be under any obligation to comply
with certain restrictive covenants including those described under "--Certain
Covenants," after the irrevocable deposit by the Company with the Trustee, in
trust for the benefit of the holders, at any time prior to the maturity of the
7.50% Notes, of (A) money in an amount, (B) Government Securities which through
the payment of interest and principal will provide, not later than one day
before the due date of payment in respect of the 7.50% Notes, money in an
amount, or (C) a combination thereof, sufficient to pay and discharge the
principal of, and interest on, the 7.50% Notes then outstanding on the dates on
which any such payments are due in accordance with the terms of the Indenture
and of the 7.50% Notes. Such defeasance or covenant defeasance shall be deemed
to occur only if certain conditions are satisfied, including, among other
things, delivery by the Company to the Trustee of an Opinion of Counsel
acceptable to the Trustee to the effect that (i) such deposit, defeasance and
discharge will not be deemed, or result in, a taxable event for federal income
tax purposes with respect to the holders; and (ii) the Company's deposit will
not result in the Trust or the Trustee being subject to regulation under the
Investment Company Act of 1940, as amended.
Governing Law
The Indenture and the 7.50% Notes will be governed by the laws of the State of
New York.
The Trustee
Bankers Trust Company will be the Trustee under the Indenture and the Senior
Note Indentures. The Trustee's current address is Four Albany Street, New York,
New York 10006. The holders of not less than a majority in principal amount of
the outstanding 7.50% Notes will have the right to direct the time, method and
place of conducting any proceeding for exercising any remedy available to the
Trustee, subject to certain exceptions. Except during the continuance of an
Event of Default, the Trustee will perform only such duties as are specifically
set forth in the Indenture. The Indenture provides that in case an Event of
Default shall occur (which shall not be cured or waived), the Trustee will be
required, in the exercise of its rights and powers under the Indenture, to use
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the degree of care of a prudent person in the conduct of such person's own
affairs.
No Personal Liability of Directors, Officers, Employees and Stockholders
No director, officer, employee, incorporator or stockholder of the Company, as
such, shall have any liability for any obligations of the Company under the
7.50% Notes or the Indenture or for any claim based on, in respect of, or by
reason of, such obligations or their creation, solely by reason of its status as
a director, officer, employee, incorporator or stockholder of the Company. By
accepting a Note each holder waives and releases all such liability (but only
such liability). The waiver and release are part of the consideration for
issuance of the 7.50% Notes. Nevertheless, such waiver may not be effective to
waive liabilities under the federal securities laws and it has been the view of
the Commission that such a waiver is against public policy.
Transfer and Exchange
A holder may transfer or exchange 7.50% Notes in accordance with the Indenture.
The Company, the Registrar and the Trustee may require a holder, among other
things, to furnish appropriate endorsements and transfer documents and the
Company may require a holder to pay any taxes and fees required by law or
permitted by the Indenture.
EXCHANGE OFFER; REGISTRATION RIGHTS
The Company has entered into a registration rights agreement with the initial
purchaser (the "Registration Agreement") pursuant to which the Company agreed,
for the benefit of the holders of the Old Notes, at the Company's cost, (a) by
February 2, 1999, to file a registration statement (a "Registration Statement")
with the Commission with respect to a registered offer to exchange the Old Notes
for the New Notes, (b) to use its best efforts to cause such Registration
Statement to be declared effective under the Securities Act by March 3, 1999,
and (c) to consummate the Exchange Offer by April 2, 1999. For each Old Note
surrendered to the Company pursuant to the Exchange Offer, the holder of such
Old Note will receive an Exchange Note having a principal amount at maturity
equal to that of the surrendered Old Note.
Based upon no-action letters issued by the staff of the Commission to third
parties, the Company believes that the New Notes issued pursuant to the Exchange
Offer in exchange for Old Notes would in general be freely transferable after
the Exchange Offer without further registration under the Securities Act if the
holder of the New Notes represents (i) that it is not an "affiliate," as defined
in Rule 405 of the Securities Act, of the Company, (ii) that it is acquiring the
New Notes in the ordinary course of its business and (iii) that it has no
arrangement or understanding with any person to participate in the distribution
(within the meaning of the Securities Act) of the New Notes; provided that, in
the case of broker-dealers, a prospectus meeting the requirements of the
Securities Act be delivered as required. However, the Commission has not
considered the Exchange Offer in the context of a no-action letter and there can
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be no assurance that the staff of the Commission would make a similar
determination with respect to the Exchange Offer as in such other circumstances.
Holders of Old Notes wishing to accept the Exchange Offer must represent to the
Company that such conditions have been met. Each broker-dealer that receives New
Notes for its own account pursuant to the Exchange Offer, where it acquired the
Old Notes exchanged for such New Notes for its own account as a result of
market-making or other trading activities, may be deemed to be an "underwriter"
within the meaning of the Securities Act and must acknowledge that it will
deliver a prospectus in connection with the resale of such New Notes. The Letter
of Transmittal states that by so acknowledging and by delivering a prospectus, a
broker-dealer will not be deemed to admit that it is an "underwriter" within the
meaning of the Securities Act. This Prospectus, as it may be amended or
supplemented from time to time, may be used by a broker-dealer in connection
with resales of New Notes received in exchange for Old Notes where such Old
Notes were acquired by such broker-dealer as a result of market-making
activities or other trading activities. The Company has agreed that, for a
period of one year after consummation of the Exchange Offer, it will make this
Prospectus available to any broker-dealer for use in connection with any such
resale. A broker-dealer that delivers such a prospectus to purchasers in
connection with such resales will be subject to certain of the civil liability
provisions under the Securities Act, and will be bound by the provisions of the
Registration Agreement (including certain indemnification and contribution
rights and obligations). See "The Exchange Offer--Resale of the New Notes" and
"Plan of Distribution."
Each holder of the Old Notes (other than certain specified holders) who wishes
to exchange Old Notes for New Notes in the Exchange Offer will be required to
represent that (a) it is not an affiliate of the Company, (b) any New Notes to
be received by it will be acquired in the ordinary course of its business and
(c) at the time of commencement of the Exchange Offer, it has no arrangement
with any person to participate in the distribution (within the meaning of the
Securities Act) of the New Notes. If the holder is a broker-dealer (a
"Participating Broker-Dealer") who acquired the Old Notes for its own account as
a result of market-making or other trading activities, it may be deemed to be an
"underwriter" within the meaning of the Securities Act and will be required to
acknowledge that it must deliver a prospectus meeting the requirements of the
Securities Act in connection with any resale of such New Notes. The Commission
has taken the position that Participating Broker-Dealers may fulfill their
prospectus delivery requirements with respect to the New Notes (other than a
resale of an unsold allotment from the original sale of the Old Notes) with the
prospectus contained in the Exchange Offer Registration Statement. Under the
Registration Agreement, the Company is required to allow Participating
Broker-Dealers and other persons, if any, subject to similar prospectus delivery
requirements to use the prospectus contained in the Exchange Offer Registration
Statement in connection with the resale of such New Notes.
If, (i) because of any change in law or applicable interpretations thereof by
the Commission's staff, the Company determines upon advice of its outside
counsel that it is not permitted to effect the Exchange Offer as contemplated by
the Registration Agreement, or (ii) for any other reason the Exchange Offer is
not consummated within 180 days of the closing date of the Old Notes, or (iii)
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the initial purchaser so requests with respect to Old Notes held by it following
consummation of the Exchange Offer, or (iv) any holder of Old Notes (other than
the initial purchaser of the Old Notes) is not eligible to participate in the
Exchange Offer or (v) if the initial purchaser participates in the Exchange
Offer or acquires New Notes issued and delivered to it by the Company in
exchange for Old Notes, such purchaser does not receive freely tradeable New
Notes in exchange for Old Notes constituting any portion of an unsold allotment,
the Company will, at its cost, (a) as promptly as practicable, file a shelf
registration statement (a "Shelf Registration Statement") with the Commission
relating to the offer and sale of the Old Notes or the New Notes, (b) cause such
Shelf Registration Statement to be declared effective under the Securities Act
and (c) use its best efforts to keep such Shelf Registration Statement
continuously effective under the Securities Act for a period of three years or
such shorter period that will terminate when all the Old Notes or New Notes, as
applicable, covered by such Shelf Registration Statement have been sold. The
Company will, in the event of filing such a Shelf Registration Statement,
provide to each holder of the Old Notes copies of the prospectus that is a part
of such Shelf Registration Statement, notify each such holder when such Shelf
Registration Statement for the Old Notes has been filed with the Commission and
when such Shelf Registration Statement or any post-effective amendment thereto
has become effective and take certain other actions as are required to permit
unrestricted resales of the 7.50% Notes. A holder of 7.50% Notes that sells such
7.50% Notes pursuant to a Shelf Registration Statement generally will be
required to be named as a selling security holder in the related prospectus and
to deliver a prospectus to purchasers, will be subject to certain of the civil
liability provisions under the Securities Act in connection with such sales and
will be bound by the provisions of the Registration Agreement which are
applicable to such a holder (including certain indemnification and contribution
rights and obligations).
The Old Notes provide that if (i) the Registration Statement has not been
filed with the Commission within 90 days after the closing date of the Old Notes
or declared effective within 150 days after the closing date of the Old Notes,
or the Exchange Offer has not been consummated within 180 days after the closing
date of the Old Notes or (ii) in lieu thereof, the Shelf Registration Statement
has not been filed with the Commission and declared effective within 210 days
after the closing date of the Old Notes or (iii) after either the Registration
Statement or the Shelf Registration Statement has been declared effective, as
the case may be, such Registration Statement thereafter ceases to be effective
or usable (subject to certain exceptions) in connection with resales of Old
Notes or New Notes in accordance with and during the periods specified in the
Registration Agreement (each such event referred to in clauses (i) through
(iii), a "Registration Default"), additional interest ("Liquidated Interest")
will accrue on the Old Notes (in addition to the stated interest on the Old
Notes) from and including the date on which any such Registration Default shall
occur up to but excluding the date on which all Registration Defaults have been
cured. Liquidated Interest will be payable in cash semiannually in arrears each
November 1 and May 1, at a rate per annum equal to 0.50% of the principal amount
of the Old Notes during the 90-day period immediately following the occurrence
of any Registration Default and shall increase by 0.25% per annum of the
principal amount of the Old Notes at the end of each subsequent 90-day period,
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but in no event shall such rates exceed 2.00% per annum in the aggregate
regardless of the number of Registration Defaults.
The summary herein of certain provisions of the Registration Agreement does
not purport to be complete and is subject to, and is qualified in its entirety
by reference to, all the provisions of the Registration Agreement, a copy of
which is filed as an exhibit to the Registration Statement of which this
Prospectus is a part.
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DESCRIPTION OF CERTAIN INDEBTEDNESS
In March 1997, the Company issued and sold $250.0 million in principal amount
of its 10 7/8% Senior Notes Due 2007 (the "10 7/8% Notes"), the proceeds of
which were used to repay certain indebtedness of the Company and also to fund
capital expenditures for the construction and activation of the Company's
network. Unamortized issuance costs totaling approximately $8.0 million are
being amortized over the term of the 10 7/8% Notes. Interest on the 10 7/8%
Notes is payable semi-annually on April 1 and October 1 of each year, commencing
on October 1, 1997, and the principal amount of the 10 7/8% Notes is due and
payable in full on April 1, 2007. The 10 7/8% Note Indenture contains certain
covenants that, among other things, limit the ability of the Company and certain
of its subsidiaries (the "Restricted Subsidiaries") to incur additional
indebtedness and issue preferred stock, pay dividends or make other
distributions, repurchase capital stock or subordinated indebtedness, create
certain liens, enter into certain transactions with affiliates, sell assets of
the Company or its Restricted Subsidiaries, issue or sell capital stock of the
Company's Restricted Subsidiaries or enter into certain mergers and
consolidations. In addition, under certain limited circumstances, the Company
will be required to offer to purchase the 10 7/8% Notes at a price equal to 100%
of the principal amount thereof plus accrued and unpaid interest to the date of
purchase with the excess proceeds of certain asset sales. In the event of a
Change of Control (as defined in the 10 7/8% Note indenture), holders of the 10
7/8% Notes will have the right to require the Company to purchase all of their
10 7/8% Notes at a price equal to 101% of the aggregate principal amount thereof
plus accrued and unpaid interest. Generally, the 10 7/8% Notes are redeemable,
at the option of the Company, in whole or in part at stated premiums over par on
or after April 1, 2002, and up to 35% of the 10 7/8% Notes may be redeemed at a
premium over par prior to April 1, 2000 with the proceeds of certain public
stock offerings.
In August 1997, the Company completed a registered exchange of new 10 7/8%
Notes (with terms identical in all material respects to the originally issued 10
7/8% Notes) for all of the originally issued 10 7/8% Notes. The Company received
no proceeds from and recognized no profit on the exchange transaction, and no
change in the financial condition of the Company occurred as a result of the
exchange transaction. In December 1998, the Company redeemed $87.5 million of
its 10 7/8% Notes.
In October 1997, the Company issued $555.9 million in principal amount at
maturity of its 9.47% Senior Discount Notes Due 2007 (the "9.47% Notes"),
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generating net proceeds of approximately $342.1 million, after deducting
offering costs which are included in intangible and other long-term assets and
are being amortized to interest expense over the term of the 9.47% Notes. The
net proceeds were used to fund capital expenditures for continuing construction
and activation of the Company's network and to fund further growth in the
business. The 9.47% Notes accrete at a rate of 9.47% per annum, compounded
semi-annually, to an aggregate principal amount of $555.9 million by October 15,
2002. The principal amount of the 9.47% Notes is due and payable in full on
October 15, 2007. The 9.47% Notes are redeemable at the Company's option, in
whole or in part, at any time on or after October 15, 2002, at specified
redemption prices over par. In addition, prior to October 15, 2000, the Company
may use the net cash proceeds from certain specified equity transactions to
redeem up to 35% of the 9.47% Notes at specified redemption prices over par.
Cash interest on the 9.47% Notes will not accrue until October 15, 2002, and
thereafter will accrue at a rate of 9.47% per annum, and will be payable
semi-annually in arrears commencing on April 15, 2003 and thereafter on April 15
and October 15 (each an interest payment date) of each year. The Company has the
option of commencing the accrual of cash interest on an interest payment date on
or after October 15, 2000, in which case the outstanding principal amount at
maturity of the 9.47% Notes will, on such interest payment date, be reduced to
the then accreted value, and cash interest will be payable on each interest
payment date thereafter. The indenture for the 9.47% Notes contains certain
covenants that are substantially identical to the 10 7/8% Notes described above.
See "Description of the Notes."
In March 1998, the Company completed a registered exchange of new 9.47% Notes
(with terms identical in all material respects to the originally issued 9.47%
Notes) for all of the originally issued 9.47% Notes. The Company received no
proceeds from and recognized no profit on the exchange transaction, and no
change in the financial condition of the Company occurred as a result of the
exchange transaction.
In January 1998, the Company issued $450.5 million in principal amount at
maturity of its 8.29% Senior Discount Notes Due 2008 (the "8.29% Notes"),
generating net proceeds of approximately $299.2 million, after deducting
offering costs which are included in intangible and other long-term assets and
will be amortized to interest expense over the term of the 8.29% Notes. The net
proceeds were used to fund capital expenditures for continuing construction and
activation of the Company's network and to fund further growth in the business.
The 8.29% Notes accrete at a rate of 8.29% per annum, compounded semi-annually,
to an aggregate principal amount of $450.5 million by February 1, 2003. The
principal amount of the 8.29% Notes is due and payable in full on February 1,
2008. The 8.29% Notes are redeemable at the Company's option, in whole or in
part, at any time on or after February 1, 2003, at specified redemption prices
over par. In addition, prior to February 1, 2001, the Company may use the net
cash proceeds from certain specified equity transactions to redeem up to 35% of
the 8.29% Notes at specified redemption prices over par. Cash interest on the
8.29% Notes will not accrue until February 1, 2003, and thereafter will accrue
at a rate of 8.29% per annum, and will be payable semi-annually in arrears
commencing on August 1, 2003 and thereafter on February 1 and August 1 (each an
interest payment date) of each year. The Company has the option of commencing
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the accrual of cash interest on an interest payment date on or after February 1,
2001, in which case the outstanding principal amount at maturity of the 8.29%
Notes will, on such interest payment date, be reduced to the then accreted
value, and cash interest will be payable on each interest payment date
thereafter. The indenture for the 8.29% Notes contains certain covenants that
are substantially identical to the 10 7/8% Notes and the 9.47% Notes described
above.
In July 1998, the Company completed a registered exchange of new 8.29% Notes
(with terms identical in all material respects to the originally issued 8.29%
Notes) for all of the originally issued 8.29% Notes. The Company received no
proceeds from and recognized no profit on the exchange transaction, and no
change in the financial condition of the Company occurred as a result of the
exchange transaction.
In connection with the acquisition of LCI, the Company assumed LCI's existing
debt instruments, including $350.0 million of 7.25% Senior Notes due 2007 (the
"7.25% Notes Due 2007").
In November 1998, the Company issued and sold the 7.50% Notes, the proceeds of
which were used to fund initiatives to further develop and deploy the Company's
network, gain additional market share in the traditional telecommunications
market segment, expand the Qwest data market strategy and to fund general
working capital needs. Pending the application of the net proceeds of the
offering of the 7.50% Notes, the Company applied a portion of the proceeds to
pay down the outstanding balances under the Company's existing credit
facilities. Unamortized issuance costs totaling approximately $9.0 million are
being amortized over the term of the 7.50% Notes. Interest on the 7.50% Notes is
payable semi-annually on May 1 and November 1 of each year, commencing on May 1,
1999, and the principal amount of the 7.50% Notes is due and payable in full on
November 1, 2008. The indenture for the 7.50% Notes contains certain covenants
that are substantially identical to the 10 7/8% Notes, the 9.47% Notes and the
8.29% Notes described above, except that under the indenture for the 7.50%
Notes, the Company has no obligation to comply with most of the covenants during
any period when the 7.50% Notes have been assigned investment grade ratings. If
the 7.50% Notes later lose an investment grade rating, the covenants will again
apply. See "Description of the Notes."
In connection with the sale of the 7.50% Notes, the Company agreed to make an
offer to exchange new notes, registered under the Securities Act and with terms
identical in all material respects to the 7.50% Notes, for the 7.50% Notes or,
alternatively, to file a shelf registration statement under the Act with respect
to the 7.50% Notes.
In late November 1998, the Company issued and sold $300.0 million in principal
amount of its 7.25% Notes Due 2008, the proceeds of which were used to fund
initiatives to further develop and deploy the Company's network, gain additional
market share in the traditional telecommunications market segment, expand the
Qwest data market strategy and to fund general working capital needs. These
initiatives (which may be effected directly by the Company or through joint
venture and similar arrangements) will include construction, development and
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lighting of the Company's network, expansion of the data and other business
services offered by the Company, development of sales channels and other needs.
Unamortized issuance costs totaling approximately $2.3 million are being
amortized over the term of the 7.25% Notes Due 2008. Interest on the 7.25% Notes
is payable semi-annually on May 1 and November 1 of each year, commencing on May
1, 1999, and the principal amount of the 7.25% Notes Due 2008 is due and payable
in full on November 1, 2008. The indenture for the 7.25% Notes contains certain
covenants that are substantially identical to the 10 7/8% Notes, the 9.47%
Notes, the 8.29% Notes and the 7.50% Notes described above, except that, like
the 7.50% Notes, under the indenture for the 7.25% Notes Due 2008, the Company
has no obligation to comply with most of the covenants during any period when
the 7.25% Notes Due 2008 have been assigned investment grade ratings. If the
7.25% Notes Due 2008 later lose an investment grade rating, the covenants will
again apply.
In connection with the sale of the 7.25% Notes Due 2008, the Company agreed to
make an offer to exchange new notes, registered under the Securities Act and
with terms identical in all material respects to the 7.25% Notes Due 2008, for
the 7.25% Notes Due 2008 or, alternatively, to file a shelf registration
statement under the Securities Act with respect to the 7.25% Notes Due 2008.
Credit Facility and Lines of Credit
In connection with the acquisition of LCI, the Company assumed a $250.0
million revolving credit facility (the "Credit Facility") from a syndicate of
banks. The Company also assumed three separate discretionary line of credit
agreements (the "Lines of Credit") with commercial banks providing for total
borrowings of up to $75.0 million.
The Credit Facility bears interest at a rate consisting of two components: the
base rate component is dependent upon a market indicator; the second component
varies from 0.30% to 0.75%, based on the more favorable of the relationship of
borrowings levels to operating cash flow (the "leverage ratio") or senior
unsecured debt rating. As of September 30, 1998, the Company had $215.0 million
outstanding under the Credit Facility at an interest rate of 6.0%. The Credit
Facility contains various financial covenants including a leverage ratio
requirement. As of September 30, 1998, the Company was in compliance with all
Credit Facility covenants. The Credit Facility expired on December 31, 1998. In
November 1998, the outstanding balance under the Credit Facility was repaid with
a portion of the proceeds from the 7.50% Notes.
As of September 30, 1998, $17.5 million was outstanding on the Lines of Credit
at an interest rate of 6.3%. In November 1998, the outstanding balances under
the Lines of Credit were repaid with a portion of the proceeds from the 7.50%
Notes. Two of the Lines of Credit expired on Dec. 31, 1998. As of December 31,
1998 the Company had $25.0 million available on the remaining Line of Credit.
On November 5, 1998, the Company executed a commitment letter with its three
lead banks to syndicate an unsecured credit facility of between $500 million and
$750 million. The lead banks agreed to a minimum aggregate commitment of $250.0
million with the remainder expected to be provided by other banks to be added to
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the syndicate. Subsequent to this, the Company obtained other financing through
the issuance of $300.0 million of 7.25% Senior Notes due 2008 and through an
investment in the Company of $200.0 million by Microsoft Corporation. As a
result of entering into these transactions, the closing of the credit facility
was postponed. The Company is currently in the process of obtraining a new
unsecured $750.0 million to $1.0 billion credit facility through a syndicate of
banks. Consummation of the new credit facility is conditioned, among other
things, on the execution of a mutually satisfactory credit agreement. The
Company and the syndicate of banks are working toward closing in the first
quarter of 1999.
Accounts Receivable Securitization
As of September 30, 1998, the Company, through its wholly-owned subsidiary,
LCI, maintained an agreement to sell a percentage ownership interest in a
defined pool of trade accounts receivable (the "Securitization Program"). Under
the Securitization Program, LCI SPC I, Inc. ("SPC"), a single-purpose subsidiary
of the Company, sold accounts receivable. SPC had approximately $150.0 million
of accounts receivable available for sale and had sold a total of approximately
$125.0 million as of September 30, 1998.
In October 1998, the Company borrowed approximately $67.0 million under a
demand note payable to a bank. This demand note was utilized to reacquire the
ownership interest in a portion of the pool of trade accounts receivable that
were sold under the Securitization Program. The remaining portion of such
accounts was reacquired with cash. In November 1998, the outstanding balance
under the demand note was repaid with a portion of the proceeds of the 7.50%
Notes.
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CERTAIN UNITED STATES FEDERAL INCOME TAX CONSIDERATIONS
General
The following is a general discussion of certain of the expected United
States federal income tax consequences applicable to holders of the Old Notes
who purchased the Old Notes for cash pursuant to the Offering, exchange the Old
Notes for New Notes pursuant to this Exchange Offer and hold the Old Notes and
will hold the New Notes as capital assets (such persons are referred to herein
as "Holders"). This discussion is intended only as a descriptive summary and
does not purport to be a complete technical analysis or listing of all potential
tax considerations that may be relevant to Holders. Qwest has received an
opinion of its counsel, Holme Roberts & Owen LLP, that the following describes
the material United States federal income tax consequences expected to result to
Holders, subject to the conditions and limitations described herein. This
discussion is based on the current provisions of the Internal Revenue Code of
1986, as amended (the "Code"), the applicable Treasury regulations
("Regulations"), and public administrative and judicial interpretations of the
Code and Regulations, all of which are subject to change, which changes could be
applied retroactively. This discussion is also based on the information
contained in this Prospectus and the related documents, and on certain
representations from Qwest as to factual matters. This discussion does not cover
all aspects of United States federal taxation that may be relevant to, or the
actual tax effect that any of the
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matters described herein will have on, particular Holders and does not address
foreign, state, or local tax consequences.
Qwest has not sought and will not seek any ruling from the Internal Revenue
Service (the "Service") with respect to the 7.50% Notes. There can be no
assurance that the Service will not take a different position concerning the tax
consequences of the exchange of Old Notes for New Notes or the ownership or
disposition of the New Notes, or that the Service's position would not be
sustained by a court.
The United States federal income tax consequences to a Holder may vary
depending upon the Holder's particular situation or status. Holders that are
subject to special rules under the Code (including insurance companies,
tax-exempt organizations, mutual funds, retirement plans, financial
institutions, dealers in securities or foreign currency, persons that hold the
7.50% Notes as part of a "straddle" or as a "hedge" against currency risk or in
connection with a conversion transaction, persons that have a functional
currency other than the United States dollar, investors in pass-through
entities, traders in securities that elect to mark to market, and except as
expressly addressed herein, Non-U.S. Holders (as defined below)) may be subject
to special rules not discussed below.
As used in this discussion, the term "U.S. Holder" means a Holder that, for
United States federal income tax purposes, is (i) a citizen or resident of the
United States, (ii) a corporation, partnership, or other entity created or
organized in or under the laws of the United States, of the District of
Columbia, or of any State, (iii) an estate the income of which is subject to
United States federal income tax, regardless of its source, or (iv) a trust if
(a) a court within the United States is able to exercise primary supervision
over the administration of the trust and (b) one or more United States persons
have the authority to control all substantial decisions of the trust. The term
"Non-U.S. Holder" means a Holder that is, for United States federal income tax
purposes, not a U.S. Holder.
THIS DISCUSSION IS FOR GENERAL INFORMATION PURPOSES ONLY. EACH HOLDER IS
URGED TO CONSULT ITS TAX ADVISOR AS TO THE PARTICULAR TAX CONSEQUENCES TO SUCH
PERSON OF EXCHANGING OLD NOTES FOR NEW NOTES AND OF HOLDING AND DISPOSING OF THE
NEW NOTES, INCLUDING THE APPLICABILITY AND EFFECT OF ALL FOREIGN, STATE, OR
LOCAL TAX LAWS AND OF ANY CHANGE IN FEDERAL INCOME TAX LAW OR ADMINISTRATIVE OR
JUDICIAL INTERPRETATION THEREOF SINCE THE DATE OF THIS PROSPECTUS.
Although there is no direct authority as to whether the exchange of Old
Notes for New Notes pursuant to the Exchange Offer will be treated as a taxable
exchange for United States federal income tax purposes, it is the opinion of
Holme Rboberts & Owen LLP, counsel to Qwest, that based on its analysis of
applicable law, such exchange should not be treated as a taxable exchange for
United States federal income tax purposes. A Holder should not recognize gain or
loss upon the exchange of Old Notes for New Notes pursuant to the Exchange Offer
and, upon such exchange, should have the same adjusted tax basis in and holding
period for the New Notes as it had in the Old Notes immediately prior to the
exchange.
Original Issue Discount
Qwest was advised by the Initial Purchaser at the time of the sale of the
Old Notes that the Initial Purchaser intended to sell the Old Notes at a price
equal to 99.324% of the stated principal amount of the Old Notes, and Qwest
believes that substantially all of the Old Notes were sold to investors at that
price. This discussion is therefore based on the assumption that the Old Notes
were not issued with an amount of original issue discount in excess of the de
minimis exception under the Code, and thus, that the original issue discount
amount, if any, will be considered zero for United States federal income tax
purposes. Each U.S. Holder is required to include stated
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interest on the 7.50% Notes in gross income in accordance with such U.S.
Holder's regular method of tax accounting.
Effect of Liquidated Interest
Pursuant to the Registration Agreement, Qwest has agreed to commence a
registered Exchange Offer pursuant to a Registration Statement or to cause the
7.50% Notes to be registered under the Securities Act pursuant to a Shelf
Registration Statement within the time periods set forth therein. If the
applicable deadlines are not met with respect to the Exchange Offer or the Shelf
Registration Statement, additional interest (in the form of Liquidated Interest)
will accrue and be payable semiannually with respect to the 7.50% Notes. See
"Exchange Offer Registration Rights" and "Description of the 7.50% Notes."
Although the treatment is not free from doubt, the provision for the payment of
Liquidated Interest probably constitutes contingent payments for purposes of
computing original issue discount. Qwest believes that it is unlikely that the
Exchange Offer and Shelf Registration Statement requirements of the Registration
Agreement will not be met, and thus, that Liquidated Interest will be required
to be paid with respect to the 7.50% Notes. Accordingly, Qwest intends to treat
the Liquidated Interest contingency as remote and thus that it will not occur
for purposes of computing original issue discount. If, contrary to this
assumption, Liquidated Interest is triggered, then the additional interest will
be reportable as income at that time or will be reflected as original issue
discount on the 7.50% Notes. Also, if Liquidated Interest is triggered, the U.S.
Holder may be subject to special rules applicable to gains or losses recognized
on the disposition of a contingent payment debt instrument.
Market Discount
Under the market discount rules of the Code, a U.S. Holder who purchases a
7.50% Note at a "market discount" will generally be required to treat any gain
recognized on the disposition of the 7.50% Note as ordinary income to the extent
of the lesser of such gain or the portion of the market discount that accrued
during the period that the U.S. Holder held such 7.50% Note. Market discount is
generally defined as the amount by which a U.S. Holder's purchase price for a
7.50% Note is less than the stated redemption price at maturity (the stated
principal amount in this case) of the 7.50% Note on the date of purchase,
subject to a statutory de minimis exception. A U.S. Holder who acquires a 7.50%
Note at a market discount may be required to defer all or a portion of any
interest expense that otherwise may be deductible on any indebtedness incurred
or continued to purchase or carry such 7.50% Note until the retirement of the
7.50% Note, or if earlier, the U.S. Holder disposes of the 7.50% Note in a
taxable transaction. A U.S. Holder who has elected under applicable Code
provisions to include market discount in income annually as such discount
accrues will not, however, be required to treat any gain recognized as ordinary
income or to defer any deductions for interest expense under these rules. This
election to include market discount in income currently, once made, applies to
all market discount obligations acquired on or after the first day of the
taxable year to which the election applies and may not be revoked without the
consent of the Service. Holders should consult their tax advisors as to the
portion of any gain that would be taxable as ordinary income
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under these provisions and any other consequences of the market discount rules
that may apply to them in particular.
Amortizable Bond Premium
Generally, if the tax basis of an obligation held as a capital asset exceeds
the amount payable at maturity of the obligation, such excess will constitute
amortizable bond premium that the holder of such debt instrument may elect,
under section 171 of the Code, to amortize as an offset to interest income under
the constant yield method over the period from its acquisition date to the
obligation's maturity date subject to special rules for early call provisions. A
U.S. Holder who elects to amortize bond premium must reduce its tax basis in the
related 7.50% Notes by the amount of the aggregate amortization allowable as
amortizable bond premium. An election to amortize bond premium applies to all
obligations with amortizable bond premium held by the electing U.S. Holder at
the beginning of the first taxable year to which the election applies or
thereafter acquired by the U.S. Holder and is irrevocable without the consent of
the Service.
Sale, Retirement, or Other Taxable Disposition
Upon the sale, retirement, or other taxable disposition of a 7.50% Note, a
U.S. Holder will generally recognize gain or loss measured by the difference
between (i) the amount of cash plus the fair market value of property received
in exchange therefor (except to the extent attributable to accrued interest not
previously taken into account) and (ii) the U.S. Holder's adjusted tax basis in
the 7.50% Note. If the 7.50% Note has market discount or amortizable bond
premium, appropriate adjustments may be required in computing the U.S. Holder's
adjusted tax basis for the 7.50% Note. Any gain or loss on the sale, retirement,
or other taxable disposition of a 7.50% Note, measured as described above, will
generally be capital gain or loss (except as discussed under "-Market
Discount"). In the case of an individual U.S. Holder, such capital gain will be
taxable at various preferential rates, depending on such U.S. Holder's holding
period for the 7.50% Note at the time of disposition.
With respect to tax matters related to legal defeasance and covenant
defeasance in certain circumstances, see "Description of the 7.50%
Notes-Satisfaction and Discharge of the Indenture, Defeasance."
Backup Withholding
The backup withholding rules of the Code require a payor to deduct and
withhold a tax amount if (i) the payee fails to furnish a taxpayer
identification number ("TIN") to the payor, (ii) the Service notifies the payor
that the TIN furnished by the payee is incorrect, (iii) the payee has failed to
report properly the receipt of a "reportable payment" and the Service has
notified the payor that withholding is required, or (iv) there has been a
failure on the part of the payee to certify under penalty of perjury that the
payee is not subject to withholding under section 3406 of the Code. If any one
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of the events discussed above occurs, Qwest or its paying agent or other
withholding agent will be required to withhold a tax equal to 31 percent of
any "reportable payment" which includes, among other things, interest
actually paid and amounts paid through brokers in retirement of securities.
Any amount withheld from a payment to a U.S. Holder under the backup
withholding rules will be allowed as a refund or credit against such U.S.
Holder's United States federal income tax, provided that the required
information is furnished to the Service. Certain U.S. Holders (including,
among others, corporations) are not subject to the backup withholding or
information reporting requirements.
Certain Tax Consequences to Non-U.S. Holders
General. The following discussion is for general information purposes only
and does not purport to cover all aspects of United States federal taxation that
may apply to, or the actual tax effect that any of the matters described herein
will have on, any particular Non-U.S. Holder. Non-U.S. Holders are urged to
consult their tax advisors as to the particular tax consequences to them of
purchasing, holding and disposing of the 7.50% Notes.
Portfolio Interest Exemption. A Non-U.S. Holder not engaged in any U.S.
trade or business will generally, under the portfolio interest exemption of the
Code, not be subject to United States federal income taxes or United States
federal withholding tax, on payments of principal, if any, on the 7.50% Notes,
and interest paid on the 7.50% Notes, provided that (i) the Non-U.S. Holder does
not actually or constructively own 10 percent or more of the total combined
voting power of all classes of stock of Qwest entitled to vote, (ii) the
Non-U.S. Holder is not (a) a bank receiving interest pursuant to a loan
agreement entered into in the ordinary course of its trade or business or (b) a
controlled foreign corporation that is related to Qwest through stock ownership,
(iii) such interest is not effectively connected with a United States trade or
business and (iv) either (a) the beneficial owner of the 7.50% Notes certifies
to Qwest or its agent, under penalties of perjury, that it is not a U.S. Holder
and provides a completed IRS Form W-8 ("Certificate of Foreign Status") or (b) a
securities clearing organization, bank, or other financial institution which
holds customers' securities in the ordinary course of its trade or business (a
"financial institution") and holds the 7.50% Notes, certifies to Qwest or it
agent, under penalties of perjury, that it has received Form W-8 from the
beneficial owner or that it has received from another financial institution a
Form W-8 and furnishes the payor with a copy thereof and none of the persons
reviewing the relevant certification or IRS Form has actual knowledge that the
certification or any statement on the IRS Form is false. If any of the
situations described in proviso (i), (ii), or (iv) of the preceding sentence do
not exist, interest on the 7.50% Notes, when paid, is subject to United
States withholding tax at the rate of 30 percent, unless an income tax treaty
between the United States and the country of which the Non-U.S. Holder is a tax
resident provides for the elimination or reduction in the rate of United States
federal withholding tax. Interest for this purpose includes income, other than
capital gains, received from the sale or exchange of the 7.50% Notes or from a
payment on the 7.50% Notes to the extent of unpaid interest accrued while the
7.50% Notes were held by a Non-U.S. Holder and the amounts so accrued were not
previously subject to United States withholding tax.
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Effectively Connected Income. If a Non-U.S. Holder is engaged in a trade or
business in the United States and interest on the 7.50% Notes is effectively
connected with the conduct of such trade or business, such Non-U.S. Holder,
although exempt from United States federal withholding tax as discussed in the
preceding paragraph (or by reason of the delivery of a properly completed IRS
Form 4224), will be subject to United States federal income tax on such interest
and on any gain realized on the sale, exchange, or other disposition of a Note
in the same manner as if it were a U.S. Holder. In addition, if such Non-U.S.
Holder is a foreign corporation, it may be subject to a branch profits tax equal
to 30 percent of its effectively connected earnings and profits for that taxable
year, subject to certain adjustments, unless it qualifies for a lower rate under
an applicable income tax treaty.
Federal Estate Tax. 7.50% Notes owned or treated as owned by an individual who
is neither a United States citizen nor a United States resident (as defined for
United States federal estate tax purposes) at the time of death will be excluded
from the individual's gross estate for United States federal estate tax purposes
and will not be subject to United States federal estate tax if the individual
does not own, actually or constructively, 10% or more of the total combined
voting power of all classes of stock of Qwest entitled to vote and, at the time
of such individual's death, payments with respect to such 7.50% Notes would not
have been effectively connected to the conduct by such individual of a trade or
business in the United States.
Disposition of the 7.50% Notes. A Non-U.S. Holder generally will not be
subject to United States federal income tax on any gain realized in connection
with the sale, exchange, or retirement of the 7.50% Notes, unless: (i)(a) the
gain is effectively connected with a trade or business carried on by the
Non-U.S. Holder within the United States or (b) if a tax treaty applies, the
gain is generally attributable to the United States permanent establishment
maintained by the Non-U.S. Holder, (ii) in the case of a Non-U.S. Holder who is
an individual, such Non-U.S. Holder is present in the United States for 183 days
or more in the taxable year of disposition, and certain other conditions are
satisfied, or (iii) the Non-U.S. Holder is subject to tax pursuant to provisions
of the Code applicable to United States expatriates.
Information Reporting and Backup Withholding Tax. In general, there is no
United States information reporting requirement or backup withholding tax on
payments to Non-U.S. Holders who provide the appropriate certification described
above regarding qualification for the portfolio interest exemption from United
States federal income tax for payments of interest on the 7.50% Notes.
In general, backup withholding and information reporting will not apply to a
payment of the gross proceeds of a sale of the 7.50% Notes effected at a foreign
office of a broker. If, however, such broker is, for United States federal
income tax purposes, a United States person, a controlled foreign corporation, a
foreign person, 50 percent or more of whose gross income for certain periods is
derived from activities that are effectively connected with the conduct of a
trade or business in the United States, or (in the case of payments made after
December 31, 1999) a foreign partnership with certain connections to the United
States, such payments will not be subject to backup withholding, but will be
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subject to information reporting, unless (i) such broker has documentary
evidence in its records that the beneficial owner is a Non-U.S. Holder and
certain other conditions are met or (ii) the beneficial owner otherwise
establishes an exemption.
Payment by Qwest of principal on the 7.50% Notes or payment by a United States
office of a broker of the proceeds of a sale of the 7.50% Notes is subject to
both backup withholding and information reporting unless the beneficial owner
provides a completed IRS Form W-8 which certifies under penalties of perjury
that it is a Non-U.S. Holder who meets all the requirements for exemption from
United States federal income tax on any gain from the sale, exchange, or
retirement of the 7.50% Notes. Backup withholding is not an additional tax. Any
amounts withheld under the backup withholding rules will be allowed as a refund
or a credit against such Non-U.S. Holder's United States federal income tax
liability, provided the required information is furnished to the Service.
Recently promulgated Regulations (the "New Regulations") would modify the
procedures to be followed by Non-U.S. Persons and payors of interest and sale
proceeds in complying with the United States federal withholding, backup
withholding, and information reporting rules, and the availability of any
exemption therefrom. The New Regulations are not currently effective, but will
generally be effective for payments made after December 31, 1999. In general,
the New Regulations do not significantly alter the current substantive
withholding and information requirements, but unify current certification
procedures and forms and clarify reliance standards. The New Regulations impose
more stringent conditions on the ability of financial intermediaries acting for
Non-U.S. Holders to provide certifications on behalf of Non-U.S. Holders. Each
Holder of a Note is strongly urged to consult its tax advisor regarding the
effect of the New Regulations on the purchase, ownership and disposition of the
7.50% Notes.
PLAN OF DISTRIBUTION
Each broker-dealer that receives New Notes for its own account pursuant to the
Exchange Offer must acknowledge that it will deliver a prospectus in connection
with any resale of such New Notes. This Prospectus, as it may be amended or
supplemented from time to time, may be used by a broker-dealer in connection
with resales of New Notes received in exchange for Old Notes where such Old
Notes were acquired as a result of market-making activities or other trading
activities. The Company has agreed that for a period of one year after
consummation of the Exchange Offer, it will make this Prospectus, as amended or
supplemented, available to any broker-dealer for use in connection with any such
resale.
The Company will not receive any proceeds from any sale of New Notes by any
broker-dealer. New Notes received by broker-dealers for their own account
pursuant to the Exchange Offer may be sold from time to time in one or more
transactions in the over-the-counter market, in negotiated transactions, through
the writing of options on the New Notes or a combination of such methods of
resale, at market prices prevailing at the time of resale, at prices related to
such prevailing market prices or negotiated prices. Any such resale may be made
directly to purchasers or to or through brokers or dealers who may receive
compensation in the form of commissions or concessions from any such
broker-dealer and/or the purchasers of any such New Notes. Any broker-dealer
that resells New Notes that were received by it for its own account pursuant to
the Exchange Offer and any broker or dealer that participates in a distribution
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of such New Notes may be deemed to be an "underwriter" within the meaning of the
Securities Act and any profit on any such resale of New Notes and any
commissions or concessions received by any such persons may be deemed to be
underwriting compensation under the Securities Act. The Letter of Transmittal
states that by acknowledging that it will deliver and by delivering a
prospectus, a broker-dealer will not be deemed to admit that it is an
"underwriter" within the meaning of the Securities Act.
For a period of one year after consummation of the Exchange Offer, the Company
will promptly send additional copies of this Prospectus and any amendment or
supplement to this Prospectus to any broker-dealer that requests such documents
in the letter of transmittal. The Company has agreed to pay all expenses
incident to the Company's performance of, or compliance with, the Registration
Agreement and all expenses incident to the Exchange Offer (including the
expenses of one counsel for the holders of the Old Notes) other than commissions
or concessions of any brokers or dealers, and will indemnify the holders
(including any broker-dealers) and certain parties related to the holders
against certain liabilities, including liabilities under the Securities Act.
The Company has not entered into any arrangements or understandings with any
person to distribute the New Notes to be received in the Exchange Offer.
LEGAL MATTERS
The validity of the New Notes and certain other legal matters in connection
with the New Notes offered hereby are being passed upon for the Company by Holme
Roberts & Owen LLP, Denver, Colorado with respect to matters of United States
law. Certain United States federal income tax matters will be passed upon for
the Company by Holme Roberts & Owen LLP, Denver, Colorado.
EXPERTS
The consolidated financial statements and schedule of Qwest Communications
International Inc. and subsidiaries as of December 31, 1997 and 1996 and for
each of the years in the three-year period ended December 31, 1997 have been
incorporated herein and in the Registration Statement by reference in reliance
upon the report pertaining to such consolidated financial statements, dated
February 24, 1998, except as to note 22, which is as of March 8, 1998, and the
report dated February 24, 1998 pertaining to such schedule, of KPMG LLP,
independent certified public accountants, incorporated herein and in the
Registration Statement by reference, and upon the authority of said firm as
experts in accounting and auditing.
The consolidated financial statements and schedules of LCI International, Inc.
and subsidiaries as of December 31, 1997 and 1996 and for each of the years in
the three-year period ended December 31, 1997 incorporated by reference herein
have been audited by Arthur Andersen LLP, independent public accountants as
stated in their reports also incorporated by reference herein.
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The consolidated financial statements of Phoenix Network, Inc. as of December
31, 1997 and 1996 and for each of the years in the three-year period ended
December 31, 1997 have been audited by Grant Thornton LLP, independent certified
public accountants.
The financial statements of SuperNet, Inc. as of and for the year ended June
30, 1997 have been audited by Dollinger, Smith & Co., independent certified
public accountants.
The consolidated financial statements of Icon CMT Corp. as of December 31, 1996
and 1997 and for each of the three years in the period ended December 31, 1997,
have been incorporated herein by reference to the Registration Statement (No.
333-65095) on Form S-4 of Qwest Communications International Inc. dated
September 30, 1998, as amended by Amendment No. 1 to the S-4 dated December 10,
1998. Such financial statements, except as they relate to Frontier Media Group,
Inc. as of December 31, 1996 and 1997 and for each of the two years in the
period ended December 31, 1997, have been audited by PricewaterhouseCoopers LLP,
independent accountants, and insofar as they relate to Frontier Media Group,
Inc. as of December 31, 1996 and 1997 and for each of the two years in the
period ended December 31, 1997, by Ernst & Young LLP, independent accountants.
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QWEST COMMUNICATIONS INTERNATIONAL INC.
OFFER TO EXCHANGE
7.50% SERIES B SENIOR DISCOUNT NOTES DUE 2008 FOR ANY AND ALL OF ITS
OUTSTANDING 7.50% SENIOR DISCOUNT NOTES DUE 2008
[LOGO]
THE EXCHANGE OFFER WILL EXPIRE AT 5:00 P.M., NEW YORK CITY TIME, ON ___DAY,
__________ __, 1999, UNLESS EXTENDED; PROVIDED IT MAY NOT BE EXTENDED BEYOND
_________ __, 1999.
PROSPECTUS
DATED JANUARY __, 1999
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PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 20. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Section 145 of the Delaware General Corporation Law ("DGCL") empowers a
Delaware corporation to indemnify any persons who are, or are threatened to be
made, parties to any threatened, pending or completed action, suit or
proceeding, whether civil, criminal, administrative or investigative (other than
an action by or in the right of such corporation), by reason of the fact that
such person is or was an officer or director of such corporation, or is or was
serving at the request of such corporation as a director, officer, employee or
agent of another corporation, partnership, joint venture, trust or other
enterprise. The indemnity may include expenses (including attorneys' fees),
judgments, fines and amounts paid in settlement actually and reasonably incurred
by such person in connection with such action, suit or proceeding, if such
officer or director acted in good faith and in a manner such person reasonably
believed to be in or not opposed to the best interests of the corporation, and,
with respect to any criminal action or proceeding, had no reasonable cause to
believe such officer's or director's conduct was unlawful. A Delaware
corporation may indemnify officers and directors in an action by or in the right
of the corporation under the same conditions, except that no indemnification is
permitted without judicial approval if the officer or director is adjudged to be
liable to the corporation in the performance of his duty. Where an officer or
director is successful on the merits or otherwise in the defense of any action
referred to above, the corporation must indemnify such officer or director
against the expenses which such officer or director actually and reasonably
incurred.
In accordance with Section 102(b)(7) of the DGCL, the Company's Certificate of
Incorporation provides that directors shall not be personally liable for
monetary damages for breaches of their fiduciary duty as directors except for
(i) breaches of their duty of loyalty to the Company or its stockholders, (ii)
acts or omissions not in good faith or which involve intentional misconduct or
knowing violations of law, (iii) certain transactions under Section 174 of the
DGLC (unlawful payment of dividends or unlawful stock purchases or redemptions)
or (iv) transactions from which a director derives an improper personal benefit.
The effect of this provision is to eliminate the personal liability of directors
for monetary damages for actions involving a breach of their fiduciary duty of
care, including any actions involving gross negligence.
The Certificate of Incorporation and the By-laws of the Company provide for
indemnification of the Company's officers and directors to the fullest extent
permitted by applicable law, except that the By-laws provide that the Company is
required to indemnify an officer or director in connection with a proceeding
initiated by such person only if the proceeding was authorized by the Board of
Directors of the Company. In addition, the Company maintains insurance policies
which provide coverage for its officers and directors in certain situations
where the Company cannot directly indemnify such officers or directors.
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Pursuant to Section 145 of the DGCL and the Certificate of Incorporation and
the By-laws of the Company, the Company maintains directors' and officers'
liability insurance coverage.
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ITEM 21. EXHIBITS AND FINANCIAL DATA SCHEDULES.
(a) The following is a complete list of Exhibits filed as part of this
Registration Statement, which are incorporated herein:
EXHIBIT NO.
1.1 Purchase Agreement dated October 28, 1998, between the Company and
Salomon Smith Barney Inc.
3.1** Amended and Restated Certificate of Incorporation of Qwest.
3.2 Certificate of Amendment of Amended and Restated Certificate of
Incorporation of Qwest (incorporated by reference to the exhibit of
the same number to Qwest's Registration Statement on Form S-3 (File
No. 333-58617) filed July 7, 1998).
3.3 Bylaws of Qwest (incorporated by reference to exhibit 3 in Qwest's
Form 10-Q for the quarter ended September 30, 1997 (File No. 000-
22609)).
4.1(a)*** Indenture dated as of October 15, 1997 with Bankers Trust Company
(including form of Qwest's 9.47% Senior Discount Notes due 2007 and
9.47% Series B Senior Discount Notes due 2007 as an exhibit thereto).
4.1(b)****Indenture dated as of August 28, 1997 with Bankers Trust Company
(including form of Qwest's 10 7/8% Series B Senior Notes due 2007 as
an exhibit thereto).
4.1(c)****Indenture dated as of January 29, 1998 with Bankers Trust Company
(including form of Qwest's 8.29% Senior Discount Notes due 2008 and
8.29% Series B Senior Discount Notes due 2008 as an exhibit thereto).
4.1(d) Indenture dated as of November 27, 1998 with Bankers Trust Company
(including form of the Company's 7.25% Senior Discount Notes Due
2008 and 7.25% Series B Senior Discount Notes Due as an exhibit
thereto).
4.1(e) Indenture dated as of November 4, 1998 with Bankers Trust Company
(including form of the Company's 7.50% Senior Discount Notes Due 2008
and 7.50% Series B Senior Discount Notes Due as an exhibit thereto).
4.2(a) Registration Agreement dated November 4, 1998 with Salomon Brothers
Inc. relating to the Company's 7.50% Senior Discount Notes Due 2008.
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4.2(b) Registration Agreement dated November _, 1998 with Salomon Brothers
Inc. relating to the Company's 7.25% Senior Discount Notes Due 2008.
4.3 Third Amended and Restated Credit Agreement, dated as of September 5,
1997, by and among LCI International Inc., First Union National Bank,
Nationsbank of Texas, N.A., and the Bank of New York (incorporated by
reference to exhibit 4(c)(xv) in LCI's Quarterly Report on Form 10-Q
for the quarter ended September 30, 1997).
4.4 Indenture dated as of June 23, 1997 between LCI International, Inc.,
and First Trust National Association, as trustee, Providing for the
Issuance of Senior Debt Securities, including Resolutions of the
Pricing Committee of the Board of Directors establishing the terms of
the 7.25% Senior Notes due June 15, 2007 (incorporated by reference
to exhibit 4(c) in LCI's Current Report on Form 8-K dated June 23,
1997).
5.1 Opinion of Holme Roberts & Owen LLP with respect to the legality of
the securities being registered.
8.1 Opinion of Holme Roberts & Owen LLP with respect to certain tax
matters.
10.1** Growth Share Plan, as amended, effective October 1, 1996.
10.2** Employment Agreement dated December 21, 1996 with Joseph P. Nacchio.
10.3** Promissory Note dated November 20, 1996 and Severance Agreement
dated December 1, 1996 with Robert S. Woodruff.
10.4**** Equity Compensation Plan for Non-Employee Directors.
10.5**+ IRU Agreement dated as of October 18, 1996 with Frontier
Communications International Inc.
10.6**+ IRU Agreement dated as of February 26, 1996 with WorldCom Network
Services, Inc.
10.7**+ IRU Agreement dated as of May 2, 1997 with GTE.
10.8** Equity Incentive Plan.
10.9**** Employment Agreement dated March 7, 1997 with Stephen M. Jacobsen.
10.10**** Employment Agreement dated October 8, 1997 with Lewis O. Wilks.
10.11**** Employment Agreement dated September 26, 1997 with Brij Khandelwal.
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10.12**** Employment Agreement dated September 19, 1997 with Larry Seese.
10.13**** Growth Share Plan Agreement with Joseph P. Nacchio, effective January
1, 1997, and Amendment thereto.
10.14**** Non-Qualified Stock Option Agreement with Joseph P. Nacchio,
effective June 1997.
10.15 Employment Agreement, dated as of October 18, 1993, between LCI
International Management Services, Inc. and Joseph A. Lawrence
(incorporated by reference to LCI's Annual Report on Form 10-K for
the year ended December 31, 1994).*
10.16 LCI International, Inc. 1992 Stock Option Plan (incorporated by
reference to LCI's Registration Statement No. 33-60558).*
10.17 LiTel Communications, Inc. 1993 Stock Option Plan (incorporated by
reference to LCI's Registration Statement No. 33-60558).*
10.18 LCI International, Inc. 1994/1995 Stock Option Plan (incorporated by
reference to LCI's Annual Report on Form 10-K for the year ended
December 31, 1993).*
10.19 LCI International, Inc. and Subsidiaries Nonqualified Stock Option
Plan for Directors (incorporated by reference to LCI's Registration
Statement No. 33-67368).*
10.20 LCI International, Inc. 1995/1996 Stock Option (incorporated by
reference to LCI's Proxy Statement for the 1995 Annual Meeting of
Shareowners).*
10.21 Employment Agreement, dated as of March 20, 1994, between LCI
International, Inc. and H. Brian Thompson (incorporated by reference
to LCI's Annual Report on Form 10-K for the year ended December 31,
1994).*
10.22 LCI International Management Services, Inc. Supplemental Executive
Retirement Plan (incorporated by reference to LCI's Quarterly Report
on Form 10-Q for the quarter ended March 31, 1995).*
10.23 Employment Agreement, dated as of October 1, 1995 between LCI
International Management Services, Inc., and Larry Bouman
(incorporated by reference to exhibit 10(1)(xviii) in LCI's Annual
Report on Form 10-K for the year ended December 31, 1995).*
10.24 1997/1998 LCI International, Inc. Stock Option Plan (incorporated by
reference to exhibit 10(1)(xxi) in LCI's Annual Report on Form 10-K
for the year ended December 31, 1996).*
10.25 LCI International, Inc. and Subsidiaries Executive Incentive
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Compensation Plan (incorporated by reference to exhibit 10(1)(xxii)
in LCI's Annual Report on Form 10-K for the year ended December 31,
1996).*
10.26 Contractor Agreement dated January 18, 1993 by and between LCI
International Telecom Corp. and American Communications Network, Inc.
(incorporated by reference to LCI's Quarterly Report on Form 10-Q for
the quarter ended September 30, 1995). Portions of this exhibit have
been omitted pursuant to a request for confidential treatment.*
10.27 Transfer and Administrative Agreement among Enterprise Funding
Corporation, LCI SPC I, Inc., LCI International Telecom Corp.,
NationsBank, N.A. and certain other parties thereto, dated August 29,
1996 (incorporated by reference to exhibit 10(r)(i) in LCI's
Quarterly Report on Form 10-Q for the quarter ended September 30,
1996).
10.28 Receivables Purchase Agreement dated August 29, 1996, among LCI
International Telecom Corp. and LCI SPC I, Inc. (incorporated by
reference to exhibit 10(r)(ii) in LCI's Quarterly Report on Form 10-Q
for the quarter ended September 30, 1996).
10.29 Subordinated Intercompany Revolving Note, dated August 29, 1996,
issued to LCI International Telecom Corp. by LCI SPC I, Inc.
(incorporated by reference to exhibit 10(r)(iii) in LCI's Quarterly
Report on Form 10-Q for the quarter ended September 30, 1996).
10.30 Support Agreement, dated August 29, 1996, by LCI International, Inc.
in favor of LCI SPC I, Inc. (incorporated by reference to exhibit
10(r)(iv) in LCI's Quarterly Report on Form 10-Q for the quarterly
period ended September 30, 1996).
10.31 Participation Agreement dated as of November 1996 among LCI
International, Inc., as the Construction Agent and as the Lessee,
First Security Bank, National Association, as the Owner Trustee under
the Stuart Park Trust the various banks and lending institutions
which are parties thereto from time to time as the Holders, the
various banks and lending institutions which are parties thereto from
time to time as the Lenders and NationsBank of Texas, N.A., as the
Agent for the Lenders (incorporated by reference to exhibit 10(s)(i)
in LCI's Annual Report on Form 10-K for the year ended December 31,
1996).
10.32 Unconditional Guaranty Agreement dated as of November 15, 1996 made
by LCI International, Inc., as Guarantor in favor of NationsBank of
Texas, N.A., as Agent for the ratable benefit of the Tranche A
Lenders (incorporated by reference to exhibit 10(s)(ii) in LCI's
Annual Report on Form 10-K for the year ended December 31, 1996).
10.33 Agency Agreement between LCI International, Inc., as the
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Construction Agent and First Security Bank, National Association, as
the Owner Trustee under the Stuart Park Trust as the Lessor dated as
of November 15, 1996 (incorporated by reference to exhibit 10(s)(iii)
in LCI's Annual Report on Form 10-K for the year ended December 31,
1996).
10.34 Deed of Lease Agreement dated as of November 15, 1996 between First
Security Bank, National Association as the Owner Trustee under the
Stuart Park Trust, as Lessor and LCI International, Inc. as Lessee
(incorporated by reference to exhibit 10(s)(iv) in LCI's Annual
Report on Form 10-K for the year ended December 31, 1996).
10.35* Equity Compensation Plan for Non-Employee Directors.
12.1 Statement re Computation of Ratios.
21.1 Subsidiaries of the Registrant (incorporated by reference to the
exhibit of the same number in Form S-4 (File No. 333-65095)
23.1 Consent of KPMG LLP.
23.2 Consent of Arthur Andersen LLP.
23.3 Consent of Grant Thornton LLP.
23.4 Consent of PricewaterhouseCoopers LLP.
23.5 Consent of Ernst & Young LLP.
23.6 Consent of Dollinger, Smith & Co.
23.7 Consent of Holme Roberts & Owen LLP (contained in Exhibit 5.1).
24.1 Power of Attorney. Included on the signature page hereof.
25 Form T-1, Statement of Eligibility of Bankers Trust Company.
- - --------
*Indicates executive compensation plans and arrangements.
** Incorporated by reference to the exhibit of the same number in Form S-1
as declared effective on June 23, 1997 (File No. 333-25391).
*** Incorporated by reference to exhibit 4.1 in Form S-4 as declared
effective on January 5, 1998 (File No. 333-42847).
**** Incorporated by reference to the exhibit of the same number in Qwest's Form
10-K for the year ended December 31, 1997.
+ Portions have been omitted pursuant to a request for confidential
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treatment.
(b) Financial Statement Schedules. The following is a complete list of
financial statement schedules filed as part of this Registration Statement,
which are incorporated by reference herein from Amendment No. 1 to Registration
Statement on Form S-4 (File No. 333-65095):
Schedule Number
II-A Qwest Communications International Inc.
Valuation and Qualifying Accounts
II-B LCI International Inc.
Valuation and Qualifying Accounts
II-C Icon CMT Corp.
Valuation and Qualifying Accounts
ITEM 22. UNDERTAKINGS.
(a) The undersigned Company hereby undertakes:
(1) That prior to any public reoffering of the securities registered
hereunder through use of a prospectus which is a part of this registration
statement, by any person or party who is deemed to be an underwriter within the
meaning of Rule 145(c) under the Securities Act of 1933, as amended (the
"Securities Act"), the issuer undertakes that such reoffering prospectus will
contain the information called for by the applicable registration form with
respect to reofferings by persons who may be deemed underwriters, in addition to
the information called for by the other Items of the applicable form.
(2) That every prospectus (i) that is filed pursuant to paragraph (1)
immediately preceding, or (ii) that purports to meet the requirements of section
10(a)(3) of the Securities Act and is used in connection with an offering of
securities subject to Rule 415 under the Securities Act, will be filed as a part
of an amendment to the registration statement and will not be used until such
amendment is effective, and that, for purposes of determining any liability
under the Securities Act, each such post-effective amendment shall be deemed to
be a new registration statement relating to the securities offered therein, and
the offering of such securities at that time shall be deemed to be the initial
bona fide offering thereof.
(b) Insofar as indemnification for liabilities arising under the Securities
Act may be permitted to directors, officers and controlling persons of the
registrant pursuant to the foregoing provisions, or otherwise, the registrant
has been advised that in the opinion of the Commission such indemnification is
against public policy as expressed in the Securities Act and is, therefore,
unenforceable. In the event that a claim for indemnification against such
liabilities (other than the payment by the registrant of expenses incurred or
paid by a director, officer or controlling person of the registrant in the
successful defense of any action, suit or proceedings) is
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asserted by such director, officer or controlling person in connection with the
securities being registered, the registrant will, unless in the opinion of its
counsel the matter has been settled by controlling precedent, submit to a court
of appropriate jurisdiction the question whether indemnification by it is
against public policy as expressed in the Securities Act and will be governed by
the final adjudication of such issue.
(c) The undersigned Company hereby undertakes to respond to requests for
information that is incorporated by reference into the prospectus pursuant to
Items 4, 10(b), 11 or 13 of this Form, within one business day of receipt of
such request, and to send the incorporated documents by first class mail or
other equally prompt means. This includes information contained in documents
filed subsequent to the effective date of the registration statement through the
date of responding to the request.
(d) The undersigned Company hereby undertakes to supply by means of a
post-effective amendment all information concerning a transaction, and the
company being acquired involved therein, that was not the subject of and
included in the registration statement when it became effective.
(e) The undersigned Company hereby undertakes that, for purposes of
determining any liability under the Securities Act, each filing of the
registrant's annual report pursuant to Section 13(a) or 15(d) of the Securities
Exchange Act of 1934 (and, where applicable, each filing of an employee benefit
plan's annual report pursuant to Section 15(d) of the Securities Exchange Act of
1934) that is incorporated by reference in the registration statement shall be
deemed to be a new registration statement
relating to the securities offered therein, and the offering of such
securities at that time shall be deemed to be the initial bona fide offering
thereof.
(f) The undersigned Company hereby undertakes:
(1) To file, during any period in which offers or sales are being made, a
post-effective amendment to this registration statement:
(i) to include any prospectus required by Section 10(a)(3) of the
Securities Act;
(ii) to reflect in the prospectus any facts or events arising after the
effective date of the registration statement (or the most recent
post-effective amendment thereof) which, individually or in the aggregate,
represent a fundamental change in the information set forth in the registration
statement. Notwithstanding the foregoing, any increase or decrease in volume of
securities offered (if the total dollar value of securities offered would not
exceed that which was registered) and any deviation from the low or high end of
the estimated maximum offering range may be reflected in the form of Prospectus
filed with the Commission pursuant to Rule 424(b) if, in the aggregate, the
changes in volume and price represent no more than a 20 percent change in the
maximum aggregate
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offering price set forth in the "Calculation of Registration Fee" table in
the effective registration statement; and
(iii) to include any material information with respect to the plan of
distribution not previously disclosed in the registration statement or any
material change to such information in the registration statement.
(2) That, for the purpose of determining any liability under the
Securities Act, each such post-effective amendment shall be deemed to be a new
registration statement relating to the securities offered therein, and the
offering of such securities at that time shall be deemed to be the initial bona
fide offering thereof.
(3) To remove from registration by means of a post-effective amendment any
of the securities being registered which remain unsold at the termination of
the offering.
(4) For purposes of determining any liability under the Securities Act,
the information omitted from the form of prospectus filed as part of a
registration statement in reliance upon Rule 430A and contained in the form of
prospectus filed by the Company pursuant to Rule 424(b)(1) or (4) or 497(h)
under the Securities Act shall be deemed part of the registration statement as
of the time it was declared effective.
SIGNATURES
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, AS AMENDED QWEST
COMMUNICATIONS INTERNATIONAL INC. HAS DULY CAUSED THIS REGISTRATION STATEMENT TO
BE SIGNED ON ITS BEHALF BY THE UNDERSIGNED THEREUNTO DULY AUTHORIZED, IN THE
CITY OF DENVER, STATE OF COLORADO, ON JANUARY 29, 1999.
Qwest Communications International Inc.
By: /s/ ROBERT S. WOODRUFF
NAME: ROBERT S. WOODRUFF
TITLE: Executive Vice President--Finance
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POWER OF ATTORNEY
KNOW ALL PERSONS BY THESE PRESENTS, THAT EACH PERSON WHOSE SIGNATURE APPEARS
BELOW CONSTITUTES AND APPOINTS, ROBERT W. WOODRUFF, HIS ATTORNEY-IN-FACT, WITH
THE POWER OF SUBSTITUTION, FOR HIM IN ANY AND ALL CAPACITIES, TO SIGN ANY AND
ALL AMENDMENTS TO THIS REGISTRATION STATEMENT (INCLUDING POST-EFFECTIVE
AMENDMENTS), AND TO FILE THE SAME, WITH EXHIBITS THERETO AND OTHER DOCUMENTS IN
CONNECTION THEREWITH, WITH THE SECURITIES AND EXCHANGE COMMISSION, HEREBY
RATIFYING AND CONFIRMING ALL THAT SAID ATTORNEY-IN-FACT, OR HIS SUBSTITUTE OR
SUBSTITUTES, MAY DO OR CAUSE TO BE DONE BY VIRTUE HEREOF.
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, AS AMENDED, THIS
REGISTRATION STATEMENT HAS BEEN SIGNED BY THE FOLLOWING PERSONS IN THE
CAPACITIES AND ON THE DATES INDICATED.
SIGNATURE CAPACITY DATE
Chairman of the
/s/ PHILIP F. ANSCHUTZ Board JANUARY 29,
PHILIP F. ANSCHUTZ 1999
Director, President
- ---------------------------------- and Chief Executive JANUARY 29,
JOSEPH P. NACCHIO Officer (Principal 1999
Executive Officer)
Director and
Executive Vice JANUARY 29,
/s/ ROBERT S. WOODRUFF President--Finance 1999
ROBERT S. WOODRUFF and Chief Financial
Officer (Principal
Financial Officer
and Principal
Accounting Officer)
/s/ CANNON Y. HARVEY Director JANUARY 29,
CANNON Y. HARVEY 1999
/s/ JORDAN L. HAINES Director JANUARY 29,
JORDAN L. HAINES 1999
/s/ DOUGLAS M. KARP Director JANUARY 29,
DOUGLAS M. KARP 1999
- ---------------------------------- Director JANUARY 29,
VINOD KHOSLA 1999
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Director
- ---------------------------------- JANUARY 29,
RICHARD T. LIEBHABER 1999
Director
/s/ DOUGLAS L. POLSON JANUARY 29,
DOUGLAS L. POLSON 1999
Director
/s/ CRAIG D. SLATER JANUARY 29,
CRAIG D. SLATER 1999
Director
/s/ W. THOMAS STEPHENS JANUARY 29,
W. THOMAS STEPHENS 1999
Director
/s/ ROY A. WILKENS JANUARY 29,
ROY A. WILKENS 1999
INDENTURE, dated as of November 27, 1998 between Qwest
Communications International Inc., a corporation duly organized and existing
under the laws of the State of Delaware (herein called the "Company"), having
its principal office at 555 Seventeenth Street, Denver, Colorado 80202, and
Bankers Trust Company, a New York banking corporation, Trustee (herein called
the "Trustee").
RECITALS OF THE COMPANY
The Company has duly authorized the creation of an issue of
7.25% Senior Notes Due 2008 (herein called the "Initial Securities") and 7.25%
Series B Senior Notes Due 2008 (the "Exchange Securities" and, together with the
Initial Securities, 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 have been done 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 each of the Company and the Trustee, in
accordance with their and its terms.
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:
(a) the terms defined in this Article have the meanings
assigned to them in this Article, and include the plural as well as the
singular;
(b) 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, and the terms "cash transaction" and
"self-liquidating paper", as used in TIA Section311,
NYDOCS01/571795 3
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shall have the meanings assigned to them in the rules of the Commission
adopted under the Trust Indenture Act;
(c) all accounting terms not otherwise defined herein have the
meanings assigned to them in accordance with generally accepted
accounting principles, 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 at the date of
such computation;
(d) 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, paragraph or other subdivision; and
(e) unless otherwise indicated, references to Articles,
Sections, paragraphs or other subdivisions are references to such
Articles, Sections, paragraphs or other subdivisions of this Indenture.
"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 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.
"Act", when used with respect to any Holder, has the meaning
specified in Section104.
"Affiliate" of any Person means any other Person directly or
indirectly controlling or controlled by or under direct or indirect common
control with such Person. For the purposes of this definition, "control" when
used with respect to any Person means the power to direct the management and
policies of such Person, directly or indirectly, whether through the ownership
of voting securities, by contract or otherwise; and the terms "controlling" and
"controlled" have meanings correlative to the foregoing.
"Agent Member" has the meaning specified in Section 312.
"Applicable Make-Whole Premium" means, with respect to any
Security, the excess of (A) the present value at the Redemption Date of the
required interest and principal payments due on such Security, computed using a
discount rate equal to the Treasury Rate plus 37.5 basis points, computed on the
basis of a 360-day year comprised of twelve 30-day months, over (B) the then
outstanding principal amount of such Security.
NYDOCS01/571795 3
<PAGE>
"Asset Disposition" means any transfer, conveyance, sale,
lease or other disposition by the Company or any Restricted Subsidiary in one or
more related transactions occurring within any 12-month period (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 to the Company or a Restricted Subsidiary or by the
Company to a Restricted Subsidiary) of (i) shares of Capital Stock or other
ownership interests of a Restricted Subsidiary (other than as permitted by
clauses (iii), (iv) and (v) of Section 1019), (ii)substantially all of the
assets of the Company or any Restricted Subsidiary representing a division or
line of business or (iii) other assets or rights of the Company or any
Restricted Subsidiary outside of the ordinary course of business (excluding any
transfer, conveyance, sale, lease or other disposition of equipment that is
obsolete or no longer used by or useful to the Company, provided that the
Company has delivered to the Trustee an Officers' Certificate stating that such
criteria are satisfied); provided in each case that the aggregate consideration
for such transfer, conveyance, sale, lease or other disposition is equal to
$500,000 or more in any 12-month period and provided further that the following
shall not be Asset Dispositions: (x) Permitted Telecommunications Capital Asset
Dispositions, (y)exchanges of Telecommunications Assets for other
Telecommunications Assets where the Fair Market Value of the Telecommunications
Assets received is at least equal to the Fair Market Value of the
Telecommunications Assets disposed of or, if less, the difference is received in
cash and such cash is Net Available Proceeds and (z)Liens permitted to be
Incurred pursuant to the second paragraph of Section 1015.
"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.
NYDOCS01/571795 3
<PAGE>
"Board of Directors" means the board of directors of the
Company.
"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 City of
NewYork 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.
"Cash Equivalents" means (i)any Debt with a maturity of 365
days or less issued or directly and fully guaranteed as insured by the United
States or any agency or instrumentality thereof (provided that the full faith
and credit of the United States is pledged in support thereof or such Debt
constitutes a general obligation of such country); (ii)deposits, certificates of
deposit or acceptances with a maturity of 365 days or less of any financial
institution that is a member of the Federal Reserve System, in each case having
combined capital and surplus and undivided profits (or any similar capital
concept) of not less than $500 million and whose senior unsecured debt is rated
at least "A-1" by Standard & Poor's Ratings Service, a division of McGraw Hill,
Inc., or "P-1" by Moody's Investors Service, Inc.; (iii)commercial paper with a
maturity of 365 days or less issued by a Corporation (other than an Affiliate of
the Company) organized under the laws of the United States or any state thereof
and rated at least "A-1" by Standard & Poor's Ratings Service, a division of
McGraw Hill, Inc., or "P-1" by Moody's Investors Service, Inc.; and
(iv)repurchase agreements and reverse repurchase agreements relating to
marketable direct obligations issued or unconditionally guaranteed by the United
States or issued by any agency or instrumentality thereof and backed
NYDOCS01/571795 3
<PAGE>
by the full faith and credit of the United States maturing within 365 days from
the date of acquisition.
"Change of Control" has the meaning specified in Section 1010.
"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 Indenture 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 Stock" of any Person means Capital Stock of such
Person that does not rank 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.
"Company" means the Person named as the "Company" in the first
paragraph of this Indenture, 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 Order" or "Company Request" means a written request
or order signed in the name of the Company by the Chief Executive Officer, the
President or a Vice President, and by the Chief Financial Officer, the Chief
Accounting Officer, the Treasurer, an Assistant Treasurer, the Secretary or an
Assistant Secretary of the Company and delivered to the Trustee.
"Comparable Treasury Issue" means the United States Treasury
security selected by a Reference Treasury Dealer appointed by the Company has
having a maturity comparable to the remaining term of the Securities to be
redeemed that would be utilized, at the time of selection and in accordance with
customary financial practice, in pricing new issues of corporate debt securities
of comparable maturity to the remaining term of such Securities.
"Comparable Treasury Price" means, with respect to any
Redemption Date, (i) the average of the bid and asked prices for the Comparable
Treasury Issue (expressed in each case as a percentage of its principal amount)
on the third business day preceding such Redemption Date, as set forth in the
daily statistical release (or any successor release) published by the Federal
Reserve Bank of New York and designated "Composite 3:30 p.m. Quotations for U.S.
Government Securities" or (ii) if such release (or any successor release) is not
published or does not contain such prices on such business day, (A) the average
of the Reference Treasury Dealer Quotations for such Redemption Date, after
excluding the highest and lowest such Reference Treasury Dealer Quotations, or
(B) if the Company obtains fewer
NYDOCS01/571795 3
<PAGE>
than four such Reference Treasury Dealer Quotations, the average of all such
Reference Treasury Dealer Quotations.
"Consolidated Capital Ratio" of any Person as of any date
means the ratio of (i)the aggregate consolidated principal amount of Debt of
such Person then outstanding to (ii)the greater of either (a)the aggregate
consolidated paid-in capital of such Person as of such date or (b)the
stockholders' equity as of such date as shown on the consolidated balance sheet
of such Person in accordance with generally accepted accounting principles.
"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 Subsidiaries for
such period, plus (iii) the consolidated depreciation and amortization expense
or other non-cash write-offs of assets included in the income statement of the
Company and its Restricted Subsidiaries for such period, plus (iv) 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 (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 to the
extent of such restriction.
"Consolidated Income Tax Expense" for any period means the
aggregate amounts of the provisions for income taxes of the Company and its
Subsidiaries for such period calculated on a consolidated basis in accordance
with generally accepted accounting principles.
"Consolidated Interest Expense" means for any period the
interest expense included in a consolidated income statement (excluding interest
income) of the Company and its Restricted Subsidiaries for such period 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 Stock dividends of
the Company and its 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
NYDOCS01/571795 3
<PAGE>
Restricted Subsidiaries; and (vii)the portion of any Capital Lease Obligation
paid during such period that is allocable to interest expense.
"Consolidated Net Income" for any period means the net income
(or loss) of the Company and its Restricted Subsidiaries for such period
determined on a consolidated basis in accordance with generally accepted
accounting principles; provided that there shall be excluded therefrom (a) the
net income (or loss) of any Person acquired by the Company or a Restricted
Subsidiary 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 except to the extent of the amount of dividends or other
distributions actually paid to the Company or a Restricted Subsidiary 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, determined in accordance with generally accepted
accounting principles, (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 expense related to the issuance to employees or
directors of the Company or any Restricted Subsidiary or any Affiliate of the
Company of (i) options to purchase Capital Stock of the Company or such
Restricted Subsidiary or (ii) other compensatory rights (including under the
Company's Growth Share Plan), provided, in either case, that such options or
rights, by their terms, can be redeemed only for Capital Stock, (h) with respect
to a Restricted Subsidiary that is not a Wholly Owned Subsidiary, any aggregate
net income (or loss) in excess of the Company's or any Restricted Subsidiary's
pro rata share of the net income (or loss) of such Restricted Subsidiary that is
not a Wholly Owned Subsidiary shall be excluded and (i) the tax effect of any of
the items described in clauses (a) through (h) above; provided further that for
purposes of any determination pursuant to Section 1013, there shall further be
excluded therefrom the net income (but not net loss) of any Restricted
Subsidiary that is subject to a restriction which prevents the payment of
dividends or the making of distributions to the Company or another Restricted
Subsidiary to the extent of such restriction.
"Consolidated Net Worth" of any Person means the 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 March 31, 1997 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 Subsidiaries after deducting
therefrom all goodwill, trade names, trademarks, patents,
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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.
"Continuing Director" means, as of any date of determination,
any member of the Board of Directors who (i) was a member of such Board of
Directors on March 31, 1997 or (ii) was nominated for election or elected to the
Board of Directors with the affirmative vote of a majority of the Continuing
Directors who were members of the Board of Directors at the time of such
nomination or election or the affirmative vote of Permitted Holders.
"Corporate Trust Office" means the principal corporate trust
office of the Trustee, at which at any particular time its corporate trust
business shall be administered, which office at the date of execution of this
Indenture is located at Four Albany Street, New York, New York 10006, except
that, with respect to presentation of Securities for payment or for registration
of transfer or exchange, such term shall mean the office or agency of the
Trustee at which, at any particular time, its corporate agency business shall be
conducted.
"Corporation" includes corporations, associations, companies
and business trusts.
"Credit Facilities" means one or more credit agreements, loan
agreements or similar facilities, secured or unsecured, entered into from time
to time by the Company and its Restricted Subsidiaries, and including any
related notes, Guarantees, collateral documents, instruments and agreements
executed in connection therewith, as the same may be amended, supplemented,
modified, restated or replaced from time to time.
"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 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), (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 and 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
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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 Subsidiary of the Company) thereof, excluding amounts
representative of yield or interest earned on such investment, or (c)any
Disqualified Stock shall be the maximum fixed redemption or repurchase price in
respect thereof.
"Debt Securities" means any debt securities (including any
guarantee of such securities) issued by the Company or any Restricted Subsidiary
of the Company in connection with a public offering or a private placement
(excluding Debt permitted to be Incurred pursuant to paragraph(b) of
Section1011).
"Default" means any event, act or condition the occurrence of
which is, or after notice or the passage of time or both would be, an Event of
Default.
"Defaulted Interest" has the meaning specified in Section307.
"Depository" means The Depository Trust Company, its nominees
and successors.
"Designation" and "Designation Amount" have the respective
meanings specified in Section1021.
"Disqualified Stock" of any Person means any Capital Stock of
such Person which, by its terms (or by the terms of any security into which it
is convertible or for which it is exchangeable), or upon the happening of any
event, matures or is mandatorily redeemable, pursuant to a sinking fund
obligation or otherwise, or is redeemable at the option of such Person, any
Subsidiary of such Person or the holder thereof, in whole or in part, on or
prior to the final Stated Maturity of the Securities, provided, however, that
any Preferred Stock which would not constitute Disqualified Stock but for
provisions thereof giving holders thereof the right to require the Company to
repurchase or redeem such Preferred Stock upon the occurrence of a Change of
Control occurring prior to the final Stated Maturity of the Securities shall not
constitute Disqualified Stock if the 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 Section1010
and such Preferred Stock specifically provides that the Company shall 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 Section1010.
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"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" (or higher) according to
Standard & Poor's Ratings Service, a division of McGraw Hill, Inc. (or any
successor to the rating agency business thereof), or Moody's Investors Service,
Inc. (or any successor to the rating agency business thereof) 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, less Receivables of the Company or any Restricted
Subsidiary employed to secure Debt Incurred pursuant to clause(vii) of
paragraph(b) of Section1011.
"Event of Default" has the meaning specified in Section501.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended (or any successor act), and the rules and regulations thereunder (or
respective successors thereto).
"Exchange Offer" means the exchange offer that may be effected
pursuant to the Registration Agreement.
"Exchange Offer Registration Statement" means the Exchange
Offer Registration Statement as defined in the Registration Agreement.
"Exchange Securities" has the meaning stated in the first
recital of this Indenture and refers to any Exchange Securities containing terms
substantially identical to the Initial Securities (except that such Exchange
Securities shall not contain terms with respect to transfer restrictions) that
are issued and exchanged for the Initial Securities pursuant to the Registration
Agreement and this Indenture.
"Expiration Date" has the meaning specified in "Offer to
Purchase" below.
"Fair Market Value" means, with respect to any asset or
property, the price that could be negotiated in an arm's-length free market
transaction, for cash, between a willing seller and a willing buyer, neither of
whom is under pressure or compulsion to complete the transaction. Fair Market
Value shall be determined by the Board of Directors acting in good faith and
shall be evidenced by a Board Resolution delivered to the Trustee.
"Federal Bankruptcy Code" means the Bankruptcy Act of Title11
of the United States Code, as amended from time to time.
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"Global Security" means a Rule 144A Global Security or a
Regulation S Global Security, as the case may be.
"Government Securities" means direct obligations of, or
obligations guaranteed by, the United States of America for the payment of which
guarantee or obligations the full faith and credit of the United States is
pledged and which have a remaining weighted average life to maturity of not less
than one year from the date of investment therein.
"Group" has the meaning specified in Section1010.
"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.
"Guarantor" means a Restricted Subsidiary of the Company that
has executed a Restricted Subsidiary Guarantee.
"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.
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"Indenture" means this instrument as originally executed and
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.
"Indenture Obligations" means the obligations of the Company
and any other obligor under this Indenture or under the Securities to pay
principal of, premium, if any, and interest on the Securities when due and
payable, whether at maturity, by acceleration, call for redemption or repurchase
or otherwise, and all other amounts due or to become due under or in connection
with this Indenture or the Securities and the performance of all other
obligations to the Trustee (including, but not limited to, payment of all
amounts due the Trustee under Section607), Paying Agent, Security Registrar and
the Holders of the Securities under this Indenture and the Securities according
to the terms thereof.
"Initial Purchaser" means Salomon Smith Barney Inc.
"Initial Securities" has the meaning provided in the recitals
to this Indenture.
"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.
"Investment Grade Rating" means, (i) with respect to Moodys
Investors Service, Inc. (or any successor to the rating agency business
thereof), a rating equal to or higher than Baa3 (or the equivalent), and (ii)
with respect to Standard & Poors Ratings Service, a division of McGraw Hill,
Inc. (or any successor to the rating agency business thereof), a rating equal to
or higher than BBB- (or the equivalent).
"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),
NYDOCS01/571795 3
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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). For purposes of this definition the sale, lease, conveyance or other
transfer by the Company or any Subsidiary of, including the grant of
indefeasible rights of use or equivalent arrangements with respect to, dark or
lit communications fiber capacity or communications conduit shall not constitute
a Lien.
"Liquidated Interest" has the meaning specified in Exhibit A.
"Maturity", when used with respect to any Security, means the
date on which the principal of such Security or an installment of principal
becomes due and payable as therein or herein provided, whether at the Stated
Maturity or by declaration of acceleration, notice of redemption or otherwise.
"Net Available Proceeds" from any Asset Disposition by any
Person means cash or cash equivalents received (including amounts received by
way of sale or discounting of any 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) any portion thereof
invested within 360 days of such Asset Disposition in Telecommunications Assets,
(ii) all legal, title and recording tax expenses, commissions and other fees and
expenses Incurred and all federal, state, provincial, foreign and local taxes
required to be accrued as a liability as a consequence of such Asset
Disposition, (iii)all payments made by such Person or its 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,
(iv)all distributions and other payments made to minority interest holders in
Subsidiaries of such Person or Permitted Joint Ventures as a result of such
Asset Disposition and (v) appropriate amounts to be provided by such Person or
any 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 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 of such Person, in its reasonable good
faith judgment evidenced by Board Resolution filed with the Trustee; provided,
however, that any reduction in such reserve within twelve months following the
consummation of such Asset Disposition shall be for all purposes of this
Indenture and the Securities treated as a new Asset Disposition at the time of
such reduction with Net Available Proceeds equal to the amount of such
reduction.
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"Notice of Default" has the meaning specified in Section501.
"Offer" has the meaning specified in "Offer to Purchase"
below.
"Offer to Purchase" means a written offer (the "Offer") sent
by the Company by first class mail, postage prepaid, to each Holder of
Securities 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 Section1010 or Section 1018, as the case may be). 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 Section1008 (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 the Section hereof requiring the Offer to
Purchase) (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 Section1010 or Section 1018, as the case may
be) (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 any Securities not tendered or tendered but not
purchased by the Company will continue to accrue interest;
(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, if any, 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 its attorney duly
authorized in writing);
(j) that Holders will be entitled to withdraw all or any
portion of Securities tendered if the Company (or their 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 its
tender;
(k) that (i) 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 (ii) 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); and
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(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.
Any Offer to Purchase shall be governed by and effected in accordance with the
Offer for such Offer to Purchase.
"Offering Memorandum" means the Offering Memorandum dated
November 19, 1998 pursuant to which the Securities were offered, and any
supplement thereto.
"Officers' Certificate" means a certificate signed by the
Chairman of the board of directors of the Company, a Vice Chairman of the board
of directors of the Company, the President or a Vice President, and by the Chief
Financial Officer, the Chief Accounting Officer, the Treasurer, an Assistant
Treasurer, the Secretary or an Assistant Secretary of the Company and delivered
to the Trustee, which shall comply with the Indenture.
"Opinion of Counsel" means an opinion of counsel acceptable to
the Trustee (who may be counsel to the Company, including an employee of the
Company).
"Outstanding", when used with respect to Securities, means, as
of the date of determination, all Securities theretofore authenticated and
delivered under this Indenture, except:
(i) Securities theretofore cancelled by the Trustee or
delivered to the Trustee for cancellation;
(ii) Securities, or portions thereof, 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;
(iii) Securities, except to the extent provided in
Sections1202 and 1203, with respect to which the Company has effected
defeasance and/or covenant defeasance as provided in Article Twelve;
and
(iv) Securities which have been paid pursuant to Section306 or
in exchange for or in lieu of which other Securities have been
authenticated and delivered pursuant
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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
the Securities are valid obligations of the Company;
provided, however, that in determining whether the Holders of the requisite
principal amount of Outstanding Securities have given any request, demand,
authorization, direction, consent, notice or waiver hereunder, and for the
purpose of making the calculations required by TIA Section313, Securities owned
by the Company or any other obligor upon the Securities or any Affiliate of the
Company or such other obligor shall be disregarded and deemed not to be
Outstanding, except that, in determining whether the Trustee shall be protected
in making such calculation or in relying upon any such request, demand,
authorization, direction, notice, consent or waiver, only Securities which any
Responsible Officer of 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 such other obligor.
"Paying Agent" means any Person (including the Company acting
as Paying Agent) authorized by the Company to pay the principal of (and premium,
if any) or interest on any Securities on behalf of the Company.
"Permitted Holders" means any Person who was the beneficial
owner (within the meaning of Rule 13d-3 under the Exchange Act) of stock of the
Company on March 31, 1997, and any Affiliates of such Person (i) who were
Affiliates of such Person on March 31, 1997 or (ii) who were formed, directly or
indirectly, by any such Person after March 31, 1997; provided, however, that
Persons who were beneficial owners (within the meaning of Rule 13d-3 under the
Exchange Act) of such Person on March 31, 1997 continued to be beneficial owners
(within the meaning of Rule 13d-3 under the Exchange Act) at the time of
formation of such Affiliate.
"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 Investments" means (a) Cash Equivalents; (b)
Investments in prepaid expenses, negotiable instruments held for collection and
lease, utility and workers'
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compensation, performance and other similar deposits; (c)loans, advances or
extensions of credit to employees and directors made in the ordinary course of
business and consistent with past practice; (d) obligations under Interest Rate
or Currency Protection Agreements; (e)bonds, notes, debentures and other
securities received as a result of Asset Dispositions pursuant to and in
compliance with Section1018; (f)Investments made in the ordinary course of
business as partial payment for constructing a network relating to a
Telecommunications Business; (g)commercially reasonable extensions of trade
credit; (h)Investments in any Person as a result of which such Person becomes a
Restricted Subsidiary; (i)Investments in Permitted Joint Ventures in an
aggregate amount not to exceed $25 million; (j)Investments in Affiliates or
Related Persons in an aggregate amount not to exceed $11million, provided that
the making of such Investments is permitted pursuant to Section1020; and
(k)Investments in an aggregate amount not to exceed $15 million consisting of
the contribution by the Company or any Restricted Subsidiary of assets located
in Mexico to joint ventures in which the Company or a Restricted Subsidiary has
an interest.
"Permitted Joint Venture" means a Corporation, partnership or
other entity other than a Restricted Subsidiary engaged in one or more
Telecommunications Businesses over which the Company and/or one or more
Strategic Investors have, directly or indirectly, the power to direct the
policies, management and affairs.
"Permitted Liens" means (a) Liens for taxes, assessments,
governmental charges, levies 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 or a Restricted Subsidiary to secure Debt owing to the
Company or such Restricted Subsidiary; (d) Liens, pledges and deposits made in
the ordinary course of business in connection with workers' compensation,
unemployment insurance and other types of statutory obligations; (e) Liens,
pledges or deposits made to secure the performance of tenders, bids, leases,
public or statutory obligations, sureties, stays, appeals, indemnities,
performance or other similar bonds 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 materially interfere with the ordinary
conduct of the business of the Company or its Restricted Subsidiaries; (g) Liens
arising out of judgments or awards against or
NYDOCS01/571795 3
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other court proceedings concerning 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; and (h) any interest or title of a lessor in the property subject to
any lease other than a Capital Lease.
"Permitted Telecommunications Capital Asset Disposition" means
the transfer, conveyance, sale, lease or other disposition of a capital asset
that is a Telecommunications Asset (including fiber, conduit and related
equipment) (i) the proceeds of which are treated as revenues by the Company in
accordance with generally accepted accounting principles and (ii)that, in the
case of the sale of fiber, would not result in the Company retaining less than
24 fibers per route mile on any segment of the Company's network.
"Person" means any individual, Corporation, partnership, joint
venture, association, joint stock company, trust, unincorporated organization,
government or agency or political subdivision thereof or any other entity.
"Physical Security" means Securities issued in registered
definitive form without coupons substantially in the form of Exhibit A.
"Predecessor Security" of any particular Security means every
previous Security 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 Section306 in exchange for a
mutilated security or in lieu of a lost, destroyed or stolen Security shall be
deemed to evidence the same debt as the mutilated, lost, destroyed 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.
"Primary Treasury Dealer" means a primary Government
Securities dealer in The City of New York.
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"Private Placement Legend" means the third paragraph of the
legend set forth in the Securities in the form set forth in ExhibitA.
"Purchase Amount" has the meaning specified in "Offer to
Purchase" above.
"Purchase Date" has the meaning specified in "Offer to
Purchase" above.
"Purchase Money Debt" means Debt Incurred at any time within
270 days of, and for the purposes of financing all or any part of the cost of,
the construction, installation, acquisition or improvement by the Company or any
Restricted Subsidiary of the Company of any new Telecommunications Assets
constructed, installed, acquired or improved after March 31, 1997, provided that
the proceeds of such Debt are expended for such purposes within such 270-day
period.
"Purchase Price" has the meaning specified in "Offer to
Purchase" above.
"Qualified Institutional Buyer" or "QIB" has the meaning
specified in Rule
144A.
"Rating Agencies" means Moodys Investors Service, Inc. (or any
successor to the rating agency business thereof) and Standard & Poors Ratings
Service, a division of McGraw Hill, Inc. (or any successor to the rating agency
business thereof).
"Rating Decline" means the Securities cease to be rated B+ (or
the equivalent thereof) or better by Standard & Poor's Ratings Service, a
division of McGraw Hill, Inc., or B2 (or the equivalent thereof) or better by
Moody's Investors Service, Inc.
"Receivables" means receivables, chattel paper, instruments,
documents or intangibles evidencing or relating to the right to payment of
money, excluding allowances for doubtful accounts.
"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 purposes of collection and
not as a financing arrangement.
"Redemption Date", when used with respect to any Security to
be redeemed, in whole or in part, 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.
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"Reference Treasury Dealer" means each of Salomon Smith Barney
Inc., Merrill Lynch, Pierce, Fenner & Smith Incorporated, Donaldson, Lufkin &
Jenrette Securities Corporation and Lehman Brothers Inc. and their respective
successors; provided, however, that if any of the foregoing shall cease to be a
Primary Treasury Dealer, the Company shall substitute therefor another Primary
Treasury Dealer.
"Reference Treasury Dealer Quotations" means, with respect to
each Reference Treasury Dealer and any Redemption Date, the average, as
determined by the Company, of the bid and asked prices for the Comparable
Treasury Issue (expressed in each case as a percentage of its principal amount)
quoted in writing to the Company by such Reference Treasury Dealer at 5:00 p.m.
on the third business day preceding such Redemption Date.
"Registration Agreement" means the Registration Agreement
between the Company and the Initial Purchaser named therein, dated as of
November 27, 1998, relating to the Securities.
"Registration Statement" means the Registration Statement as
defined in the Registration Agreement.
"Regular Record Date" for the interest payable on any Interest
Payment Date means the April 15 or October 15 (whether or not a Business Day),
as the case may be, next preceding such Interest Payment Date.
"Regulation S" means Regulation S under the Securities Act.
"Regulation S Global Security" has the meaning specified in
Section 303.
"Related Person" of any Person means any other Person directly
or indirectly owning (a)5% or more of the outstanding Common Stock of such
Person (or, in the case of a Person that is not a Corporation, 5% or more of the
outstanding equity interest in such Person) or (b)5% or more of the combined
outstanding voting power of the Voting Stock of such Person.
"Responsible Officer", when used with respect to the Trustee,
means any officer within the Trustee's Corporate Trust Office, including any
vice president, the Managing Director, the secretary, any assistant secretary,
any assistant treasurer, or any other officer of the Trustee customarily
performing functions similar to those performed by any of the above-designated
officers, and also means, with respect to a particular corporate trust matter,
any other officer to whom such matter is referred because of his knowledge of
and familiarity with the particular subject.
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"Restricted Payment" has the meaning specified in Section1013.
"Restricted Subsidiary" means a Subsidiary of the Company, or
of a Restricted Subsidiary that is a Wholly Owned Subsidiary of the Company,
that has not been designated by the Board of Directors (by a Board Resolution
delivered to the Trustee) as an Unrestricted Subsidiary pursuant to and in
compliance with Section1021.
"Restricted Subsidiary Guarantee" means a supplemental
indenture to this Indenture, in form satisfactory to the Trustee, executed in
accordance with Article Nine, providing for an unconditional Guarantee of
payment in full of the principal of, premium, if any, and interest on the
Securities. Any such Restricted Subsidiary Guarantee shall not be subordinate in
right of payment to any Debt of the Restricted Subsidiary providing the
Restricted Subsidiary Guarantee.
"Revocation" has the meaning specified in Section1021.
"Rule 144A" means Rule 144A under the Securities Act.
"Rule 144A Global Security" has the meaning specified in
Section 303.
"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.
"Securities" means any of the Securities, as defined in the
recitals of this Indenture, that are authenticated and delivered under this
Indenture. For all purposes of this Indenture, the "Securities" shall include
the Initial Securities initially issued on November 27, 1998 and any Exchange
Securities to be issued and exchanged for any Initial Securities pursuant to the
Registration Agreement and this Indenture and any other Notes issued after
November 27, 1998 under this Indenture. For purposes of this Indenture, all
Securities shall vote together as one series of Securities under this Indenture.
"Securities Act" means the Securities Act of 1933, as amended.
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"Security Register" and "Security Registrar" have the
respective meanings specified in Section305.
"Senior Note Indentures" means (i) the Indenture dated as of
March 31, 1997 between the Company and Bankers Trust Company, as trustee
thereunder, relating to the Company's 107/8% Senior Notes Due 2007 (which were
subsequently exchanged for the Company's 107/8% Series B Senior Notes Due 2007)
and the Indenture dated as of August 28, 1997, pursuant to which such 107/8%
Series B Senior Notes Due 2007 were issued, (ii) the Indenture dated as of
October 15, 1997 between the Company and Bankers Trust Company, as trustee
thereunder, relating to the Company's 9.47% Series B Senior Discount Notes Due
2007, (iii) the Indenture dated as of January 28, 1998 between the Company and
Bankers Trust Company, as trustee thereunder, relating to the Companys 8.29%
Series B Senior Discount Notes Due 2008 and (iv) the Indenture dated as of
November 4, 1998 between the Company and Bankers Trust Company, as trustee
thereunder, relating to the Companys 7.50% Senior Notes Due 2008.
"Shelf Registration Statement" means the Shelf Registration
Statement as defined in the Registration Agreement.
"Special Record Date" for the payment of any Defaulted
Interest means a date fixed by the Trustee pursuant to Section307.
"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 amount of such Security or such
installment of interest is due and payable.
"Strategic Investor" means a Corporation, partnership or other
entity engaged in one or more Telecommunications Businesses that has, or 80% or
more of the Voting Stock of which is owned by a Person that has, an equity
market capitalization, at the time of its initial Investment in the Company or
in a Permitted Joint Venture with the Company, in excess of $2 billion.
"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 of (or premium, if any) or interest on the Securities exists; (ii)in
the event that any other 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
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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; 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
described in Section1010 (and which shall provide that such Debt shall 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 Section1010).
"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.
"Suspended Covenants" has the meaning specified in Section
1025.
"Suspension Period" has the meaning specified in Section 1025.
"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, data
or video through owned or leased transmission facilities, (ii)constructing,
creating, developing or marketing communications related network equipment,
software and other devices for use in a telecommunications business or
(iii)evaluating, participating or pursuing any other activity or opportunity
that is primarily related to those identified in (i) or (ii) above, provided
that the determination of what
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constitutes a Telecommunications Business shall be made in good faith by the
Board of Directors.
"Treasury Rate" means, with respect to any Redemption Date,
the rate per annum equal to the semiannual equivalent yield to maturity of the
Comparable Treasury Issue, assuming a price for the Comparable Treasury Issue
(expressed as a percentage of its principal amount) equal to the Comparable
Treasury Price for such Redemption Date.
"Trust Indenture Act" or "TIA" means the Trust Indenture Act
of 1939 as in force at the date as of which this Indenture was executed, except
as provided in Section905.
"Trustee" means the Person named as the "Trustee" in the first
paragraph of this Indenture until a successor Trustee shall have become such
pursuant to the applicable provisions of this Indenture, and thereafter
"Trustee" shall mean such successor Trustee.
"Unrestricted Subsidiary" means any Subsidiary of the Company
designated as such pursuant to and in compliance with Section1021.
"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 for so long as no senior class of securities has such voting power by
reason of any contingency.
"Wholly Owned Subsidiary" of any Person means a Subsidiary of
such Person all of the outstanding Voting Stock or other ownership interests
(other than directors' qualifying shares) of which shall at the time be owned by
such Person or by one or more Wholly Owned Subsidiaries of such Person or by
such Person and one or more Wholly Owned 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 an Officers' Certificate stating that all conditions
precedent, if any, provided for in this Indenture (including any covenant
compliance with which constitutes a condition precedent) relating to the
proposed action have been complied with and an Opinion of Counsel stating that
in the opinion of such counsel all such conditions precedent, if any, have been
complied with, except
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that in the case of any such application or request as to which the furnishing
of such documents is specifically required by any provision of this Indenture
relating to such particular application or request, no additional certificate or
opinion need be furnished.
Every certificate or opinion with respect to compliance with a
condition or covenant provided for in this Indenture (other than pursuant to
Section1009(a))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 or opinion of an officer of the Company may be
based, insofar as it relates to legal matters, upon a certificate or opinion of,
or representations by, counsel, unless such officer knows, or in the exercise of
reasonable care should know, that the certificate or opinion or representations
with respect to the matters upon which his certificate or opinion is based are
erroneous. Any such certificate or Opinion of Counsel may be based, insofar as
it relates to factual matters, upon a certificate or opinion of, or
representations by, an officer or officers of the Company stating that the
information with respect to such factual matters is in the possession of the
Company, unless such counsel knows, or in the exercise of reasonable care should
know, that the certificate or opinion or representations with respect to such
matters are erroneous.
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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
(with proper identification of each matter covered therein) and form one
instrument.
SECTION 104. Acts of Holders.
(a) 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 agents 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.
(b) The fact and date of the execution by any Person of any
such instrument or writing 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 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 that the Trustee deems sufficient.
(c) The principal amount and serial numbers of Securities held
by any Person, and the date of holding the same, shall be proved by the Security
Register.
(d) If the Company shall solicit from the Holders of
Securities any request, demand, authorization, direction, notice, consent,
waiver or other Act, the Company may, at its option, by or pursuant to a Board
Resolution, fix in advance a record date for the determination of Holders
entitled to give such request, demand, authorization, direction, notice,
consent, waiver or other Act, but the Company shall have no obligation to do so.
Notwithstanding TIA Section316(c), such record date shall be the record date
specified in or pursuant to such Board Resolution, which shall be a date not
earlier than the date 30 days prior to the first solicitation of Holders
generally in connection therewith and not later than the date such solicitation
is completed. If such a record date is fixed, such request, demand,
authorization, direction, notice, consent, waiver or other Act may be given
before or after such
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record date, but only the Holders of record at the close of business on such
record date shall be deemed to be Holders for the purposes of determining
whether Holders of the requisite proportion of Outstanding Securities have
authorized or agreed or consented to such request, demand, authorization,
direction, notice, consent, waiver or other Act, and for that purpose the
Outstanding Securities shall be computed as of such record date; provided that
no such authorization, agreement or consent by the Holders on such record date
shall be deemed effective unless it shall become effective pursuant to the
provisions of this Indenture not later than eleven months after the record date.
(e) 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.
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 made, given, furnished or filed in writing to or with
the Trustee at its Corporate Trust Office, Attention: Corporate Market Services,
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 it
at the address of its principal office specified in the first paragraph of this
Indenture, 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 of any event to
Holders by the Company or the Trustee, such notice shall be sufficiently given
(unless otherwise herein expressly provided) if in writing and mailed,
first-class postage prepaid, to each Holder affected by such event, at the
address of such Holder as it appears in the Security Register, not later than
the latest date, and not earlier than the earliest date, 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
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sufficiency of such notice with respect to other Holders. Any notice mailed to a
Holder in the manner herein prescribed shall be conclusively deemed to have been
received by such Holder, whether or not such Holder actually receives such
notice. 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 or irregularities in
regular mail service or by reason of any other cause, it shall be impracticable
to mail notice of any event to Holders when such notice is required to be given
pursuant to any provision of this Indenture, then any manner of giving such
notice as shall be satisfactory to the Trustee shall be deemed to be a
sufficient giving of such notice for every purpose hereunder.
SECTION 107. 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 108. 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 109. 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 110. Benefits of Indenture.
Nothing in this Indenture or in the Securities, express or
implied, shall give to any Person, other than the parties hereto, any Paying
Agent, any Security Registrar and their successors hereunder and the Holders any
legal or equitable right, remedy or claim under this Indenture.
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SECTION 111. Governing Law.
This Indenture and the Securities shall be governed by and
construed in accordance with the law of the State of NewYork.
SECTION 112. Conflict with Trust Indenture Act.
Prior to the issuance of the Exchange Securities or the
effectiveness of the Shelf Registration Statement, the Trust Indenture Act shall
apply as a matter of contract to this Indenture for purposes of interpretation,
construction and defining the rights and obligations hereunder. Upon the
issuance of the Exchange Securities or the effectiveness of the Shelf
Registration Statement, this Indenture shall be subject to the provisions of the
Trust Indenture Act that are required to be part of this Indenture and shall, to
the extent applicable, be governed by such provisions. If any provision hereof
limits, qualifies or conflicts with any provision of the Trust Indenture Act or
another provision which is required or deemed to be included in this Indenture
by any of the provisions of the Trust Indenture Act, such provision or
requirement of the Trust Indenture Act 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
excluded, as the case may be.
SECTION 113. Legal Holidays.
In any case where any Interest Payment Date, Redemption Date,
or Stated Maturity or Maturity of any Security shall not be a Business Day, then
(notwithstanding any other provision of this Indenture or of the Securities)
payment of principal of (or premium, if any) or interest 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 or Redemption Date or
at the Stated Maturity or Maturity; provided that no interest shall accrue for
the period from and after such Interest Payment Date, Redemption Date, Stated
Maturity or Maturity, as the case may be.
SECTION 114. No Personal Liability of Directors, Officers,
Employees and Stockholders.
No director, officer, employee, incorporator or stockholder of
the Company, as such, shall have any liability for any obligations of the
Company under the Securities or this Indenture or for any claim based on, in
respect of, or by reason of, such obligations or their creation, solely by
reason of its status as a director, officer, employee, incorporator or
stockholder of the Company. By accepting a Security, each Holder waives and
releases all
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such liability (but only such liability). The waiver and release are part of
the consideration for issuance of the Securities.
SECTION 115. Independence of Covenants.
All covenants and agreements in this Indenture shall be given
independent effect so that if a particular action or condition is not permitted
by any of such covenants, the fact that it would be permitted by an exception
to, or be otherwise within the limitations of, another covenant shall not avoid
the occurrence of a Default if such action is taken or condition exists.
SECTION 116. Exhibits.
All exhibits attached hereto are by this reference made a part
hereof with the same effect as if herein set forth in full.
SECTION 117. Counterparts.
This Indenture may be executed in any number of counterparts,
each of which shall be an original; but such counterparts shall together
constitute but one and the same instrument.
SECTION 118. Duplicate Originals.
The parties may sign any number of copies of this Indenture.
Each signed copy shall be an original, but all of them together represent the
same agreement.
ARTICLE TWO
SECURITY FORMS
SECTION 201. Forms Generally.
The Securities and the Trustee's certificate of authentication
with respect thereto shall be in substantially the form set forth in Exhibit A
hereto, with such appropriate 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 system on which the Securities may be listed or eligible
for trading or as may, consistently herewith, be determined by the officers
executing such Securities, as evidenced by their execution of the Securities.
Any portion of the text of any Security may be
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set forth on the reverse thereof, with an appropriate reference thereto on the
face of the Security.
The definitive Securities shall be printed, lithographed or
engraved on steel-engraved borders or may be produced in any other manner
permitted by the rules of any securities exchange or system on which the
Securities may be listed or eligible for trading, all as determined by the
officers of the Company executing such Securities, as evidenced by their
execution of such Securities.
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 $300,000,000,
except for Securities authenticated and delivered upon registration of transfer
of, or in exchange for, or in lieu of, other Securities pursuant to Section304,
305, 306, 906, 1010, 1018 or 1108.
The Initial Securities shall be known and designated as the
"7.25% Senior Notes Due 2008" and the Exchange Securities shall be known as the
"7.25% SeriesB Senior Notes". The final Stated Maturity of the Securities shall
be November 1, 2008. Interest on the Securities will accrue at a rate of 7.25%
per annum accruing from November 27, 1998 or from the most recent Interest
Payment Date to which cash interest has been paid or duly provided for, and will
be payable semiannually in arrears on May 1 and November 1 of each year,
commencing May 1, 1999, to the Holders of record on the immediately preceding
Regular Record Date. Interest will be computed on the basis of a 360-day year
comprised of twelve 30-day months.
Principal of, premium, if any, and interest on the Securities
will be payable, and the Securities may be exchanged or transferred, at the
office or agency of the Company in The City of New York, which, unless otherwise
provided by the Company, will be the offices of the Trustee. At the option of
the Company, interest may be paid by check mailed to addresses of the Persons
entitled thereto as such addresses shall appear on the Security Register.
The interest rate on the Securities is subject to increase by
the addition of Liquidated Interest and otherwise, all as set forth or referred
to in the text of the Securities appearing in ExhibitA hereto.
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The Securities shall be redeemable as provided in
ArticleEleven.
At the election of the Company, the entire Debt on the
Securities or certain of the Company's obligations and covenants and certain
Events of Default thereunder may be defeased as provided in Article Twelve.
The Securities will be senior unsecured obligations of the
Company, ranking pari passu in right of payment with all existing and future
senior unsecured Debt of the Company, and will be senior in right of payment to
all existing and future Subordinated Debt of the Company.
SECTION 302. Denominations.
The Securities will be issued without coupons and in fully
registered form only, in minimum denominations of $1,000 principal amount and
integral multiples 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 or a Vice President under its
corporate seal reproduced thereon. The signature of any of these officers on the
Securities may be manual or facsimile signatures of the present or any future
such authorized officer and may be imprinted or otherwise reproduced on the
Securities. The seal of the Company may be in the form of a facsimile thereof
and may be impressed, affixed, imprinted or otherwise reproduced on the
Securities.
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. In addition, any
Security may be signed on behalf of the Company by such Persons as, at the
actual date of the execution of such Security, shall be the proper officers of
the Company, although at the date of such Security or of the execution of this
Indenture any such Person was not such officer.
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.
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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 duly executed by the Trustee by manual signature of an authorized
signatory, and such certificate upon any Security shall be conclusive evidence,
and the only evidence, that such Security has been duly authenticated and
delivered hereunder and is entitled to the benefits of this Indenture.
The Trustee shall authenticate Securities for original issue
in an aggregate principal amount not to exceed $300,000,000 upon receipt of a
Company Order, which shall specify the amount of Securities to be authenticated,
the names of the Persons in which such Securities shall be registered and the
date on which such Securities are to be authenticated and direct the Trustee to
authenticate such Securities together with an Officers' Certificate certifying
that all conditions precedent to the issuance of such Securities contained
herein have been complied with. The aggregate principal amount of Securities
Outstanding at any time shall not exceed $300,000,000, except as provided in
Section 304.
Except as described below, the Securities will be deposited
with, or on behalf of, the Depository, and registered in the name of Cede & Co.
as the Depository's nominee in the form of one or more global note
certificate(s) substantially in the form of Exhibit A (each, a "Rule 144A Global
Security"), for credit to the respective accounts of the beneficial owners of
the Securities represented thereby.
Securities purchased by Persons outside the United States
pursuant to sales in accordance with Regulation S under the Securities Act shall
be deposited with, or on behalf of, the Depository, and registered in the name
of Cede & Co. as the Depository's nominee in the form of one or more global note
certificates substantially in the form of Exhibit A (each, a "Regulation S
Global Security"), for credit to the respective accounts of the beneficial
owners of the Securities represented thereby (or such other accounts as they may
direct), provided that upon such deposit all such Securities shall be credited
to or through accounts maintained at the Depository by or on behalf of the
Euroclear System or Cedel Bank, socit anonyme. Securities represented by a
Regulation S Global Security will not be exchangeable for Physical Securities
until the expiration of the "40-day distribution compliance period" within the
meaning of Rule 903(c)(3) of Regulation S under the Securities Act.
In case the Company, pursuant to Article Eight, shall be
consolidated or merged with or into any other Person or shall convey, transfer,
lease or otherwise dispose of its properties and assets substantially as an
entirety to any Person, and the successor Person resulting from such
consolidation, or surviving such merger, or into which the Company shall have
been merged, or the Person which shall have received a conveyance, transfer,
lease or
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other disposition as aforesaid, shall have executed an indenture supplemental
hereto with the Trustee pursuant to Article Eight, any of the Securities
authenticated or delivered prior to such consolidation, merger, conveyance,
transfer, lease or other disposition may, from time to time, at the request of
the successor Person, be exchanged for other Securities executed in the name of
the successor Person with such changes in phraseology and form as may be
appropriate, but otherwise in substance of like tenor as the Securities
surrendered for such exchange and of like principal amount; and the Trustee,
upon Company Request of the successor Person, shall authenticate and deliver
Securities as specified in such request for the purpose of such exchange. If
Securities shall at any time be authenticated and delivered in any new name of a
successor Person pursuant to this Section in exchange or substitution for or
upon registration of transfer of any Securities, such successor Person, at the
option of the Holders but without expense to them, shall provide for the
exchange of all Securities at the time Outstanding for Securities authenticated
and delivered in such new name.
SECTION 304. Temporary Securities.
Pending the preparation of definitive Securities, the Company
may execute, and upon 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 conclusively 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 the office or agency of the Company designated for such purpose
pursuant to Section1002, 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
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.
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 Section1002 being herein sometimes
referred to as the "Security Register") in which, subject to such reasonable
regulations as it may prescribe, the Company shall provide for the registration
of Securities and of transfers and exchange of Securities. The Security
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Register shall be in written form or any other form capable of being converted
into written form within a reasonable time. At all reasonable times, the
Security Register shall be open to inspection by the Trustee. The Trustee is
hereby initially appointed as security registrar (the "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
the office or agency of the Company designated pursuant to Section1002, the
Company shall execute, the Trustee shall authenticate and deliver, and the
Security Registrar shall register, if the requirements, of such transfer are
met, in the name of the designated transferee or transferees, one or more new
Securities of any authorized denomination or denominations of a like aggregate
principal amount.
At the option of the Holder, Securities may be exchanged for
other Securities of any authorized denomination and of a like aggregate
principal amount (including an exchange of Initial Securities for Exchange
Securities), 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, the Trustee shall authenticate and deliver, and the Security
Registrar shall register, the Securities which the Holder making the exchange is
entitled to receive, provided that no exchange of Initial Securities for
Exchange Securities shall occur until an Exchange Offer Registration Statement
shall have been declared effective by the Commission (confirmed in an Officer's
Certificate) and that the Initial Securities to be exchanged for the Exchange
Securities shall be cancelled by the Trustee.
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 Security
Registrar) 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 for any registration of
transfer or exchange or redemption 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 Section304, 906, 1010, 1018 or 1108
not involving any transfer.
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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 selection of Securities to be redeemed under
Section1104 and ending at the close of business on the day of such mailing of
the relevant notice of redemption 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.
SECTION 306. Mutilated, Destroyed, Lost and Stolen Securities.
If (i)any mutilated Security is surrendered to the Trustee or
(ii)the Company and the Trustee receive evidence to their satisfaction of the
destruction, loss or theft of any Security, and there is delivered to the
Company and the Trustee such security or indemnity as may be required by them to
save each 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 upon Company Order the Trustee shall authenticate and
deliver, in exchange for any such mutilated Security or in lieu of any such
destroyed, lost or stolen Security, a new Security of like tenor and principal
amount, 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 its discretion
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 mutilated, destroyed, lost or stolen Security shall constitute an original
additional contractual obligation of the Company, whether or not the mutilated,
destroyed, lost or stolen Security shall be at any time enforceable by anyone,
and shall be entitled to all 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.
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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 such Security (or one or more Predecessor Securities) is
registered at the close of business on the Regular Record Date for such interest
at the office or agency of the Company maintained for such purpose pursuant to
Section1002; provided, however, that each installment of interest may at the
Company's option be paid (i) by mailing a check for such interest, payable to or
upon the written order of the Person entitled thereto pursuant to Section308, to
the address of such Person as it appears in the Security Register, or (ii) by
wire transfer of such interest in immediately available funds to an account
located in the United States maintained by the Depository.
Any interest on any Security which is payable, but is not
punctually paid or duly provided for, on any Interest Payment Date shall
forthwith cease to be payable to the Holder on the Regular Record Date by virtue
of having been such Holder, and such defaulted interest and (to the extent
lawful) interest on such defaulted interest at the rate borne by the Securities
(such defaulted interest and interest thereon herein collectively called
"Defaulted Interest") may be paid by the Company, at its election in each case,
as provided in paragraph(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
given in the manner provided for in Section106, 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 given, such Defaulted Interest shall be
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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 paragraph(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 or system on which the Securities may be listed or
eligible for trading, and upon such notice as may be required by such
exchange or system, 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 the 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 Sections305 and 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 or exchange 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 may deliver to the Trustee (or
to any other Person for delivery to the Trustee) for cancellation any Securities
previously authenticated hereunder which the Company has not issued and sold,
and all Securities so delivered shall be promptly cancelled by the Trustee. If
the Company shall so acquire any of the Securities, however, such acquisition
shall not operate as a redemption or satisfaction of the indebtedness
represented by such Securities unless and until the same are surrendered to the
Trustee for cancellation. 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 by the Trustee in
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accordance with its customary procedures and certification of their disposal
delivered to the Company unless by Company Order the Company shall direct that
cancelled Securities be returned to it.
SECTION 310. Computation of Interest.
Interest on the Securities shall be computed on the basis of a
360-day year comprised of twelve 30-day months.
SECTION 311. CUSIP Number.
The Company in issuing the Securities may use a "CUSIP" number
(if then generally in use), and if so, the Trustee may use the CUSIP numbers in
notices of redemption or exchange as a convenience to Holders; provided,
however, that any such notice may state that no representation is made as to the
correctness or accuracy of the CUSIP number printed in the notice or on the
Securities, and that reliance may be placed only on the other identification
numbers printed on the Securities. The Company shall promptly notify the Trustee
in writing of any change in the CUSIP number of the Securities.
SECTION 312. Book-Entry Provisions for Global Securities.
(a) The Global Securities initially shall (i) be registered in
the name of the Depository or the nominee of such Depository, (ii) be delivered
to the Trustee as custodian for such Depository and (iii) bear legends as set
forth in Exhibit A.
Members of, or participants in, the Depository ("Agent
Members") shall have no rights under this Indenture with respect to any Global
Security held on their behalf by the Depository, or the Trustee as its
custodian, or under the Global Security, and the Depository may be treated by
the Company, the Trustee and any agent of the Company or the Trustee as the
absolute owner of the Global Security for all purposes whatsoever.
Notwithstanding the foregoing, nothing herein shall prevent the Company, the
Trustee or any agent of the Company or the Trustee from giving effect to any
written certification, proxy or other authorization furnished by the Depository
or impair, as between the Depository and its Agent Members, the operation of
customary practices governing the exercise of the rights of a beneficial owner
of any Security.
(b) Transfers of Global Securities shall be limited to
transfers in whole, but not in part, to the Depository, its successors or their
respective nominees. Interests of beneficial owners in a Rule 144A Global
Security may be transferred or exchanged for interests in a Regulation S Global
Security, and interests of beneficial owners in a Regulation S Global Security
may be transferred or exchanged for interests in a Rule 144A Global Security,
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in each case in accordance with the rules and procedures of the Depository and
the provisions of Section 313. In addition, Physical Securities shall be
transferred to all beneficial owners in exchange for their beneficial interests
in a Global Security if (i)the Depository notifies the Company that it is
unwilling or unable to continue as a depository for such Global Security or if
at any time the Depository ceases to be a clearing agency registered under the
Exchange Act, and a successor depository is not appointed by the Company within
90 days, (ii)the Company executes and delivers to the Trustee a notice that such
Global Security shall be so transferable, registrable and exchangeable, and such
transfer shall be registrable, or (iii)there shall have occurred and be
continuing a Default or Event of Default with respect to the Securities
represented by such Global Security.
(c) In connection with the transfer of Global Securities as an
entirety to beneficial owners pursuant to paragraph (b), the Global Securities
shall be deemed to be surrendered to the Trustee for cancellation, and the
Company shall execute, and the Trustee shall authenticate and deliver, to each
beneficial owner identified by the Depository in exchange for its beneficial
interest in the Global Securities, an equal aggregate principal amount of
Physical Securities of like tenor of authorized denominations.
(d) Any Physical Security delivered in exchange for an
interest in a Global Security pursuant to paragraph (c) of this Section 312
shall, except as otherwise provided by (b)(1)(x) and paragraph (d) of Section
313, bear the legend regarding transfer restrictions applicable to the Physical
Securities set forth in Exhibit A.
(e) The Holder of any Global Security may grant proxies and
otherwise authorize any person, including Agent Members and persons that may
hold interests through Agent Members, to take any action which a Holder is
entitled to take under this Indenture or the Securities.
SECTION 313. Special Transfer Provisions.
(a) Transfers to Non-QIB Institutional Accredited Investors. Except as
provided in paragraph (d) of this Section 313, the Initial Securities shall not
be transferred to any Person that is not a QIB or a non-U.S. Person.
(b) Transfers to Non-U.S. Persons. The following provisions shall apply
with respect to the registration of any proposed transfer of an Initial Security
to any non-U.S. Person:
(1) the Security Registrar shall register the transfer of any
Initial Security if (x) the requested transfer is not prior to the date
which is two years (or such shorter period as may be prescribed by Rule
144(k) under the Securities Act or any successor
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provision thereunder) after the later of the original issue date of
such Initial Security (or of any Predecessor Security) or the last day
on which the Company or any Affiliate of the Company was the owner of
such Initial Security or any Predecessor Security or (y) the proposed
transferee has delivered to the Security Registrar a certificate
substantially in the form of Exhibit B hereto; and
(2) the Security Registrar shall register the transfer of any
Initial Security if the proposed transferor is an Agent Member holding
a beneficial interest in a Rule 144A Global Security, upon receipt by
the Security Registrar of (x) the certificate, if any, required by
paragraph (1) above and (y) instructions given in accordance with the
Depository's and the Security Registrar's procedures;
whereupon the Security Registrar shall reflect on its books and records the date
of such transfer and (A)(if the transfer involves a transfer of a beneficial
interest in a Rule 144A Global Security) a decrease in the principal amount of
such Rule 144A Global Security in an amount equal to the principal amount to be
transferred and (B) an increase in the principal amount of a Regulation S Global
Security in an amount equal to the principal amount to be transferred.
(c) Private Placement Legend. Upon the registration of
transfer, exchange or replacement of Initial Securities, the Security Registrar
shall deliver only Initial Securities that bear the Private Placement Legend
unless (i) (x) the circumstances contemplated by clause (b)(1)(x) of this
Section 313 exist or (y) such Security has been sold pursuant to an effective
registration statement under the Securities Act and (ii) there is delivered to
the Security Registrar and the Trustee an Opinion of Counsel reasonably
satisfactory to the Company and the Trustee to the effect that neither such
legend nor the related restrictions on transfer are required in order to
maintain compliance with the provisions of the Securities Act.
(d) Other Transfers. If a Holder proposes to transfer an
Initial Security pursuant to any exemption from the registration requirements of
the Securities Act other than as provided for by Section 313(a) and 313(b), the
Security Registrar shall only register such transfer or exchange if such
transferor delivers to the Security Registrar and the Trustee an Opinion of
Counsel satisfactory to the Company and the Security Registrar that such
transfer is in compliance with the Securities Act and the terms of this
Indenture; provided that the Company may, based upon the opinion of its counsel,
instruct the Security Registrar by a Company Order not to register such transfer
in any case where the proposed transferee is not a QIB or a non-U.S. Person.
(e) General. By its acceptance of any Security bearing the Private
Placement Legend, each Holder of such a Security acknowledges the restrictions
on transfer of
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such Security set forth in this Indenture and in the Private Placement Legend
and agrees that it will transfer such Security only as provided in this
Indenture.
The Security Registrar shall retain copies of all letters,
notices and other written communications received pursuant to Section 312 or
this Section 313 for a period of two years, after which time such letters,
notices and other written communications shall at the written request of the
Company be delivered to the Company. The Company shall have the right to inspect
and make copies of all such letters, notices or other written communications at
any reasonable time upon the giving of reasonable prior written notice to the
Security Registrar.
ARTICLE FOUR
SATISFACTION AND DISCHARGE
SECTION 401. Satisfaction and Discharge of Indenture.
This Indenture shall upon Company Request cease to be of
further effect (except as to surviving rights of registration of transfer or
exchange of Securities expressly provided for herein or pursuant hereto) and the
Trustee, at the expense of the Company, shall execute proper instruments
acknowledging satisfaction and discharge of this Indenture when
(1) either
(a) all Securities theretofore authenticated and delivered (other than
(i)Securities which have been destroyed, lost or stolen and which have been
replaced or paid as provided in Section306 and (ii)Securities for whose payment
money has theretofore been deposited in trust with the Trustee or any Paying
Agent or segregated and held in trust by the Company and thereafter repaid to
the Company or discharged from such trust as provided in Section1003) have been
delivered to the Trustee for cancellation; or
(b) all such Securities not theretofore delivered to the Trustee for
cancellation
(i) have become due and payable, or
(ii) will become due and payable at their Stated Maturity within one year,
or
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(iii) are to be called for redemption within one year under irrevocable
arrangements satisfactory to the Trustee for the giving of notice of redemption
by the Trustee in the name, and at the expense, of the Company,
and the Company, in the case of (i), (ii) or (iii) above, has irrevocably
deposited or caused to be deposited with the Trustee as trust funds in trust for
such purpose an amount sufficient to pay and discharge the entire indebtedness
on such Securities not theretofore delivered to the Trustee for cancellation,
for principal (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; and
(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.
Notwithstanding the satisfaction and discharge of this
Indenture, the obligations of the Company to the Trustee under Section607 and,
if money shall have been deposited with the Trustee pursuant to clause(1)(b) of
this Section 401, the obligations of the Trustee under Section402 and the last
paragraph of Section1003 shall survive.
SECTION 402. Application of Trust Money.
Subject to the provisions of the last paragraph of
Section1003, all money deposited with the Trustee pursuant to Section401 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; but such money need not be segregated from other funds except
to the extent required by law.
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ARTICLE FIVE
REMEDIES
SECTION 501. Events of Default.
"Event of Default", wherever used herein, means any one of the
following events (whatever the reason for such Event of Default and whether it
shall be voluntary or involuntary or be effected by operation of law or pursuant
to any judgment, decree or order of any court or any order, rule or regulation
of any administrative or governmental body):
(1) default in the payment of the principal of (or premium, if any, on) any
Security at its Maturity; or
(2) default in the payment of any interest on any Security when it becomes
due and payable, and continuance of such default for a period of 30 days; or
(3) default in the payment of principal and interest on any Security
required to be purchased pursuant to an Offer to Purchase pursuant to Section
1010 or 1018; or
(4) default in the performance, or breach, of Section801 or 1018; 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 60days 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 indebtedness by the Company or any Restricted Subsidiary 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 indebtedness of such type by
the Company or any such Restricted Subsidiary with a principal amount then
outstanding, individually or in the aggregate, in excess of $10million, whether
such indebtedness now exists or shall hereafter be created, which default or
defaults shall result in the acceleration of the payment of such indebtedness or
shall constitute a failure to pay the principal of such indebtedness when due at
the final maturity thereof, or shall have resulted in
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excess of $10 million of indebtedness becoming or being declared due and
payable prior to the date on which it would otherwise have become due and
payable (after expiration of any applicable grace period); or
(7) a final judgment or final judgments for the payment of money are
entered against the Company or any Restricted Subsidiary in an aggregate amount
in excess of $10million by a court or courts of competent jurisdiction, which
judgment or judgments remain undischarged or unbonded for a period (during which
execution shall not be effectively stayed) of 45days after the date on which the
right to appeal all such judgments has expired; or
(8) the entry of a decree or order by a court having jurisdiction in the
premises adjudging the Company or any Restricted 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
Restricted Subsidiary under the Federal Bankruptcy Code or any other applicable
federal or state law, or appointing a receiver, liquidator, assignee, trustee or
sequestrator (or other similar official) of the Company or any Restricted
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 unstayed and in effect for a period of 60 consecutive days; or
(9) the institution by the Company or any Restricted Subsidiary of
proceedings to be adjudicated a bankrupt or insolvent, or the consent by it to
the institution of bankruptcy or insolvency proceedings against it, or the
filing by it of a petition or answer or consent seeking reorganization or relief
under the Federal Bankruptcy Code or any other applicable federal or state law,
or the consent by it to the filing of any such petition or to the appointment of
a receiver, liquidator, assignee, trustee or sequestrator (or other similar
official) of the Company or any Restricted 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.
SECTION 502. Acceleration of Maturity; Rescission and Annulment.
If an Event of Default (other than an Event of Default specified in
Section501(8) or (9)) occurs and is continuing, then and in every such case the
Trustee or the Holders of not less than 25% in principal amount of the
Outstanding Securities may declare the principal 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 principal shall
become immediately due and payable. If an Event of Default specified in
Section501(8) or (9) occurs and is continuing, then the principal of all the
Securities shall ipso
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facto become and be immediately due and payable without any declaration or other
act on the part of the Trustee or any Holder.
At any time after a declaration of acceleration has been made and before a
judgment or decree for payment of the money due has been obtained by the Trustee
as hereinafter provided in this Article Five, the Holders of a majority in
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 Outstanding Securities,
(B) all unpaid principal of (and premium, if any, on) any Outstanding
Securities which has become due otherwise than by such declaration of
acceleration, and interest on such unpaid principal at the rate borne by the
Securities,
(C) to the extent that payment of such interest is lawful, interest on
overdue interest at the 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 nonpayment of amounts of
principal of (or premium, if any, on) Securities which have become due solely by
such declaration of acceleration, have been cured or waived as provided in
Section513.
No such rescission shall affect any subsequent default or impair any right
consequent thereon.
Notwithstanding the preceding paragraph, in the event that a
declaration of acceleration in respect of the Securities due to an Event of
Default specified in Section501(6) shall have occurred and be continuing, such
declaration of acceleration shall be automatically annulled if the Debt that is
the subject of such Event of Default has been discharged or the holders thereof
have rescinded their declaration of acceleration in respect of such Debt, and
written notice of such discharge or rescission, as the case may be, shall have
been given to the Trustee by the Company and countersigned by the holders of
such Debt or a trustee, fiduciary or agent for such holders, within 30 days
after such declaration of acceleration in respect of the
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Securities, and no other Event of Default has occurred during such 30-day period
which has not been cured or waived during such period.
SECTION 503. Collection of Indebtedness and Suits for Enforcement by
Trustee.
The Company covenants that if
(a) default is made in the payment of any installment of interest on any
Security when such interest becomes due and payable and such default continues
for a period of 30 days, or
(b) default is made in the payment of the principal of (or premium, if any,
on) any Security at the Maturity thereof,
the Company will, upon demand of the Trustee, pay to the Trustee 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 interest on any
overdue principal (and premium, if any) and, to the extent that payment of such
interest shall be legally enforceable, upon any overdue installment of interest,
at the rate borne by the Securities, and, in addition thereto, such further
amount as shall be sufficient to cover the costs and expenses of collection,
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 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 effectual 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.
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SECTION 504. Trustee May File Proofs of Claim.
In case of the pendency of any receivership, insolvency,
liquidation, bankruptcy, reorganization, arrangement, adjustment, composition or
other judicial proceeding relative to the Company or any other obligor upon the
Securities or the property of the Company or of such other obligor or their
creditors, the Trustee (irrespective of whether the principal of the Securities
shall then be due and payable as herein expressed or by declaration or otherwise
and irrespective of whether the Trustee shall have made any demand on the
Company for the payment of overdue principal, premium, if any, or interest)
shall be entitled and empowered, by intervention in such proceeding or
otherwise,
(i) to file and prove a claim for the whole amount of principal (and
premium, if any) and interest owing and unpaid in respect of the Securities and
to file such other papers or documents as may be necessary or advisable in order
to have the claims of the Trustee (including any claim for the reasonable
compensation, expenses, disbursements and advances of the Trustee and its agents
and counsel) and of the Holders allowed in such judicial proceeding, and
(ii) to collect and receive any moneys or other property payable or
deliverable on any such claims and to distribute the same;
and any custodian, receiver, assignee, trustee, liquidator or 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 the Trustee any amount due it for the reasonable compensation, expenses,
disbursements and advances of the Trustee and its agents and counsel, and any
other amounts due the Trustee under Section607.
Nothing herein contained 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.
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 and as trustee of an express trust, and any recovery of judgment
shall, after provision for the payment of the reasonable compensation,
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expenses, disbursements and advances of the Trustee and 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
Five 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 Section607;
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; and
THIRD: The balance, if any, to the Person or Persons entitled thereto.
SECTION 507. Limitation on Suits.
No Holder of any Securities 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 not less than 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 to the Trustee indemnity reasonably
satisfactory to it 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 of indemnity has failed to institute any such proceeding; and
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(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 or more in
aggregate principal amount of the Outstanding Securities;
it being understood and intended that no one or more Holders shall have any
right in any manner whatsoever 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 as provided herein (including, if applicable,
Article Twelve) and in such Security of the principal of (and premium, if any)
and (subject to Section307) interest on such Security on the respective Stated
Maturities expressed in such Security (or, in the case of redemption, on the
Redemption 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 Section306, 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.
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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 Five 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 not less than 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,
(2) the Trustee may take any other action deemed proper by the Trustee
which is not inconsistent with such direction, and
(3) the Trustee need not take any action which might involve it in personal
liability or be unjustly prejudicial to the Holders not consenting.
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 waive any past default hereunder and its consequences, except a
default
(1) in respect of the payment of the principal of (or premium, if any) or
interest on any Security, 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.
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
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Indenture; but no such waiver shall extend to any subsequent or other default or
Event of Default or impair any right consequent thereon.
SECTION 514. Waiver of Stay or Extension Laws.
The Company covenants (to the extent that it may lawfully do
so) that it shall 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 shall not hinder, delay or impede the
execution of any power herein granted to the Trustee, but shall suffer and
permit the execution of every such power as though no such law had been enacted.
ARTICLE SIX
THE TRUSTEE
SECTION601. Certain Duties and Responsibilities.
(a) Except during the continuance of an Event of Default,
(1) the Trustee undertakes to perform such duties and only
such duties as are specifically set forth in this Indenture, and no
implied covenants or obligations shall be read into this Indenture
against the Trustee; and
(2) in the absence of bad faith on its part, the Trustee may
conclusively rely, as to the truth of the statements and the
correctness of the opinions expressed therein, upon certificates or
opinions furnished to the Trustee and conforming to the requirements of
this Indenture; but, in the case of any such certificates or opinions
which by any provision hereof are specifically required to be furnished
to the Trustee, the Trustee shall be under a duty to examine the same
to determine whether or not they conform to the requirements of this
Indenture.
(b) In case an Event of Default has occurred and is
continuing, the Trustee shall exercise such of the rights and powers vested in
it by this Indenture, and use the same degree of care and skill in their
exercise, as a prudent man would exercise or use under the circumstances in the
conduct of his own affairs.
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(c) No provision of this Indenture shall be construed to
relieve the Trustee from liability for its own negligent action, its own
negligent failure to act or its own willful misconduct, except that
(1) this paragraph (c) shall not be construed to limit the effect of
paragraph (a) of this Section 601;
(2) the Trustee shall not be liable for any error of judgment made in good
faith by a Responsible Officer, unless it shall be proved that the Trustee was
negligent in ascertaining the pertinent facts;
(3) the Trustee shall not be liable with respect to any action taken or
omitted to be taken by it in good faith in accordance with the direction of the
Holders of a majority in principal amount of the Outstanding Securities relating
to the time, method and place of conducting any proceeding for any remedy
available to the Trustee, or exercising any trust or power conferred upon the
Trustee, under this Indenture; and
(4) 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 indemnity reasonably satisfactory to it against such risk or liability
is not reasonably assured to it.
(d) 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 601.
SECTION 602. Notice of Default.
Within 60 days after the occurrence of any Default hereunder,
the Trustee shall transmit, in the manner and to the extent provided in TIA
Section313(c), notice of such Default hereunder known to any Responsible Officer
of the Trustee, unless such Default shall have been cured or waived; provided,
however, that, except in the case of a Default in the payment of the principal
of (or premium, if any) or interest on any Security, the Trustee shall be
protected in withholding such notice if and so long as the board of directors,
the executive committee or a trust committee of directors and/or Responsible
Officers of the Trustee in good faith determines that the withholding of such
notice is in the interest of the Holders; and provided further that in the case
of any Default of the character specified in Section501(5) no such notice to
Holders shall be given until at least 30 days after the occurrence thereof.
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SECTION 603. Certain Rights of Trustee.
Subject to Section 601 and to the provisions of TIA Sections315(a) through
315(d):
(1) the Trustee may conclusively rely and shall be fully
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;
(2) any request or direction of the Company mentioned herein
shall be sufficiently evidenced by a Company Request or Company Order
and any resolution of the Board of Directors may be sufficiently
evidenced by a Board Resolution;
(3) 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, receive and rely upon an
Officers' Certificate;
(4) 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;
(5) 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 security or indemnity
reasonably satisfactory to it against the costs, expenses and
liabilities which might be incurred by it in compliance with such
request or direction;
(6) 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;
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(7) 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;
(8) the Trustee shall not be liable for any action taken,
suffered or omitted by it in good faith and believed by it to be
authorized or within the discretion or rights or powers conferred upon
it by this Indenture; and
(9) the Trustee shall have no duties, obligations or liability
in connection with any Event of Default hereunder unless a Responsible
Officer of the Trustee has knowledge thereof.
The Trustee shall not be required 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.
SECTION 604. Trustee Not Responsible for Recitals or Issuance of
Securities.
The recitals contained herein and in the Securities, except
for 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 of the Securities, except that the Trustee
represents that it is duly authorized to execute and deliver this Indenture,
authenticate the Securities and perform its obligations hereunder. 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 or any
other agent of the Company or of the Trustee, in its individual or any other
capacity, may become the owner or pledgee of Securities and, subject to TIA
Sections310(b) and 311, 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.
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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.
TheCompany 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 the Trustee's negligence or bad faith; and
(3) to indemnify the Trustee and its directors, officers,
employees and agents for, and to hold them harmless against, any loss,
liability or expense incurred without negligence or bad faith on the
part of any of them, arising out of or in connection with the
acceptance or administration of this trust, including the costs and
expenses of defending itself or themselves against any claim or
liability in connection with the exercise or performance of any of its
or their powers or duties hereunder.
The obligations of the Company under this Section 607 to
compensate the Trustee, to pay or reimburse the Trustee for expenses,
disbursements and advances and to indemnify and hold harmless the Trustee shall
constitute additional indebtedness hereunder and shall survive the satisfaction
and discharge of this Indenture or the earlier resignation or removal of the
Trustee. As security for the performance of such obligations of the Company, the
Trustee shall have a claim prior to the Securities upon all property and funds
held or collected by the Trustee as such, except funds held in trust for the
payment of principal of (and premium, if any) or interest on particular
Securities.
When the Trustee incurs expenses or renders services in
connection with an Event of Default specified in Section 501(8) or (9), the
expenses (including the reasonable charges and expenses of its counsel) of and
the compensation for such services are intended to
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constitute expenses of administration under any applicable federal or state
bankruptcy, insolvency or other similar law.
The provisions of this Section 607 shall survive the
termination of this Indenture or the earlier resignation or removal of the
Trustee.
SECTION 608. Corporate Trustee Required; Eligibility; Conflicting
Interests.
(a) There shall be at all times a Trustee hereunder which
shall be subject to and comply with the provisions of Section310(a)(1) of the
Trust Indenture Act and shall have a combined capital and surplus of at least
$50,000,000. If such Corporation publishes reports of condition at least
annually, pursuant to law or to the requirements of federal, state, territorial
or District of Columbia supervising or examining authority, then, for the
purposes of this Section608, the combined capital and surplus of such
Corporation 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
608, it shall resign immediately in the manner and with the effect hereinafter
specified in this Article Six.
(b) The Trustee shall be subject to and comply with Section 310(b) of the
Trust Indenture Act.
SECTION 609. 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 in
accordance with the applicable requirements of Section610.
(b) The Trustee may resign at any time by giving written
notice thereof to the Company. If the instrument of acceptance by a successor
Trustee required by Section610 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 not less than a majority in aggregate 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 the provisions of
TIA Section310(b) 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 Section608(a)
and shall fail to resign 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
(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 a Board Resolution, may remove the
Trustee or (ii)subject to TIA Section315(e), 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 a 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 aggregate 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 the
Holders of Securities in the manner provided for in Section106. Each notice
shall include the name of the successor Trustee and the address of its Corporate
Trust Office.
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(g) The retiring Trustee shall not be liable for any of the
acts or omissions of any successor Trustee appointed hereunder.
SECTION 610. 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, such retiring Trustee shall, upon payment of
its charges, 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 611. 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 of 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 Six, 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. In case at that time any of the Securities shall
not have been authenticated, any successor Trustee may authenticate such
Securities either in the name of any predecessor hereunder or in the name of the
successor Trustee. In all such cases such certificates shall have the full force
and effect which this Indenture provides that the certificate of authentication
of the Trustee shall have; provided, however, that the right to adopt the
certificate of authentication of any predecessor Trustee or to authenticate
Securities in the name of any predecessor Trustee shall apply only to its
successor or successors by merger, conversion or consolidation.
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ARTICLE SEVEN
HOLDERS' LISTS AND REPORTS BY TRUSTEE AND COMPANY
SECTION 701. Disclosure of Names and Addresses of Holders.
Every Holder of Securities, by receiving and holding the same,
agrees with the Company and the Trustee that none of the Company or the Trustee
or any agent of either of them shall be held accountable by reason of the
disclosure of any such information as to the names and addresses of the Holders
in accordance with TIA Section312, regardless of the source from which such
information was derived, and that the Trustee shall not be held accountable by
reason of mailing any material pursuant to a request made under TIA
Section312(b).
SECTION 702. Reports by Trustee.
Within 60 days after May15 of each year commencing with the
first May15 after the first issuance of Securities, the Trustee shall transmit
to the Holders, in the manner and to the extent provided in TIA Section313(c), a
brief report dated as of such May15 if required by TIA Section313(a).
SECTION 703. Reports by Company.
The Company shall file with the Trustee and deliver to the
Holders of Securities the reports and other information required to be provided
by it pursuant to Section1008.
ARTICLE EIGHT
CONSOLIDATION, MERGER, CONVEYANCE, TRANSFER OR LEASE
SECTION 801. Company May Consolidate, Etc., Only on Certain Terms.
The Company shall not, except as provided in Section 1025, in
a single transaction or a series of related transactions, (i)consolidate with or
merge into any other Person or Persons or permit any other Person to consolidate
with or merge into the Company (other than a merger of Qwest Corporation into
the Company in which the Company shall be the surviving Person) or (ii) directly
or indirectly, transfer, sell, lease or otherwise dispose of all or
substantially all of its assets to any other Person or Persons, unless, in any
such transaction specified in clause (i) or (ii):
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(1) in a transaction in which the Company is not the surviving
Person or in which the Company sells, leases or otherwise disposes of
all or substantially all of its assets to any other Person, the
resulting, surviving or transferee Person (the "successor entity") is
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 before and after giving effect to such
transaction and treating any Debt which becomes an obligation of the
Company or a Restricted Subsidiary as a result of such transaction as
having been Incurred by the Company or such Restricted 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) immediately after giving effect to such transaction and
treating any Debt which becomes an obligation of the Company or a
Restricted Subsidiary as a result of such transaction as having been
Incurred by the Company or such Restricted Subsidiary at the time of
the transaction, the Company (including any successor entity to the
Company) could Incur at least $1.00 of additional Debt pursuant to the
provisions of paragraph(a) of Section 1011;
(5) 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 Section1015, the Company or the successor entity to the
Company shall have secured the Securities as required by such
Section1015; and
(6) the Company has delivered to the Trustee an Officers'
Certificate and an Opinion of Counsel, each in form and substance
reasonably 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
Officers' Certificate, setting forth the manner of determination of the
Consolidated Net Worth, in accordance with clause(3) of this
Section801, of the Company or, if applicable, of the successor entity
as required pursuant to the foregoing.
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SECTION 802. Successor Substituted.
Upon any consolidation of the Company with or merger of the
Company with or into any other Corporation or any conveyance, transfer or lease
of the properties and assets of the Company substantially as an entirety to any
Person or Persons in accordance with Section801, 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, in the event of any such conveyance or transfer, the Company (which
term shall for this purpose mean the Person named as the "Company" in the first
paragraph of this Indenture or any successor Person which shall have become such
in the manner described in Section801), except in the case of a lease, shall be
discharged of all obligations and covenants under this Indenture and the
Securities and may be dissolved and liquidated.
ARTICLE NINE
SUPPLEMENTAL INDENTURES
SECTION 901. Supplemental Indentures Without Consent of Holders.
Without the consent of any Holders, the Company, when
authorized by a Board Resolution, and the Trustee, at any time and from time to
time, may enter into one or more indentures supplemental hereto, in form and
substance 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 contained
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 add any additional Events of Default; or
(4) to provide for uncertificated Securities in addition to or in place of
certificated Securities; or
(5) to evidence and provide for the acceptance of appointment hereunder by
a successor Trustee pursuant to the requirements of Section610; or
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(6) 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;
provided that such action shall not adversely affect the interests of the
Holders in any material respect; or
(7) to secure the Securities pursuant to the requirements of Section1015;
or
(8) to provide for a Restricted Subsidiary Guarantee pursuant to the
requirements of Section 1016.
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, the Company, when authorized by a
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 alter the redemption provisions thereof, or reduce
the principal amount thereof (or premium, if any) or the rate of interest
thereon or reduce the amount of the principal of the Securities that would be
due and payable upon a declaration of acceleration of the Maturity thereof
pursuant to Section502 or the amount thereof provable in bankruptcy pursuant to
Section504, or change the place of payment where, or the coin or currency, in
which any Security or any premium or the 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
(2) reduce the percentage in aggregate 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) subordinate in right of payment, or otherwise subordinate, the Notes to
any other Debt; or
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(4) modify any of the provisions of this Section 902, 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.
It shall not be necessary for any Act of Holders under this
Section 902 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 Nine or the modifications
thereby of the trusts created by this Indenture, the Trustee shall be entitled
to receive, and 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 and an Officers' Certificate stating that all
conditions precedent to the execution of such supplemental indenture have been
fulfilled. 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 Nine, 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
Nine shall conform as a matter of contract or law to the requirements of the
Trust Indenture Act as then in effect.
SECTION 906. Reference in Securities to Supplemental Indentures.
Securities authenticated and delivered after the execution of
any supplemental indenture pursuant to this Article Nine may bear a notation in
form approved by the Trustee and the Company 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
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by the Company and authenticated and delivered by the Trustee in exchange for
Outstanding Securities.
SECTION 907. Notice of Supplemental Indentures.
Promptly after the execution by the Company and the Trustee of
any supplemental indenture pursuant to the provisions of Section902, the Company
shall give notice thereof to the Holders of each Outstanding Security affected,
in the manner provided for in Section106, setting forth in general terms the
substance of such supplemental indenture.
ARTICLE TEN
COVENANTS
SECTION 1001. Payment of Principal, Premium, if Any, and Interest.
The Company covenants and agrees for the benefit of the
Holders that it shall 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 shall maintain in The City of NewYork 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 Corporate Trust Office of the Trustee shall be such
office or agency of the Company, unless the Company shall designate and maintain
some other office or agency for one or more of such purposes. The Company shall
give prompt written notice to the Trustee of any change in the location of any
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 of The City of NewYork) where the
Securities may be presented or surrendered for any or all such purposes and may
from time to time rescind any such designation; 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 City of NewYork
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for such purposes. The Company shall give prompt written notice to the Trustee
of any such designation or rescission and 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 shall, on or before each due date of the principal of (or 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 of (or
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 shall promptly
notify the Trustee of its action or failure so to act.
Whenever the Company shall have one or more Paying Agents for
the Securities, it shall, on or before each due date of the principal of (or
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 of such action or
any failure so to act.
The Company shall 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 1003, that such Paying Agent shall:
(1) hold all sums held by it for the payment of the principal,
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, 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) indemnify the Trustee and its officers, directors,
employees and agents against any loss, cost or liability caused by, or
incurred as a result of, such Paying Agent's acts or omissions.
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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 sums.
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, premium or interest has become due and payable shall be paid to
the Company on 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 NewYork, 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. Corporate Existence.
Subject to Article Eight, the Company shall do or cause to be
done all things necessary to preserve and keep in full force and effect the
corporate existence, rights (charter and statutory) and franchises of the
Company and each Subsidiary; provided, however, that the Company shall not be
required to preserve, with respect to the Company, any such right or franchise
or, with respect to any Subsidiary (subject to all the other covenants in this
Indenture), any such corporate existence, 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 its Subsidiaries as a whole
and that the loss thereof is not disadvantageous in any material respect to the
Holders.
SECTION 1005. Payment of Taxes and Other Claims.
The Company shall pay or discharge or cause to be paid or
discharged, before the same shall become delinquent, (a)all taxes, assessments
and governmental charges levied or imposed upon the Company or any Restricted
Subsidiary or upon the income, profits or
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property of the Company or any Restricted Subsidiary and (b)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 Restricted Subsidiary; 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 1006. Maintenance of Properties.
The Company shall cause all properties owned by the Company or
any Restricted Subsidiary or used or held for use in the conduct of its business
or the business of any Restricted Subsidiary to be maintained and kept in good
condition, repair and working order and supplied with all necessary equipment
and shall 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 1006 shall prevent the Company from discontinuing the
maintenance of any of such properties if such discontinuance is, in the judgment
of the Company, desirable in the conduct of its business or the business of any
Subsidiary and not disadvantageous in any material respect to the Holders.
SECTION 1007. Insurance.
The Company shall at all times keep all of its and its
Restricted Subsidiaries' properties which are of an insurable nature insured
with insurers, believed by the Company to be responsible, against loss or damage
to the extent that property of similar character is usually so insured by
Corporations similarly situated and owning like properties.
SECTION 1008. Provision of Financial Statements.
The Company will file with the Trustee on the date on which it
files them with the Commission copies of the annual and quarterly reports and
the information, documents, and other reports that the Company is required to
file with the Commission pursuant to Section 13(a) or 15(d) of the Exchange Act
("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.
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SECTION 1009. Statement by Officers as to Default.
(a) The Company shall deliver to the Trustee, on the date of
delivery of each quarterly report to be delivered pursuant to Section 1008, a
brief certificate from the principal executive officer, principal financial
officer or principal accounting officer as to his or her knowledge of the
Company's compliance with all conditions and covenants under this Indenture. For
purposes of this Section1009(a), such compliance shall be determined without
regard to any period of grace or requirement of notice under this Indenture.
(b) When any Default has occurred and is continuing under this
Indenture, or if the trustee for or the holder of any other evidence of Debt of
the Company or any Restricted Subsidiary gives any notice or takes any other
action with respect to a claimed default (other than with respect to Debt in the
principal amount of less than $5,000,000), the Company shall deliver to the
Trustee by registered or certified mail or by telegram, telex or facsimile
transmission an Officers' Certificate specifying such event, notice or other
action within five Business Days of its occurrence.
SECTION 1010. Purchase of Securities upon Change of Control.
(a) Upon the occurrence of a Change of Control, each Holder
shall have the right to require that the Company repurchase such Holder's
Securities in whole or in part in integral multiples of $1,000 principal amount,
in accordance with the procedures set forth in this Section 1010 and this
Indenture.
(b) Within 30 days of the occurrence of a Change of Control,
the Company shall mail an Offer with respect to an Offer to Purchase all
Outstanding Securities at a price in cash equal to 101% of the principal amount
of the Securities plus accrued and unpaid interest thereon, if any, to such
Purchase Date. Installments of interest (including Liquidated Interest) whose
Stated Maturity is on or prior to the Purchase 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. 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.
(c) The Company and the Trustee shall perform their respective
obligations for the Offer to Purchase as specified in the Offer. 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
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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.
(d) A "Change of Control" shall be deemed to have occurred at
such time as (i) a Rating Decline shall have occurred and (ii) either (A) the
sale, conveyance, transfer or lease of all or substantially all of the assets of
the Company to any Person or any Persons acting together that would constitute a
"group" (a "Group") for purposes of Section 13(d) of the Exchange Act, together
with any Affiliates or Related Persons thereof, other than any Permitted Holder
or any Restricted Subsidiary, shall have occurred; (B) any Person or Group,
together with any Affiliates or Related Persons thereof, other than any
Permitted Holder or any Restricted Subsidiary, shall beneficially own (within
the meaning of Rule 13d-3 under the Exchange Act, except that a Person shall be
deemed to have beneficial ownership of all shares that such Person has the right
to acquire, whether such right is exercisable immediately or only after the
passage of time) at least 50% of the aggregate voting power of all classes of
Voting Stock of the Company at a time when Permitted Holders own less than or
equal to 25% of the aggregate voting power of all classes of Voting Stock of the
Company; or (C) during any period of two consecutive years, Continuing Directors
cease for any reason to constitute a majority of the Board of Directors then in
office.
(e) In the event that the Company makes an Offer to Purchase
the Securities, the Company shall 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.
SECTION 1011. Limitation on Consolidated Debt.
(a) The Company shall not, and shall not permit any Restricted
Subsidiary to, Incur any Debt, unless, after giving effect to the application of
the proceeds thereof, no Default or Event of Default would occur as a
consequence of such Incurrence or be continuing following such Incurrence and
either (i)the ratio of (A)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 or repaid since such balance sheet date and the receipt
and application of the proceeds thereof, to (B) 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 any such Debt had been Incurred
and the proceeds thereof had been applied at the beginning of such four fiscal
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quarters, would be less than 5.5 to 1.0 for Debt Incurred on or prior to April
1, 2000 and 5.0 to 1.0 for Debt Incurred thereafter, or (ii) 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 and
any other Debt Incurred or repaid since such balance sheet date and the receipt
and application of the proceeds thereof, is less than 2.0 to 1.0.
(b) Notwithstanding the foregoing limitation, the Company and
any Restricted Subsidiary may Incur any and all of the following (each of which
shall be given independent effect):
(i) Debt under the Securities, this Indenture and any Restricted Subsidiary
Guarantee;
(ii) (A)Debt Incurred subsequent to March 31, 1997 under Credit Facilities
in an aggregate principal amount at any time outstanding not to exceed $150
million plus (B)Debt Incurred subsequent to March 31, 1997 under one or more
Credit Facilities that are revolving credit facilities in an aggregate principal
amount at any time outstanding not to exceed the greater of (x)$100 million or
(y)85% of Eligible Receivables;
(iii) Purchase Money Debt, provided that the amount of such Purchase Money
Debt does not exceed 100% of the cost of the construction, installation,
acquisition or improvement of the applicable Telecommunications Assets;
(iv) 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 to a Person other than the Company or another such Restricted
Subsidiary, the provisions of this clause (iv) shall no longer be applicable to
such Debt and such Debt shall be deemed to have been Incurred by the issuer
thereof at the time of such transfer or other disposition;
(v) Debt Incurred to renew, extend, refinance, defease or refund (each, a
"refinancing") the Securities, notes issued under the Senior Note Indentures or
Debt of the Company Incurred pursuant to clause (iii) of this paragraph (b), 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
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connection with such refinancing pursuant to the terms of the Debt so refinanced
or the amount of any premium reasonably determined by the Board of Directors as
necessary to accomplish such refinancing by means of a tender offer or privately
negotiated repurchase, plus the 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 under this clause (v) 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 constitutes Subordinated Debt, and, in
the case of any refinancing of Subordinated Debt, the refinancing Debt
constitutes Subordinated Debt, and (B)in any 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
Stated Maturity 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
the acceleration of any payment with respect to 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 time the same are
required by the terms 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 of
control pursuant to provisions substantially similar to those described under
Section1010;
(vi) Debt consisting of Permitted Interest Rate and Currency Protection
Agreements;
(vii) Debt secured by Receivables originated by the Company or any
Restricted Subsidiary and related assets, provided that such Debt is nonrecourse
to the Company and any of its other Restricted Subsidiaries and provided further
that Receivables shall not be available at any time to secure Debt of the
Company under this clause (vii) to the extent that they are used at such time as
the basis for the Incurrence of Debt in excess of $100 million pursuant to
clause (ii)(B)(y) of this paragraph (b); and
(viii) Debt not otherwise permitted to be Incurred pursuant to clauses (i)
through (vii) above, which, together with any other outstanding Debt Incurred
pursuant to this clause (viii), has an aggregate principal amount not in excess
of $25 million at any time outstanding.
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SECTION 1012. Limitation on Debt and Preferred Stock of Restricted
Subsidiaries.
The Company shall not permit any Restricted Subsidiary that is
not a Guarantor to Incur any Debt or issue any Preferred Stock except any and
all of the following (each of which shall be given independent effect):
(i) Restricted Subsidiary Guarantees;
(ii) Debt of Restricted Subsidiaries under Credit Facilities permitted to
be Incurred pursuant to clause (ii) of paragraph (b) of Section 1011;
(iii) Purchase Money Debt of Restricted Subsidiaries permitted to be
Incurred pursuant to clause (iii) of paragraph (b) of Section 1011;
(iv) Debt owed by a Restricted Subsidiary of the Company to the Company or
a Restricted Subsidiary of the Company permitted to be Incurred pursuant to
clause (iv) of paragraph (b) of Section 1011;
(v) Debt of Restricted Subsidiaries consisting of Permitted Interest Rate
and Currency Protection Agreements permitted to be Incurred pursuant to clause
(vi) of paragraph (b) of Section 1011;
(vi) Debt of Restricted Subsidiaries secured by Receivables originated by
the Company or any Restricted Subsidiary and related assets permitted to be
Incurred pursuant to clause (vii) of paragraph (b) of Section 1011;
(vii) Debt of Restricted Subsidiaries permitted to be Incurred pursuant to
clause (viii) of paragraph (b) of Section 1011;
(viii) Preferred Stock issued to and held by the Company or a Restricted
Subsidiary;
(ix) Debt Incurred or Preferred Stock issued by a Person prior to the time
(A)such Person became a Restricted Subsidiary, (B)such Person merges into or
consolidates with a Restricted Subsidiary or (C)another Restricted Subsidiary
merges into or consolidates with such Person (in a transaction in which such
Person becomes a Restricted Subsidiary), which Debt or Preferred Stock was not
Incurred or issued in anticipation of such transaction and was outstanding prior
to such transaction; and
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(x) Debt or Preferred Stock which is exchanged for, or the proceeds of
which are used to renew, extend, refinance, defease, refund or redeem, any Debt
of a Restricted Subsidiary permitted to be Incurred pursuant to clause (iii) of
this Section 1012 or any Debt or Preferred Stock of a Restricted Subsidiary
permitted to be Incurred pursuant to clause (ix) of this Section 1012 (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 applicable 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 (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 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) which is conditioned upon the change of control of
the Company pursuant to provisions substantially similar to those contained in
Section1010, and provided further that, in the case of any exchange or
redemption of Preferred Stock of a Restricted Subsidiary, such Preferred Stock
may only be exchanged for or redeemed with Preferred Stock of such Restricted
Subsidiary.
SECTION 1013. Limitation on Restricted Payments.
The Company (i) shall not, and shall not permit any Restricted
Subsidiary to, directly or indirectly, declare or pay any dividend, or make any
distribution, in respect of its Capital Stock or to the holders thereof,
excluding any dividends or distributions which are
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made solely to the Company or a Restricted Subsidiary (and, if such Restricted
Subsidiary is not a Wholly Owned Subsidiary, to the other stockholders of such
Restricted Subsidiary on a pro rata basis) or 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)shall not, and shall not permit any Restricted
Subsidiary to, purchase, redeem or otherwise retire or acquire for value (x)any
Capital Stock of the Company, any Restricted Subsidiary or any Related Person of
the Company (other than a permitted refinancing) or (y) any options, warrants or
rights to purchase or acquire shares of Capital Stock of the Company, any
Restricted Subsidiary or any Related Person of the Company or any securities
convertible or exchangeable into shares of Capital Stock of the Company, any
Restricted Subsidiary or any Related Person of the Company (other than a
permitted refinancing), except, in any such case, any such purchase, redemption
or retirement or acquisition for value paid to the Company or a Restricted
Subsidiary (or, in the event of any such purchase, redemption or other
retirement or acquisition for value with respect to a Restricted Subsidiary that
is not a Wholly Owned Subsidiary, paid to the Company or a Restricted
Subsidiary, or to the other stockholders of such Restricted Subsidiary that is
not a Wholly Owned Subsidiary, on a pro rata basis); (iii) shall 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; and (iv) shall not, and shall 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 (other than a permitted refinancing) (each of clauses (i) through
(iv) being a "Restricted Payment") if: (1) an Event of Default, or an event that
with the passing of time or the giving of notice, or both, would constitute an
Event of Default, shall have occurred and be 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 terms of paragraph (a) of Section 1011, or (3)
upon giving effect to such Restricted Payment, the aggregate of all Restricted
Payments from March 31, 1997 exceeds the sum of: (a)50% of cumulative
Consolidated Net Income (or, in the event that Consolidated Net Income shall be
negative, 100% of such negative amount) since the end of the last full fiscal
quarter prior to March 31, 1997 through the last day of the last full fiscal
quarter ending at least 45 days prior to the date of such Restricted Payment,
(b)plus $5 million, (c)less, in the case of any Designation with respect to a
Restricted Subsidiary that was made after March 31, 1997, an amount equal to the
Designation Amount with respect to such Restricted Subsidiary, (d)plus, in the
case of any Revocation made after March 31, 1997, an amount equal to the lesser
of the Designation Amount with respect to the Subsidiary with respect to which
such Designation was made or the Fair Market Value of the Investment of the
Company and its Restricted Subsidiaries in such Subsidiary at the time of
Revocation; provided, however, that the Company or a Restricted Subsidiary of
the Company may make any Restricted Payment with the aggregate net cash proceeds
received after March 31, 1997 as capital contributions to the Company or from
the issuance (other than to a 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
Subsidiary) of the Company after March 31, 1997.
Notwithstanding the foregoing limitation, (i) the Company and
any Restricted Subsidiary may make Permitted Investments; (ii) the Company may
pay any dividend on Capital Stock of any class of the Company 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; (iii) the Company may repurchase any shares of its Common Stock or
options to acquire its Common Stock from Persons who were formerly directors,
officers or employees of the Company or any of its Subsidiaries or Affiliates,
provided that the aggregate amount of all such repurchases made pursuant to this
clause (iii) shall not exceed $1 million in any twelve-month period; (iv) the
Company and any Restricted Subsidiary may refinance any Debt otherwise permitted
by clause (v) of paragraph (b) of Section 1011 or clause (x) of Section 1012;
and (v) the Company and any Restricted Subsidiary may retire or repurchase any
Capital Stock of the Company or of any Restricted Subsidiary in exchange for, or
out of the proceeds of the substantially concurrent sale (other than to a
Subsidiary of the Company) of, Capital Stock (other than Disqualified Stock) of
the Company.
SECTION 1014. Limitation on Dividend and Other Payment Restrictions
Affecting Restricted Subsidiaries.
(a) The Company shall not, and shall 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 (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 or to 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.
(b) Notwithstanding the foregoing limitation, the Company may,
and may permit any Restricted Subsidiary to, create or otherwise cause or suffer
to exist any such encumbrance or restriction (i) pursuant to any agreement in
effect on March 31, 1997; (ii) any customary encumbrance or restriction
applicable to a Restricted Subsidiary that is contained in an agreement or
instrument governing or relating to Debt contained in any Credit Facilities or
Purchase Money Debt, provided that the provisions of such agreement permit the
payment of interest and mandatory payment or prepayment of principal pursuant to
the terms of this Indenture and the Securities and other Debt that is solely an
obligation of the Company, but provided further that such agreement may
nevertheless contain customary net worth, leverage,
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invested capital and other financial covenants, customary covenants regarding
the merger of or sale of all or any substantial part of the assets of the
Company or any Restricted Subsidiary, customary restrictions on transactions
with Affiliates, and customary subordination provisions governing Debt owed to
the Company or any Restricted Subsidiary; (iii) 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; (iv) pursuant to an agreement effecting a renewal,
refunding, permitted refinancing or extension of Debt Incurred pursuant to an
agreement referred to in clause (i), (ii) or (iii) of this paragraph (b),
provided, however, that the provisions contained in such renewal, refunding,
permitted refinancing or extension agreement relating to such encumbrance or
restriction are no more restrictive in any material respect than the provisions
contained in the agreement the subject thereof; (v) in the case of clause (iii)
of paragraph (a) of this Section 1014, 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; (vi) in the case of clause (iii) of paragraph (a) of
this Section 1014, customary nonassignment provisions entered into in the
ordinary course of business in leases and other agreements and customary
restrictions contained in asset sale agreements limiting the transfer of such
property or assets pending the closing of such sale; (vii) any restriction with
respect to a Restricted Subsidiary 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 the
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 the consummation or abandonment of such transaction occurs within one
year of the date such agreement was entered into; (viii) pursuant to applicable
law; and (ix) pursuant to this Indenture, the Securities, notes issued under the
Senior Note Indentures and the Senior Note Indentures.
SECTION 1015. Limitation on Liens.
The Company shall not, and shall not permit any Restricted
Subsidiary to, Incur or suffer to exist any Lien on or with respect to any
property or assets now owned or acquired after March 31, 1997 to secure any Debt
without making, or causing such Restricted Subsidiary to make, effective
provision for securing the Securities (x) equally and ratably with 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 March 31, 1997 and securing Debt outstanding on March 31, 1997; (ii)
Liens in favor of the Company or any Restricted Subsidiary; (iii) Liens to
secure the Securities; (iv) Liens to secure Restricted
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Subsidiary Guarantees; (v) Liens to secure Debt under Credit Facilities
permitted to be Incurred pursuant to clause (ii) of paragraph (b) of Section
1011; (vi)Liens on real or personal property of the Company or a Restricted
Subsidiary constructed, installed, acquired or constituting improvements made
after the date of original issuance of the Securities to secure Purchase Money
Debt permitted to be Incurred pursuant to clause (iii) of paragraph (b) of
Section 1011, provided, however, that (a) the principal amount of any Debt
secured by such a Lien does not exceed 100% of such purchase price or cost of
construction, installation or improvement of the property subject to such Lien,
(b) such Lien attaches to such property prior to, at the time of or within 270
days after the acquisition, the completion of construction, installation or
improvement or the commencement of operation of such property and (c) such Lien
does not extend to or cover any property other than the specific item of
property (or portion thereof) acquired, constructed, installed or constituting
the improvements financed by the proceeds of such Purchase Money Debt; (vii)
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; (viii) 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), (iii), (iv), (v), (vi) and (vii)
of this Section 1015 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 (v) of paragraph (b) of Section 1011 or clause (x) of
Section 1012; (ix) Liens to secure debt consisting of Permitted Interest Rate
and Currency Protection Agreements permitted to be Incurred pursuant to clause
(vi) of paragraph (b) of Section 1011; (x) Liens to secure Debt secured by
Receivables permitted to be Incurred pursuant to clause (vii) of paragraph (b)
of Section 1011; (xi) Liens to secure Debt of Restricted Subsidiaries permitted
to be Incurred pursuant to clause (viii) of paragraph (b) of Section 1011; (xii)
Liens not otherwise permitted by the foregoing clauses (i) through (xi) in an
amount not to exceed 5% of the Company's Consolidated Tangible Assets; and
(xiii) Permitted Liens.
SECTION 1016. Limitation on Issuances of Certain Guarantees by, and Debt
Securities of, Restricted Subsidiaries.
The Company shall not (i)permit any Restricted Subsidiary to,
directly or indirectly, guarantee any Debt Securities of the Company or (ii)
permit any Restricted Subsidiary to issue any Debt Securities unless, in either
such case, such Restricted Subsidiary simultaneously executes and delivers a
Restricted Subsidiary Guarantee providing for a Guarantee of payment of the
Securities.
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SECTION 1017. Limitation on Sale and Leaseback Transactions.
The Company shall not, and shall not permit any Restricted
Subsidiary to, directly or indirectly, enter into, assume, Guarantee or
otherwise become liable with respect to any Sale and Leaseback Transaction,
other than a Sale and Leaseback Transaction between the Company or a Restricted
Subsidiary on the one hand and a Restricted Subsidiary or the Company on the
other hand, 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
1015, equal in amount to the Attributable Value of the Sale and Leaseback
Transaction, without equally and ratably securing the Securities and (ii)the
Sale and Leaseback Transaction is treated as an Asset Disposition and all of the
conditions of Section 1018 (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 as Net Available Proceeds for purposes of such Section
1018.
SECTION 1018. Limitation on Asset Dispositions.
The Company shall not, and shall not permit any Restricted
Subsidiary to, make any Asset Disposition 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; and (ii) at least 75% of the consideration for such
disposition consists of cash or Cash Equivalents or the assumption of Debt of
the Company (other than Debt that is subordinated to the Securities) or of the
Restricted Subsidiary and release from all liability on the Debt assumed. If the
aggregate of Net Available Proceeds within any twelve-month period exceeds $5
million, then all such Net Available Proceeds shall be applied within 360 days
of the last such Asset Disposition (1) first, to the permanent repayment or
reduction of Debt then outstanding under any Credit 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 a price in cash
equal to 100% of the principal amount of the Securities on the Purchase Date
plus accrued and unpaid interest thereon and premium, if any, to such Purchase
Date 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 and unpaid interest to the purchase
date (or 100% of the accreted value plus accrued and unpaid interest and
premium, if any, to the purchase date in the case of original issue discount
Debt); (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, to the extent permitted
under the terms thereof; and (4) fourth, to the extent of any remaining Net
Available Proceeds, to any other use as determined by the Company which is not
otherwise prohibited by this Indenture.
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SECTION 1019. Limitation on Issuances and Sales of Capital Stock of
Restricted Subsidiaries.
The Company shall not, and shall not permit any Restricted
Subsidiary to, issue, transfer, convey, sell or otherwise dispose of any shares
of Capital Stock of a Restricted Subsidiary or securities convertible or
exchangeable into, or options, warrants, rights or any other interest with
respect to, Capital Stock of a Restricted Subsidiary to any Person other than
the Company or a Restricted Subsidiary except: (i) a sale of all of the Capital
Stock of such Restricted Subsidiary owned by the Company and any Restricted
Subsidiary that complies with the provisions of Section 1018 to the extent such
provisions apply; (ii) in a transaction that results in such Restricted
Subsidiary becoming a Permitted Joint Venture, provided (x) such transaction
complies with the provisions of Section1018 to the extent such provisions apply
and (y)the Company's remaining Investment in such Permitted Joint Venture would
have been permitted as a new Investment under the provisions of Section 1013;
(iii)the transfer, conveyance, sale or other disposition of shares required by
applicable law or regulation; (iv)if required, the issuance, transfer,
conveyance, sale or other disposition of directors' qualifying shares; or (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 1020. Transactions with Affiliates and Related Persons.
The Company shall not, and shall not permit any Restricted
Subsidiary 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
Restricted Subsidiary), including any Investment, unless such transaction is on
terms 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 and is in the best interests of the
Company or such Restricted Subsidiary, provided that the Company or any
Restricted Subsidiary may enter into: (i) transactions pursuant to the Company's
tax sharing agreement entered into with Anschutz Company existing at the date of
execution of this Indenture described under the caption "Certain Relationships
and Related Transactions" in the Companys annual report on Form 10-K for the
year ended December 31, 1997, incorporated by reference in the Offering
Memorandum, provided that any amendment of, supplement to or substitute for such
agreement is on terms that are no less favorable to the Company or such
Restricted Subsidiary than such existing agreement; (ii)transactions pursuant to
employee compensation arrangements approved by the Board of Directors, either
directly or indirectly; and
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(iii)Receivables Sales between the Company or a Restricted Subsidiary and an
Affiliate of the Company or such Restricted Subsidiary, provided that such
Receivables Sales satisfy the provisions of clauses (i) and (ii) of Section
1018. For any transaction that involves in excess of $10 million but less than
or equal to $15 million, the Company shall deliver to the Trustee an Officers'
Certificate stating that the transaction satisfies the above criteria. For any
transaction that involves in excess of $15 million, a majority of the
disinterested members of the Board of Directors shall determine that the
transaction satisfies the above criteria and shall evidence such a determination
by a Board Resolution or, in the event that there shall not be disinterested
members of the Board of Directors with respect to the transaction, the Company
shall file with the Trustee a written opinion stating that the transaction
satisfies the above criteria from an investment banking firm of national
standing in the United States which, in the good faith judgment of the Board of
Directors, is independent with respect to the Company and its Affiliates and
qualified to perform such task.
SECTION 1021. Limitation on Designations of Unrestricted Subsidiaries.
The Company shall not designate any Subsidiary of the Company
(other than a newly created Subsidiary in which no Investment has previously
been made) as an Unrestricted Subsidiary (a "Designation") unless:
(a) no Default or Event of Default shall have occurred and be
continuing at the time of or after giving effect to such Designation;
(b) immediately after giving effect to such Designation, the
Company would be able to Incur $1.00 of Debt under paragraph (a) of
Section 1011; and
(c) the Company would not be prohibited under any provision of
this Indenture from making an Investment at the time of Designation
(assuming the effectiveness of such Designation) in an amount (the
"Designation Amount") equal to the Fair Market Value of the net
Investment of the Company or any other Restricted Subsidiary in such
Restricted Subsidiary on such date.
In the event of any such Designation, the Company shall be
deemed to have made an Investment constituting a Restricted Payment pursuant to
Section 1013 for all purposes of this Indenture in the Designation Amount. In
addition, neither the Company nor any Restricted Subsidiary shall at any time
(x) provide credit support for, or a guarantee of, any Debt of any Unrestricted
Subsidiary (including any undertaking, agreement or instrument evidencing such
Debt), provided that the Company or a Restricted Subsidiary may pledge Capital
Stock or Debt of any Unrestricted Subsidiary on a nonrecourse basis such that
the pledgee has no claim whatsoever against the Company other than to obtain
such pledged property, (y) be directly or indirectly liable for any Debt of any
Unrestricted Subsidiary or (z)
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be directly or indirectly liable for any Debt which provides that the holder
thereof may (upon notice, lapse of time or both) declare a default thereon or
cause the payment thereof to be accelerated or payable prior to its final
scheduled maturity upon the occurrence of a default with respect to any Debt of
any Unrestricted Subsidiary (including any right to take enforcement action
against such Unrestricted Subsidiary), except in the case of clause (x) or (y)
to the extent permitted under Section 1013 or 1020.
A Designation may be revoked (a "Revocation") by a Board
Resolution, provided that the Company shall not make any Revocation unless:
(a) no Default or Event of Default shall have occurred and be
continuing at the time of and after giving effect to such Revocation;
and
(b) all Liens and Debt of such Unrestricted Subsidiary
outstanding immediately following such Revocation would, if Incurred at
such time, have been permitted to be Incurred at such time for all
purposes of this Indenture.
All Designations and Revocations must be evidenced by Board
Resolutions certifying compliance with the foregoing provisions.
SECTION 1022. No Repayment of Existing Parent Company Advances with the
Proceeds of the Securities.
The Company shall not apply any portion of the proceeds of the
offering of the Securities toward the repayment of advances made to the Company
or any of its Subsidiaries by any parent company of the Company outstanding at
the date of execution of this Indenture.
SECTION 1023. Waiver of Certain Covenants.
The Company may omit in any particular instance to comply with
any term, provision or condition set forth in Sections1007 through 1022,
inclusive, if before or after the time for such compliance the Holders of at
least a majority in principal amount of the Outstanding Securities, by Act of
such Holders, waive such compliance in such instance with such term, provision
or condition, but no such waiver shall extend to or affect such term, provision
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 term, provision or condition shall remain in full
force and effect.
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SECTION 1024. Trustee Not to Monitor Performance.
The Trustee shall have no duty to confirm or monitor the
performance by the Company of its duties pursuant to the covenants set forth in
this Article Ten.
SECTION 1025. Suspended Covenants.
During any period of time (a "Suspension Period") that (i) the
ratings assigned to the Securities by both the Rating Agencies are Investment
Grade Ratings and (ii) no Default or Event of Default has occurred and is
continuing under this Indenture, the Company and its Restricted Subsidiaries
shall not be subject to the terms of Sections 1011, 1012, 1013, 1014, 1016,
1018, 1019, 1020, clause (ii) of Section 1017 and paragraph (4) of Section 801
(collectively, the "Suspended Covenants"). In the event that the Company and its
Restricted Subsidiaries are not subject to the Suspended Covenants with respect
to the Securities for any period of time as a result of the preceding sentence
and, subsequently, one or both Rating Agencies withdraws or downgrades the
ratings assigned to such Securities below the required Investment Grade Ratings,
then the Company and its Restricted Subsidiaries will thereafter again be
subject to the Suspended Covenants and compliance with respect to Restricted
Payments made after the time of such withdrawal or downgrade will be calculated
in accordance with the provisions of Section 1013 as if such covenant had been
in effect since the date of execution of this Indenture. Notwithstanding the
foregoing, neither (a) the continued existence, after the date of such
withdrawal or downgrade, of facts and circumstances or obligations that were
Incurred or otherwise came into existence during a Suspension Period nor (b) the
performance of any such obligations, shall constitute a breach of any covenant
set forth in this Indenture or cause a Default or Event of Default thereunder;
provided that (1) the Company and its Restricted Subsidiaries did not Incur or
otherwise cause such facts and circumstances or obligations to exist in
anticipation of a withdrawal or downgrade by one or both of the Rating Agencies
below an Investment Grade Rating and (2)the Company reasonably believed that
such Incurrence or actions would not result in such a withdrawal or downgrade.
For purposes of clauses (1) and (2) in the preceding sentence, anticipation and
reasonable belief may be determined by the Company and shall be conclusively
evidenced by a Board Resolution to such effect adopted in good faith by the
Board of Directors of the Company. In reaching their determination, the Board of
Directors may, but need not, consult with the Rating Agencies.
NYDOCS01/571795 3
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ARTICLE ELEVEN
REDEMPTION OF SECURITIES
SECTION 1101. Right of Redemption.
The Securities will be subject to redemption at the option of
the Company, in whole or in part, at any time, upon not less than 30 nor more
than 60 days' prior notice, at a Redemption Price equal to the principal amount
thereof, plus accrued and unpaid interest thereon, if any, to the Redemption
Date plus the Applicable Make-Whole Premium.
SECTION 1102. Applicability of Article.
Redemption of Securities at the election of the Company or
otherwise, 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 Section1101 shall be evidenced by a Board Resolution. In case of any
redemption at the election of the Company, 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 of such Redemption Date and
of the principal amount of Securities to be redeemed and shall deliver to the
Trustee such documentation and records as shall enable the Trustee to select the
Securities to be redeemed pursuant to Section1104.
SECTION 1104. Selection by Trustee of Securities to Be Redeemed.
If less than all the Securities are to be redeemed, the
particular Securities to be redeemed shall be selected not more than 60 days
prior to the Redemption Date by the Trustee, from the Outstanding Securities not
previously called for redemption, by such method as the Trustee shall deem fair
and appropriate and which may provide for the selection for redemption of
portions of the principal amount of Securities; provided, however, that no such
partial redemption shall reduce the portion of the principal amount of a
Security not redeemed to less than $1,000.
The Trustee shall promptly notify the Company 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.
NYDOCS01/571795 3
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For all purposes of this Indenture, unless the context
otherwise requires, all provisions relating to redemption of Securities shall
relate, in the case of any Security redeemed or to be redeemed only in part, to
the portion of the principal amount of such Security which has been or is to be
redeemed.
SECTION 1105. Notice of Redemption.
Notice of redemption shall be given in the manner provided for
in Section106 not less than 30 nor more than 60 days prior to the Redemption
Date, to each Holder of Securities to be redeemed.
Each notice of redemption shall state:
(1) the Redemption Date,
(2) the Redemption Price and the amount of accrued interest to the
Redemption Date payable as provided in Section1107, if any,
(3) if less than all Outstanding Securities are to be
redeemed, the identification (and, in the case of a partial redemption,
the principal amount) of the particular Securities to be redeemed,
(4) in case any Security is to be redeemed in part only, that
on and after the Redemption Date, upon surrender of such Security, the
Holder will receive, without charge, a new Security or Securities of
authorized denominations for the principal amount thereof remaining
unredeemed,
(5) that on the Redemption Date the Redemption Price (and
accrued interest, if any, to the Redemption Date payable as provided in
Section1107) will become due and payable upon each such Security, or
the portion thereof, to be redeemed, and that interest thereon will
cease to accrue on and after said date, and
(6) the place or places where such Securities are to be
presented and surrendered for payment of the Redemption Price and
accrued interest, if any.
Notice of redemption of Securities to be redeemed at the
election of the Company shall be given by the Company or, at the Company's
request, by the Trustee in the name and at the expense of the Company.
NYDOCS01/571795 3
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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 Section1003) an amount
of money sufficient to pay the Redemption Price of, and accrued 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 (together with accrued
interest, if any, to the Redemption Date), and from and after such date (unless
the Company shall default in the payment of the Redemption Price and accrued
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 interest,
if any, 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 Section307.
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 interest rate
borne by the Securities.
SECTION 1108. Securities Redeemed in Part.
Any Security which is to be redeemed only in part shall be
surrendered at the office or agency of the Company maintained for such purpose
pursuant to Section1002 (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 such Holder's
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 any authorized denomination as
requested by such Holder, in aggregate principal amount equal to and in exchange
for the unredeemed portion of the principal amount of the Security so
surrendered.
NYDOCS01/571795 3
<PAGE>
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, with respect to the Securities, elect to have either Section1202 or
Section1203 be applied to all Outstanding Securities upon compliance with the
conditions set forth below in this ArticleTwelve.
SECTION 1202. Defeasance and Discharge.
Upon the Company's exercise under Section1201 of the option
applicable to this Section1202, the Company shall be deemed to have been
discharged from its obligations with respect to all Outstanding Securities on
the date the conditions set forth in Section1204 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, which shall thereafter be deemed to be "Outstanding"
only for the purposes of Section1205 and the other Sections of this Indenture
referred to in clauses (A) and (B) below, 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 Section1204 and as more fully set forth in such Section, payments
in respect of the principal of, premium, if any, and interest on such Securities
when such payments are due (but not the Purchase Price referred to in Section
1010) and any rights of the Holders with respect to such amounts, (B)the
Company's obligations with respect to such Securities under Sections304, 305,
306, 1002 and 1003, (C)the rights, powers, trusts, duties and immunities of the
Trustee hereunder and (D)this ArticleTwelve. Subject to compliance with this
Article Twelve, the Company may exercise its option under this Section1202
notwithstanding the prior exercise of its option under Section1203 with respect
to the Securities.
SECTION 1203. Covenant Defeasance.
Upon the Company's exercise under Section1201 of the option
applicable to this Section1203, the Company shall be released from its
obligations under any covenant contained in Section801(4) and in Sections1007
through 1021 with respect to the Outstanding
NYDOCS01/571795 3
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Securities on and after the date the conditions set forth below are satisfied
(hereinafter, "covenant defeasance"), and the Securities shall thereafter be
deemed not to be "Outstanding" for the purposes of any direction, waiver,
consent or declaration or Act of Holders (and the consequences of any thereof)
in connection with such covenants, but shall continue to be deemed "Outstanding"
for all other purposes hereunder. For this purpose, such covenant defeasance
means that, with respect to the Outstanding Securities, 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 covenant, whether directly or indirectly, by
reason of any reference elsewhere herein to any such covenant or by reason of
any reference in any such covenant to any other provision herein or in any other
document and such omission to comply shall not constitute a Default or an Event
of Default under Section501(3), 501(4) or 501(5), but, except as specified
above, 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
Section1202 or Section1203 to the Outstanding Securities:
(1) The Company shall irrevocably have deposited or caused to
be deposited with the Trustee (or another trustee satisfying the
requirements of Section608 who shall agree to comply with the
provisions of this ArticleTwelve applicable to it) 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) Government
Securities 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 in
respect of the Securities, money in an amount (which, for the purpose
of clarification, shall be sufficient to pay such amounts regardless of
whether any call features in such Government Securities are exercised),
or (C)a combination thereof, sufficient, in the opinion of a nationally
recognized firm of independent public accountants expressed in a
written certification thereof delivered to the Trustee, to pay and
discharge, and which shall be applied by the Trustee (or other
qualifying trustee) to pay and discharge, the principal of (and
premium, if any) and interest on the Outstanding Securities on the
Stated Maturity (or Redemption Date, if applicable) of such principal
(and premium, if any) or installment of interest; provided that the
Trustee shall have been irrevocably instructed in writing to apply such
money or the proceeds of such Government Securities to said payments
with respect to the Securities. Before such a deposit, the Company may
give to the Trustee, in accordance with Section1103, a notice of its
election to redeem all of the Outstanding Securities at a future date
in accordance with ArticleEleven, which notice shall be irrevocable.
Such irrevocable redemption notice, if given, shall be given effect in
applying the foregoing.
NYDOCS01/571795 3
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(2) No Default or Event of Default with respect to the
Securities shall have occurred and be continuing on the date of such
deposit or, insofar as paragraphs(8) and (9) of Section501 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 result in
a breach or violation of, or constitute a default under, this Indenture
or any other material agreement or instrument to which the Company is a
party or by which it is bound.
(4) In the case of an election under Section1202, 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 November 19, 1998 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 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 defeasance had not occurred.
(5) In the case of an election under Section1203, the Company
shall have delivered to the Trustee an Opinion of Counsel to the effect
that (i) the Holders of the Outstanding Securities will not recognize
income, gain or loss for federal income tax purposes as a result of
such 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 and
(ii) the Company's deposit will not result in the Trust or the Trustee
being subject to regulation under the Investment Company Act of 1940.
(6) 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 Section1202 or the covenant defeasance under Section1203 (as the
case may be) have been complied with.
SECTION 1205. Deposited Money and Government Securities to Be Held in
Trust; Other Miscellaneous Provisions.
Subject to the provisions of the last paragraph of
Section1003, all money and Government Securities (including the proceeds
thereof) deposited with the Trustee (or other qualifying trustee, collectively
for purposes of this Section1205, the "Trustee") pursuant to Section1204 in
respect of the Outstanding Securities shall be held in trust and applied by the
NYDOCS01/571795 3
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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, 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 and (if
applicable) its officers, directors, employees and agents against any tax, fee
or other charge imposed on or assessed against the Government Securities
deposited pursuant to Section1204 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 Government Securities held by it as
provided in Section1204 which, in the opinion of a nationally recognized firm of
independent public accountants 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, as applicable, in accordance with this Article Twelve.
SECTION 1206. Reinstatement.
If the Trustee or any Paying Agent is unable to apply any
money in accordance with Section1205 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 Section1202 or 1203, as the case may be, until such time as the
Trustee or Paying Agent is permitted to apply all such money in accordance with
Section1205; provided, however, that if the Company makes any payment of
principal of, premium, if any, or interest on 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 Paying Agent.
NYDOCS01/571795 3
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this
Indenture to be duly executed, and their respective corporate seals to be
hereunto affixed and attested, all as of the day and year first above written.
QWEST COMMUNICATIONS
INTERNATIONAL INC.
By: /s/______________________________
Title:
Attest: /s/____________________
Title:
BANKERS TRUST COMPANY, Trustee
By: /s/______________________________
Title:
NYDOCS01/571795 3
<PAGE>
A-1
EXHIBIT A
Form of Face of Security
[If a Global Security, then insert:] THIS SECURITY IS A GLOBAL
SECURITY WITHIN THE MEANING OF THE INDENTURE HEREINAFTER REFERRED TO AND IS
REGISTERED IN THE NAME OF A DEPOSITORY OR A NOMINEE OF A DEPOSITORY OR A
SUCCESSOR DEPOSITORY. THIS SECURITY IS NOT EXCHANGEABLE FOR SECURITIES
REGISTERED IN THE NAME OF A PERSON OTHER THAN THE DEPOSITORY OR ITS NOMINEE
EXCEPT IN THE LIMITED CIRCUMSTANCES DESCRIBED IN THE INDENTURE, AND NO TRANSFER
OF THIS SECURITY (OTHER THAN A TRANSFER OF THIS SECURITY AS A WHOLE BY THE
DEPOSITORY TO A NOMINEE OF THE DEPOSITORY OR BY A NOMINEE OF THE DEPOSITORY TO
THE DEPOSITORY OR ANOTHER NOMINEE OF THE DEPOSITORY) MAY BE REGISTERED EXCEPT IN
THE LIMITED CIRCUMSTANCES DESCRIBED IN THE INDENTURE.
[If a Global Security, then insert:] UNLESS THIS CERTIFICATE
IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY, A
NEW YORK CORPORATION ("DTC"), TO THE COMPANY OR ITS AGENT FOR REGISTRATION OF
TRANSFER, EXCHANGE, OR PAYMENT, AND ANY CERTIFICATE 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 OR TO ANY PERSON IS
WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST
HEREIN.
[If a Rule 144A Security, then insert:] THIS SECURITY HAS NOT
BEEN REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE
"SECURITIES ACT"), AND MAY NOT BE OFFERED, SOLD, PLEDGED OR OTHERWISE
TRANSFERRED EXCEPT (A)(1) TO A PERSON WHOM THE SELLER REASONABLY BELIEVES IS A
QUALIFIED INSTITUTIONAL BUYER WITHIN THE MEANING OF RULE 144A UNDER THE
SECURITIES ACT ("RULE144A") IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE
144A, (2) IN AN OFFSHORE TRANSACTION MEETING THE REQUIREMENTS OF RULE 903 OR
RULE 904 OF REGULATION S UNDER THE SECURITIES ACT, OR (3) PURSUANT TO AN
EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT PROVIDED BY RULE 144
THEREUNDER (IF AVAILABLE) AND (B) IN ACCORDANCE WITH ALL APPLICABLE SECURITIES
LAWS OF THE STATES OF THE UNITED STATES.
NYDOCS01/571795 3
<PAGE>
A-2
[If a Regulation S Security, then insert:] THIS SECURITY HAS
NOT BEEN REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED
(THE "SECURITIES ACT"), AND, PRIOR TO THE EXPIRATION OF THE DISTRIBUTION
COMPLIANCE PERIOD (DEFINED AS 40 DAYS AFTER THE ISSUE DATE WITH RESPECT TO THE
SECURITIES), MAY NOT BE OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED EXCEPT
(A)(1) IN AN OFFSHORE TRANSACTION IN ACCORDANCE WITH RULE 903 OR RULE 904 OF
REGULATION S OR (2) TO A PERSON WHOM THE SELLER REASONABLY BELIEVES IS A
QUALIFIED INSTITUTIONAL BUYER WITHIN THE MEANING OF RULE 144A UNDER THE
SECURITIES ACT ("RULE 144A") IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE
144A, AND (B) IN ACCORDANCE WITH ALL APPLICABLE SECURITIES LAWS OF THE STATES OF
THE UNITED STATES.
QWEST COMMUNICATIONS
INTERNATIONAL INC.
7.25% [Series B] Senior Note Due 2008
CUSIP: ________
No. __________ $_____________
Qwest Communications International Inc., a Delaware
corporation (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 [if a Global Security, then insert: (which
principal amount may from time to time be increased or decreased to such other
principal amounts which, taken together with the principal amounts of all other
Outstanding Securities, shall not exceed $300,000,000 in the aggregate at any
time, by adjustments made on the records of the Trustee hereinafter referred to
in accordance with the Indenture)] on November 1, 2008, at the office or agency
of the Company referred to below, and to pay cash interest thereon, semiannually
on May 1 and November 1 in each year, commencing on May 1, 1999, accruing from
November 27, 1998 or from the most recent Interest Payment Date to which cash
interest has been paid or duly provided for, at the rate of 7.25% per annum,
until the principal hereof is paid or duly provided for, and (to the extent
lawful) to pay on demand interest on any overdue interest at the rate borne by
the Securities from the date on which such
- --------
Include only for Exchange Securities.
NYDOCS01/571795 3
<PAGE>
A-3
overdue interest becomes payable to the date payment of such interest has been
made or duly provided for; provided, however, that if (i) (a) the Company has
not filed a registration statement (the "Registration Statement") under the
Securities Act of 1933, as amended (the "Securities Act") within 90 days after
November 27, 1998, with respect to a registered offer (the "Exchange Offer") to
exchange this Security for a security (an "Exchange Security") with terms
identical in all material respects to this Security (except that such security
will not contain terms with respect to registration rights or transfer
restrictions, and provisions regarding interest and Liquidated Interest
(described below) will be modified or eliminated, as appropriate), or (b) the
Registration Statement has not been declared effective within 150 days after
November 27, 1998, or (c) the Exchange Offer has not been consummated within 180
days after November 27, 1998; or (ii) in lieu thereof, the Company has not filed
a shelf registration statement (the "Shelf Registration Statement") under the
Securities Act within 210 days after November 27, 1998, covering resales of this
Security and such Shelf Registration Statement has not been declared effective;
or (iii) either the Registration Statement or, if applicable, the Shelf
Registration Statement is filed and declared effective but shall thereafter
cease to be effective or usable (subject to certain exceptions) in connection
with resales of this Security or Exchange Securities in accordance with and
during the periods specified in the Registration Agreement without being
succeeded promptly by an additional registration statement filed and declared
effective, in each case (i) through (iii) upon the terms and conditions set
forth in the Registration Agreement (each such event referred to in clauses (i)
through (iii), a "Registration Default"), then additional interest ("Liquidated
Interest") will accrue (in addition to any stated interest on the Securities)
from and including the date on which any such Registration Default shall occur
to but excluding the date on which all Registration Defaults have been cured.
Liquidated Interest will be payable at a rate per annum equal to 0.5% on the
principal amount of the Securities during the 90-day period immediately
following the occurrence of any Registration Default and shall increase by 0.25%
per annum of the principal amount of the Securities at the end of each
subsequent 90-day period, but in no event shall such rates exceed 2.00% per
annum in the aggregate regardless of the number of Registration Defaults.
Accrued Liquidated Interest, if any, shall be paid in cash semiannually on May 1
and November 1 in each year; and the amount of accrued Liquidated Interest shall
be determined on the basis of the number of days actually elapsed. Any accrued
and unpaid interest (including Liquidated Interest) on this Security upon the
issuance of an Exchange Security in exchange for this Security shall cease to be
payable to the Holder hereof but such accrued and unpaid interest (including
Liquidated Interest) shall be payable on the next Interest Payment Date for such
Exchange Security to the Holder thereof on the related Regular Record Date.]
- --------
Include for Initial Securities and, if there has occurred a
Registration Default, include for Exchange Securities.
NYDOCS01/571795 3
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A-4
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 the April 15 or October 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 shall forthwith
cease to be payable to the Holder on such Regular Record Date, and such
defaulted interest, and (to the extent lawful) interest on such defaulted
interest at the rate borne by the Securities, may 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 may be
paid at any time in any other lawful manner, all as more fully provided in said
Indenture. Payment of the principal of (and premium, if any, on) and interest on
this Security will be made at the office or agency of the Company maintained for
that purpose in The City of New York, or at such other office or agency of the
Company as may be maintained 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 each installment of
interest may at the Companys option be paid (i) by mailing a check for such
interest, payable to or upon the written order of the Person entitled thereto to
the address of such Person as it appears on the Security Register, or (ii) by
wire transfer of such interest in immediately available funds to an account
located in the United States maintained by the Depository.
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 duly
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.
NYDOCS01/571795 3
<PAGE>
A-5
IN WITNESS WHEREOF, the Company has caused this instrument to
be duly executed under its corporate seal.
Dated: QWEST COMMUNICATIONS
INTERNATIONAL INC.
By:
Authorized Signatory
NYDOCS01/571795 3
<PAGE>
A-6
Form of Reverse of Security
This Security is one of a duly authorized issue of securities
of the Company designated as its 7.25% [SeriesB] Senior Notes Due 2008 (herein
called the "Securities"), limited (except as otherwise provided in the Indenture
referred to below) in aggregate principal amount to $300,000,000, which may be
issued under an indenture (herein called the "Indenture") dated as of November
27, 1998 between the Company and Bankers Trust Company, trustee (herein called
the "Trustee", which term includes any successor trustee under the Indenture),
to which Indenture and all indentures supplemental thereto reference is hereby
made for a statement of the respective rights, limitations of rights, duties,
obligations 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. Capitalized terms used herein but not
defined herein have the respective meanings assigned thereto in the Indenture.
The Securities are subject to redemption at the option of the
Company, in whole or in part, at any time upon not less than 30 and not more
than 60 days prior notice at a redemption price equal to the principal amount
thereof, plus accrued and unpaid interest thereon (if any) to the Redemption
Date plus the Applicable Make-Whole Premium.
Within 30 days of the occurrence of a Change of Control, the
Company will be required, subject to certain limitations provided in the
Indenture, to make an Offer to Purchase all Outstanding Securities at a purchase
price in cash in an amount equal to 101% of the principal amount of the
Securities on the Purchase Date plus accrued and unpaid interest and premium, if
any, to such Purchase Date.
In the case of any redemption of Securities, interest
installments whose Stated Maturity is on or prior to the 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 Date
referred to on the face hereof. Securities (or portions thereof) for whose
redemption and payment provision is made in accordance with the Indenture shall
cease to bear interest from and after the Redemption Date.
In the event of redemption of this Security in part only, a
new Security or Securities for the unredeemed portion hereof shall be issued in
the name of the Holder hereof upon the cancellation hereof.
- --------
Include for Exchange Securities only.
NYDOCS01/571795 3
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A-7
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 and in an amount equal to the
principal amount of the Securities as of the date on which the Securities first
become due and payable, plus any accrued and unpaid interest and premium, if
any, not otherwise included in the principal amount to such date.
The Indenture contains provisions for defeasance at any time
of (a)the entire indebtedness of the Company on this Security and (b)certain
restrictive covenants and the related Defaults and Events of Default, upon
compliance by the Company with certain conditions set forth therein, which
provisions apply to this Security. In addition, the Indenture contains
provisions for the suspension of certain restrictive covenants under certain
circumstances.
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 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 or on behalf of 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.
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 registerable on
the Security Register of the Company, upon surrender of this Security for
registration of transfer at the office or agency of the Company maintained for
such purpose in The City of NewYork, 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 for the same aggregate principal amount, will be issued to the
designated transferee or transferees.
NYDOCS01/571795 3
<PAGE>
A-8
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,
the Securities are exchangeable for a like 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 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 payable in connection
therewith.
Prior to the time of 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
neither the Company, the Trustee nor any agent shall be affected by notice to
the contrary.
All terms used in this Security which are defined in the
Indenture shall have the meanings assigned to them in the Indenture.
NYDOCS01/571795 3
<PAGE>
A-9
Form of Trustee's Certificate of Authentication
The Trustee's certificate of authentication shall be in
substantially the following form:
TRUSTEE'S CERTIFICATE OF AUTHENTICATION
Dated: ____________________
This is one of the Securities referred to in the
within-mentioned Indenture.
[NAME OF TRUSTEE]
as Trustee
By:_________________________
Authorized Signatory
NYDOCS01/571795 3
<PAGE>
A-10
Assignment Form
If you, the holder, want to assign this Security, fill in the
form below and have your signature guaranteed:
I or we assign and transfer this Security to ___________________________________
(Insert assignee's social security or tax ID number)
(Print or type assignee's name, address and zip code)
and irrevocably appoint ________________________________
of ________________________________
--------------------------------
agent to transfer this Security on the books of the Company. The agent may
substitute another to act for such agent.
In connection with any transfer of this Security occurring
prior to the date which is the earlier of (i) the date of the declaration by the
Commission of the effectiveness of a registration statement under the Securities
Act of 1933, as amended (the "Securities Act"), covering resales of this
Security (which effectiveness shall not have been suspended or terminated at the
date of the transfer) and (ii)the date two years (or such shorter period of time
as may be permitted by Rule 144(k) under the Securities Act or any successor
provision thereunder) after the later of the original issuance date appearing on
the face of this Security (or any Predecessor Security) or the last date on
which the Company or any Affiliate of the Company was the owner of this Security
(or any Predecessor Security), the undersigned confirms that it has not utilized
any general solicitation or general advertising in connection with the transfer
and that:
[Check One]
|_| (a) this Security is being transferred in compliance with the
exemption from registration under the Securities Act provided
by Rule 144A thereunder.
or
NYDOCS01/571795 3
<PAGE>
A-11
|_| (b) this Security is being transferred other than in
accordance with (a) above and documents, including a
transferee certificate substantially in the form attached
hereto, are being furnished which comply with the conditions
of transfer set forth in this Security and the Indenture.
If neither of the foregoing boxes is checked and, in the case of (b) above, if
the appropriate document is not attached or otherwise furnished to the Trustee,
the Trustee or Registrar shall not be obligated to register this Security in the
name of any person other than the Holder hereof unless and until the conditions
to any such transfer or registration set forth herein and in Section 313 of the
Indenture shall have been satisfied.
Dated:_________________ Your signature:
(Sign exactly as your name appears on the other side
of this Security)
By:
NOTICE: To be executed by an executive officer
Signature Guarantee:__________________________
TO BE COMPLETED BY PURCHASER IF (a) ABOVE IS CHECKED:
The undersigned represents and warrants that it is purchasing
this Security for its own account or an account with respect to which it
exercises sole investment discretion and that it and any such account is a
"qualified institutional buyer" within the meaning of Rule 144A under the
Securities Act and is aware that the sale to it is being made in reliance on
Rule144A and acknowledges that it has received such information regarding the
Company as the undersigned has requested pursuant to Rule 144A (including the
information specified in Rule 144A(d)(4)) or has determined not to request such
information and that it is aware that the transferor is relying upon the
undersigned's foregoing representations in order to claim the exemption from
registration provided by Rule 144A.
Dated:__________________________
NOTICE: To be executed by an executive officer
[The Transferee Certificates (Exhibit B to the Indenture) will be attached to
the Security]
NYDOCS01/571795 3
<PAGE>
A-12
Option of Holder to Elect Purchase
If you wish to have this Security purchased by the Company pursuant to
Section 1010 or 1018 of the Indenture, check the box: |_|
If you wish to have a portion of this Security purchased by the Company
pursuant to Section 1010 or 1018 of the Indenture, state the amount:
$_____________
Dated:______________________ Your Signature:
(Sign exactly as your name appears on the
other side of this Security)
NYDOCS01/571795 3
<PAGE>
B-1
EXHIBIT B
Form of Certificate to Be Delivered
in Connection with Transfers
Pursuant to Regulation S
[Date]
Bankers Trust Company
Four Albany Street
New York, NY 10006
Attention: Corporate Market Services
Re: Qwest Communications International Inc. (the "Company")
7.25% Senior Notes Due 2008 (the "Securities")
Dear Sirs:
In connection with our proposed sale of $ aggregate principal
amount of the Securities, we confirm that such sale has been effected pursuant
to and in accordance with Regulation S under the U.S. Securities Act of 1933, as
amended (the "Securities Act"), and, accordingly, we represent that:
(1) the offer of the Securities was not made to a person in the United
States;
(2) either (a) at the time the buy offer was originated, the transferee was
outside the United States or we and any person acting on our behalf reasonably
believed that the transferee was outside the United States, or (b) the
transaction was executed in, on or through the facilities of a designated
off-shore securities market and neither we nor any person acting on our behalf
knows that the transaction has been pre-arranged with a buyer in the United
States;
(3) no directed selling efforts have been made in the United States in
contravention of the requirements of Rule 903(b) or Rule 904(b) of Regulation S,
as applicable;
(4) the transaction is not part of a plan or scheme to evade the
registration requirements of the Securities Act;
(5) we have advised the transferee of the transfer restrictions applicable
to the Securities; and
NYDOCS01/571795 3
<PAGE>
B-2
(6) if the circumstances set forth in Rule 904(c) under the Securities Act
are applicable, we have complied with the additional conditions therein,
including (if applicable) sending a confirmation or other notice stating that
the Securities may be offered and sold: during the distribution compliance
period specified in Rule 903(c)(2) or (3), as applicable; in accordance with the
provisions of Regulation S; pursuant to registration of the Securities under the
Securities Act; or pursuant to an available exemption from the registration
requirements under the Securities Act.
You and the Company are entitled to rely upon this letter and
are irrevocably authorized to produce this letter or a copy hereof to any
interested party in any administrative or legal proceedings or official inquiry
with respect to the matters covered hereby. Terms used in this certificate have
the meanings set forth in Regulation S.
Very truly yours,
[Name of Transferor]
By:
Authorized Signatory
NYDOCS01/571795 3
<PAGE>
B-3
EXECUTION COPY
QWEST COMMUNICATIONS INTERNATIONAL INC.,
Issuer
to
BANKERS TRUST COMPANY,
Trustee
--------------------
Indenture
Dated as of November 27, 1998
---------------------
$300,000,000 Principal Amount
7.25% Senior Notes Due 2008
NYDOCS01/571795 3
<PAGE>
B-4
Reconciliationand tie between Trust Indenture Act of
1939, as amended, and Indenture, dated as of
November 4, 1998
Trust Indenture Act Section Indenture Section
310(a)(1)................................................... 608
(a)(2)................................................ 608
(b)................................................... 608, 609
311 ........................................................ 605
312......................................................... 701
(b)................................................... 701
(c)................................................... 701
313(a)...................................................... 702
(c)................................................... 702
314(a)(1)................................................... 703
(a)(4)................................................ 1009
(c)(1)................................................ 102
(c)(2)................................................ 102
(e)................................................... 102
315(a)...................................................... 601
(b)................................................... 602
(c)................................................... 601
(d)................................................... 601
(e)................................................... 609
316(a) (last sentence)...................................... 101(Outstanding)
(a)(1)(A)............................................. 502, 512
(a)(1)(B)............................................. 513
(b)................................................... 508
(c)................................................... 104(d)
317(a)(1)................................................... 503
(a)(2)................................................ 504
(b)................................................... 1003
318(a)...................................................... 112
--------
Note: This reconciliation and tie shall not, for any purpose, be
deemed to be a part of the Indenture.
NYDOCS01/571795 3
<PAGE>
i
<PAGE>
TABLE OF CONTENTS
Page
PARTIES..................................................................... 1
RECITALS OF THE COMPANY..................................................... 1
ARTICLE ONE
DEFINITIONS AND OTHER PROVISIONS
OF GENERAL APPLICATION
SECTION 101. Definitions.............................................1
Acquired Debt........................................................2
Act..................................................................2
Affiliate............................................................2
Agent Member.........................................................2
Applicable Make-Whole Premium........................................2
Asset Disposition....................................................3
Attributable Value...................................................3
Board of Directors...................................................4
Board Resolution.....................................................4
Business Day.........................................................4
Capital Lease Obligation.............................................4
Capital Stock........................................................4
Cash Equivalents.....................................................4
Change of Control....................................................5
Commission...........................................................5
Common Stock.........................................................5
Company..............................................................5
Company Order........................................................5
Company Request......................................................5
Comparable Treasury Issue............................................5
Comparable Treasury Price............................................5
Consolidated Capital Ratio...........................................6
Consolidated Cash Flow Available for Fixed Charges...................6
Consolidated Income Tax Expense......................................6
- --------
Note: This table of contents shall not, for any purpose, be deemed to be a part
of
the Indenture.
NYDOCS01/571795 3
<PAGE>
ii
Page
Consolidated Interest Expense........................................6
Consolidated Net Income..............................................7
Consolidated Net Worth...............................................7
Consolidated Tangible Assets.........................................7
Continuing Director..................................................8
Corporate Trust Office...............................................8
Corporation..........................................................8
Credit Facilities....................................................8
Debt.................................................................8
Debt Securities......................................................9
Default..............................................................9
Defaulted Interest...................................................9
Depository...........................................................9
Designation..........................................................9
Designation Amount...................................................9
Disqualified Stock...................................................9
Eligible Institution................................................10
Eligible Receivables................................................10
Event of Default....................................................10
Exchange Act........................................................10
Exchange Offer......................................................10
Exchange Offer Registration Statement...............................10
Exchange Securities.................................................10
Expiration Date.....................................................10
Fair Market Value...................................................10
Federal Bankruptcy Code.............................................10
Global Security.....................................................11
Government Securities...............................................11
Group...............................................................11
Guarantee...........................................................11
Guarantor...........................................................11
Holder..............................................................11
Incur...............................................................11
Indenture...........................................................12
Indenture Obligations...............................................12
Initial Purchaser...................................................12
Initial Securities..................................................12
Interest Payment Date...............................................12
Interest Rate or Currency Protection Agreement......................12
Investment..........................................................12
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iii
ge
Investment Grade Rating.........................................12
Lien............................................................12
Liquidated Interest.............................................13
Maturity........................................................13
Net Available Proceeds..........................................13
Notice of Default...............................................14
Offer...........................................................14
Offer to Purchase...............................................14
Offering Memorandum.............................................16
Officers' Certificate...........................................16
Opinion of Counsel..............................................16
Outstanding.....................................................16
Paying Agent....................................................17
Permitted Holders...............................................17
Permitted Interest Rate or Currency Protection Agreement........17
Permitted Investments...........................................17
Permitted Joint Venture.........................................18
Permitted Liens.................................................18
Permitted Telecommunications Capital Asset Disposition..........19
Person..........................................................19
Physical Security...............................................19
Predecessor Security............................................19
Preferred Dividends.............................................19
Preferred Stock.................................................19
Primary Treasury Dealer.........................................19
Private Placement Legend........................................20
Purchase Amount.................................................20
Purchase Date...................................................20
Purchase Money Debt.............................................20
Purchase Price..................................................20
Qualified Institutional Buyer...................................20
QIB.............................................................20
Rating Agencies.................................................20
Rating Decline..................................................20
Receivables.....................................................20
Receivables Sale................................................20
Redemption Date.................................................20
Redemption Price................................................20
Reference Treasury Dealer.......................................21
Reference Treasury Dealer Quotations............................21
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iv
Page
Registration Agreement.............................................21
Registration Statement.............................................21
Regular Record Date................................................21
Regulation S.......................................................21
Regulation S Global Security.......................................21
Related Person.....................................................21
Responsible Officer................................................21
Restricted Payment.................................................22
Restricted Subsidiary..............................................22
Restricted Subsidiary Guarantee....................................22
Revocation.........................................................22
Rule 144A..........................................................22
Rule 144A Global Security..........................................22
Sale and Leaseback Transaction.....................................22
Securities.........................................................22
Securities Act.....................................................22
Security Register..................................................23
Security Registrar.................................................23
Senior Note Indentures.............................................23
Shelf Registration Statement.......................................23
Special Record Date................................................23
Stated Maturity....................................................23
Strategic Investor.................................................23
Subordinated Debt..................................................23
Subsidiary.........................................................24
Suspended Covenants................................................24
Suspension Period..................................................24
Telecommunications Assets..........................................24
Telecommunications Business........................................24
Treasury Rate......................................................25
Trust Indenture Act................................................25
TIA................................................................25
Trustee............................................................25
Unrestricted Subsidiary............................................25
Vice President.....................................................25
Voting Stock.......................................................25
Wholly Owned Subsidiary............................................25
SECTION 102. Compliance Certificates and Opinions..................25
SECTION 103. Form of Documents Delivered to Trustee................26
SECTION 104. Acts of Holders.......................................27
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v
Page
SECTION 105. Notices, Etc., to Trustee and Company.................28
SECTION 106. Notice to Holders; Waiver.............................28
SECTION 107. Effect of Headings and Table of Contents..............29
SECTION 108. Successors and Assigns................................29
SECTION 109. Separability Clause...................................29
SECTION 110. Benefits of Indenture.................................29
SECTION 111. Governing Law.........................................29
SECTION 112. Conflict with Trust Indenture Act.....................29
SECTION 113. Legal Holidays........................................30
SECTION 114. No Personal Liability of Directors, Officers,
Employees and Stockholders.......................30
SECTION 115. Independence of Covenants.............................30
SECTION 116. Exhibits..............................................31
SECTION 117. Counterparts..........................................31
SECTION 118. Duplicate Originals...................................31
ARTICLE TWO
SECURITY FORMS
SECTION 201. Forms Generally...................................... 31
ARTICLE THREE
THE SECURITIES
SECTION 301. Title and Terms........................................32
SECTION 302. Denominations..........................................33
SECTION 303. Execution, Authentication, Delivery and Dating.........33
SECTION 304. Temporary Securities...................................35
SECTION 305. Registration, Registration of Transfer and Exchange....35
SECTION 306. Mutilated, Destroyed, Lost and Stolen Securities.......37
SECTION 307. Payment of Interest; Interest Rights Preserved.........37
SECTION 308. Persons Deemed Owners..................................39
SECTION 309. Cancellation...........................................39
SECTION 310. Computation of Interest................................39
SECTION 311. CUSIP Number...........................................40
SECTION 312. Book-Entry Provisions for Global Securities............40
SECTION 313. Special Transfer Provisions............................41
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vi
Page
ARTICLE FOUR
SATISFACTION AND DISCHARGE
SECTION 401. Satisfaction and Discharge of Indenture......................43
SECTION 402. Application of Trust Money...................................44
ARTICLE FIVE
REMEDIES
SECTION 501. Events of Default.............................................44
SECTION 502. Acceleration of Maturity; Rescission and Annulment............46
SECTION 503. Collection of Indebtedness and Suits for Enforcement by
Trustee.................................................47
SECTION 504. Trustee May File Proofs of Claim..............................48
SECTION 505. Trustee May Enforce Claims Without Possession of Securities...49
SECTION 506. Application of Money Collected................................49
SECTION 507. Limitation on Suits...........................................50
SECTION 508. Unconditional Right of Holders to Receive Principal, Premium
and Interest............................................50
SECTION 509. Restoration of Rights and Remedies............................51
SECTION 510. Rights and Remedies Cumulative................................51
SECTION 511. Delay or Omission Not Waiver..................................51
SECTION 512. Control by Holders............................................51
SECTION 513. Waiver of Past Defaults.......................................52
SECTION 514. Waiver of Stay or Extension Laws..............................52
ARTICLE SIX
THE TRUSTEE
SECTION 601. Certain Duties and Responsibilities...........................53
SECTION 602. Notice of Default.............................................54
SECTION 603. Certain Rights of Trustee.....................................54
SECTION 604. Trustee Not Responsible for Recitals or Issuance of Securities56
SECTION 605. May Hold Securities...........................................56
SECTION 606. Money Held in Trust...........................................56
SECTION 607. Compensation and Reimbursement................................56
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vii
Page
SECTION 608. Corporate Trustee Required; Eligibility; Conflicting Interests..57
SECTION 609. Resignation and Removal; Appointment of Successor...............58
SECTION 610. Acceptance of Appointment by Successor..........................59
SECTION 611. Merger, Conversion, Consolidation or Succession to Business.....59
ARTICLE SEVEN
HOLDERS' LISTS AND REPORTS BY TRUSTEE AND COMPANY
SECTION 701. Disclosure of Names and Addresses of Holders....................60
SECTION 702. Reports by Trustee..............................................60
SECTION 703. Reports by Company..............................................61
ARTICLE EIGHT
CONSOLIDATION, MERGER, CONVEYANCE, TRANSFER OR LEASE
SECTION 801. Company May Consolidate, Etc., Only on Certain Terms............61
SECTION 802. Successor Substituted...........................................62
ARTICLE NINE
SUPPLEMENTAL INDENTURES
SECTION 901. Supplemental Indentures Without Consent of Holders..............63
SECTION 902. Supplemental Indentures with Consent of Holders.................64
SECTION 903. Execution of Supplemental Indentures............................65
SECTION 904. Effect of Supplemental Indentures...............................65
SECTION 905. Conformity with Trust Indenture Act.............................65
SECTION 906. Reference in Securities to Supplemental Indentures..............65
SECTION 907. Notice of Supplemental Indentures...............................65
ARTICLE TEN
COVENANTS
SECTION 1001. Payment of Principal, Premium, if Any, and Interest............66
SECTION 1002. Maintenance of Office or Agency................................66
SECTION 1003. Money for Security Payments to Be Held in Trust................66
SECTION 1004. Corporate Existence............................................68
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viii
ge
SECTION 1005. Payment of Taxes and Other Claims............................68
SECTION 1006. Maintenance of Properties....................................69
SECTION 1007. Insurance....................................................69
SECTION 1008. Provision of Financial Statements............................69
SECTION 1009. Statement by Officers as to Default..........................69
SECTION 1010. Purchase of Securities upon Change of Control................70
SECTION 1011. Limitation on Consolidated Debt..............................71
SECTION 1012. Limitation on Debt and Preferred Stock of Restricted
Subsidiaries............................................74
SECTION 1013. Limitation on Restricted Payments............................75
SECTION 1014. Limitation on Dividend and Other Payment Restrictions
Affecting Restricted Subsidiaries.......................77
SECTION 1015. Limitation on Liens..........................................78
SECTION 1016. Limitation on Issuances of Certain Guarantees by, and Debt
Securities of, Restricted Subsidiaries..................79
SECTION 1017. Limitation on Sale and Leaseback Transactions................80
SECTION 1018. Limitation on Asset Dispositions.............................80
SECTION 1019. Limitation on Issuances and Sales of Capital Stock of
Restricted Subsidiaries.................................81
SECTION 1020. Transactions with Affiliates and Related Persons.............81
SECTION 1021. Limitation on Designations of Unrestricted Subsidiaries......82
SECTION 1022. No Repayment of Existing Parent Company Advances with
the Proceeds of the Securities..........................83
SECTION 1023. Waiver of Certain Covenants..................................83
SECTION 1024. Trustee Not to Monitor Performance...........................84
SECTION 1025. Suspended Covenants..........................................84
ARTICLE ELEVEN
REDEMPTION OF SECURITIES
SECTION 1101. Right of Redemption..........................................85
SECTION 1102. Applicability of Article.....................................85
SECTION 1103. Election to Redeem; Notice to Trustee........................85
SECTION 1104. Selection by Trustee of Securities to Be Redeemed............85
SECTION 1105. Notice of Redemption.........................................86
SECTION 1106. Deposit of Redemption Price..................................87
SECTION 1107. Securities Payable on Redemption Date........................87
SECTION 1108. Securities Redeemed in Part..................................87
NYDOCS01/571795 3
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Page
ARTICLE TWELVE
DEFEASANCE AND COVENANT DEFEASANCE
SECTION 1201. Company's Option to Effect Defeasance or Covenant
Defeasance.............................................88
SECTION 1202. Defeasance and Discharge....................................88
SECTION 1203. Covenant Defeasance.........................................88
SECTION 1204. Conditions to Defeasance or Covenant Defeasance.............89
SECTION 1205. Deposited Money and Government Securities to Be Held in
Trust; Other Miscellaneous Provisions..................90
SECTION 1206. Reinstatement...............................................91
TESTIMONIUM................................................................ 92
SIGNATURES AND SEALS........................................................92
EXHIBIT A - Form of Security
EXHIBIT B - Form of Certificate to Be Delivered in Connection with
Transfers Pursuant to Regulation S
NYDOCS01/571795 3
Exhibit 4.1(e)
INDENTURE, dated as of November 4, 1998 between Qwest
Communications International Inc., a corporation duly organized and existing
under the laws of the State of Delaware (herein called the "Company"), having
its principal office at 555 Seventeenth Street, Denver, Colorado 80202, and
Bankers Trust Company, a New York banking corporation, Trustee (herein called
the "Trustee").
RECITALS OF THE COMPANY
The Company has duly authorized the creation of an issue of
7.50% Senior Notes Due 2008 (herein called the "Initial Securities") and 7.50%
Series B Senior Notes Due 2008 (the "Exchange Securities" and, together with the
Initial Securities, 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 have been done 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 each of the Company and the Trustee, in
accordance with their and its terms.
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:
(a) the terms defined in this Article have the meanings
assigned to them in this Article, and include the plural as well as the
singular;
(b) 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, and the terms "cash transaction" and
"self-liquidating paper", as used in TIA Section311,
NYDOCS01/566567 3
<PAGE>
shall have the meanings assigned to them in the rules of the Commission
adopted under the Trust Indenture Act;
(c) all accounting terms not otherwise defined herein have the
meanings assigned to them in accordance with generally accepted
accounting principles, 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 at the date of
such computation;
(d) 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, paragraph or other subdivision; and
(e) unless otherwise indicated, references to Articles,
Sections, paragraphs or other subdivisions are references to such
Articles, Sections, paragraphs or other subdivisions of this Indenture.
"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 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.
"Act", when used with respect to any Holder, has the meaning
specified in Section104.
"Affiliate" of any Person means any other Person directly or
indirectly controlling or controlled by or under direct or indirect common
control with such Person. For the purposes of this definition, "control" when
used with respect to any Person means the power to direct the management and
policies of such Person, directly or indirectly, whether through the ownership
of voting securities, by contract or otherwise; and the terms "controlling" and
"controlled" have meanings correlative to the foregoing.
"Agent Member" has the meaning specified in Section 312.
"Applicable Make-Whole Premium" means, with respect to any
Security, the excess of (A) the present value at the Redemption Date of the
required interest and principal payments due on such Security, computed using a
discount rate equal to the Treasury Rate plus 37.5 basis points, computed on the
basis of a 360-day year comprised of twelve 30-day months, over (B) the then
outstanding principal amount of such Security.
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"Asset Disposition" means any transfer, conveyance, sale,
lease or other disposition by the Company or any Restricted Subsidiary in one or
more related transactions occurring within any 12-month period (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 to the Company or a Restricted Subsidiary or by the
Company to a Restricted Subsidiary) of (i) shares of Capital Stock or other
ownership interests of a Restricted Subsidiary (other than as permitted by
clauses (iii), (iv) and (v) of Section 1019), (ii)substantially all of the
assets of the Company or any Restricted Subsidiary representing a division or
line of business or (iii) other assets or rights of the Company or any
Restricted Subsidiary outside of the ordinary course of business (excluding any
transfer, conveyance, sale, lease or other disposition of equipment that is
obsolete or no longer used by or useful to the Company, provided that the
Company has delivered to the Trustee an Officers' Certificate stating that such
criteria are satisfied); provided in each case that the aggregate consideration
for such transfer, conveyance, sale, lease or other disposition is equal to
$500,000 or more in any 12-month period and provided further that the following
shall not be Asset Dispositions: (x) Permitted Telecommunications Capital Asset
Dispositions, (y)exchanges of Telecommunications Assets for other
Telecommunications Assets where the Fair Market Value of the Telecommunications
Assets received is at least equal to the Fair Market Value of the
Telecommunications Assets disposed of or, if less, the difference is received in
cash and such cash is Net Available Proceeds and (z)Liens permitted to be
Incurred pursuant to the second paragraph of Section 1015.
"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.
NYDOCS01/566567 3
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"Board of Directors" means the board of directors of the
Company.
"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 City of
NewYork 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.
"Cash Equivalents" means (i)any Debt with a maturity of 365
days or less issued or directly and fully guaranteed as insured by the United
States or any agency or instrumentality thereof (provided that the full faith
and credit of the United States is pledged in support thereof or such Debt
constitutes a general obligation of such country); (ii)deposits, certificates of
deposit or acceptances with a maturity of 365 days or less of any financial
institution that is a member of the Federal Reserve System, in each case having
combined capital and surplus and undivided profits (or any similar capital
concept) of not less than $500 million and whose senior unsecured debt is rated
at least "A-1" by Standard & Poor's Ratings Service, a division of McGraw Hill,
Inc., or "P-1" by Moody's Investors Service, Inc.; (iii)commercial paper with a
maturity of 365 days or less issued by a Corporation (other than an Affiliate of
the Company) organized under the laws of the United States or any state thereof
and rated at least "A-1" by Standard & Poor's Ratings Service, a division of
McGraw Hill, Inc., or "P-1" by Moody's Investors Service, Inc.; and
(iv)repurchase agreements and reverse repurchase agreements relating to
marketable direct obligations issued or unconditionally guaranteed by the United
States or issued by any agency or instrumentality thereof and backed
NYDOCS01/566567 3
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by the full faith and credit of the United States maturing within 365 days from
the date of acquisition.
"Change of Control" has the meaning specified in Section 1010.
"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 Indenture 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 Stock" of any Person means Capital Stock of such
Person that does not rank 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.
"Company" means the Person named as the "Company" in the first
paragraph of this Indenture, 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 Order" or "Company Request" means a written request
or order signed in the name of the Company by the Chief Executive Officer, the
President or a Vice President, and by the Chief Financial Officer, the Chief
Accounting Officer, the Treasurer, an Assistant Treasurer, the Secretary or an
Assistant Secretary of the Company and delivered to the Trustee.
"Comparable Treasury Issue" means the United States Treasury
security selected by a Reference Treasury Dealer appointed by the Company has
having a maturity comparable to the remaining term of the Securities to be
redeemed that would be utilized, at the time of selection and in accordance with
customary financial practice, in pricing new issues of corporate debt securities
of comparable maturity to the remaining term of such Securities.
"Comparable Treasury Price" means, with respect to any
Redemption Date, (i) the average of the bid and asked prices for the Comparable
Treasury Issue (expressed in each case as a percentage of its principal amount)
on the third business day preceding such Redemption Date, as set forth in the
daily statistical release (or any successor release) published by the Federal
Reserve Bank of New York and designated "Composite 3:30 p.m. Quotations for U.S.
Government Securities" or (ii) if such release (or any successor release) is not
published or does not contain such prices on such business day, (A) the average
of the Reference Treasury Dealer Quotations for such Redemption Date, after
excluding the highest and lowest such Reference Treasury Dealer Quotations, or
(B) if the Company obtains fewer
NYDOCS01/566567 3
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than four such Reference Treasury Dealer Quotations, the average of all such
Reference Treasury Dealer Quotations
"Consolidated Capital Ratio" of any Person as of any date
means the ratio of (i)the aggregate consolidated principal amount of Debt of
such Person then outstanding to (ii)the greater of either (a)the aggregate
consolidated paid-in capital of such Person as of such date or (b)the
stockholders' equity as of such date as shown on the consolidated balance sheet
of such Person in accordance with generally accepted accounting principles.
"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 Subsidiaries for
such period, plus (iii) the consolidated depreciation and amortization expense
or other non-cash write-offs of assets included in the income statement of the
Company and its Restricted Subsidiaries for such period, plus (iv) 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 (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 to the
extent of such restriction.
"Consolidated Income Tax Expense" for any period means the
aggregate amounts of the provisions for income taxes of the Company and its
Subsidiaries for such period calculated on a consolidated basis in accordance
with generally accepted accounting principles.
"Consolidated Interest Expense" means for any period the
interest expense included in a consolidated income statement (excluding interest
income) of the Company and its Restricted Subsidiaries for such period 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 Stock dividends of
the Company and its 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
NYDOCS01/566567 3
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Restricted Subsidiaries; and (vii)the portion of any Capital Lease Obligation
paid during such period that is allocable to interest expense.
"Consolidated Net Income" for any period means the net income
(or loss) of the Company and its Restricted Subsidiaries for such period
determined on a consolidated basis in accordance with generally accepted
accounting principles; provided that there shall be excluded therefrom (a) the
net income (or loss) of any Person acquired by the Company or a Restricted
Subsidiary 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 except to the extent of the amount of dividends or other
distributions actually paid to the Company or a Restricted Subsidiary 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, determined in accordance with generally accepted
accounting principles, (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 expense related to the issuance to employees or
directors of the Company or any Restricted Subsidiary or any Affiliate of the
Company of (i) options to purchase Capital Stock of the Company or such
Restricted Subsidiary or (ii) other compensatory rights (including under the
Company's Growth Share Plan), provided, in either case, that such options or
rights, by their terms, can be redeemed only for Capital Stock, (h) with respect
to a Restricted Subsidiary that is not a Wholly Owned Subsidiary, any aggregate
net income (or loss) in excess of the Company's or any Restricted Subsidiary's
pro rata share of the net income (or loss) of such Restricted Subsidiary that is
not a Wholly Owned Subsidiary shall be excluded and (i) the tax effect of any of
the items described in clauses (a) through (h) above; provided further that for
purposes of any determination pursuant to Section 1013, there shall further be
excluded therefrom the net income (but not net loss) of any Restricted
Subsidiary that is subject to a restriction which prevents the payment of
dividends or the making of distributions to the Company or another Restricted
Subsidiary to the extent of such restriction.
"Consolidated Net Worth" of any Person means the 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 March 31, 1997 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 Subsidiaries after deducting
therefrom all goodwill, trade names, trademarks, patents,
NYDOCS01/566567 3
<PAGE>
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.
"Continuing Director" means, as of any date of determination,
any member of the Board of Directors who (i) was a member of such Board of
Directors on March 31, 1997 or (ii) was nominated for election or elected to the
Board of Directors with the affirmative vote of a majority of the Continuing
Directors who were members of the Board of Directors at the time of such
nomination or election or the affirmative vote of Permitted Holders.
"Corporate Trust Office" means the principal corporate trust
office of the Trustee, at which at any particular time its corporate trust
business shall be administered, which office at the date of execution of this
Indenture is located at Four Albany Street, New York, New York 10006, except
that, with respect to presentation of Securities for payment or for registration
of transfer or exchange, such term shall mean the office or agency of the
Trustee at which, at any particular time, its corporate agency business shall be
conducted.
"Corporation" includes corporations, associations, companies
and business trusts.
"Credit Facilities" means one or more credit agreements, loan
agreements or similar facilities, secured or unsecured, entered into from time
to time by the Company and its Restricted Subsidiaries, and including any
related notes, Guarantees, collateral documents, instruments and agreements
executed in connection therewith, as the same may be amended, supplemented,
modified, restated or replaced from time to time.
"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 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), (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 and 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
NYDOCS01/566567 3
<PAGE>
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 Subsidiary of the Company) thereof, excluding amounts
representative of yield or interest earned on such investment, or (c)any
Disqualified Stock shall be the maximum fixed redemption or repurchase price in
respect thereof.
"Debt Securities" means any debt securities (including any
guarantee of such securities) issued by the Company or any Restricted Subsidiary
of the Company in connection with a public offering or a private placement
(excluding Debt permitted to be Incurred pursuant to paragraph(b) of
Section1011).
"Default" means any event, act or condition the occurrence of
which is, or after notice or the passage of time or both would be, an Event of
Default.
"Defaulted Interest" has the meaning specified in Section307.
"Depository" means The Depository Trust Company, its nominees
and successors.
"Designation" and "Designation Amount" have the respective
meanings specified in Section1021.
"Disqualified Stock" of any Person means any Capital Stock of
such Person which, by its terms (or by the terms of any security into which it
is convertible or for which it is exchangeable), or upon the happening of any
event, matures or is mandatorily redeemable, pursuant to a sinking fund
obligation or otherwise, or is redeemable at the option of such Person, any
Subsidiary of such Person or the holder thereof, in whole or in part, on or
prior to the final Stated Maturity of the Securities, provided, however, that
any Preferred Stock which would not constitute Disqualified Stock but for
provisions thereof giving holders thereof the right to require the Company to
repurchase or redeem such Preferred Stock upon the occurrence of a Change of
Control occurring prior to the final Stated Maturity of the Securities shall not
constitute Disqualified Stock if the 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 Section1010
and such Preferred Stock specifically provides that the Company shall 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 Section1010.
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"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" (or higher) according to
Standard & Poor's Ratings Service, a division of McGraw Hill, Inc. (or any
successor to the rating agency business thereof), or Moody's Investors Service,
Inc. (or any successor to the rating agency business thereof) 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, less Receivables of the Company or any Restricted
Subsidiary employed to secure Debt Incurred pursuant to clause(vii) of
paragraph(b) of Section1011.
"Event of Default" has the meaning specified in Section501.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended (or any successor act), and the rules and regulations thereunder (or
respective successors thereto).
"Exchange Offer" means the exchange offer that may be effected
pursuant to the Registration Agreement.
"Exchange Offer Registration Statement" means the Exchange
Offer Registration Statement as defined in the Registration Agreement.
"Exchange Securities" has the meaning stated in the first
recital of this Indenture and refers to any Exchange Securities containing terms
substantially identical to the Initial Securities (except that such Exchange
Securities shall not contain terms with respect to transfer restrictions) that
are issued and exchanged for the Initial Securities pursuant to the Registration
Agreement and this Indenture.
"Expiration Date" has the meaning specified in "Offer to
Purchase" below.
"Fair Market Value" means, with respect to any asset or
property, the price that could be negotiated in an arm's-length free market
transaction, for cash, between a willing seller and a willing buyer, neither of
whom is under pressure or compulsion to complete the transaction. Fair Market
Value shall be determined by the Board of Directors acting in good faith and
shall be evidenced by a Board Resolution delivered to the Trustee.
"Federal Bankruptcy Code" means the Bankruptcy Act of Title11
of the United States Code, as amended from time to time.
NYDOCS01/566567 3
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"Global Security" means a Rule 144A Global Security or a
Regulation S Global Security, as the case may be.
"Government Securities" means direct obligations of, or
obligations guaranteed by, the United States of America for the payment of which
guarantee or obligations the full faith and credit of the United States is
pledged and which have a remaining weighted average life to maturity of not less
than one year from the date of investment therein.
"Group" has the meaning specified in Section1010.
"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.
"Guarantor" means a Restricted Subsidiary of the Company that
has executed a Restricted Subsidiary Guarantee.
"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.
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"Indenture" means this instrument as originally executed and
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.
"Indenture Obligations" means the obligations of the Company
and any other obligor under this Indenture or under the Securities to pay
principal of, premium, if any, and interest on the Securities when due and
payable, whether at maturity, by acceleration, call for redemption or repurchase
or otherwise, and all other amounts due or to become due under or in connection
with this Indenture or the Securities and the performance of all other
obligations to the Trustee (including, but not limited to, payment of all
amounts due the Trustee under Section607), Paying Agent, Security Registrar and
the Holders of the Securities under this Indenture and the Securities according
to the terms thereof.
"Initial Purchaser" means Salomon Smith Barney Inc.
"Initial Securities" has the meaning provided in the recitals
to this Indenture.
"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.
"Investment Grade Rating" means, (i) with respect to Moodys
Investors Service, Inc. (or any successor to the rating agency business
thereof), a rating equal to or higher than Baa3 (or the equivalent), and (ii)
with respect to Standard & Poors Ratings Service, a division of McGraw Hill,
Inc. (or any successor to the rating agency business thereof), a rating equal to
or higher than BBB- (or the equivalent).
"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),
NYDOCS01/566567 3
<PAGE>
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). For purposes of this definition the sale, lease, conveyance or other
transfer by the Company or any Subsidiary of, including the grant of
indefeasible rights of use or equivalent arrangements with respect to, dark or
lit communications fiber capacity or communications conduit shall not constitute
a Lien.
"Liquidated Interest" has the meaning specified in Exhibit A.
"Maturity", when used with respect to any Security, means the
date on which the principal of such Security or an installment of principal
becomes due and payable as therein or herein provided, whether at the Stated
Maturity or by declaration of acceleration, notice of redemption or otherwise.
"Net Available Proceeds" from any Asset Disposition by any
Person means cash or cash equivalents received (including amounts received by
way of sale or discounting of any 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) any portion thereof
invested within 360 days of such Asset Disposition in Telecommunications Assets,
(ii) all legal, title and recording tax expenses, commissions and other fees and
expenses Incurred and all federal, state, provincial, foreign and local taxes
required to be accrued as a liability as a consequence of such Asset
Disposition, (iii)all payments made by such Person or its 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,
(iv)all distributions and other payments made to minority interest holders in
Subsidiaries of such Person or Permitted Joint Ventures as a result of such
Asset Disposition and (v) appropriate amounts to be provided by such Person or
any 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 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 of such Person, in its reasonable good
faith judgment evidenced by Board Resolution filed with the Trustee; provided,
however, that any reduction in such reserve within twelve months following the
consummation of such Asset Disposition shall be for all purposes of this
Indenture and the Securities treated as a new Asset Disposition at the time of
such reduction with Net Available Proceeds equal to the amount of such
reduction.
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"Notice of Default" has the meaning specified in Section501.
"Offer" has the meaning specified in "Offer to Purchase"
below.
"Offer to Purchase" means a written offer (the "Offer") sent
by the Company by first class mail, postage prepaid, to each Holder of
Securities 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 Section1010). 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 Section1008 (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 the
Section hereof requiring the Offer to Purchase) (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
Section1010) (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 any Securities not tendered or tendered but not purchased by the
Company will continue to accrue interest;
(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, if any, 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 its attorney
duly authorized in writing);
(j) that Holders will be entitled to withdraw all or any portion of
Securities tendered if the Company (or their 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 its tender;
(k) that (i) 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 (ii) 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); and
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(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.
Any Offer to Purchase shall be governed by and effected in accordance with the
Offer for such Offer to Purchase.
"Offering Memorandum" means the Offering Memorandum dated
October 28, 1998 pursuant to which the Securities were offered, and any
supplement thereto.
"Officers' Certificate" means a certificate signed by the
Chairman of the board of directors of the Company, a Vice Chairman of the board
of directors of the Company, the President or a Vice President, and by the Chief
Financial Officer, the Chief Accounting Officer, the Treasurer, an Assistant
Treasurer, the Secretary or an Assistant Secretary of the Company and delivered
to the Trustee, which shall comply with the Indenture.
"Opinion of Counsel" means an opinion of counsel acceptable to
the Trustee (who may be counsel to the Company, including an employee of the
Company).
"Outstanding", when used with respect to Securities, means, as
of the date of determination, all Securities theretofore authenticated and
delivered under this Indenture, except:
(i) Securities theretofore cancelled by the Trustee or delivered to the
Trustee for cancellation;
(ii) Securities, or portions thereof, 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;
(iii) Securities, except to the extent provided in Sections1202 and 1203,
with respect to which the Company has effected defeasance and/or covenant
defeasance as provided in Article Twelve; and
(iv) Securities which have been paid pursuant to Section306 or in exchange
for or in lieu of which other Securities have been authenticated and delivered
pursuant
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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 the Securities are
valid obligations of the Company;
provided, however, that in determining whether the Holders of the requisite
principal amount of Outstanding Securities have given any request, demand,
authorization, direction, consent, notice or waiver hereunder, and for the
purpose of making the calculations required by TIA Section313, Securities owned
by the Company or any other obligor upon the Securities or any Affiliate of the
Company or such other obligor shall be disregarded and deemed not to be
Outstanding, except that, in determining whether the Trustee shall be protected
in making such calculation or in relying upon any such request, demand,
authorization, direction, notice, consent or waiver, only Securities which any
Responsible Officer of 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 such other obligor.
"Paying Agent" means any Person (including the Company acting
as Paying Agent) authorized by the Company to pay the principal of (and premium,
if any) or interest on any Securities on behalf of the Company.
"Permitted Holders" means any Person who was the beneficial
owner (within the meaning of Rule 13d-3 under the Exchange Act) of stock of the
Company on March 31, 1997, and any Affiliates of such Person (i) who were
Affiliates of such Person on March 31, 1997 or (ii) who were formed, directly or
indirectly, by any such Person after March 31, 1997; provided, however, that
Persons who were beneficial owners (within the meaning of Rule 13d-3 under the
Exchange Act) of such Person on March 31, 1997 continued to be beneficial owners
(within the meaning of Rule 13d-3 under the Exchange Act) at the time of
formation of such Affiliate.
"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 Investments" means (a) Cash Equivalents; (b)
Investments in prepaid expenses, negotiable instruments held for collection and
lease, utility and workers'
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compensation, performance and other similar deposits; (c)loans, advances or
extensions of credit to employees and directors made in the ordinary course of
business and consistent with past practice; (d) obligations under Interest Rate
or Currency Protection Agreements; (e)bonds, notes, debentures and other
securities received as a result of Asset Dispositions pursuant to and in
compliance with Section1018; (f)Investments made in the ordinary course of
business as partial payment for constructing a network relating to a
Telecommunications Business; (g)commercially reasonable extensions of trade
credit; (h)Investments in any Person as a result of which such Person becomes a
Restricted Subsidiary; (i)Investments in Permitted Joint Ventures in an
aggregate amount not to exceed $25 million; (j)Investments in Affiliates or
Related Persons in an aggregate amount not to exceed $11million, provided that
the making of such Investments is permitted pursuant to Section1020; and
(k)Investments in an aggregate amount not to exceed $15 million consisting of
the contribution by the Company or any Restricted Subsidiary of assets located
in Mexico to joint ventures in which the Company or a Restricted Subsidiary has
an interest.
"Permitted Joint Venture" means a Corporation, partnership or
other entity other than a Restricted Subsidiary engaged in one or more
Telecommunications Businesses over which the Company and/or one or more
Strategic Investors have, directly or indirectly, the power to direct the
policies, management and affairs.
"Permitted Liens" means (a) Liens for taxes, assessments,
governmental charges, levies 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 or a Restricted Subsidiary to secure Debt owing to the
Company or such Restricted Subsidiary; (d) Liens, pledges and deposits made in
the ordinary course of business in connection with workers' compensation,
unemployment insurance and other types of statutory obligations; (e) Liens,
pledges or deposits made to secure the performance of tenders, bids, leases,
public or statutory obligations, sureties, stays, appeals, indemnities,
performance or other similar bonds 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 materially interfere with the ordinary
conduct of the business of the Company or its Restricted Subsidiaries; (g) Liens
arising out of judgments or awards against or
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other court proceedings concerning 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; and (h) any interest or title of a lessor in the property subject to
any lease other than a Capital Lease.
"Permitted Telecommunications Capital Asset Disposition" means
the transfer, conveyance, sale, lease or other disposition of a capital asset
that is a Telecommunications Asset (including fiber, conduit and related
equipment) (i) the proceeds of which are treated as revenues by the Company in
accordance with generally accepted accounting principles and (ii)that, in the
case of the sale of fiber, would not result in the Company retaining less than
24 fibers per route mile on any segment of the Company's network.
"Person" means any individual, Corporation, partnership, joint
venture, association, joint stock company, trust, unincorporated organization,
government or agency or political subdivision thereof or any other entity.
"Physical Security" means Securities issued in registered
definitive form without coupons substantially in the form of Exhibit A.
"Predecessor Security" of any particular Security means every
previous Security 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 Section306 in exchange for a
mutilated security or in lieu of a lost, destroyed or stolen Security shall be
deemed to evidence the same debt as the mutilated, lost, destroyed 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.
"Primary Treasury Dealer" means a primary Government
Securities dealer in The City of New York.
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"Private Placement Legend" means the third paragraph of the
legend set forth in the Securities in the form set forth in ExhibitA.
"Purchase Amount" has the meaning specified in "Offer to
Purchase" above.
"Purchase Date" has the meaning specified in "Offer to
Purchase" above.
"Purchase Money Debt" means Debt Incurred at any time within
270 days of, and for the purposes of financing all or any part of the cost of,
the construction, installation, acquisition or improvement by the Company or any
Restricted Subsidiary of the Company of any new Telecommunications Assets
constructed, installed, acquired or improved after March 31, 1997, provided that
the proceeds of such Debt are expended for such purposes within such 270-day
period.
"Purchase Price" has the meaning specified in "Offer to
Purchase" above.
"Qualified Institutional Buyer" or "QIB" has the meaning
specified in Rule 144A.
"Rating Agencies" means Moodys Investors Service, Inc. (or any
successor to the rating agency business thereof) and Standard & Poors Ratings
Service, a division of McGraw Hill, Inc. (or any successor to the rating agency
business thereof).
"Rating Decline" means the Securities cease to be rated B+ (or
the equivalent thereof) or better by Standard & Poor's Ratings Service, a
division of McGraw Hill, Inc., or B2 (or the equivalent thereof) or better by
Moody's Investors Service, Inc.
"Receivables" means receivables, chattel paper, instruments,
documents or intangibles evidencing or relating to the right to payment of
money, excluding allowances for doubtful accounts.
"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 purposes of collection and
not as a financing arrangement.
"Redemption Date", when used with respect to any Security to
be redeemed, in whole or in part, 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.
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"Reference Treasury Dealer" means each of Salomon Smith Barney
Inc., Merrill Lynch, Pierce, Fenner & Smith Incorporated, Donaldson, Lufkin &
Jenrette Securities Corporation and Lehman Brothers Inc. and their respective
successors; provided, however, that if any of the foregoing shall cease to be a
Primary Treasury Dealer, the Company shall substitute therefor another Primary
Treasury Dealer.
"Reference Treasury Dealer Quotations" means, with respect to
each Reference Treasury Dealer and any Redemption Date, the average, as
determined by the Company, of the bid and asked prices for the Comparable
Treasury Issue (expressed in each case as a percentage of its principal amount)
quoted in writing to the Company by such Reference Treasury Dealer at 5:00 p.m.
on the third business day preceding such Redemption Date.
"Registration Agreement" means the Registration Agreement
between the Company and the Initial Purchaser named therein, dated as of
November 4, 1998, relating to the Securities.
"Registration Statement" means the Registration Statement as
defined in the Registration Agreement.
"Regular Record Date" for the interest payable on any Interest
Payment Date means the April 15 or October 15 (whether or not a Business Day),
as the case may be, next preceding such Interest Payment Date.
"Regulation S" means Regulation S under the Securities Act.
"Regulation S Global Security" has the meaning specified in
Section 303.
"Related Person" of any Person means any other Person directly
or indirectly owning (a)5% or more of the outstanding Common Stock of such
Person (or, in the case of a Person that is not a Corporation, 5% or more of the
outstanding equity interest in such Person) or (b)5% or more of the combined
outstanding voting power of the Voting Stock of such Person.
"Responsible Officer", when used with respect to the Trustee,
means any officer within the Trustee's Corporate Trust Office, including any
vice president, the Managing Director, the secretary, any assistant secretary,
any assistant treasurer, or any other officer of the Trustee customarily
performing functions similar to those performed by any of the above-designated
officers, and also means, with respect to a particular corporate trust matter,
any other officer to whom such matter is referred because of his knowledge of
and familiarity with the particular subject.
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"Restricted Payment" has the meaning specified in Section1013.
"Restricted Subsidiary" means a Subsidiary of the Company, or
of a Restricted Subsidiary that is a Wholly Owned Subsidiary of the Company,
that has not been designated by the Board of Directors (by a Board Resolution
delivered to the Trustee) as an Unrestricted Subsidiary pursuant to and in
compliance with Section1021.
"Restricted Subsidiary Guarantee" means a supplemental
indenture to this Indenture, in form satisfactory to the Trustee, executed in
accordance with Article Nine, providing for an unconditional Guarantee of
payment in full of the principal of, premium, if any, and interest on the
Securities. Any such Restricted Subsidiary Guarantee shall not be subordinate in
right of payment to any Debt of the Restricted Subsidiary providing the
Restricted Subsidiary Guarantee.
"Revocation" has the meaning specified in Section1021.
"Rule 144A" means Rule 144A under the Securities Act.
"Rule 144A Global Security" has the meaning specified in
Section 303.
"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.
"Securities" means any of the Securities, as defined in the
recitals of this Indenture, that are authenticated and delivered under this
Indenture. For all purposes of this Indenture, the "Securities" shall include
the Initial Securities initially issued on November 4, 1998 and any Exchange
Securities to be issued and exchanged for any Initial Securities pursuant to the
Registration Agreement and this Indenture and any other Notes issued after
November 4, 1998 under this Indenture. For purposes of this Indenture, all
Securities shall vote together as one series of Securities under this Indenture.
"Securities Act" means the Securities Act of 1933, as amended.
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"Security Register" and "Security Registrar" have the
respective meanings specified in Section 305.
"Senior Note Indentures" means (i) the Indenture dated as of
March 31, 1997 between the Company and Bankers Trust Company, as trustee
thereunder, relating to the Company's 107/8% Senior Notes Due 2007 (which were
subsequently exchanged for the Company's 107/8% Series B Senior Notes Due 2007)
and the Indenture dated as of August 28, 1997, pursuant to which such 107/8%
Series B Senior Notes Due 2007 were issued, (ii) the Indenture dated as of
October 15, 1997 between the Company and Bankers Trust Company, as trustee
thereunder, relating to the Company's 9.47% Series B Senior Discount Notes Due
2007, and (iii) the Indenture dated as of January 28, 1998 between the Company
and Bankers Trust Company, as trustee thereunder, relating to the Companys 8.29%
Series B Senior Discount Notes Due 2008.
"Shelf Registration Statement" means the Shelf Registration
Statement as defined in the Registration Agreement.
"Special Record Date" for the payment of any Defaulted
Interest means a date fixed by the Trustee pursuant to Section307.
"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 amount of such Security or such
installment of interest is due and payable.
"Strategic Investor" means a Corporation, partnership or other
entity engaged in one or more Telecommunications Businesses that has, or 80% or
more of the Voting Stock of which is owned by a Person that has, an equity
market capitalization, at the time of its initial Investment in the Company or
in a Permitted Joint Venture with the Company, in excess of $2 billion.
"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 of (or premium, if any) or interest on the Securities exists; (ii)in
the event that any other 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
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date of such notice; 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 described in Section1010 (and which shall provide
that such Debt shall 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 Section1010).
"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.
"Suspended Covenants" has the meaning specified in Section
1025.
"Suspension Period" has the meaning specified in Section 1025.
"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, data
or video through owned or leased transmission facilities, (ii)constructing,
creating, developing or marketing communications related network equipment,
software and other devices for use in a telecommunications business or
(iii)evaluating, participating or pursuing any other activity or opportunity
that is primarily related to those identified in (i) or (ii) above, provided
that the determination of what constitutes a Telecommunications Business shall
be made in good faith by the Board of Directors.
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"Treasury Rate" means, with respect to any Redemption Date,
the rate per annum equal to the semiannual equivalent yield to maturity of the
Comparable Treasury Issue, assuming a price for the Comparable Treasury Issue
(expressed as a percentage of its principal amount) equal to the Comparable
Treasury Price for such Redemption Date.
"Trust Indenture Act" or "TIA" means the Trust Indenture Act
of 1939 as in force at the date as of which this Indenture was executed, except
as provided in Section905.
"Trustee" means the Person named as the "Trustee" in the first
paragraph of this Indenture until a successor Trustee shall have become such
pursuant to the applicable provisions of this Indenture, and thereafter
"Trustee" shall mean such successor Trustee.
"Unrestricted Subsidiary" means any Subsidiary of the Company
designated as such pursuant to and in compliance with Section1021.
"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 for so long as no senior class of securities has such voting power by
reason of any contingency.
"Wholly Owned Subsidiary" of any Person means a Subsidiary of
such Person all of the outstanding Voting Stock or other ownership interests
(other than directors' qualifying shares) of which shall at the time be owned by
such Person or by one or more Wholly Owned Subsidiaries of such Person or by
such Person and one or more Wholly Owned 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 an Officers' Certificate stating that all conditions
precedent, if any, provided for in this Indenture (including any covenant
compliance with which constitutes a condition precedent) relating to the
proposed action have been complied with and an Opinion of Counsel stating that
in the opinion of such counsel all such conditions precedent, if any, have been
complied with, except that in the case of any such application or request as to
which the furnishing of such documents is specifically required by any provision
of this Indenture relating to such particular application or request, no
additional certificate or opinion need be furnished.
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Every certificate or opinion with respect to compliance with a
condition or covenant provided for in this Indenture (other than pursuant to
Section1009(a))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 or opinion of an officer of the Company may be
based, insofar as it relates to legal matters, upon a certificate or opinion of,
or representations by, counsel, unless such officer knows, or in the exercise of
reasonable care should know, that the certificate or opinion or representations
with respect to the matters upon which his certificate or opinion is based are
erroneous. Any such certificate or Opinion of Counsel may be based, insofar as
it relates to factual matters, upon a certificate or opinion of, or
representations by, an officer or officers of the Company stating that the
information with respect to such factual matters is in the possession of the
Company, unless such counsel knows, or in the exercise of reasonable care should
know, that the certificate or opinion or representations with respect to such
matters are 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
(with proper identification of each matter covered therein) and form one
instrument.
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SECTION 104. Acts of Holders.
(a) 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 agents 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.
(b) The fact and date of the execution by any Person of any
such instrument or writing 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 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 that the Trustee deems sufficient.
(c) The principal amount and serial numbers of Securities held
by any Person, and the date of holding the same, shall be proved by the Security
Register.
(d) If the Company shall solicit from the Holders of
Securities any request, demand, authorization, direction, notice, consent,
waiver or other Act, the Company may, at its option, by or pursuant to a Board
Resolution, fix in advance a record date for the determination of Holders
entitled to give such request, demand, authorization, direction, notice,
consent, waiver or other Act, but the Company shall have no obligation to do so.
Notwithstanding TIA Section316(c), such record date shall be the record date
specified in or pursuant to such Board Resolution, which shall be a date not
earlier than the date 30 days prior to the first solicitation of Holders
generally in connection therewith and not later than the date such solicitation
is completed. If such a record date is fixed, such request, demand,
authorization, direction, notice, consent, waiver or other Act may be given
before or after such record date, but only the Holders of record at the close of
business on such record date shall be deemed to be Holders for the purposes of
determining whether Holders of the requisite proportion of Outstanding
Securities have authorized or agreed or consented to such request, demand,
authorization, direction, notice, consent, waiver or other Act, and for that
purpose the Outstanding Securities shall be computed as of such record date;
provided that no such
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authorization, agreement or consent by the Holders on such record date shall be
deemed effective unless it shall become effective pursuant to the provisions of
this Indenture not later than eleven months after the record date.
(e) 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.
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 made, given, furnished or filed in writing to or with
the Trustee at its Corporate Trust Office, Attention: Corporate Market Services,
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 it
at the address of its principal office specified in the first paragraph of this
Indenture, 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 of any event to
Holders by the Company or the Trustee, such notice shall be sufficiently given
(unless otherwise herein expressly provided) if in writing and mailed,
first-class postage prepaid, to each Holder affected by such event, at the
address of such Holder as it appears in the Security Register, not later than
the latest date, and not earlier than the earliest date, 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. Any notice mailed to a Holder in the manner herein
prescribed shall be conclusively deemed to have been received by such Holder,
whether or not such Holder actually receives such notice. 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
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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 or irregularities in
regular mail service or by reason of any other cause, it shall be impracticable
to mail notice of any event to Holders when such notice is required to be given
pursuant to any provision of this Indenture, then any manner of giving such
notice as shall be satisfactory to the Trustee shall be deemed to be a
sufficient giving of such notice for every purpose hereunder.
SECTION 107. 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 108. 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 109. 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 110. Benefits of Indenture.
Nothing in this Indenture or in the Securities, express or
implied, shall give to any Person, other than the parties hereto, any Paying
Agent, any Security Registrar and their successors hereunder and the Holders any
legal or equitable right, remedy or claim under this Indenture.
SECTION 111. Governing Law.
This Indenture and the Securities shall be governed by and
construed in accordance with the law of the State of NewYork.
SECTION 112. Conflict with Trust Indenture Act.
Prior to the issuance of the Exchange Securities or the
effectiveness of the Shelf Registration Statement, the Trust Indenture Act shall
apply as a matter of contract to this
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Indenture for purposes of interpretation, construction and defining the rights
and obligations hereunder. Upon the issuance of the Exchange Securities or the
effectiveness of the Shelf Registration Statement, this Indenture shall be
subject to the provisions of the Trust Indenture Act that are required to be
part of this Indenture and shall, to the extent applicable, be governed by such
provisions. If any provision hereof limits, qualifies or conflicts with any
provision of the Trust Indenture Act or another provision which is required or
deemed to be included in this Indenture by any of the provisions of the Trust
Indenture Act, such provision or requirement of the Trust Indenture Act 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
excluded, as the case may be.
SECTION 113. Legal Holidays.
In any case where any Interest Payment Date, Redemption Date,
or Stated Maturity or Maturity of any Security shall not be a Business Day, then
(notwithstanding any other provision of this Indenture or of the Securities)
payment of principal of (or premium, if any) or interest 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 or Redemption Date or
at the Stated Maturity or Maturity; provided that no interest shall accrue for
the period from and after such Interest Payment Date, Redemption Date, Stated
Maturity or Maturity, as the case may be.
SECTION 114. No Personal Liability of Directors, Officers, Employees and
Stockholders.
No director, officer, employee, incorporator or stockholder of
the Company, as such, shall have any liability for any obligations of the
Company under the Securities or this Indenture or for any claim based on, in
respect of, or by reason of, such obligations or their creation, solely by
reason of its status as a director, officer, employee, incorporator or
stockholder of the Company. By accepting a Security, each Holder waives and
releases all such liability (but only such liability). The waiver and release
are part of the consideration for issuance of the Securities.
SECTION 115. Independence of Covenants.
All covenants and agreements in this Indenture shall be given
independent effect so that if a particular action or condition is not permitted
by any of such covenants, the fact that it would be permitted by an exception
to, or be otherwise within the limitations of, another covenant shall not avoid
the occurrence of a Default if such action is taken or condition exists.
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SECTION 116. Exhibits.
All exhibits attached hereto are by this reference made a part
hereof with the same effect as if herein set forth in full.
SECTION 117. Counterparts.
This Indenture may be executed in any number of counterparts,
each of which shall be an original; but such counterparts shall together
constitute but one and the same instrument.
SECTION 118. Duplicate Originals.
The parties may sign any number of copies of this Indenture.
Each signed copy shall be an original, but all of them together represent the
same agreement.
ARTICLE TWO
SECURITY FORMS
SECTION 201. Forms Generally.
The Securities and the Trustee's certificate of authentication
with respect thereto shall be in substantially the form set forth in Exhibit A
hereto, with such appropriate 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 system on which the Securities may be listed or eligible
for trading or as may, consistently herewith, be determined by the officers
executing such Securities, as evidenced by their execution of the Securities.
Any portion of the text of any Security may be set forth on the reverse thereof,
with an appropriate reference thereto on the face of the Security.
The definitive Securities shall be printed, lithographed or
engraved on steel-engraved borders or may be produced in any other manner
permitted by the rules of any securities exchange or system on which the
Securities may be listed or eligible for trading, all as determined by the
officers of the Company executing such Securities, as evidenced by their
execution of such Securities.
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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 $750,000,000,
except for Securities authenticated and delivered upon registration of transfer
of, or in exchange for, or in lieu of, other Securities pursuant to Section304,
305, 306, 906, 1010, 1018 or 1108.
The Initial Securities shall be known and designated as the
"7.50% Senior Notes Due 2008" and the Exchange Securities shall be known as the
"7.50% SeriesB Senior Notes". The final Stated Maturity of the Securities shall
be November 1, 2008. Interest on the Securities will accrue at a rate of 7.50%
per annum accruing from November 4, 1998 or from the most recent Interest
Payment Date to which cash interest has been paid or duly provided for, and will
be payable semiannually in arrears on May 1 and November 1 of each year,
commencing May 1, 1999, to the Holders of record on the immediately preceding
Regular Record Date. Interest will be computed on the basis of a 360-day year
comprised of twelve 30-day months.
Principal of, premium, if any, and interest on the Securities
will be payable, and the Securities may be exchanged or transferred, at the
office or agency of the Company in The City of New York, which, unless otherwise
provided by the Company, will be the offices of the Trustee. At the option of
the Company, interest may be paid by check mailed to addresses of the Persons
entitled thereto as such addresses shall appear on the Security Register.
The interest rate on the Securities is subject to increase by
the addition of Liquidated Interest and otherwise, all as set forth or referred
to in the text of the Securities appearing in ExhibitA hereto.
The Securities shall be redeemable as provided in
ArticleEleven.
At the election of the Company, the entire Debt on the
Securities or certain of the Company's obligations and covenants and certain
Events of Default thereunder may be defeased as provided in Article Twelve.
The Securities will be senior unsecured obligations of the
Company, ranking pari passu in right of payment with all existing and future
senior unsecured Debt of the
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Company, and will be senior in right of payment to all existing and future
Subordinated Debt of the Company.
SECTION 302. Denominations.
The Securities will be issued without coupons and in fully
registered form only, in minimum denominations of $1,000 principal amount and
integral multiples 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 or a Vice President under its
corporate seal reproduced thereon. The signature of any of these officers on the
Securities may be manual or facsimile signatures of the present or any future
such authorized officer and may be imprinted or otherwise reproduced on the
Securities. The seal of the Company may be in the form of a facsimile thereof
and may be impressed, affixed, imprinted or otherwise reproduced on the
Securities.
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. In addition, any
Security may be signed on behalf of the Company by such Persons as, at the
actual date of the execution of such Security, shall be the proper officers of
the Company, although at the date of such Security or of the execution of this
Indenture any such Person was not such officer.
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.
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 duly executed by the Trustee by manual signature of an authorized
signatory, and such certificate upon any Security shall be conclusive evidence,
and the only evidence, that such Security has been duly authenticated and
delivered hereunder and is entitled to the benefits of this Indenture.
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The Trustee shall authenticate Securities for original issue
in an aggregate principal amount not to exceed $750,000,000 upon receipt of a
Company Order, which shall specify the amount of Securities to be authenticated,
the names of the Persons in which such Securities shall be registered and the
date on which such Securities are to be authenticated and direct the Trustee to
authenticate such Securities together with an Officers' Certificate certifying
that all conditions precedent to the issuance of such Securities contained
herein have been complied with. The aggregate principal amount of Securities
Outstanding at any time shall not exceed $750,000,000, except as provided in
Section 304.
Except as described below, the Securities will be deposited
with, or on behalf of, the Depository, and registered in the name of Cede & Co.
as the Depository's nominee in the form of one or more global note
certificate(s) substantially in the form of Exhibit A (each, a "Rule 144A Global
Security"), for credit to the respective accounts of the beneficial owners of
the Securities represented thereby.
Securities purchased by Persons outside the United States
pursuant to sales in accordance with Regulation S under the Securities Act shall
be deposited with, or on behalf of, the Depository, and registered in the name
of Cede & Co. as the Depository's nominee in the form of one or more global note
certificates substantially in the form of Exhibit A (each, a "Regulation S
Global Security"), for credit to the respective accounts of the beneficial
owners of the Securities represented thereby (or such other accounts as they may
direct), provided that upon such deposit all such Securities shall be credited
to or through accounts maintained at the Depository by or on behalf of the
Euroclear System or Cedel Bank, socit anonyme. Securities represented by a
Regulation S Global Security will not be exchangeable for Physical Securities
until the expiration of the "40-day distribution compliance period" within the
meaning of Rule 903(c)(3) of Regulation S under the Securities Act.
In case the Company, pursuant to Article Eight, shall be
consolidated or merged with or into any other Person or shall convey, transfer,
lease or otherwise dispose of its properties and assets substantially as an
entirety to any Person, and the successor Person resulting from such
consolidation, or surviving such merger, or into which the Company shall have
been merged, or the Person which shall have received a conveyance, transfer,
lease or other disposition as aforesaid, shall have executed an indenture
supplemental hereto with the Trustee pursuant to Article Eight, any of the
Securities authenticated or delivered prior to such consolidation, merger,
conveyance, transfer, lease or other disposition may, from time to time, at the
request of the successor Person, be exchanged for other Securities executed in
the name of the successor Person with such changes in phraseology and form as
may be appropriate, but otherwise in substance of like tenor as the Securities
surrendered for such exchange and of like principal amount; and the Trustee,
upon Company Request of the successor Person, shall authenticate and deliver
Securities as specified in such request for the purpose of such exchange. If
Securities shall at any time be authenticated and delivered in any new name of a
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successor Person pursuant to this Section in exchange or substitution for or
upon registration of transfer of any Securities, such successor Person, at the
option of the Holders but without expense to them, shall provide for the
exchange of all Securities at the time Outstanding for Securities authenticated
and delivered in such new name.
SECTION 304. Temporary Securities.
Pending the preparation of definitive Securities, the Company
may execute, and upon 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 conclusively 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 the office or agency of the Company designated for such purpose
pursuant to Section1002, 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
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.
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 Section1002 being herein
sometimes referred to as the "Security Register") in which, subject to such
reasonable regulations as it may prescribe, the Company shall provide for the
registration of Securities and of transfers and exchange of Securities. The
Security Register shall be in written form or any other form capable of being
converted into written form within a reasonable time. At all reasonable times,
the Security Register shall be open to inspection by the Trustee. The Trustee is
hereby initially appointed as security registrar (the "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
the office or agency of the Company designated pursuant to Section1002, the
Company shall execute, the Trustee shall authenticate and deliver, and the
Security Registrar shall register, if the
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requirements, of such transfer are met, in the name of the designated transferee
or transferees, one or more new Securities of any authorized denomination or
denominations of a like aggregate principal amount.
At the option of the Holder, Securities may be exchanged for
other Securities of any authorized denomination and of a like aggregate
principal amount (including an exchange of Initial Securities for Exchange
Securities), 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, the Trustee shall authenticate and deliver, and the Security
Registrar shall register, the Securities which the Holder making the exchange is
entitled to receive, provided that no exchange of Initial Securities for
Exchange Securities shall occur until an Exchange Offer Registration Statement
shall have been declared effective by the Commission (confirmed in an Officer's
Certificate) and that the Initial Securities to be exchanged for the Exchange
Securities shall be cancelled by the Trustee.
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 Security
Registrar) 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 for any registration of
transfer or exchange or redemption 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 Section304, 906, 1010, 1018 or 1108
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 selection of Securities to be redeemed under
Section1104 and ending at the close of business on the day of such mailing of
the relevant notice of redemption 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.
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SECTION 306. Mutilated, Destroyed, Lost and Stolen Securities.
If (i)any mutilated Security is surrendered to the Trustee or
(ii)the Company and the Trustee receive evidence to their satisfaction of the
destruction, loss or theft of any Security, and there is delivered to the
Company and the Trustee such security or indemnity as may be required by them to
save each 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 upon Company Order the Trustee shall authenticate and
deliver, in exchange for any such mutilated Security or in lieu of any such
destroyed, lost or stolen Security, a new Security of like tenor and principal
amount, 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 its discretion
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 mutilated, destroyed, lost or stolen Security shall constitute an original
additional contractual obligation of the Company, whether or not the mutilated,
destroyed, lost or stolen Security shall be at any time enforceable by anyone,
and shall be entitled to all 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 such Security (or one or more Predecessor Securities) is
registered at the close of business on the Regular Record Date for such interest
at the office or agency of the Company maintained for such purpose pursuant to
Section1002; provided, however, that each installment of interest may at the
Company's option be paid (i) by mailing a check for such interest, payable to or
upon the written order of the Person entitled thereto pursuant to Section308, to
the address of such Person as it appears in the Security Register, or (ii) by
wire transfer of such interest in
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immediately available funds to an account located in the United States
maintained by the Depository.
Any interest on any Security which is payable, but is not
punctually paid or duly provided for, on any Interest Payment Date shall
forthwith cease to be payable to the Holder on the Regular Record Date by virtue
of having been such Holder, and such defaulted interest and (to the extent
lawful) interest on such defaulted interest at the rate borne by the Securities
(such defaulted interest and interest thereon herein collectively called
"Defaulted Interest") may be paid by the Company, at its election in each case,
as provided in paragraph(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
given in the manner provided for in Section106, 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 given, 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 paragraph(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 or system on which the Securities may be listed or
eligible for trading, and upon such notice as may be required by such
exchange or system, 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.
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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 the 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 Sections305 and 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 or exchange 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 may deliver to the Trustee (or
to any other Person for delivery to the Trustee) for cancellation any Securities
previously authenticated hereunder which the Company has not issued and sold,
and all Securities so delivered shall be promptly cancelled by the Trustee. If
the Company shall so acquire any of the Securities, however, such acquisition
shall not operate as a redemption or satisfaction of the indebtedness
represented by such Securities unless and until the same are surrendered to the
Trustee for cancellation. 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 by the Trustee in accordance with its customary
procedures and certification of their disposal delivered to the Company unless
by Company Order the Company shall direct that cancelled Securities be returned
to it.
SECTION 310. Computation of Interest.
Interest on the Securities shall be computed on the basis of a
360-day year comprised of twelve 30-day months.
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SECTION 311. CUSIP Number.
The Company in issuing the Securities may use a "CUSIP" number
(if then generally in use), and if so, the Trustee may use the CUSIP numbers in
notices of redemption or exchange as a convenience to Holders; provided,
however, that any such notice may state that no representation is made as to the
correctness or accuracy of the CUSIP number printed in the notice or on the
Securities, and that reliance may be placed only on the other identification
numbers printed on the Securities. The Company shall promptly notify the Trustee
in writing of any change in the CUSIP number of the Securities.
SECTION 312. Book-Entry Provisions for Global Securities.
(a) The Global Securities initially shall (i) be registered in
the name of the Depository or the nominee of such Depository, (ii) be delivered
to the Trustee as custodian for such Depository and (iii) bear legends as set
forth in Exhibit A.
Members of, or participants in, the Depository ("Agent
Members") shall have no rights under this Indenture with respect to any Global
Security held on their behalf by the Depository, or the Trustee as its
custodian, or under the Global Security, and the Depository may be treated by
the Company, the Trustee and any agent of the Company or the Trustee as the
absolute owner of the Global Security for all purposes whatsoever.
Notwithstanding the foregoing, nothing herein shall prevent the Company, the
Trustee or any agent of the Company or the Trustee from giving effect to any
written certification, proxy or other authorization furnished by the Depository
or impair, as between the Depository and its Agent Members, the operation of
customary practices governing the exercise of the rights of a beneficial owner
of any Security.
(b) Transfers of Global Securities shall be limited to
transfers in whole, but not in part, to the Depository, its successors or their
respective nominees. Interests of beneficial owners in a Rule 144A Global
Security may be transferred or exchanged for interests in a Regulation S Global
Security, and interests of beneficial owners in a Regulation S Global Security
may be transferred or exchanged for interests in a Rule 144A Global Security, in
each case in accordance with the rules and procedures of the Depository and the
provisions of Section 313. In addition, Physical Securities shall be transferred
to all beneficial owners in exchange for their beneficial interests in a Global
Security if (i)the Depository notifies the Company that it is unwilling or
unable to continue as a depository for such Global Security or if at any time
the Depository ceases to be a clearing agency registered under the Exchange Act,
and a successor depository is not appointed by the Company within 90 days,
(ii)the Company executes and delivers to the Trustee a notice that such Global
Security shall be so transferable, registrable and exchangeable, and such
transfer shall be registrable, or (iii)there shall have
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occurred and be continuing a Default or Event of Default with respect to the
Securities represented by such Global Security.
(c) In connection with the transfer of Global Securities as an
entirety to beneficial owners pursuant to paragraph (b), the Global Securities
shall be deemed to be surrendered to the Trustee for cancellation, and the
Company shall execute, and the Trustee shall authenticate and deliver, to each
beneficial owner identified by the Depository in exchange for its beneficial
interest in the Global Securities, an equal aggregate principal amount of
Physical Securities of like tenor of authorized denominations.
(d) Any Physical Security delivered in exchange for an
interest in a Global Security pursuant to paragraph (c) of this Section 312
shall, except as otherwise provided by (b)(1)(x) and paragraph (d) of Section
313, bear the legend regarding transfer restrictions applicable to the Physical
Securities set forth in Exhibit A.
(e) The Holder of any Global Security may grant proxies and
otherwise authorize any person, including Agent Members and persons that may
hold interests through Agent Members, to take any action which a Holder is
entitled to take under this Indenture or the Securities.
SECTION 313. Special Transfer Provisions.
(a) Transfers to Non-QIB Institutional Accredited Investors. Except as
provided in paragraph (d) of this Section 313, the Initial Securities shall not
be transferred to any Person that is not a QIB or a non-U.S. Person.
(b) Transfers to Non-U.S. Persons. The following provisions shall apply
with respect to the registration of any proposed transfer of an Initial Security
to any non-U.S. Person:
(1) the Security Registrar shall register the transfer of any
Initial Security if (x) the requested transfer is not prior to the date
which is two years (or such shorter period as may be prescribed by Rule
144(k) under the Securities Act or any successor provision thereunder)
after the later of the original issue date of such Initial Security (or
of any Predecessor Security) or the last day on which the Company or
any Affiliate of the Company was the owner of such Initial Security or
any Predecessor Security or (y) the proposed transferee has delivered
to the Security Registrar a certificate substantially in the form of
Exhibit B hereto; and
(2) the Security Registrar shall register the transfer of any
Initial Security if the proposed transferor is an Agent Member holding
a beneficial interest in a Rule
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144A Global Security, upon receipt by the Security Registrar of (x) the
certificate, if any, required by paragraph (1) above and (y)
instructions given in accordance with the Depository's and the Security
Registrar's procedures;
whereupon the Security Registrar shall reflect on its books and records the date
of such transfer and (A)(if the transfer involves a transfer of a beneficial
interest in a Rule 144A Global Security) a decrease in the principal amount of
such Rule 144A Global Security in an amount equal to the principal amount to be
transferred and (B) an increase in the principal amount of a Regulation S Global
Security in an amount equal to the principal amount to be transferred.
(c) Private Placement Legend. Upon the registration of
transfer, exchange or replacement of Initial Securities, the Security Registrar
shall deliver only Initial Securities that bear the Private Placement Legend
unless (i) (x) the circumstances contemplated by clause (b)(1)(x) of this
Section 313 exist or (y) such Security has been sold pursuant to an effective
registration statement under the Securities Act and (ii) there is delivered to
the Security Registrar and the Trustee an Opinion of Counsel reasonably
satisfactory to the Company and the Trustee to the effect that neither such
legend nor the related restrictions on transfer are required in order to
maintain compliance with the provisions of the Securities Act.
(d) Other Transfers. If a Holder proposes to transfer an
Initial Security pursuant to any exemption from the registration requirements of
the Securities Act other than as provided for by Section 313(a) and 313(b), the
Security Registrar shall only register such transfer or exchange if such
transferor delivers to the Security Registrar and the Trustee an Opinion of
Counsel satisfactory to the Company and the Security Registrar that such
transfer is in compliance with the Securities Act and the terms of this
Indenture; provided that the Company may, based upon the opinion of its counsel,
instruct the Security Registrar by a Company Order not to register such transfer
in any case where the proposed transferee is not a QIB or a non-U.S. Person.
(e) General. By its acceptance of any Security bearing the
Private Placement Legend, each Holder of such a Security acknowledges the
restrictions on transfer of such Security set forth in this Indenture and in the
Private Placement Legend and agrees that it will transfer such Security only as
provided in this Indenture.
The Security Registrar shall retain copies of all letters,
notices and other written communications received pursuant to Section 312 or
this Section 313 for a period of two years, after which time such letters,
notices and other written communications shall at the written request of the
Company be delivered to the Company. The Company shall have the right to inspect
and make copies of all such letters, notices or other written communications at
any reasonable time upon the giving of reasonable prior written notice to the
Security Registrar.
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ARTICLE FOUR
SATISFACTION AND DISCHARGE
SECTION 401. Satisfaction and Discharge of Indenture.
This Indenture shall upon Company Request cease to be of
further effect (except as to surviving rights of registration of transfer or
exchange of Securities expressly provided for herein or pursuant hereto) and the
Trustee, at the expense of the Company, shall execute proper instruments
acknowledging satisfaction and discharge of this Indenture when
(1) either
(a) all Securities theretofore authenticated and delivered (other than
(i)Securities which have been destroyed, lost or stolen and which have been
replaced or paid as provided in Section306 and (ii)Securities for whose payment
money has theretofore been deposited in trust with the Trustee or any Paying
Agent or segregated and held in trust by the Company and thereafter repaid to
the Company or discharged from such trust as provided in Section1003) have been
delivered to the Trustee for cancellation; or
(b) all such Securities not theretofore delivered to the Trustee for
cancellation
(i) have become due and payable, or
(ii) will become due and payable at their Stated Maturity within one year,
or
(iii) are to be called for redemption within one year under irrevocable
arrangements satisfactory to the Trustee for the giving of notice of redemption
by the Trustee in the name, and at the expense, of the Company,
and the Company, in the case of (i), (ii) or (iii) above, has irrevocably
deposited or caused to be deposited with the Trustee as trust funds in trust for
such purpose an amount sufficient to pay and discharge the entire indebtedness
on such Securities not theretofore delivered to the Trustee for cancellation,
for principal (and premium, if any) and interest to the date of such deposit (in
the
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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; and
(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.
Notwithstanding the satisfaction and discharge of this
Indenture, the obligations of the Company to the Trustee under Section607 and,
if money shall have been deposited with the Trustee pursuant to clause(1)(b) of
this Section 401, the obligations of the Trustee under Section402 and the last
paragraph of Section1003 shall survive.
SECTION 402. Application of Trust Money.
Subject to the provisions of the last paragraph of
Section1003, all money deposited with the Trustee pursuant to Section401 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; but such money need not be segregated from other funds except
to the extent required by law.
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 the principal of (or premium, if any, on) any
Security at its Maturity; or
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(2) default in the payment of any interest on any Security when it becomes
due and payable, and continuance of such default for a period of 30 days; or
(3) default in the payment of principal and interest on any Security
required to be purchased pursuant to an Offer to Purchase pursuant to Section
1010 or 1018; or
(4) default in the performance, or breach, of Section801 or 1018; 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 60days 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 indebtedness by the Company or any Restricted Subsidiary 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 indebtedness of such type by
the Company or any such Restricted Subsidiary with a principal amount then
outstanding, individually or in the aggregate, in excess of $10million, whether
such indebtedness now exists or shall hereafter be created, which default or
defaults shall result in the acceleration of the payment of such indebtedness or
shall constitute a failure to pay the principal of such indebtedness when due at
the final maturity thereof, or shall have resulted in excess of $10 million of
indebtedness becoming or being declared due and payable prior to the date on
which it would otherwise have become due and payable (after expiration of any
applicable grace period); or
(7) a final judgment or final judgments for the payment of money are
entered against the Company or any Restricted Subsidiary in an aggregate amount
in excess of $10million by a court or courts of competent jurisdiction, which
judgment or judgments remain undischarged or unbonded for a period (during which
execution shall not be effectively stayed) of 45days after the date on which the
right to appeal all such judgments has expired; or
(8) the entry of a decree or order by a court having jurisdiction in the
premises adjudging the Company or any Restricted Subsidiary a bankrupt or
insolvent, or approving as properly filed a petition seeking reorganization,
arrangement,
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adjustment or composition of or in respect of the Company or any Restricted
Subsidiary under the Federal Bankruptcy Code or any other applicable federal or
state law, or appointing a receiver, liquidator, assignee, trustee or
sequestrator (or other similar official) of the Company or any Restricted
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 unstayed and in effect for a period of 60 consecutive days; or
(9) the institution by the Company or any Restricted Subsidiary of
proceedings to be adjudicated a bankrupt or insolvent, or the consent by it to
the institution of bankruptcy or insolvency proceedings against it, or the
filing by it of a petition or answer or consent seeking reorganization or relief
under the Federal Bankruptcy Code or any other applicable federal or state law,
or the consent by it to the filing of any such petition or to the appointment of
a receiver, liquidator, assignee, trustee or sequestrator (or other similar
official) of the Company or any Restricted 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.
SECTION 502. Acceleration of Maturity; Rescission and Annulment.
If an Event of Default (other than an Event of Default
specified in Section501(8) or (9)) occurs and is continuing, then and in every
such case the Trustee or the Holders of not less than 25% in principal amount of
the Outstanding Securities may declare the principal 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 principal shall
become immediately due and payable. If an Event of Default specified in
Section501(8) or (9) occurs and is continuing, then the principal of all the
Securities shall ipso facto become and be immediately due and payable without
any declaration or other act on the part of the Trustee or any Holder.
At any time after a declaration of acceleration has been made
and before a judgment or decree for payment of the money due has been obtained
by the Trustee as hereinafter provided in this Article Five, the Holders of a
majority in 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 Outstanding Securities,
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(B) all unpaid principal of (and premium, if any, on) any Outstanding
Securities which has become due otherwise than by such declaration of
acceleration, and interest on such unpaid principal at the rate borne by the
Securities,
(C) to the extent that payment of such interest is lawful, interest on
overdue interest at the 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 nonpayment of amounts of
principal of (or premium, if any, on) Securities which have become due solely by
such declaration of acceleration, have been cured or waived as provided in
Section513.
No such rescission shall affect any subsequent default or impair any right
consequent thereon.
Notwithstanding the preceding paragraph, in the event that a
declaration of acceleration in respect of the Securities due to an Event of
Default specified in Section501(6) shall have occurred and be continuing, such
declaration of acceleration shall be automatically annulled if the Debt that is
the subject of such Event of Default has been discharged or the holders thereof
have rescinded their declaration of acceleration in respect of such Debt, and
written notice of such discharge or rescission, as the case may be, shall have
been given to the Trustee by the Company and countersigned by the holders of
such Debt or a trustee, fiduciary or agent for such holders, within 30 days
after such declaration of acceleration in respect of the Securities, and no
other Event of Default has occurred during such 30-day period which has not been
cured or waived during such period.
SECTION 503. Collection of Indebtedness and Suits for Enforcement by
Trustee.
The Company covenants that if
(a) default is made in the payment of any installment of interest on any
Security when such interest becomes due and payable and such default continues
for a period of 30 days, or
(b) default is made in the payment of the principal of (or premium, if any,
on) any Security at the Maturity thereof,
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the Company will, upon demand of the Trustee, pay to the Trustee 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 interest on any
overdue principal (and premium, if any) and, to the extent that payment of such
interest shall be legally enforceable, upon any overdue installment of interest,
at the rate borne by the Securities, and, in addition thereto, such further
amount as shall be sufficient to cover the costs and expenses of collection,
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 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 effectual 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 the pendency of any receivership, insolvency,
liquidation, bankruptcy, reorganization, arrangement, adjustment, composition or
other judicial proceeding relative to the Company or any other obligor upon the
Securities or the property of the Company or of such other obligor or their
creditors, the Trustee (irrespective of whether the principal of the Securities
shall then be due and payable as herein expressed or by declaration or otherwise
and irrespective of whether the Trustee shall have made any demand on the
Company for the payment of overdue principal, premium, if any, or interest)
shall be entitled and empowered, by intervention in such proceeding or
otherwise,
(i) to file and prove a claim for the whole amount of principal (and
premium, if any) and interest owing and unpaid in respect of the Securities and
to file such other papers or documents as may be necessary or advisable in order
to have the claims of the Trustee (including any claim for the reasonable
compensation, expenses, disbursements and advances of the Trustee and its agents
and counsel) and of the Holders allowed in such judicial proceeding, and
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(ii) to collect and receive any moneys or other property payable or
deliverable on any such claims and to distribute the same;
and any custodian, receiver, assignee, trustee, liquidator or 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 the Trustee any amount due it for the reasonable compensation, expenses,
disbursements and advances of the Trustee and its agents and counsel, and any
other amounts due the Trustee under Section607.
Nothing herein contained 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.
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 and 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 and 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
Five 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 Section607;
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
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of any kind, according to the amounts due and payable on such Securities for
principal (and premium, if any) and interest, respectively; and
THIRD: The balance, if any, to the Person or Persons entitled thereto.
SECTION 507. Limitation on Suits.
No Holder of any Securities 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 not less than 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 to the Trustee indemnity reasonably
satisfactory to it 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 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 or more in
aggregate principal amount of the Outstanding Securities;
it being understood and intended that no one or more Holders shall have any
right in any manner whatsoever 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 as provided herein (including, if applicable,
Article Twelve) and in such Security of the principal
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of (and premium, if any) and (subject to Section307) interest on such Security
on the respective Stated Maturities expressed in such Security (or, in the case
of redemption, on the Redemption 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 Section306, 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 Five 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 not less than 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,
(2) the Trustee may take any other action deemed proper by the Trustee
which is not inconsistent with such direction, and
(3) the Trustee need not take any action which might involve it in personal
liability or be unjustly prejudicial to the Holders not consenting.
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 waive any past default hereunder and its consequences, except a
default
(1) in respect of the payment of the principal of (or premium, if any) or
interest on any Security, 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.
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 Event of Default or impair any right consequent
thereon.
SECTION 514. Waiver of Stay or Extension Laws.
The Company covenants (to the extent that it may lawfully do
so) that it shall 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 shall not hinder, delay or impede the
execution of any power herein granted to the Trustee, but shall suffer and
permit the execution of every such power as though no such law had been enacted.
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ARTICLE SIX
THE TRUSTEE
SECTION601. Certain Duties and Responsibilities.
(a) Except during the continuance of an Event of Default,
(1) the Trustee undertakes to perform such duties and only
such duties as are specifically set forth in this Indenture, and no
implied covenants or obligations shall be read into this Indenture
against the Trustee; and
(2) in the absence of bad faith on its part, the Trustee may
conclusively rely, as to the truth of the statements and the
correctness of the opinions expressed therein, upon certificates or
opinions furnished to the Trustee and conforming to the requirements of
this Indenture; but, in the case of any such certificates or opinions
which by any provision hereof are specifically required to be furnished
to the Trustee, the Trustee shall be under a duty to examine the same
to determine whether or not they conform to the requirements of this
Indenture.
(b) In case an Event of Default has occurred and is
continuing, the Trustee shall exercise such of the rights and powers vested in
it by this Indenture, and use the same degree of care and skill in their
exercise, as a prudent man would exercise or use under the circumstances in the
conduct of his own affairs.
(c) No provision of this Indenture shall be construed to
relieve the Trustee from liability for its own negligent action, its own
negligent failure to act or its own willful misconduct, except that
(1) this paragraph (c) shall not be construed to limit the effect of
paragraph (a) of this Section 601;
(2) the Trustee shall not be liable for any error of judgment made in good
faith by a Responsible Officer, unless it shall be proved that the Trustee was
negligent in ascertaining the pertinent facts;
(3) the Trustee shall not be liable with respect to any action taken or
omitted to be taken by it in good faith in accordance with the direction of the
Holders of a majority in principal amount of the Outstanding Securities relating
to the time, method and place of conducting any proceeding for any remedy
available to the Trustee, or exercising any trust or power conferred upon the
Trustee, under this Indenture; and
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(4) 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 indemnity reasonably satisfactory to it against such risk or liability
is not reasonably assured to it.
(d) 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 601.
SECTION 602. Notice of Default.
Within 60 days after the occurrence of any Default hereunder,
the Trustee shall transmit, in the manner and to the extent provided in TIA
Section313(c), notice of such Default hereunder known to any Responsible Officer
of the Trustee, unless such Default shall have been cured or waived; provided,
however, that, except in the case of a Default in the payment of the principal
of (or premium, if any) or interest on any Security, the Trustee shall be
protected in withholding such notice if and so long as the board of directors,
the executive committee or a trust committee of directors and/or Responsible
Officers of the Trustee in good faith determines that the withholding of such
notice is in the interest of the Holders; and provided further that in the case
of any Default of the character specified in Section501(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 Section 601 and to the provisions of TIA Sections315(a) through
315(d):
(1) the Trustee may conclusively rely and shall be fully
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;
(2) any request or direction of the Company mentioned herein
shall be sufficiently evidenced by a Company Request or Company Order
and any resolution of the Board of Directors may be sufficiently
evidenced by a Board Resolution;
(3) 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
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prescribed) may, in the absence of bad faith on its part, receive and rely upon
an Officers' Certificate;
(4) 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;
(5) 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 security or indemnity
reasonably satisfactory to it against the costs, expenses and
liabilities which might be incurred by it in compliance with such
request or direction;
(6) 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;
(7) 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;
(8) the Trustee shall not be liable for any action taken,
suffered or omitted by it in good faith and believed by it to be
authorized or within the discretion or rights or powers conferred upon
it by this Indenture; and
(9) the Trustee shall have no duties, obligations or liability
in connection with any Event of Default hereunder unless a Responsible
Officer of the Trustee has knowledge thereof.
The Trustee shall not be required 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.
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SECTION 604. Trustee Not Responsible for Recitals or Issuance of
Securities.
The recitals contained herein and in the Securities, except
for 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 of the Securities, except that the Trustee
represents that it is duly authorized to execute and deliver this Indenture,
authenticate the Securities and perform its obligations hereunder. 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 or any
other agent of the Company or of the Trustee, in its individual or any other
capacity, may become the owner or pledgee of Securities and, subject to TIA
Sections310(b) and 311, 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.
TheCompany 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 the Trustee's negligence or bad faith; and
(3) to indemnify the Trustee and its directors, officers,
employees and agents for, and to hold them harmless against, any loss,
liability or expense incurred without
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negligence or bad faith on the part of any of them, arising out of or
in connection with the acceptance or administration of this trust,
including the costs and expenses of defending itself or themselves
against any claim or liability in connection with the exercise or
performance of any of its or their powers or duties hereunder.
The obligations of the Company under this Section 607 to
compensate the Trustee, to pay or reimburse the Trustee for expenses,
disbursements and advances and to indemnify and hold harmless the Trustee shall
constitute additional indebtedness hereunder and shall survive the satisfaction
and discharge of this Indenture or the earlier resignation or removal of the
Trustee. As security for the performance of such obligations of the Company, the
Trustee shall have a claim prior to the Securities upon all property and funds
held or collected by the Trustee as such, except funds held in trust for the
payment of principal of (and premium, if any) or interest on particular
Securities.
When the Trustee incurs expenses or renders services in
connection with an Event of Default specified in Section 501(8) or (9), the
expenses (including the reasonable charges and expenses of its counsel) of and
the compensation for such services are intended to constitute expenses of
administration under any applicable federal or state bankruptcy, insolvency or
other similar law.
The provisions of this Section 607 shall survive the
termination of this Indenture or the earlier resignation or removal of the
Trustee.
SECTION 608. Corporate Trustee Required; Eligibility; Conflicting
Interests.
(a) There shall be at all times a Trustee hereunder which
shall be subject to and comply with the provisions of Section310(a)(1) of the
Trust Indenture Act and shall have a combined capital and surplus of at least
$50,000,000. If such Corporation publishes reports of condition at least
annually, pursuant to law or to the requirements of federal, state, territorial
or District of Columbia supervising or examining authority, then, for the
purposes of this Section608, the combined capital and surplus of such
Corporation 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
608, it shall resign immediately in the manner and with the effect hereinafter
specified in this Article Six.
(b) The Trustee shall be subject to and comply with Section 310(b) of the
Trust Indenture Act.
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SECTION 609. 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 in
accordance with the applicable requirements of Section610.
(b) The Trustee may resign at any time by giving written
notice thereof to the Company. If the instrument of acceptance by a successor
Trustee required by Section610 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 not less than a majority in aggregate 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 the provisions of
TIA Section310(b) 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 Section608(a)
and shall fail to resign 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
(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 a Board Resolution, may remove the
Trustee or (ii)subject to TIA Section315(e), 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 a Board Resolution, shall promptly appoint a
successor Trustee. If, within one year after such
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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
aggregate 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 the
Holders of Securities in the manner provided for in Section106. Each notice
shall include the name of the successor Trustee and the address of its Corporate
Trust Office.
(g) The retiring Trustee shall not be liable for any of the
acts or omissions of any successor Trustee appointed hereunder.
SECTION 610. 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, such retiring Trustee shall, upon payment of
its charges, 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 611. 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
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substantially all of 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 Six, 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. In case at that time
any of the Securities shall not have been authenticated, any successor Trustee
may authenticate such Securities either in the name of any predecessor hereunder
or in the name of the successor Trustee. In all such cases such certificates
shall have the full force and effect which this Indenture provides that the
certificate of authentication of the Trustee shall have; provided, however, that
the right to adopt the certificate of authentication of any predecessor Trustee
or to authenticate Securities in the name of any predecessor Trustee shall apply
only to its successor or successors by merger, conversion or consolidation.
ARTICLE SEVEN
HOLDERS' LISTS AND REPORTS BY TRUSTEE AND COMPANY
SECTION 701. Disclosure of Names and Addresses of Holders.
Every Holder of Securities, by receiving and holding the same,
agrees with the Company and the Trustee that none of the Company or the Trustee
or any agent of either of them shall be held accountable by reason of the
disclosure of any such information as to the names and addresses of the Holders
in accordance with TIA Section312, regardless of the source from which such
information was derived, and that the Trustee shall not be held accountable by
reason of mailing any material pursuant to a request made under TIA
Section312(b).
SECTION 702. Reports by Trustee.
Within 60 days after May15 of each year commencing with the
first May15 after the first issuance of Securities, the Trustee shall transmit
to the Holders, in the manner and to the extent provided in TIA Section313(c), a
brief report dated as of such May15 if required by TIA Section313(a).
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SECTION 703. Reports by Company.
The Company shall file with the Trustee and deliver to the
Holders of Securities the reports and other information required to be provided
by it pursuant to Section1008.
ARTICLE EIGHT
CONSOLIDATION, MERGER, CONVEYANCE, TRANSFER OR LEASE
SECTION 801. Company May Consolidate, Etc., Only on Certain Terms.
The Company shall not, except as provided in Section 1025, in
a single transaction or a series of related transactions, (i)consolidate with or
merge into any other Person or Persons or permit any other Person to consolidate
with or merge into the Company (other than a merger of Qwest Corporation into
the Company in which the Company shall be the surviving Person) or (ii) directly
or indirectly, transfer, sell, lease or otherwise dispose of all or
substantially all of its assets to any other Person or Persons, unless, in any
such transaction specified in clause (i) or (ii):
(1) in a transaction in which the Company is not the surviving
Person or in which the Company sells, leases or otherwise disposes of
all or substantially all of its assets to any other Person, the
resulting, surviving or transferee Person (the "successor entity") is
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 before and after giving effect to such
transaction and treating any Debt which becomes an obligation of the
Company or a Restricted Subsidiary as a result of such transaction as
having been Incurred by the Company or such Restricted 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) immediately after giving effect to such transaction and
treating any Debt which becomes an obligation of the Company or a
Restricted Subsidiary as a result of such transaction as having been
Incurred by the Company or such Restricted Subsidiary
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at the time of the transaction, the Company (including any successor
entity to the Company) could Incur at least $1.00 of additional Debt
pursuant to the provisions of paragraph(a) of Section 1011;
(5) 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 Section1015, the Company or the successor entity to the
Company shall have secured the Securities as required by such
Section1015; and
(6) the Company has delivered to the Trustee an Officers'
Certificate and an Opinion of Counsel, each in form and substance
reasonably 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
Officers' Certificate, setting forth the manner of determination of the
Consolidated Net Worth, in accordance with clause(3) of this
Section801, of the Company or, if applicable, of the successor entity
as required pursuant to the foregoing.
SECTION 802. Successor Substituted.
Upon any consolidation of the Company with or merger of the
Company with or into any other Corporation or any conveyance, transfer or lease
of the properties and assets of the Company substantially as an entirety to any
Person or Persons in accordance with Section801, 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, in the event of any such conveyance or transfer, the Company (which
term shall for this purpose mean the Person named as the "Company" in the first
paragraph of this Indenture or any successor Person which shall have become such
in the manner described in Section801), except in the case of a lease, shall be
discharged of all obligations and covenants under this Indenture and the
Securities and may be dissolved and liquidated.
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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 a Board Resolution, and the Trustee, at any time and from time to
time, may enter into one or more indentures supplemental hereto, in form and
substance 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 contained
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 add any additional Events of Default; or
(4) to provide for uncertificated Securities in addition to or in place of
certificated Securities; or
(5) to evidence and provide for the acceptance of appointment hereunder by
a successor Trustee pursuant to the requirements of Section610; or
(6) 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; provided that such action shall
not adversely affect the interests of the Holders in any material
respect; or
(7) to secure the Securities pursuant to the requirements of Section1015;
or
(8) to provide for a Restricted Subsidiary Guarantee pursuant
to the requirements of Section 1016.
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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, the Company, when authorized by a
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 alter the redemption provisions thereof, or reduce
the principal amount thereof (or premium, if any) or the rate of interest
thereon or reduce the amount of the principal of the Securities that would be
due and payable upon a declaration of acceleration of the Maturity thereof
pursuant to Section502 or the amount thereof provable in bankruptcy pursuant to
Section504, or change the place of payment where, or the coin or currency, in
which any Security or any premium or the 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
(2) reduce the percentage in aggregate 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) subordinate in right of payment, or otherwise subordinate, the Notes to
any other Debt; or
(4) modify any of the provisions of this Section 902, 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.
It shall not be necessary for any Act of Holders under this
Section 902 to approve the particular form of any proposed supplemental
indenture, but it shall be sufficient if such Act shall approve the substance
thereof.
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SECTION 903. Execution of Supplemental Indentures.
In executing, or accepting the additional trusts created by,
any supplemental indenture permitted by this Article Nine or the modifications
thereby of the trusts created by this Indenture, the Trustee shall be entitled
to receive, and 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 and an Officers' Certificate stating that all
conditions precedent to the execution of such supplemental indenture have been
fulfilled. 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 Nine, 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
Nine shall conform as a matter of contract or law to the requirements of the
Trust Indenture Act as then in effect.
SECTION 906. Reference in Securities to Supplemental Indentures.
Securities authenticated and delivered after the execution of
any supplemental indenture pursuant to this Article Nine may bear a notation in
form approved by the Trustee and the Company 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.
SECTION 907. Notice of Supplemental Indentures.
Promptly after the execution by the Company and the Trustee of
any supplemental indenture pursuant to the provisions of Section902, the Company
shall give notice thereof to the Holders of each Outstanding Security affected,
in the manner provided for in Section106, setting forth in general terms the
substance of such supplemental indenture.
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ARTICLE TEN
COVENANTS
SECTION 1001. Payment of Principal, Premium, if Any, and Interest.
The Company covenants and agrees for the benefit of the
Holders that it shall 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 shall maintain in The City of NewYork 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 Corporate Trust Office of the Trustee shall be such
office or agency of the Company, unless the Company shall designate and maintain
some other office or agency for one or more of such purposes. The Company shall
give prompt written notice to the Trustee of any change in the location of any
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 of The City of NewYork) where the
Securities may be presented or surrendered for any or all such purposes and may
from time to time rescind any such designation; 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 City of NewYork for such
purposes. The Company shall give prompt written notice to the Trustee of any
such designation or rescission and 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 shall, on or before each due date of the principal of (or 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 of (or
premium, if any) or interest so becoming due until such
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sums shall be paid to such Persons or otherwise disposed of as herein provided
and shall promptly notify the Trustee of its action or failure so to act.
Whenever the Company shall have one or more Paying Agents for
the Securities, it shall, on or before each due date of the principal of (or
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 of such action or
any failure so to act.
The Company shall 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 1003, that such Paying Agent shall:
(1) hold all sums held by it for the payment of the principal,
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, 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) indemnify the Trustee and its officers, directors,
employees and agents against any loss, cost or liability caused by, or
incurred as a result of, such Paying Agent's acts or omissions.
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 sums.
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
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Security and remaining unclaimed for two years after such principal, premium or
interest has become due and payable shall be paid to the Company on 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
NewYork, 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. Corporate Existence.
Subject to Article Eight, the Company shall do or cause to be
done all things necessary to preserve and keep in full force and effect the
corporate existence, rights (charter and statutory) and franchises of the
Company and each Subsidiary; provided, however, that the Company shall not be
required to preserve, with respect to the Company, any such right or franchise
or, with respect to any Subsidiary (subject to all the other covenants in this
Indenture), any such corporate existence, 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 its Subsidiaries as a whole
and that the loss thereof is not disadvantageous in any material respect to the
Holders.
SECTION 1005. Payment of Taxes and Other Claims.
The Company shall pay or discharge or cause to be paid or
discharged, before the same shall become delinquent, (a)all taxes, assessments
and governmental charges levied or imposed upon the Company or any Restricted
Subsidiary or upon the income, profits or property of the Company or any
Restricted Subsidiary and (b)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 Restricted Subsidiary; 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 1006. Maintenance of Properties.
The Company shall cause all properties owned by the Company or
any Restricted Subsidiary or used or held for use in the conduct of its business
or the business of any Restricted Subsidiary to be maintained and kept in good
condition, repair and working order and supplied with all necessary equipment
and shall 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 1006 shall prevent the Company from discontinuing the
maintenance of any of such properties if such discontinuance is, in the judgment
of the Company, desirable in the conduct of its business or the business of any
Subsidiary and not disadvantageous in any material respect to the Holders.
SECTION 1007. Insurance.
The Company shall at all times keep all of its and its
Restricted Subsidiaries' properties which are of an insurable nature insured
with insurers, believed by the Company to be responsible, against loss or damage
to the extent that property of similar character is usually so insured by
Corporations similarly situated and owning like properties.
SECTION 1008. Provision of Financial Statements.
The Company will file with the Trustee on the date on which it
files them with the Commission copies of the annual and quarterly reports and
the information, documents, and other reports that the Company is required to
file with the Commission pursuant to Section 13(a) or 15(d) of the Exchange Act
("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 1009. Statement by Officers as to Default.
(a) The Company shall deliver to the Trustee, on the date of
delivery of each quarterly report to be delivered pursuant to Section 1008, a
brief certificate from the principal executive officer, principal financial
officer or principal accounting officer as to his or her knowledge of the
Company's compliance with all conditions and covenants under this Indenture. For
purposes of this Section1009(a), such compliance shall be determined without
regard to any period of grace or requirement of notice under this Indenture.
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(b) When any Default has occurred and is continuing under this
Indenture, or if the trustee for or the holder of any other evidence of Debt of
the Company or any Restricted Subsidiary gives any notice or takes any other
action with respect to a claimed default (other than with respect to Debt in the
principal amount of less than $5,000,000), the Company shall deliver to the
Trustee by registered or certified mail or by telegram, telex or facsimile
transmission an Officers' Certificate specifying such event, notice or other
action within five Business Days of its occurrence.
SECTION 1010. Purchase of Securities upon Change of Control.
(a) Upon the occurrence of a Change of Control, each Holder
shall have the right to require that the Company repurchase such Holder's
Securities in whole or in part in integral multiples of $1,000 principal amount,
in accordance with the procedures set forth in this Section 1010 and this
Indenture.
(b) Within 30 days of the occurrence of a Change of Control,
the Company shall mail an Offer with respect to an Offer to Purchase all
Outstanding Securities at a price in cash equal to 101% of the principal amount
of the Securities plus accrued and unpaid interest thereon, if any, to such
Purchase Date. Installments of interest (including Liquidated Interest) whose
Stated Maturity is on or prior to the Purchase 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. 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.
(c) The Company and the Trustee shall perform their respective
obligations for the Offer to Purchase as specified in the Offer. 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.
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(d) A "Change of Control" shall be deemed to have occurred at
such time as (i) a Rating Decline shall have occurred and (ii) either (A) the
sale, conveyance, transfer or lease of all or substantially all of the assets of
the Company to any Person or any Persons acting together that would constitute a
"group" (a "Group") for purposes of Section 13(d) of the Exchange Act, together
with any Affiliates or Related Persons thereof, other than any Permitted Holder
or any Restricted Subsidiary, shall have occurred; (B) any Person or Group,
together with any Affiliates or Related Persons thereof, other than any
Permitted Holder or any Restricted Subsidiary, shall beneficially own (within
the meaning of Rule 13d-3 under the Exchange Act, except that a Person shall be
deemed to have beneficial ownership of all shares that such Person has the right
to acquire, whether such right is exercisable immediately or only after the
passage of time) at least 50% of the aggregate voting power of all classes of
Voting Stock of the Company at a time when Permitted Holders own less than or
equal to 25% of the aggregate voting power of all classes of Voting Stock of the
Company; or (C) during any period of two consecutive years, Continuing Directors
cease for any reason to constitute a majority of the Board of Directors then in
office.
(e) In the event that the Company makes an Offer to Purchase
the Securities, the Company shall 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.
SECTION 1011. Limitation on Consolidated Debt.
(a) The Company shall not, and shall not permit any Restricted
Subsidiary to, Incur any Debt, unless, after giving effect to the application of
the proceeds thereof, no Default or Event of Default would occur as a
consequence of such Incurrence or be continuing following such Incurrence and
either (i)the ratio of (A)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 or repaid since such balance sheet date and the receipt
and application of the proceeds thereof, to (B) 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 any such Debt had been Incurred
and the proceeds thereof had been applied at the beginning of such four fiscal
quarters, would be less than 5.5 to 1.0 for Debt Incurred on or prior to April
1, 2000 and 5.0 to 1.0 for Debt Incurred thereafter, or (ii) 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 and
any other Debt Incurred or repaid since such balance sheet date and the receipt
and application of the proceeds thereof, is less than 2.0 to 1.0.
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(b) Notwithstanding the foregoing limitation, the Company and
any Restricted Subsidiary may Incur any and all of the following (each of which
shall be given independent effect):
(i) Debt under the Securities, this Indenture and any Restricted Subsidiary
Guarantee;
(ii) (A)Debt Incurred subsequent to March 31, 1997 under Credit Facilities
in an aggregate principal amount at any time outstanding not to exceed $150
million plus (B)Debt Incurred subsequent to March 31, 1997 under one or more
Credit Facilities that are revolving credit facilities in an aggregate principal
amount at any time outstanding not to exceed the greater of (x)$100 million or
(y)85% of Eligible Receivables;
(iii) Purchase Money Debt, provided that the amount of such
Purchase Money Debt does not exceed 100% of the cost of the
construction, installation, acquisition or improvement of the
applicable Telecommunications Assets;
(iv) 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 to a Person other than the Company or another such Restricted
Subsidiary, the provisions of this clause (iv) shall no longer be applicable to
such Debt and such Debt shall be deemed to have been Incurred by the issuer
thereof at the time of such transfer or other disposition;
(v) Debt Incurred to renew, extend, refinance, defease or refund (each, a
"refinancing") the Securities, notes issued under the Senior Note Indentures or
Debt of the Company Incurred pursuant to clause (iii) of this paragraph (b), 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
Board of Directors as necessary to accomplish such refinancing by means of a
tender offer or privately negotiated repurchase, plus the 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
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in right of payment to the Securities shall only be permitted under
this clause (v) 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 constitutes Subordinated Debt,
and, in the case of any refinancing of Subordinated Debt, the
refinancing Debt constitutes Subordinated Debt, and (B)in any 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 Stated Maturity 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 the acceleration of any payment with respect to 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 time the same are required by the
terms 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 of control pursuant to provisions substantially similar to
those described under Section1010;
(vi) Debt consisting of Permitted Interest Rate and Currency Protection
Agreements;
(vii) Debt secured by Receivables originated by the Company or any
Restricted Subsidiary and related assets, provided that such Debt is nonrecourse
to the Company and any of its other Restricted Subsidiaries and provided further
that Receivables shall not be available at any time to secure Debt of the
Company under this clause (vii) to the extent that they are used at such time as
the basis for the Incurrence of Debt in excess of $100 million pursuant to
clause (ii)(B)(y) of this paragraph (b); and
(viii) Debt not otherwise permitted to be Incurred pursuant to
clauses (i) through (vii) above, which, together with any other
outstanding Debt Incurred pursuant to this clause (viii), has an
aggregate principal amount not in excess of $25 million at any time
outstanding.
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SECTION 1012. Limitation on Debt and Preferred Stock of Restricted
Subsidiaries.
The Company shall not permit any Restricted Subsidiary that is
not a Guarantor to Incur any Debt or issue any Preferred Stock except any and
all of the following (each of which shall be given independent effect):
(i) Restricted Subsidiary Guarantees;
(ii) Debt of Restricted Subsidiaries under Credit Facilities
permitted to be Incurred pursuant to clause (ii) of paragraph (b) of
Section 1011;
(iii) Purchase Money Debt of Restricted Subsidiaries permitted
to be Incurred pursuant to clause (iii) of paragraph (b) of Section
1011;
(iv) Debt owed by a Restricted Subsidiary of the Company to
the Company or a Restricted Subsidiary of the Company permitted to be
Incurred pursuant to clause (iv) of paragraph (b) of Section 1011;
(v) Debt of Restricted Subsidiaries consisting of Permitted
Interest Rate and Currency Protection Agreements permitted to be
Incurred pursuant to clause (vi) of paragraph (b) of Section 1011;
(vi) Debt of Restricted Subsidiaries secured by Receivables
originated by the Company or any Restricted Subsidiary and related
assets permitted to be Incurred pursuant to clause (vii) of paragraph
(b) of Section 1011;
(vii) Debt of Restricted Subsidiaries permitted to be Incurred
pursuant to clause (viii) of paragraph (b) of Section 1011;
(viii) Preferred Stock issued to and held by the Company or a Restricted
Subsidiary;
(ix) Debt Incurred or Preferred Stock issued by a Person prior to the time
(A)such Person became a Restricted Subsidiary, (B)such Person merges into or
consolidates with a Restricted Subsidiary or (C)another Restricted Subsidiary
merges into or consolidates with such Person (in a transaction in which such
Person becomes a Restricted Subsidiary), which Debt or Preferred Stock was not
Incurred or issued in anticipation of such transaction and was outstanding prior
to such transaction; and
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(x) Debt or Preferred Stock which is exchanged for, or the proceeds of
which are used to renew, extend, refinance, defease, refund or redeem, any Debt
of a Restricted Subsidiary permitted to be Incurred pursuant to clause (iii) of
this Section 1012 or any Debt or Preferred Stock of a Restricted Subsidiary
permitted to be Incurred pursuant to clause (ix) of this Section 1012 (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 applicable 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 (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 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) which is conditioned upon the change of control of
the Company pursuant to provisions substantially similar to those contained in
Section1010, and provided further that, in the case of any exchange or
redemption of Preferred Stock of a Restricted Subsidiary, such Preferred Stock
may only be exchanged for or redeemed with Preferred Stock of such Restricted
Subsidiary.
SECTION 1013. Limitation on Restricted Payments.
The Company (i) shall not, and shall not permit any Restricted
Subsidiary to, directly or indirectly, declare or pay any dividend, or make any
distribution, in respect of its Capital Stock or to the holders thereof,
excluding any dividends or distributions which are
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made solely to the Company or a Restricted Subsidiary (and, if such Restricted
Subsidiary is not a Wholly Owned Subsidiary, to the other stockholders of such
Restricted Subsidiary on a pro rata basis) or 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)shall not, and shall not permit any Restricted
Subsidiary to, purchase, redeem or otherwise retire or acquire for value (x)any
Capital Stock of the Company, any Restricted Subsidiary or any Related Person of
the Company (other than a permitted refinancing) or (y) any options, warrants or
rights to purchase or acquire shares of Capital Stock of the Company, any
Restricted Subsidiary or any Related Person of the Company or any securities
convertible or exchangeable into shares of Capital Stock of the Company, any
Restricted Subsidiary or any Related Person of the Company (other than a
permitted refinancing), except, in any such case, any such purchase, redemption
or retirement or acquisition for value paid to the Company or a Restricted
Subsidiary (or, in the event of any such purchase, redemption or other
retirement or acquisition for value with respect to a Restricted Subsidiary that
is not a Wholly Owned Subsidiary, paid to the Company or a Restricted
Subsidiary, or to the other stockholders of such Restricted Subsidiary that is
not a Wholly Owned Subsidiary, on a pro rata basis); (iii) shall 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; and (iv) shall not, and shall 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 (other than a permitted refinancing) (each of clauses (i) through
(iv) being a "Restricted Payment") if: (1) an Event of Default, or an event that
with the passing of time or the giving of notice, or both, would constitute an
Event of Default, shall have occurred and be 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 terms of paragraph (a) of Section 1011, or (3)
upon giving effect to such Restricted Payment, the aggregate of all Restricted
Payments from March 31, 1997 exceeds the sum of: (a)50% of cumulative
Consolidated Net Income (or, in the event that Consolidated Net Income shall be
negative, 100% of such negative amount) since the end of the last full fiscal
quarter prior to March 31, 1997 through the last day of the last full fiscal
quarter ending at least 45 days prior to the date of such Restricted Payment,
(b)plus $5 million, (c)less, in the case of any Designation with respect to a
Restricted Subsidiary that was made after March 31, 1997, an amount equal to the
Designation Amount with respect to such Restricted Subsidiary, (d)plus, in the
case of any Revocation made after March 31, 1997, an amount equal to the lesser
of the Designation Amount with respect to the Subsidiary with respect to which
such Designation was made or the Fair Market Value of the Investment of the
Company and its Restricted Subsidiaries in such Subsidiary at the time of
Revocation; provided, however, that the Company or a Restricted Subsidiary of
the Company may make any Restricted Payment with the aggregate net cash proceeds
received after March 31, 1997 as capital contributions to the Company or from
the issuance (other than to a 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
Subsidiary) of the Company after March 31, 1997.
Notwithstanding the foregoing limitation, (i) the Company and
any Restricted Subsidiary may make Permitted Investments; (ii) the Company may
pay any dividend on Capital Stock of any class of the Company 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; (iii) the Company may repurchase any shares of its Common Stock or
options to acquire its Common Stock from Persons who were formerly directors,
officers or employees of the Company or any of its Subsidiaries or Affiliates,
provided that the aggregate amount of all such repurchases made pursuant to this
clause (iii) shall not exceed $1 million in any twelve-month period; (iv) the
Company and any Restricted Subsidiary may refinance any Debt otherwise permitted
by clause (v) of paragraph (b) of Section 1011 or clause (x) of Section 1012;
and (v) the Company and any Restricted Subsidiary may retire or repurchase any
Capital Stock of the Company or of any Restricted Subsidiary in exchange for, or
out of the proceeds of the substantially concurrent sale (other than to a
Subsidiary of the Company) of, Capital Stock (other than Disqualified Stock) of
the Company.
SECTION 1014. Limitation on Dividend and Other Payment Restrictions
Affecting Restricted Subsidiaries.
(a) The Company shall not, and shall 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 (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 or to 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.
(b) Notwithstanding the foregoing limitation, the Company may,
and may permit any Restricted Subsidiary to, create or otherwise cause or suffer
to exist any such encumbrance or restriction (i) pursuant to any agreement in
effect on March 31, 1997; (ii) any customary encumbrance or restriction
applicable to a Restricted Subsidiary that is contained in an agreement or
instrument governing or relating to Debt contained in any Credit Facilities or
Purchase Money Debt, provided that the provisions of such agreement permit the
payment of interest and mandatory payment or prepayment of principal pursuant to
the terms of this Indenture and the Securities and other Debt that is solely an
obligation of the Company, but provided further that such agreement may
nevertheless contain customary net worth, leverage,
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invested capital and other financial covenants, customary covenants regarding
the merger of or sale of all or any substantial part of the assets of the
Company or any Restricted Subsidiary, customary restrictions on transactions
with Affiliates, and customary subordination provisions governing Debt owed to
the Company or any Restricted Subsidiary; (iii) 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; (iv) pursuant to an agreement effecting a renewal,
refunding, permitted refinancing or extension of Debt Incurred pursuant to an
agreement referred to in clause (i), (ii) or (iii) of this paragraph (b),
provided, however, that the provisions contained in such renewal, refunding,
permitted refinancing or extension agreement relating to such encumbrance or
restriction are no more restrictive in any material respect than the provisions
contained in the agreement the subject thereof; (v) in the case of clause (iii)
of paragraph (a) of this Section 1014, 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; (vi) in the case of clause (iii) of paragraph (a) of
this Section 1014, customary nonassignment provisions entered into in the
ordinary course of business in leases and other agreements and customary
restrictions contained in asset sale agreements limiting the transfer of such
property or assets pending the closing of such sale; (vii) any restriction with
respect to a Restricted Subsidiary 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 the
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 the consummation or abandonment of such transaction occurs within one
year of the date such agreement was entered into; (viii) pursuant to applicable
law; and (ix) pursuant to this Indenture, the Securities, notes issued under the
Senior Note Indentures and the Senior Note Indentures.
SECTION 1015. Limitation on Liens.
The Company shall not, and shall not permit any Restricted
Subsidiary to, Incur or suffer to exist any Lien on or with respect to any
property or assets now owned or acquired after March 31, 1997 to secure any Debt
without making, or causing such Restricted Subsidiary to make, effective
provision for securing the Securities (x) equally and ratably with 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 March 31, 1997 and securing Debt outstanding on March 31, 1997; (ii)
Liens in favor of the Company or any Restricted Subsidiary; (iii) Liens to
secure the Securities; (iv) Liens to secure Restricted
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Subsidiary Guarantees; (v) Liens to secure Debt under Credit Facilities
permitted to be Incurred pursuant to clause (ii) of paragraph (b) of Section
1011; (vi)Liens on real or personal property of the Company or a Restricted
Subsidiary constructed, installed, acquired or constituting improvements made
after the date of original issuance of the Securities to secure Purchase Money
Debt permitted to be Incurred pursuant to clause (iii) of paragraph (b) of
Section 1011, provided, however, that (a) the principal amount of any Debt
secured by such a Lien does not exceed 100% of such purchase price or cost of
construction, installation or improvement of the property subject to such Lien,
(b) such Lien attaches to such property prior to, at the time of or within 270
days after the acquisition, the completion of construction, installation or
improvement or the commencement of operation of such property and (c) such Lien
does not extend to or cover any property other than the specific item of
property (or portion thereof) acquired, constructed, installed or constituting
the improvements financed by the proceeds of such Purchase Money Debt; (vii)
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; (viii) 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), (iii), (iv), (v), (vi) and (vii)
of this Section 1015 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 (v) of paragraph (b) of Section 1011 or clause (x) of
Section 1012; (ix) Liens to secure debt consisting of Permitted Interest Rate
and Currency Protection Agreements permitted to be Incurred pursuant to clause
(vi) of paragraph (b) of Section 1011; (x) Liens to secure Debt secured by
Receivables permitted to be Incurred pursuant to clause (vii) of paragraph (b)
of Section 1011; (xi) Liens to secure Debt of Restricted Subsidiaries permitted
to be Incurred pursuant to clause (viii) of paragraph (b) of Section 1011; (xii)
Liens not otherwise permitted by the foregoing clauses (i) through (xi) in an
amount not to exceed 5% of the Company's Consolidated Tangible Assets; and
(xiii) Permitted Liens.
SECTION 1016. Limitation on Issuances of Certain Guarantees by, and Debt
Securities of, Restricted Subsidiaries.
The Company shall not (i)permit any Restricted Subsidiary to,
directly or indirectly, guarantee any Debt Securities of the Company or (ii)
permit any Restricted Subsidiary to issue any Debt Securities unless, in either
such case, such Restricted Subsidiary simultaneously executes and delivers a
Restricted Subsidiary Guarantee providing for a Guarantee of payment of the
Securities.
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SECTION 1017. Limitation on Sale and Leaseback Transactions.
The Company shall not, and shall not permit any Restricted
Subsidiary to, directly or indirectly, enter into, assume, Guarantee or
otherwise become liable with respect to any Sale and Leaseback Transaction,
other than a Sale and Leaseback Transaction between the Company or a Restricted
Subsidiary on the one hand and a Restricted Subsidiary or the Company on the
other hand, 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
1015, equal in amount to the Attributable Value of the Sale and Leaseback
Transaction, without equally and ratably securing the Securities and (ii)the
Sale and Leaseback Transaction is treated as an Asset Disposition and all of the
conditions of Section 1018 (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 as Net Available Proceeds for purposes of such Section
1018.
SECTION 1018. Limitation on Asset Dispositions.
The Company shall not, and shall not permit any Restricted
Subsidiary to, make any Asset Disposition 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; and (ii) at least 75% of the consideration for such
disposition consists of cash or Cash Equivalents or the assumption of Debt of
the Company (other than Debt that is subordinated to the Securities) or of the
Restricted Subsidiary and release from all liability on the Debt assumed. If the
aggregate of Net Available Proceeds within any twelve-month period exceeds $5
million, then all such Net Available Proceeds shall be applied within 360 days
of the last such Asset Disposition (1) first, to the permanent repayment or
reduction of Debt then outstanding under any Credit 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 a price in cash
equal to 100% of the principal amount of the Securities on the Purchase Date
plus accrued and unpaid interest thereon and premium, if any, to such Purchase
Date 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 and unpaid interest to the purchase
date (or 100% of the accreted value plus accrued and unpaid interest and
premium, if any, to the purchase date in the case of original issue discount
Debt); (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, to the extent permitted
under the terms thereof; and (4) fourth, to the extent of any remaining Net
Available Proceeds, to any other use as determined by the Company which is not
otherwise prohibited by this Indenture.
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SECTION 1019. Limitation on Issuances and Sales of Capital Stock of
Restricted Subsidiaries.
The Company shall not, and shall not permit any Restricted
Subsidiary to, issue, transfer, convey, sell or otherwise dispose of any shares
of Capital Stock of a Restricted Subsidiary or securities convertible or
exchangeable into, or options, warrants, rights or any other interest with
respect to, Capital Stock of a Restricted Subsidiary to any Person other than
the Company or a Restricted Subsidiary except: (i) a sale of all of the Capital
Stock of such Restricted Subsidiary owned by the Company and any Restricted
Subsidiary that complies with the provisions of Section 1018 to the extent such
provisions apply; (ii) in a transaction that results in such Restricted
Subsidiary becoming a Permitted Joint Venture, provided (x) such transaction
complies with the provisions of Section1018 to the extent such provisions apply
and (y)the Company's remaining Investment in such Permitted Joint Venture would
have been permitted as a new Investment under the provisions of Section 1013;
(iii)the transfer, conveyance, sale or other disposition of shares required by
applicable law or regulation; (iv)if required, the issuance, transfer,
conveyance, sale or other disposition of directors' qualifying shares; or (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 1020. Transactions with Affiliates and Related Persons.
The Company shall not, and shall not permit any Restricted
Subsidiary 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
Restricted Subsidiary), including any Investment, unless such transaction is on
terms 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 and is in the best interests of the
Company or such Restricted Subsidiary, provided that the Company or any
Restricted Subsidiary may enter into: (i) transactions pursuant to the Company's
tax sharing agreement entered into with Anschutz Company existing at the date of
execution of this Indenture described under the caption "Certain Relationships
and Related Transactions" in the Companys annual report on Form 10-K for the
year ended December 31, 1997, incorporated by reference in the Offering
Memorandum, provided that any amendment of, supplement to or substitute for such
agreement is on terms that are no less favorable to the Company or such
Restricted Subsidiary than such existing agreement; (ii)transactions pursuant to
employee compensation arrangements approved by the Board of Directors, either
directly or indirectly; and
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(iii)Receivables Sales between the Company or a Restricted Subsidiary and an
Affiliate of the Company or such Restricted Subsidiary, provided that such
Receivables Sales satisfy the provisions of clauses (i) and (ii) of Section
1018. For any transaction that involves in excess of $10 million but less than
or equal to $15 million, the Company shall deliver to the Trustee an Officers'
Certificate stating that the transaction satisfies the above criteria. For any
transaction that involves in excess of $15 million, a majority of the
disinterested members of the Board of Directors shall determine that the
transaction satisfies the above criteria and shall evidence such a determination
by a Board Resolution or, in the event that there shall not be disinterested
members of the Board of Directors with respect to the transaction, the Company
shall file with the Trustee a written opinion stating that the transaction
satisfies the above criteria from an investment banking firm of national
standing in the United States which, in the good faith judgment of the Board of
Directors, is independent with respect to the Company and its Affiliates and
qualified to perform such task.
SECTION 1021. Limitation on Designations of Unrestricted Subsidiaries.
The Company shall not designate any Subsidiary of the Company
(other than a newly created Subsidiary in which no Investment has previously
been made) as an Unrestricted Subsidiary (a "Designation") unless:
(a) no Default or Event of Default shall have occurred and be
continuing at the time of or after giving effect to such Designation;
(b) immediately after giving effect to such Designation, the
Company would be able to Incur $1.00 of Debt under paragraph (a) of
Section 1011; and
(c) the Company would not be prohibited under any provision of
this Indenture from making an Investment at the time of Designation
(assuming the effectiveness of such Designation) in an amount (the
"Designation Amount") equal to the Fair Market Value of the net
Investment of the Company or any other Restricted Subsidiary in such
Restricted Subsidiary on such date.
In the event of any such Designation, the Company shall be
deemed to have made an Investment constituting a Restricted Payment pursuant to
Section 1013 for all purposes of this Indenture in the Designation Amount. In
addition, neither the Company nor any Restricted Subsidiary shall at any time
(x) provide credit support for, or a guarantee of, any Debt of any Unrestricted
Subsidiary (including any undertaking, agreement or instrument evidencing such
Debt), provided that the Company or a Restricted Subsidiary may pledge Capital
Stock or Debt of any Unrestricted Subsidiary on a nonrecourse basis such that
the pledgee has no claim whatsoever against the Company other than to obtain
such pledged property, (y) be directly or indirectly liable for any Debt of any
Unrestricted Subsidiary or (z)
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be directly or indirectly liable for any Debt which provides that the holder
thereof may (upon notice, lapse of time or both) declare a default thereon or
cause the payment thereof to be accelerated or payable prior to its final
scheduled maturity upon the occurrence of a default with respect to any Debt of
any Unrestricted Subsidiary (including any right to take enforcement action
against such Unrestricted Subsidiary), except in the case of clause (x) or (y)
to the extent permitted under Section 1013 or 1020.
A Designation may be revoked (a "Revocation") by a Board
Resolution, provided that the Company shall not make any Revocation unless:
(a) no Default or Event of Default shall have occurred and be
continuing at the time of and after giving effect to such Revocation;
and
(b) all Liens and Debt of such Unrestricted Subsidiary
outstanding immediately following such Revocation would, if Incurred at
such time, have been permitted to be Incurred at such time for all
purposes of this Indenture.
All Designations and Revocations must be evidenced by Board
Resolutions certifying compliance with the foregoing provisions.
SECTION 1022. No Repayment of Existing Parent Company Advances with the
Proceeds of the Securities.
The Company shall not apply any portion of the proceeds of the
offering of the Securities toward the repayment of advances made to the Company
or any of its Subsidiaries by any parent company of the Company outstanding at
the date of execution of this Indenture.
SECTION 1023. Waiver of Certain Covenants.
The Company may omit in any particular instance to comply with
any term, provision or condition set forth in Sections1007 through 1022,
inclusive, if before or after the time for such compliance the Holders of at
least a majority in principal amount of the Outstanding Securities, by Act of
such Holders, waive such compliance in such instance with such term, provision
or condition, but no such waiver shall extend to or affect such term, provision
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 term, provision or condition shall remain in full
force and effect.
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SECTION 1024. Trustee Not to Monitor Performance.
The Trustee shall have no duty to confirm or monitor the
performance by the Company of its duties pursuant to the covenants set forth in
this Article Ten.
SECTION 1025. Suspended Covenants.
During any period of time (a "Suspension Period") that (i) the
ratings assigned to the Securities by both the Rating Agencies are Investment
Grade Ratings and (ii) no Default or Event of Default has occurred and is
continuing under this Indenture, the Company and its Restricted Subsidiaries
shall not be subject to the terms of Sections 1011, 1012, 1013, 1014, 1016,
1018, 1019, 1020, clause (ii) of Section 1017 and paragraph (4) of Section 801
(collectively, the "Suspended Covenants"). In the event that the Company and its
Restricted Subsidiaries are not subject to the Suspended Covenants with respect
to the Securities for any period of time as a result of the preceding sentence
and, subsequently, one or both Rating Agencies withdraws or downgrades the
ratings assigned to such Securities below the required Investment Grade Ratings,
then the Company and its Restricted Subsidiaries will thereafter again be
subject to the Suspended Covenants and compliance with respect to Restricted
Payments made after the time of such withdrawal or downgrade will be calculated
in accordance with the provisions of Section 1013 as if such covenant had been
in effect since the date of execution of this Indenture. Notwithstanding the
foregoing, neither (a) the continued existence, after the date of such
withdrawal or downgrade, of facts and circumstances or obligations that were
Incurred or otherwise came into existence during a Suspension Period nor (b) the
performance of any such obligations, shall constitute a breach of any covenant
set forth in this Indenture or cause a Default or Event of Default thereunder;
provided that (1) the Company and its Restricted Subsidiaries did not Incur or
otherwise cause such facts and circumstances or obligations to exist in
anticipation of a withdrawal or downgrade by one or both of the Rating Agencies
below an Investment Grade Rating and (2)the Company reasonably believed that
such Incurrence or actions would not result in such a withdrawal or downgrade.
For purposes of clauses (1) and (2) in the preceding sentence, anticipation and
reasonable belief may be determined by the Company and shall be conclusively
evidenced by a Board Resolution to such effect adopted in good faith by the
Board of Directors of the Company. In reaching their determination, the Board of
Directors may, but need not, consult with the Rating Agencies.
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ARTICLE ELEVEN
REDEMPTION OF SECURITIES
SECTION 1101. Right of Redemption.
The Securities will be subject to redemption at the option of
the Company, in whole or in part, at any time, upon not less than 30 nor more
than 60 days' prior notice, at a Redemption Price equal to the principal amount
thereof, plus accrued and unpaid interest thereon, if any, to the Redemption
Date plus the Applicable Make-Whole Premium.
SECTION 1102. Applicability of Article.
Redemption of Securities at the election of the Company or
otherwise, 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 Section1101 shall be evidenced by a Board Resolution. In case of any
redemption at the election of the Company, 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 of such Redemption Date and
of the principal amount of Securities to be redeemed and shall deliver to the
Trustee such documentation and records as shall enable the Trustee to select the
Securities to be redeemed pursuant to Section1104.
SECTION 1104. Selection by Trustee of Securities to Be Redeemed.
If less than all the Securities are to be redeemed, the
particular Securities to be redeemed shall be selected not more than 60 days
prior to the Redemption Date by the Trustee, from the Outstanding Securities not
previously called for redemption, by such method as the Trustee shall deem fair
and appropriate and which may provide for the selection for redemption of
portions of the principal amount of Securities; provided, however, that no such
partial redemption shall reduce the portion of the principal amount of a
Security not redeemed to less than $1,000.
The Trustee shall promptly notify the Company 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.
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For all purposes of this Indenture, unless the context
otherwise requires, all provisions relating to redemption of Securities shall
relate, in the case of any Security redeemed or to be redeemed only in part, to
the portion of the principal amount of such Security which has been or is to be
redeemed.
SECTION 1105. Notice of Redemption.
Notice of redemption shall be given in the manner provided for
in Section106 not less than 30 nor more than 60 days prior to the Redemption
Date, to each Holder of Securities to be redeemed.
Each notice of redemption shall state:
(1) the Redemption Date,
(2) the Redemption Price and the amount of accrued interest to the
Redemption Date payable as provided in Section1107, if any,
(3) if less than all Outstanding Securities are to be redeemed, the
identification (and, in the case of a partial redemption, the principal amount)
of the particular Securities to be redeemed,
(4) in case any Security is to be redeemed in part only, that on and after
the Redemption Date, upon surrender of such Security, the Holder will receive,
without charge, a new Security or Securities of authorized denominations for the
principal amount thereof remaining unredeemed,
(5) that on the Redemption Date the Redemption Price (and accrued interest,
if any, to the Redemption Date payable as provided in Section1107) will become
due and payable upon each such Security, or the portion thereof, to be redeemed,
and that interest thereon will cease to accrue on and after said date, and
(6) the place or places where such Securities are to be presented and
surrendered for payment of the Redemption Price and accrued interest, if any.
Notice of redemption of Securities to be redeemed at the
election of the Company shall be given by the Company or, at the Company's
request, 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 Section1003) an amount
of money sufficient to pay the Redemption Price of, and accrued 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 (together with accrued
interest, if any, to the Redemption Date), and from and after such date (unless
the Company shall default in the payment of the Redemption Price and accrued
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 interest,
if any, 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 Section307.
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 interest rate
borne by the Securities.
SECTION 1108. Securities Redeemed in Part.
Any Security which is to be redeemed only in part shall be
surrendered at the office or agency of the Company maintained for such purpose
pursuant to Section1002 (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 such Holder's
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 any authorized denomination as
requested by such Holder, in aggregate principal amount equal to and in exchange
for the unredeemed portion of the principal amount of the Security so
surrendered.
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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, with respect to the Securities, elect to have either Section1202 or
Section1203 be applied to all Outstanding Securities upon compliance with the
conditions set forth below in this ArticleTwelve.
SECTION 1202. Defeasance and Discharge.
Upon the Company's exercise under Section1201 of the option
applicable to this Section1202, the Company shall be deemed to have been
discharged from its obligations with respect to all Outstanding Securities on
the date the conditions set forth in Section1204 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, which shall thereafter be deemed to be "Outstanding"
only for the purposes of Section1205 and the other Sections of this Indenture
referred to in clauses (A) and (B) below, 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 Section1204 and as more fully set forth in such Section, payments
in respect of the principal of, premium, if any, and interest on such Securities
when such payments are due (but not the Purchase Price referred to in Section
1010) and any rights of the Holders with respect to such amounts, (B)the
Company's obligations with respect to such Securities under Sections304, 305,
306, 1002 and 1003, (C)the rights, powers, trusts, duties and immunities of the
Trustee hereunder and (D)this ArticleTwelve. Subject to compliance with this
Article Twelve, the Company may exercise its option under this Section1202
notwithstanding the prior exercise of its option under Section1203 with respect
to the Securities.
SECTION 1203. Covenant Defeasance.
Upon the Company's exercise under Section1201 of the option
applicable to this Section1203, the Company shall be released from its
obligations under any covenant contained in Section801(4) and in Sections1007
through 1021 with respect to the Outstanding
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Securities on and after the date the conditions set forth below are satisfied
(hereinafter, "covenant defeasance"), and the Securities shall thereafter be
deemed not to be "Outstanding" for the purposes of any direction, waiver,
consent or declaration or Act of Holders (and the consequences of any thereof)
in connection with such covenants, but shall continue to be deemed "Outstanding"
for all other purposes hereunder. For this purpose, such covenant defeasance
means that, with respect to the Outstanding Securities, 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 covenant, whether directly or indirectly, by
reason of any reference elsewhere herein to any such covenant or by reason of
any reference in any such covenant to any other provision herein or in any other
document and such omission to comply shall not constitute a Default or an Event
of Default under Section501(3), 501(4) or 501(5), but, except as specified
above, 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
Section1202 or Section1203 to the Outstanding Securities:
(1) The Company shall irrevocably have deposited or caused to
be deposited with the Trustee (or another trustee satisfying the
requirements of Section608 who shall agree to comply with the
provisions of this ArticleTwelve applicable to it) 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) Government
Securities 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 in
respect of the Securities, money in an amount (which, for the purpose
of clarification, shall be sufficient to pay such amounts regardless of
whether any call features in such Government Securities are exercised),
or (C)a combination thereof, sufficient, in the opinion of a nationally
recognized firm of independent public accountants expressed in a
written certification thereof delivered to the Trustee, to pay and
discharge, and which shall be applied by the Trustee (or other
qualifying trustee) to pay and discharge, the principal of (and
premium, if any) and interest on the Outstanding Securities on the
Stated Maturity (or Redemption Date, if applicable) of such principal
(and premium, if any) or installment of interest; provided that the
Trustee shall have been irrevocably instructed in writing to apply such
money or the proceeds of such Government Securities to said payments
with respect to the Securities. Before such a deposit, the Company may
give to the Trustee, in accordance with Section1103, a notice of its
election to redeem all of the Outstanding Securities at a future date
in accordance with ArticleEleven, which notice shall be irrevocable.
Such irrevocable redemption notice, if given, shall be given effect in
applying the foregoing.
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(2) No Default or Event of Default with respect to the
Securities shall have occurred and be continuing on the date of such
deposit or, insofar as paragraphs(8) and (9) of Section501 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 result in
a breach or violation of, or constitute a default under, this Indenture
or any other material agreement or instrument to which the Company is a
party or by which it is bound.
(4) In the case of an election under Section1202, 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 October 28, 1998 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 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 defeasance had not occurred.
(5) In the case of an election under Section1203, the Company
shall have delivered to the Trustee an Opinion of Counsel to the effect
that (i) the Holders of the Outstanding Securities will not recognize
income, gain or loss for federal income tax purposes as a result of
such 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 and
(ii) the Company's deposit will not result in the Trust or the Trustee
being subject to regulation under the Investment Company Act of 1940.
(6) 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 Section1202 or the covenant defeasance under Section1203 (as the
case may be) have been complied with.
SECTION 1205. Deposited Money and Government Securities to Be Held in
Trust; Other Miscellaneous Provisions.
Subject to the provisions of the last paragraph of
Section1003, all money and Government Securities (including the proceeds
thereof) deposited with the Trustee (or other qualifying trustee, collectively
for purposes of this Section1205, the "Trustee") pursuant to Section1204 in
respect of the Outstanding Securities shall be held in trust and applied by the
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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, 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 and (if
applicable) its officers, directors, employees and agents against any tax, fee
or other charge imposed on or assessed against the Government Securities
deposited pursuant to Section1204 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 Government Securities held by it as
provided in Section1204 which, in the opinion of a nationally recognized firm of
independent public accountants 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, as applicable, in accordance with this Article Twelve.
SECTION 1206. Reinstatement.
If the Trustee or any Paying Agent is unable to apply any
money in accordance with Section1205 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 Section1202 or 1203, as the case may be, until such time as the
Trustee or Paying Agent is permitted to apply all such money in accordance with
Section1205; provided, however, that if the Company makes any payment of
principal of, premium, if any, or interest on 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 Paying Agent.
NYDOCS01/566567 3
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this
Indenture to be duly executed, and their respective corporate seals to be
hereunto affixed and attested, all as of the day and year first above written.
QWEST COMMUNICATIONS
INTERNATIONAL INC.
By: /s/__________________________________
Title:
Attest: /s/___________________________
Title:
BANKERS TRUST COMPANY, Trustee
By: /s/_______________________________
Title:
NYDOCS01/566567 3
<PAGE>
A-1
EXHIBIT A
Form of Face of Security
[If a Global Security, then insert:] THIS SECURITY IS A GLOBAL
SECURITY WITHIN THE MEANING OF THE INDENTURE HEREINAFTER REFERRED TO AND IS
REGISTERED IN THE NAME OF A DEPOSITORY OR A NOMINEE OF A DEPOSITORY OR A
SUCCESSOR DEPOSITORY. THIS SECURITY IS NOT EXCHANGEABLE FOR SECURITIES
REGISTERED IN THE NAME OF A PERSON OTHER THAN THE DEPOSITORY OR ITS NOMINEE
EXCEPT IN THE LIMITED CIRCUMSTANCES DESCRIBED IN THE INDENTURE, AND NO TRANSFER
OF THIS SECURITY (OTHER THAN A TRANSFER OF THIS SECURITY AS A WHOLE BY THE
DEPOSITORY TO A NOMINEE OF THE DEPOSITORY OR BY A NOMINEE OF THE DEPOSITORY TO
THE DEPOSITORY OR ANOTHER NOMINEE OF THE DEPOSITORY) MAY BE REGISTERED EXCEPT IN
THE LIMITED CIRCUMSTANCES DESCRIBED IN THE INDENTURE.
[If a Global Security, then insert:] UNLESS THIS CERTIFICATE
IS PRESENTED BY AN AUTHORIZED REPRESENTATIVE OF THE DEPOSITORY TRUST COMPANY, A
NEW YORK CORPORATION ("DTC"), TO THE COMPANY OR ITS AGENT FOR REGISTRATION OF
TRANSFER, EXCHANGE, OR PAYMENT, AND ANY CERTIFICATE 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 OR TO ANY PERSON IS
WRONGFUL INASMUCH AS THE REGISTERED OWNER HEREOF, CEDE & CO., HAS AN INTEREST
HEREIN.
[If a Rule 144A Security, then insert:] THIS SECURITY HAS NOT
BEEN REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED (THE
"SECURITIES ACT"), AND MAY NOT BE OFFERED, SOLD, PLEDGED OR OTHERWISE
TRANSFERRED EXCEPT (A)(1) TO A PERSON WHOM THE SELLER REASONABLY BELIEVES IS A
QUALIFIED INSTITUTIONAL BUYER WITHIN THE MEANING OF RULE 144A UNDER THE
SECURITIES ACT ("RULE144A") IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE
144A, (2) IN AN OFFSHORE TRANSACTION MEETING THE REQUIREMENTS OF RULE 903 OR
RULE 904 OF REGULATION S UNDER THE SECURITIES ACT, OR (3) PURSUANT TO AN
EXEMPTION FROM REGISTRATION UNDER THE SECURITIES ACT PROVIDED BY RULE 144
THEREUNDER (IF AVAILABLE) AND (B) IN ACCORDANCE WITH ALL APPLICABLE SECURITIES
LAWS OF THE STATES OF THE UNITED STATES.
NYDOCS01/566567 3
<PAGE>
A-2
[If a Regulation S Security, then insert:] THIS SECURITY HAS
NOT BEEN REGISTERED UNDER THE UNITED STATES SECURITIES ACT OF 1933, AS AMENDED
(THE "SECURITIES ACT"), AND, PRIOR TO THE EXPIRATION OF THE DISTRIBUTION
COMPLIANCE PERIOD (DEFINED AS 40 DAYS AFTER THE ISSUE DATE WITH RESPECT TO THE
SECURITIES), MAY NOT BE OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED EXCEPT
(A)(1) IN AN OFFSHORE TRANSACTION IN ACCORDANCE WITH RULE 903 OR RULE 904 OF
REGULATION S OR (2) TO A PERSON WHOM THE SELLER REASONABLY BELIEVES IS A
QUALIFIED INSTITUTIONAL BUYER WITHIN THE MEANING OF RULE 144A UNDER THE
SECURITIES ACT ("RULE 144A") IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE
144A, AND (B) IN ACCORDANCE WITH ALL APPLICABLE SECURITIES LAWS OF THE STATES OF
THE UNITED STATES.
QWEST COMMUNICATIONS
INTERNATIONAL INC.
7.50% [Series B] Senior Note Due 2008
CUSIP: ________
No. __________ $_____________
Qwest Communications International Inc., a Delaware
corporation (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 [if a Global Security, then insert: (which
principal amount may from time to time be increased or decreased to such other
principal amounts which, taken together with the principal amounts of all other
Outstanding Securities, shall not exceed $750,000,000 in the aggregate at any
time, by adjustments made on the records of the Trustee hereinafter referred to
in accordance with the Indenture)] on November 1, 2008, at the office or agency
of the Company referred to below, and to pay cash interest thereon, semiannually
on May 1 and November 1 in each year, commencing on May 1, 1999, accruing from
November 4, 1998 or from the most recent Interest Payment Date to which cash
interest has been paid or duly provided for, at the rate of 7.50% per annum,
until the principal hereof is paid or duly provided for, and (to the extent
lawful) to pay on demand interest on any overdue interest at the rate borne by
the Securities from the date on which such
- --------
Include only for Exchange Securities.
NYDOCS01/566567 3
<PAGE>
A-3
overdue interest becomes payable to the date payment of such interest has been
made or duly provided for; provided, however, that if (i) (a) the Company has
not filed a registration statement (the "Registration Statement") under the
Securities Act of 1933, as amended (the "Securities Act") within 90 days after
November 4, 1998, with respect to a registered offer (the "Exchange Offer") to
exchange this Security for a security (an "Exchange Security") with terms
identical in all material respects to this Security (except that such security
will not contain terms with respect to registration rights or transfer
restrictions, and provisions regarding interest and Liquidated Interest
(described below) will be modified or eliminated, as appropriate), or (b) the
Registration Statement has not been declared effective within 150 days after
November 4, 1998, or (c) the Exchange Offer has not been consummated within 180
days after November 4, 1998; or (ii) in lieu thereof, the Company has not filed
a shelf registration statement (the "Shelf Registration Statement") under the
Securities Act within 210 days after November 4, 1998, covering resales of this
Security and such Shelf Registration Statement has not been declared effective;
or (iii) either the Registration Statement or, if applicable, the Shelf
Registration Statement is filed and declared effective but shall thereafter
cease to be effective or usable (subject to certain exceptions) in connection
with resales of this Security or Exchange Securities in accordance with and
during the periods specified in the Registration Agreement without being
succeeded promptly by an additional registration statement filed and declared
effective, in each case (i) through (iii) upon the terms and conditions set
forth in the Registration Agreement (each such event referred to in clauses (i)
through (iii), a "Registration Default"), then additional interest ("Liquidated
Interest") will accrue (in addition to any stated interest on the Securities)
from and including the date on which any such Registration Default shall occur
to but excluding the date on which all Registration Defaults have been cured.
Liquidated Interest will be payable at a rate per annum equal to 0.5% on the
principal amount of the Securities during the 90-day period immediately
following the occurrence of any Registration Default and shall increase by 0.25%
per annum of the principal amount of the Securities at the end of each
subsequent 90-day period, but in no event shall such rates exceed 2.00% per
annum in the aggregate regardless of the number of Registration Defaults.
Accrued Liquidated Interest, if any, shall be paid in cash semiannually on May 1
and November 1 in each year; and the amount of accrued Liquidated Interest shall
be determined on the basis of the number of days actually elapsed. Any accrued
and unpaid interest (including Liquidated Interest) on this Security upon the
issuance of an Exchange Security in exchange for this Security shall cease to be
payable to the Holder hereof but such accrued and unpaid interest (including
Liquidated Interest) shall be payable on the next Interest Payment Date for such
Exchange Security to the Holder thereof on the related Regular Record Date.]
- --------
Include for Initial Securities and, if there has occurred a
Registration Default, include for Exchange Securities.
NYDOCS01/566567 3
<PAGE>
A-4
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 the April 15 or October 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 shall forthwith
cease to be payable to the Holder on such Regular Record Date, and such
defaulted interest, and (to the extent lawful) interest on such defaulted
interest at the rate borne by the Securities, may 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 may be
paid at any time in any other lawful manner, all as more fully provided in said
Indenture. Payment of the principal of (and premium, if any, on) and interest on
this Security will be made at the office or agency of the Company maintained for
that purpose in The City of New York, or at such other office or agency of the
Company as may be maintained 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 each installment of
interest may at the Companys option be paid (i) by mailing a check for such
interest, payable to or upon the written order of the Person entitled thereto to
the address of such Person as it appears on the Security Register, or (ii) by
wire transfer of such interest in immediately available funds to an account
located in the United States maintained by the Depository.
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 duly
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.
NYDOCS01/566567 3
<PAGE>
A-5
IN WITNESS WHEREOF, the Company has caused this instrument to
be duly executed under its corporate seal.
Dated: QWEST COMMUNICATIONS
INTERNATIONAL INC.
By:
Authorized Signatory
NYDOCS01/566567 3
<PAGE>
A-6
Form of Reverse of Security
This Security is one of a duly authorized issue of securities
of the Company designated as its 7.50% [SeriesB] Senior Notes Due 2008 (herein
called the "Securities"), limited (except as otherwise provided in the Indenture
referred to below) in aggregate principal amount to $750,000,000, which may be
issued under an indenture (herein called the "Indenture") dated as of November
4, 1998 between the Company and Bankers Trust Company, trustee (herein called
the "Trustee", which term includes any successor trustee under the Indenture),
to which Indenture and all indentures supplemental thereto reference is hereby
made for a statement of the respective rights, limitations of rights, duties,
obligations 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. Capitalized terms used herein but not
defined herein have the respective meanings assigned thereto in the Indenture.
The Securities are subject to redemption at the option of the
Company, in whole or in part, at any time upon not less than 30 and not more
than 60 days prior notice at a redemption price equal to the principal amount
thereof, plus accrued and unpaid interest thereon (if any) to the Redemption
Date plus the Applicable Make-Whole Premium.
Within 30 days of the occurrence of a Change of Control, the
Company will be required, subject to certain limitations provided in the
Indenture, to make an Offer to Purchase all Outstanding Securities at a purchase
price in cash in an amount equal to 101% of the principal amount of the
Securities on the Purchase Date plus accrued and unpaid interest and premium, if
any, to such Purchase Date.
In the case of any redemption of Securities, interest
installments whose Stated Maturity is on or prior to the 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 Date
referred to on the face hereof. Securities (or portions thereof) for whose
redemption and payment provision is made in accordance with the Indenture shall
cease to bear interest from and after the Redemption Date.
In the event of redemption of this Security in part only, a
new Security or Securities for the unredeemed portion hereof shall be issued in
the name of the Holder hereof upon the cancellation hereof.
- --------
Include for Exchange Securities only.
NYDOCS01/566567 3
<PAGE>
A-7
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 and in an amount equal to the
principal amount of the Securities as of the date on which the Securities first
become due and payable, plus any accrued and unpaid interest and premium, if
any, not otherwise included in the principal amount to such date.
The Indenture contains provisions for defeasance at any time
of (a)the entire indebtedness of the Company on this Security and (b)certain
restrictive covenants and the related Defaults and Events of Default, upon
compliance by the Company with certain conditions set forth therein, which
provisions apply to this Security. In addition, the Indenture contains
provisions for the suspension of certain restrictive covenants under certain
circumstances.
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 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 or on behalf of 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.
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 registerable on
the Security Register of the Company, upon surrender of this Security for
registration of transfer at the office or agency of the Company maintained for
such purpose in The City of NewYork, 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 for the same aggregate principal amount, will be issued to the
designated transferee or transferees.
NYDOCS01/566567 3
<PAGE>
A-8
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,
the Securities are exchangeable for a like 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 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 payable in connection
therewith.
Prior to the time of 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
neither the Company, the Trustee nor any agent shall be affected by notice to
the contrary.
All terms used in this Security which are defined in the
Indenture shall have the meanings assigned to them in the Indenture.
NYDOCS01/566567 3
<PAGE>
A-9
Form of Trustee's Certificate of Authentication
The Trustee's certificate of authentication shall be in
substantially the following form:
TRUSTEE'S CERTIFICATE OF AUTHENTICATION
Dated: ____________________
This is one of the Securities referred to in the
within-mentioned Indenture.
[NAME OF TRUSTEE]
as Trustee
By:_________________________
Authorized Signatory
NYDOCS01/566567 3
<PAGE>
A-10
Assignment Form
If you, the holder, want to assign this Security, fill in the
form below and have your signature guaranteed:
I or we assign and transfer this Security to ___________________________________
(Insert assignee's social security or tax ID number)
(Print or type assignee's name, address and zip code)
and irrevocably appoint ________________________________
of ________________________________
--------------------------------
agent to transfer this Security on the books of the Company. The agent may
substitute another to act for such agent.
In connection with any transfer of this Security occurring
prior to the date which is the earlier of (i) the date of the declaration by the
Commission of the effectiveness of a registration statement under the Securities
Act of 1933, as amended (the "Securities Act"), covering resales of this
Security (which effectiveness shall not have been suspended or terminated at the
date of the transfer) and (ii)the date two years (or such shorter period of time
as may be permitted by Rule 144(k) under the Securities Act or any successor
provision thereunder) after the later of the original issuance date appearing on
the face of this Security (or any Predecessor Security) or the last date on
which the Company or any Affiliate of the Company was the owner of this Security
(or any Predecessor Security), the undersigned confirms that it has not utilized
any general solicitation or general advertising in connection with the transfer
and that:
[Check One]
|_| (a) this Security is being transferred in compliance with the
exemption from registration under the Securities Act provided
by Rule 144A thereunder.
or
NYDOCS01/566567 3
<PAGE>
A-11
|_| (b) this Security is being transferred other than in
accordance with (a) above and documents, including a
transferee certificate substantially in the form attached
hereto, are being furnished which comply with the conditions
of transfer set forth in this Security and the Indenture.
If neither of the foregoing boxes is checked and, in the case of (b) above, if
the appropriate document is not attached or otherwise furnished to the Trustee,
the Trustee or Registrar shall not be obligated to register this Security in the
name of any person other than the Holder hereof unless and until the conditions
to any such transfer or registration set forth herein and in Section 313 of the
Indenture shall have been satisfied.
Dated:_________________ Your signature:
(Sign exactly as your name appears on the other
side of this Security)
By:
NOTICE: To be executed by an executive officer
Signature Guarantee:__________________________
TO BE COMPLETED BY PURCHASER IF (a) ABOVE IS CHECKED:
The undersigned represents and warrants that it is purchasing
this Security for its own account or an account with respect to which it
exercises sole investment discretion and that it and any such account is a
"qualified institutional buyer" within the meaning of Rule 144A under the
Securities Act and is aware that the sale to it is being made in reliance on
Rule144A and acknowledges that it has received such information regarding the
Company as the undersigned has requested pursuant to Rule 144A (including the
information specified in Rule 144A(d)(4)) or has determined not to request such
information and that it is aware that the transferor is relying upon the
undersigned's foregoing representations in order to claim the exemption from
registration provided by Rule 144A.
Dated:__________________________
NOTICE: To be executed by an executive officer
[The Transferee Certificates (Exhibit B to the Indenture) will be attached to
the Security]
NYDOCS01/566567 3
<PAGE>
A-12
Option of Holder to Elect Purchase
If you wish to have this Security purchased by the Company pursuant to
Section 1010 or 1018 of the Indenture, check the box: |_|
If you wish to have a portion of this Security purchased by the Company
pursuant to Section 1010 or 1018 of the Indenture, state the amount:
$_____________
Dated:______________________ Your Signature:
(Sign exactly as your name appears on the
other side of this Security)
NYDOCS01/566567 3
<PAGE>
B-1
EXHIBIT B
Form of Certificate to Be Delivered
in Connection with Transfers
Pursuant to Regulation S
[Date]
Bankers Trust Company
Four Albany Street
New York, NY 10006
Attention: Corporate Market Services
Re: Qwest Communications International Inc. (the "Company")
7.50% Senior Notes Due 2008 (the "Securities")
Dear Sirs:
In connection with our proposed sale of $ aggregate principal
amount of the Securities, we confirm that such sale has been effected pursuant
to and in accordance with Regulation S under the U.S. Securities Act of 1933, as
amended (the "Securities Act"), and, accordingly, we represent that:
(1) the offer of the Securities was not made to a person in the United
States;
(2) either (a) at the time the buy offer was originated, the transferee was
outside the United States or we and any person acting on our behalf reasonably
believed that the transferee was outside the United States, or (b) the
transaction was executed in, on or through the facilities of a designated
off-shore securities market and neither we nor any person acting on our behalf
knows that the transaction has been pre-arranged with a buyer in the United
States;
(3) no directed selling efforts have been made in the United States in
contravention of the requirements of Rule 903(b) or Rule 904(b) of Regulation S,
as applicable;
(4) the transaction is not part of a plan or scheme to evade the
registration requirements of the Securities Act;
(5) we have advised the transferee of the transfer restrictions applicable
to the Securities; and
NYDOCS01/566567 3
<PAGE>
B-2
(6) if the circumstances set forth in Rule 904(c) under the
Securities Act are applicable, we have complied with the additional
conditions therein, including (if applicable) sending a confirmation or
other notice stating that the Securities may be offered and sold:
during the distribution compliance period specified in Rule 903(c)(2)
or (3), as applicable; in accordance with the provisions of Regulation
S; pursuant to registration of the Securities under the Securities Act;
or pursuant to an available exemption from the registration
requirements under the Securities Act.
You and the Company are entitled to rely upon this letter and
are irrevocably authorized to produce this letter or a copy hereof to any
interested party in any administrative or legal proceedings or official inquiry
with respect to the matters covered hereby. Terms used in this certificate have
the meanings set forth in Regulation S.
Very truly yours,
[Name of Transferor]
By:
Authorized Signatory
NYDOCS01/566567 3
<PAGE>
B-3
EXECUTION COPY
QWEST COMMUNICATIONS INTERNATIONAL INC.,
Issuer
to
BANKERS TRUST COMPANY,
Trustee
--------------------
Indenture
Dated as of November 4, 1998
---------------------
$750,000,000 Principal Amount
7.50% Senior Notes Due 2008
NYDOCS01/566567 3
<PAGE>
B-4
Reconciliationand tie between Trust Indenture Act of
1939, as amended, and Indenture, dated as of
November 4, 1998
Trust Indenture Act Section Indenture Section
310(a)(1)............................................ 608
(a)(2)......................................... 608
(b)............................................ 608, 609
311 ................................................. 605
312.................................................. 701
(b)............................................ 701
(c)............................................ 701
313(a)............................................... 702
(c)............................................ 702
314(a)(1)............................................ 703
(a)(4)......................................... 1009
(c)(1)......................................... 102
(c)(2)......................................... 102
(e)............................................ 102
315(a)............................................... 601
(b)............................................ 602
(c)............................................ 601
(d)............................................ 601
(e)............................................ 609
316(a) (last sentence)............................... 101(Outstanding)
(a)(1)(A)...................................... 502, 512
(a)(1)(B)...................................... 513
(b)............................................ 508
(c)............................................ 104(d)
317(a)(1)............................................ 503
(a)(2)......................................... 504
(b)............................................ 1003
318(a)............................................... 112
- -------- Note: This reconciliation and tie shall not, for any purpose, be deemed
to be a part of the Indenture.
NYDOCS01/566567 3
<PAGE>
i
TABLE OF CONTENTS
Page
PARTIES.................................................................. 1
RECITALS OF THE COMPANY.................................................. 1
ARTICLE ONE
DEFINITIONS AND OTHER PROVISIONS
OF GENERAL APPLICATION
SECTION 101. Definitions............................................1
Acquired Debt.......................................................2
Act.................................................................2
Affiliate...........................................................2
Agent Member........................................................2
Applicable Make-Whole Premium.......................................2
Asset Disposition...................................................3
Attributable Value..................................................3
Board of Directors..................................................4
Board Resolution....................................................4
Business Day........................................................4
Capital Lease Obligation............................................4
Capital Stock.......................................................4
Cash Equivalents....................................................4
Change of Control...................................................5
Commission..........................................................5
Common Stock........................................................5
Company.............................................................5
Company Order.......................................................5
Company Request.....................................................5
Comparable Treasury Issue...........................................5
Comparable Treasury Price...........................................5
Consolidated Capital Ratio..........................................6
Consolidated Cash Flow Available for Fixed Charges..................6
Consolidated Income Tax Expense.....................................6
- --------
Note: This table of contents shall not, for any purpose, be deemed to be a part
of
the Indenture.
NYDOCS01/566567 3
<PAGE>
ii
Page
Consolidated Interest Expense........................................6
Consolidated Net Income..............................................7
Consolidated Net Worth...............................................7
Consolidated Tangible Assets.........................................7
Continuing Director..................................................8
Corporate Trust Office...............................................8
Corporation..........................................................8
Credit Facilities....................................................8
Debt.................................................................8
Debt Securities......................................................9
Default..............................................................9
Defaulted Interest...................................................9
Depository...........................................................9
Designation..........................................................9
Designation Amount...................................................9
Disqualified Stock...................................................9
Eligible Institution................................................10
Eligible Receivables................................................10
Event of Default....................................................10
Exchange Act........................................................10
Exchange Offer......................................................10
Exchange Offer Registration Statement...............................10
Exchange Securities.................................................10
Expiration Date.....................................................10
Fair Market Value...................................................10
Federal Bankruptcy Code.............................................10
Global Security.....................................................11
Government Securities...............................................11
Group...............................................................11
Guarantee...........................................................11
Guarantor...........................................................11
Holder..............................................................11
Incur...............................................................11
Indenture...........................................................12
Indenture Obligations...............................................12
Initial Purchaser...................................................12
Initial Securities..................................................12
Interest Payment Date...............................................12
Interest Rate or Currency Protection Agreement......................12
Investment..........................................................12
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Investment Grade Rating...........................................12
Lien..............................................................12
Liquidated Interest...............................................13
Maturity..........................................................13
Net Available Proceeds............................................13
Notice of Default.................................................14
Offer.............................................................14
Offer to Purchase.................................................14
Offering Memorandum...............................................16
Officers' Certificate.............................................16
Opinion of Counsel................................................16
Outstanding.......................................................16
Paying Agent......................................................17
Permitted Holders.................................................17
Permitted Interest Rate or Currency Protection Agreement..........17
Permitted Investments.............................................17
Permitted Joint Venture...........................................18
Permitted Liens...................................................18
Permitted Telecommunications Capital Asset Disposition............19
Person............................................................19
Physical Security.................................................19
Predecessor Security..............................................19
Preferred Dividends...............................................19
Preferred Stock...................................................19
Primary Treasury Dealer...........................................19
Private Placement Legend..........................................20
Purchase Amount...................................................20
Purchase Date.....................................................20
Purchase Money Debt...............................................20
Purchase Price....................................................20
Qualified Institutional Buyer.....................................20
QIB...............................................................20
Rating Agencies...................................................20
Rating Decline....................................................20
Receivables.......................................................20
Receivables Sale..................................................20
Redemption Date...................................................20
Redemption Price..................................................20
Reference Treasury Dealer.........................................21
Reference Treasury Dealer Quotations..............................21
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Registration Agreement.............................................21
Registration Statement.............................................21
Regular Record Date................................................21
Regulation S.......................................................21
Regulation S Global Security.......................................21
Related Person.....................................................21
Responsible Officer................................................21
Restricted Payment.................................................22
Restricted Subsidiary..............................................22
Restricted Subsidiary Guarantee....................................22
Revocation.........................................................22
Rule 144A..........................................................22
Rule 144A Global Security..........................................22
Sale and Leaseback Transaction.....................................22
Securities.........................................................22
Securities Act.....................................................22
Security Register..................................................23
Security Registrar.................................................23
Senior Note Indentures.............................................23
Shelf Registration Statement.......................................23
Special Record Date................................................23
Stated Maturity....................................................23
Strategic Investor.................................................23
Subordinated Debt..................................................23
Subsidiary.........................................................24
Suspended Covenants................................................24
Suspension Period..................................................24
Telecommunications Assets..........................................24
Telecommunications Business........................................24
Treasury Rate......................................................25
Trust Indenture Act................................................25
TIA................................................................25
Trustee............................................................25
Unrestricted Subsidiary............................................25
Vice President.....................................................25
Voting Stock.......................................................25
Wholly Owned Subsidiary............................................25
SECTION 102. Compliance Certificates and Opinions..................25
SECTION 103. Form of Documents Delivered to Trustee................26
SECTION 104. Acts of Holders.......................................27
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SECTION 105. Notices, Etc., to Trustee and Company...................28
SECTION 106. Notice to Holders; Waiver...............................28
SECTION 107. Effect of Headings and Table of Contents................29
SECTION 108. Successors and Assigns..................................29
SECTION 109. Separability Clause.....................................29
SECTION 110. Benefits of Indenture...................................29
SECTION 111. Governing Law...........................................29
SECTION 112. Conflict with Trust Indenture Act.......................29
SECTION 113. Legal Holidays..........................................30
SECTION 114. No Personal Liability of Directors, Officers,
Employees and Stockholders.........................30
SECTION 115. Independence of Covenants...............................30
SECTION 116. Exhibits................................................31
SECTION 117. Counterparts............................................31
SECTION 118. Duplicate Originals.....................................31
ARTICLE TWO
SECURITY FORMS
SECTION 201. Forms Generally.........................................31
ARTICLE THREE
THE SECURITIES
SECTION 301. Title and Terms.........................................32
SECTION 302. Denominations...........................................33
SECTION 303. Execution, Authentication, Delivery and Dating..........33
SECTION 304. Temporary Securities....................................35
SECTION 305. Registration, Registration of Transfer and Exchange.....35
SECTION 306. Mutilated, Destroyed, Lost and Stolen Securities........37
SECTION 307. Payment of Interest; Interest Rights Preserved..........37
SECTION 308. Persons Deemed Owners...................................39
SECTION 309. Cancellation............................................39
SECTION 310. Computation of Interest.................................39
SECTION 311. CUSIP Number............................................40
SECTION 312. Book-Entry Provisions for Global Securities.............40
SECTION 313. Special Transfer Provisions.............................41
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ARTICLE FOUR
SATISFACTION AND DISCHARGE
SECTION 401. Satisfaction and Discharge of Indenture......................43
SECTION 402. Application of Trust Money...................................44
ARTICLE FIVE
REMEDIES
SECTION 501. Events of Default.............................................44
SECTION 502. Acceleration of Maturity; Rescission and Annulment............46
SECTION 503. Collection of Indebtedness and Suits for Enforcement by
Trustee.................................................47
SECTION 504. Trustee May File Proofs of Claim..............................48
SECTION 505. Trustee May Enforce Claims Without Possession of Securities...49
SECTION 506. Application of Money Collected................................49
SECTION 507. Limitation on Suits...........................................50
SECTION 508. Unconditional Right of Holders to Receive Principal, Premium
and Interest............................................50
SECTION 509. Restoration of Rights and Remedies............................51
SECTION 510. Rights and Remedies Cumulative................................51
SECTION 511. Delay or Omission Not Waiver..................................51
SECTION 512. Control by Holders............................................51
SECTION 513. Waiver of Past Defaults.......................................52
SECTION 514. Waiver of Stay or Extension Laws..............................52
ARTICLE SIX
THE TRUSTEE
SECTION 601. Certain Duties and Responsibilities...........................53
SECTION 602. Notice of Default.............................................54
SECTION 603. Certain Rights of Trustee.....................................54
SECTION 604. Trustee Not Responsible for Recitals or Issuance of Securities56
SECTION 605. May Hold Securities...........................................56
SECTION 606. Money Held in Trust...........................................56
SECTION 607. Compensation and Reimbursement................................56
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SECTION 608. Corporate Trustee Required; Eligibility; Conflicting Interests..57
SECTION 609. Resignation and Removal; Appointment of Successor...............58
SECTION 610. Acceptance of Appointment by Successor..........................59
SECTION 611. Merger, Conversion, Consolidation or Succession to Business.....59
ARTICLE SEVEN
HOLDERS' LISTS AND REPORTS BY TRUSTEE AND COMPANY
SECTION 701. Disclosure of Names and Addresses of Holders....................60
SECTION 702. Reports by Trustee..............................................60
SECTION 703. Reports by Company..............................................61
ARTICLE EIGHT
CONSOLIDATION, MERGER, CONVEYANCE, TRANSFER OR LEASE
SECTION 801. Company May Consolidate, Etc., Only on Certain Terms............61
SECTION 802. Successor Substituted...........................................62
ARTICLE NINE
SUPPLEMENTAL INDENTURES
SECTION 901. Supplemental Indentures Without Consent of Holders..............63
SECTION 902. Supplemental Indentures with Consent of Holders.................64
SECTION 903. Execution of Supplemental Indentures............................65
SECTION 904. Effect of Supplemental Indentures...............................65
SECTION 905. Conformity with Trust Indenture Act.............................65
SECTION 906. Reference in Securities to Supplemental Indentures..............65
SECTION 907. Notice of Supplemental Indentures...............................65
ARTICLE TEN
COVENANTS
SECTION 1001. Payment of Principal, Premium, if Any, and Interest............66
SECTION 1002. Maintenance of Office or Agency................................66
SECTION 1003. Money for Security Payments to Be Held in Trust................66
SECTION 1004. Corporate Existence............................................68
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SECTION 1005. Payment of Taxes and Other Claims..........................68
SECTION 1006. Maintenance of Properties..................................69
SECTION 1007. Insurance..................................................69
SECTION 1008. Provision of Financial Statements..........................69
SECTION 1009. Statement by Officers as to Default........................69
SECTION 1010. Purchase of Securities upon Change of Control..............70
SECTION 1011. Limitation on Consolidated Debt............................71
SECTION 1012. Limitation on Debt and Preferred Stock of Restricted
Subsidiaries..........................................74
SECTION 1013. Limitation on Restricted Payments..........................75
SECTION 1014. Limitation on Dividend and Other Payment Restrictions
Affecting Restricted Subsidiaries.....................77
SECTION 1015. Limitation on Liens........................................78
SECTION 1016. Limitation on Issuances of Certain Guarantees by, and Debt
Securities of, Restricted Subsidiaries................79
SECTION 1017. Limitation on Sale and Leaseback Transactions..............80
SECTION 1018. Limitation on Asset Dispositions...........................80
SECTION 1019. Limitation on Issuances and Sales of Capital Stock of
Restricted Subsidiaries...............................81
SECTION 1020. Transactions with Affiliates and Related Persons...........81
SECTION 1021. Limitation on Designations of Unrestricted Subsidiaries....82
SECTION 1022. No Repayment of Existing Parent Company Advances with
the Proceeds of the Securities........................83
SECTION 1023. Waiver of Certain Covenants................................83
SECTION 1024. Trustee Not to Monitor Performance.........................84
SECTION 1025. Suspended Covenants........................................84
ARTICLE ELEVEN
REDEMPTION OF SECURITIES
SECTION 1101. Right of Redemption........................................85
SECTION 1102. Applicability of Article...................................85
SECTION 1103. Election to Redeem; Notice to Trustee......................85
SECTION 1104. Selection by Trustee of Securities to Be Redeemed..........85
SECTION 1105. Notice of Redemption.......................................86
SECTION 1106. Deposit of Redemption Price................................87
SECTION 1107. Securities Payable on Redemption Date......................87
SECTION 1108. Securities Redeemed in Part................................87
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ARTICLE TWELVE
DEFEASANCE AND COVENANT DEFEASANCE
SECTION 1201. Company's Option to Effect Defeasance or Covenant
Defeasance...............................................88
SECTION 1202. Defeasance and Discharge......................................88
SECTION 1203. Covenant Defeasance...........................................88
SECTION 1204. Conditions to Defeasance or Covenant Defeasance...............89
SECTION 1205. Deposited Money and Government Securities to Be Held in
Trust; Other Miscellaneous Provisions....................90
SECTION 1206. Reinstatement.................................................91
TESTIMONIUM................................................................ 92
SIGNATURES AND SEALS........................................................ 92
EXHIBIT A - Form of Security
EXHIBIT B - Form of Certificate to Be Delivered in Connection with
Transfers Pursuant to Regulation S
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Exhibit 4.2(a)
1
EXECUTION COPY
QWEST COMMUNICATIONS INTERNATIONAL INC.
$750,000,000
7.5% Senior Notes Due 2008
REGISTRATION AGREEMENT
Dated: November 4, 1998
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QWEST COMMUNICATIONS INTERNATIONAL INC.
$750,000,000 7.5% SENIOR NOTES DUE 2008
REGISTRATION AGREEMENT
New York, New York
November 4, 1998
Salomon Smith Barney Inc.
Seven World Trade Center
New York, New York 10048
Dear Sirs:
Qwest Communications International Inc., a Delaware
corporation (the "Company"), proposes to issue and sell to Salomon Smith Barney
Inc. (the "Initial Purchaser"), upon the terms set forth in a purchase agreement
dated October 28, 1998 (the "Purchase Agreement"), its $750,000,000 7.5% Senior
Notes Due 2008 (the "Securities") (the "Initial Placement"). As an inducement to
the Initial Purchaser to enter into the Purchase Agreement, the Company agrees
with you, (i) for your benefit and (ii) for the benefit of the holders from time
to time of the Securities (including you), as follows:
1. Definitions. Capitalized terms used herein without
definition shall have their respective meanings set forth in the Purchase
Agreement. As used in this Agreement, the following capitalized defined terms
shall have the following meanings:
"Act" means the Securities Act of 1933, as amended, and the
rules and regulations of the Commission promulgated thereunder.
"Affiliate" of any specified person means any other person
which, directly or indirectly, is in control of, is controlled by, or is under
common control with, such specified person. For purposes of this definition,
control of a person means the power, direct or indirect, to direct or cause the
direction of the management and policies of such person whether by contract or
otherwise; and the terms "controlling" and "controlled" have meanings
correlative to the foregoing.
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"Closing Date" has the meaning set forth in the Purchase
Agreement.
"Commission" means the Securities and Exchange Commission.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended, and the rules and regulations of the Commission promulgated thereunder.
"Exchange Offer Registration Period" means the 1-year period
following the consummation of the Registered Exchange Offer, exclusive of any
period during which any stop order shall be in effect suspending the
effectiveness of the Exchange Offer Registration Statement.
"Exchange Offer Registration Statement" means a registration
statement of the Company on an appropriate form under the Act with respect to
the Registered Exchange Offer, all amendments and supplements to such
registration statement, including post-effective amendments, in each case
including the Prospectus contained therein, all exhibits thereto and all
material incorporated by reference therein.
"Exchanging Dealer" means any Holder (which may include the
Initial Purchaser) that is a broker-dealer, electing to exchange Securities
acquired for its own account as a result of market-making activities or other
trading activities, for New Securities.
"Expiration Date" means the date of consummation of the
Registered Exchange Offer which shall be not less than 30 days and not more than
50 days after the date on which notice of the Registered Exchange Offer is
mailed to the Holders pursuant to clause 2(c)(ii) of this Agreement.
"Final Memorandum" has the meaning set forth in the Purchase
Agreement.
"Holder" means a holder from time to time of Securities
(including the Initial Purchaser) or of New Securities.
"Indenture" means the Indenture relating to the Securities
dated as of November 4, 1998, between the Company and Bankers Trust Company, as
trustee, as the same may be amended from time to time in accordance with the
terms thereof.
"Initial Placement" has the meaning set forth in the preamble
hereto.
"Majority Holders" means the Holders of a majority of the
aggregate principal amount of securities registered under a Registration
Statement.
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"Managing Underwriters" means the investment banker or
investment bankers and manager or managers that shall administer an underwritten
offering.
"New Securities" means debt securities of the Company
identical in all material respects to the Securities (except that the New
Securities will not contain terms with respect to registration rights or
transfer restrictions, and interest rate and interest rate step-up provisions
will be modified or eliminated, as appropriate), to be issued under the
Indenture or the New Securities Indenture.
"New Securities Indenture" means an indenture between the
Company and the New Securities Trustee, identical in all material respects with
the Indenture (except that the interest rate and interest rate step-up
provisions and the transfer restrictions will be modified or eliminated, as
appropriate).
"New Securities Trustee" means the Trustee or a bank or trust
company reasonably satisfactory to the Initial Purchaser, as trustee with
respect to the New Securities under the New Securities Indenture.
"Prospectus" means the prospectus included in any Registration
Statement (including, without limitation, a prospectus that discloses
information previously omitted from a prospectus filed as part of an effective
registration statement in reliance upon Rule 430A under the Act), as amended or
supplemented by any prospectus supplement, with respect to the terms of the
offering of any portion of the Securities or the New Securities, covered by such
Registration Statement, and all amendments and supplements to the Prospectus,
including post-effective amendments.
"Registered Exchange Offer" means the proposed offer to the
Holders to issue and deliver to such Holders, in exchange for the Securities, a
like principal amount of the New Securities.
"Registration Statement" means any Exchange Offer Registration
Statement or Shelf Registration Statement that covers any of the Securities or
the New Securities pursuant to the provisions of this Agreement, amendments and
supplements to such registration statement, including post-effective amendments,
in each case including the Prospectus contained therein, all exhibits thereto
and all material incorporated by reference therein.
"Securities" has the meaning set forth in the preamble hereto.
"Shelf Registration" means a registration effected pursuant to
Section 3 hereof.
"Shelf Registration Period" has the meaning set forth in
Section 3(b) hereof.
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"Shelf Registration Statement" means a "shelf" registration
statement of the Company pursuant to the provisions of Section 3 hereof which
covers some or all of the Securities or New Securities, as applicable, on an
appropriate form under Rule 415 under the Act, or any similar rule that may be
adopted by the Commission, amendments and supplements to such registration
statement, including post-effective amendments, in each case including the
Prospectus contained therein, all exhibits thereto and all material incorporated
by reference therein.
"Trustee" means the trustee with respect to the Securities
under the Indenture.
"Underwriter" means any underwriter of securities in
connection with an offering thereof under an Exchange Offer Registration
Statement or a Shelf Registration Statement.
2. Registered Exchange Offer; Resales of New Securities by
Exchanging Dealers; Private Exchange. (a) The Company shall prepare and, within
90 days following the Closing Date, shall file with the Commission the Exchange
Offer Registration Statement with respect to the Registered Exchange Offer. The
Company shall use its best efforts to cause the Exchange Offer Registration
Statement to become effective under the Act within 150 days of the Closing Date.
(b) Upon the effectiveness of the Exchange Offer Registration
Statement, the Company shall promptly commence the Registered Exchange Offer, it
being the objective of such Registered Exchange Offer to enable each Holder
electing to exchange Securities for New Securities (assuming (i) that such
Holder is not an affiliate, as defined in Rule 405 of the Act, of the Company,
(ii) that such Holder is acquiring the New Securities in the ordinary course of
such Holder's business and (iii) that such Holder has no arrangement or
undertaking with any person to participate in the distribution (within the
meaning of the Act) of the New Securities) to trade such New Securities from and
after their receipt without any limitations or restrictions under the Act and
without material restrictions under the securities laws of a substantial
proportion of the several states of the United States.
(c) In connection with the Registered Exchange Offer, the
Company shall:
(i) mail to each Holder a copy of the Prospectus forming part
of the Exchange Offer Registration Statement, together with an
appropriate letter of transmittal (which shall include deemed
representations by the Holders to the effect set forth under (i), (ii)
and (iii) in paragraph (b) above) and related documents;
NYDOCS01/565802 2
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(ii) keep the Registered Exchange Offer open for not less than
30 days and not more than 50 days after the date notice thereof is
mailed to the Holders (or longer if required by applicable law);
(iii) utilize the services of a depositary for the Registered
Exchange Offer with an address in the Borough of Manhattan, The City of
New York; and
(iv) comply in all respects with all applicable laws.
(d) As soon as practicable after the close of the Registered
Exchange Offer, the Company shall:
(i) accept for exchange all Securities tendered and not
validly withdrawn
pursuant to the Registered Exchange Offer;
(ii) deliver to the Trustee for cancellation all
Securities so accepted for exchange; and
(iii) cause the Trustee or the New Securities Trustee, as the
case may be, promptly to authenticate and deliver to each Holder of
Securities a principal amount of New Securities equal in principal
amount to the Securities of such Holder so accepted for exchange.
(e) The Initial Purchaser and the Company acknowledge that,
pursuant to interpretations by the Commission's staff of Section 5 of the Act,
and in the absence of an applicable exemption therefrom, each Exchanging Dealer
is required to deliver a Prospectus in connection with a sale of any New
Securities received by such Exchanging Dealer pursuant to the Registered
Exchange Offer in exchange for Securities acquired for its own account as a
result of market-making activities or other trading activities. Accordingly, the
Company shall:
(i) include the information set forth in Annex A hereto on the
cover of the Exchange Offer Registration Statement, in Annex B hereto
in the forepart of the Exchange Offer Registration Statement in a
section setting forth details of the Exchange Offer, and in Annex C
hereto in the "Underwriting" or "Plan of Distribution" section of the
Prospectus forming a part of the Exchange Offer Registration Statement,
and include the information set forth in Annex D hereto in the letter
of transmittal delivered pursuant to the Registered Exchange Offer; and
(ii) keep the Exchange Offer Registration Statement
continuously effective under the Act during the Exchange Offer
Registration Period for delivery by
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6
Exchanging Dealers in connection with sales of New Securities received
pursuant to the Registered Exchange Offer, as contemplated by Section
4(h) below.
(f) In the event that the Initial Purchaser determines that it
is not eligible to participate in the Registered Exchange Offer with respect to
the exchange of Securities constituting any portion of an unsold allotment, at
the request of the Initial Purchaser, the Company shall issue and deliver to the
Initial Purchaser or the party purchasing New Securities registered under a
Shelf Registration Statement as contemplated by Section 3 hereof from the
Initial Purchaser, in exchange for such Securities, a like principal amount of
New Securities. The Company shall seek to cause the CUSIP Service Bureau to
issue the same CUSIP number for such New Securities as for New Securities issued
pursuant to the Registered Exchange Offer.
3. Shelf Registration. If, (i) because of any change in law or
applicable interpretations thereof by the Commission's staff, the Company
determines upon advice of its outside counsel that it is not permitted to effect
the Registered Exchange Offer as contemplated by Section 2 hereof, or (ii) for
any other reason the Registered Exchange Offer is not consummated within 180
days of the date hereof, or (iii)the Initial Purchaser so requests with respect
to Securities held by it following consummation of the Registered Exchange
Offer, or (iv) any Holder (other than the Initial Purchaser) is not eligible to
participate in the Registered Exchange Offer and so notifies the Company as soon
as practicable, but in any event not later than 30 days following consummation
of the Registered Exchange Offer, or (v) in the case of the Initial Purchaser
that participates in the Registered Exchange Offer or acquires New Securities
pursuant to Section 2(f) hereof, such Initial Purchaser does not receive freely
tradeable New Securities in exchange for Securities constituting any portion of
an unsold allotment (it being understood that, for purposes of this Section 3,
(x) the requirement that an Initial Purchaser deliver a Prospectus containing
the information required by Items 507 and/or 508 of Regulation S-K under the Act
in connection with sales of New Securities acquired in exchange for such
Securities shall result in such New Securities being not "freely tradeable" but
(y) the requirement that an Exchanging Dealer deliver a Prospectus in connection
with sales of New Securities acquired in the Registered Exchange Offer in
exchange for Securities acquired as a result of market-making activities or
other trading activities shall not result in such New Securities being not
"freely tradeable"), the following provisions shall apply:
(a) The Company shall, as promptly as practicable (but in no
event more than 30 days after so required or requested pursuant to this
Section 3), file with the Commission, and thereafter shall cause to be
declared effective under the Act, a Shelf Registration Statement
relating to the offer and sale of the Securities or the New Securities,
as applicable, by the Holders from time to time in accordance with the
methods of distribution elected by such Holders and set forth in such
Shelf Registration Statement; provided that, with respect to New
Securities received by the Initial
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7
Purchaser in exchange for Securities constituting any portion of an
unsold allotment, the Company may, if permitted by current
interpretations by the Commission's staff, file a post-effective
amendment to the Exchange Offer Registration Statement containing the
information required by Regulation S-K Items 507 and/or 508, as
applicable, in satisfaction of its obligations under this paragraph (a)
with respect thereto, and any such Exchange Offer Registration
Statement, as so amended, shall be referred to herein as, and governed
by the provisions herein applicable to, a Shelf Registration Statement.
(b) The Company shall use its best efforts to keep the Shelf
Registration Statement continuously effective in order to permit the
Prospectus forming part thereof to be usable by Holders for a period of
three years from the date the Shelf Registration Statement is declared
effective by the Commission or such shorter period that will terminate
when all the Securities or New Securities, as applicable, covered by
the Shelf Registration Statement have been sold pursuant to the Shelf
Registration Statement (in any such case, such period being called the
"Shelf Registration Period"). The Company shall be deemed not to have
used its best efforts to keep the Shelf Registration Statement
effective during the requisite period if it voluntarily takes any
action that would result in Holders of securities covered thereby not
being able to offer and sell such securities during that period, unless
(i) such action is required by applicable law, or (ii) such action is
taken by the Company in good faith and for valid business reasons (not
including avoidance of the Company's obligations hereunder), including
the acquisition or divestiture of assets, so long as the Company as
promptly as practicable thereafter complies with the requirements of
Section 4(k) hereof, if applicable.
4. Registration Procedures. In connection with any Shelf
Registration Statement and, to the extent applicable, any Exchange Offer
Registration Statement, the following provisions shall apply:
(a) The Company shall furnish to you, prior to the filing
thereof with the Commission, a copy of any Shelf Registration Statement
and any Exchange Offer Registration Statement, and each amendment
thereof and each amendment or supplement, if any, to the Prospectus
included therein, and shall reflect in each such document, when so
filed with the Commission, such comments as you reasonably may propose.
(b) The Company shall ensure that (i) any Registration
Statement and any amendment thereto and any Prospectus forming part
thereof and any amendment or supplement thereto complies in all
material respects with the Act and the rules and regulations
thereunder, (ii) any Registration Statement and any amendment thereto
does
NYDOCS01/565802 2
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8
not, when it becomes effective, contain an untrue statement of a
material fact or omit to state a material fact required to be stated
therein or necessary to make the statements therein not misleading and
(iii) any Prospectus forming part of any Registration Statement, and
any amendment or supplement to such Prospectus, does not include an
untrue statement of a material fact or omit to state a material fact
necessary in order to make the statements, in the light of the
circumstances under which they were made, not misleading.
(c) (1) The Company shall advise you and, in the case of a
Shelf Registration Statement, the Holders of securities covered
thereby, and, if requested by you or any such Holder, confirm such
advice in writing:
(i) when a Registration Statement and any amendment
thereto has been filed with the Commission and when the
Registration Statement or any post-effective amendment thereto
has become effective; and
(ii) of any request by the Commission for amendments
or supplements to the Registration Statement or the Prospectus
included therein or for additional information.
(2) The Company shall advise you and, in the case of a Shelf
Registration Statement, the Holders of securities covered thereby, and,
in the case of an Exchange Offer Registration Statement, any Exchanging
Dealer which has provided in writing to the Company a telephone or
facsimile number and address for notices, and, if requested by you or
any such Holder or Exchanging Dealer, confirm such advice in writing:
(i) of the issuance by the Commission of any stop order suspending the
effectiveness of the Registration Statement or the initiation of any proceedings
for that purpose;
(ii) of the receipt by the Company of any notification with respect to the
suspension of the qualification of the securities included therein for sale in
any jurisdiction or the initiation or threatening of any proceeding for such
purpose; and
(iii) of the happening of any event that requires the making of any changes
in the Registration Statement or the Prospectus so that, as of such date, the
statements therein are not misleading and do not omit to state a material fact
required to be stated therein or necessary to make the statements therein (in
the case of the Prospectus, in light of the circumstances under which they were
NYDOCS01/565802 2
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9
made) not misleading (which advice shall be accompanied by an instruction to
suspend the use of the Prospectus until the requisite changes have been made).
(d) The Company shall obtain the withdrawal of any order
suspending the effectiveness of any Registration Statement at the
earliest possible time.
(e) The Company shall furnish to each Holder of securities
included within the coverage of any Shelf Registration Statement,
without charge, at least one copy of such Shelf Registration Statement
and any post-effective amendment thereto, including financial
statements and schedules, and, if the Holder so requests in writing,
all exhibits (including those incorporated by reference).
(f) The Company shall, during the Shelf Registration Period,
deliver to each Holder of securities included within the coverage of
any Shelf Registration Statement, without charge, as many copies of the
Prospectus (including each preliminary Prospectus) included in such
Shelf Registration Statement and any amendment or supplement thereto as
such Holder may reasonably request; and the Company consents to the use
of the Prospectus or any amendment or supplement thereto by each of the
selling Holders of securities in connection with the offering and sale
of the securities covered by the Prospectus or any amendment or
supplement thereto.
(g) The Company shall furnish to each Exchanging Dealer which
so requests, without charge, at least one copy of the Exchange Offer
Registration Statement and any post-effective amendment thereto,
including financial statements and schedules, any documents
incorporated by reference therein, and, if the Exchanging Dealer so
requests in writing, all exhibits (including those incorporated by
reference).
(h) The Company shall, during the Exchange Offer Registration
Period, promptly deliver to each Exchanging Dealer, without charge, as
many copies of the Prospectus included in such Exchange Offer
Registration Statement and any amendment or supplement thereto as such
Exchanging Dealer may reasonably request for delivery by such
Exchanging Dealer in connection with a sale of New Securities received
by it pursuant to the Registered Exchange Offer; and the Company
consents to the use of the Prospectus or any amendment or supplement
thereto by any such Exchanging Dealer, as aforesaid.
(i) Prior to the Registered Exchange Offer or any other
offering of securities pursuant to any Registration Statement, the
Company shall use its best efforts to register or qualify or cooperate
with the Holders of securities included therein and their respective
counsel in connection with the registration or qualification of such
securities for offer and sale under the securities or blue sky laws of
such jurisdictions as
NYDOCS01/565802 2
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10
any such Holders reasonably request in writing and do any and all other
acts or things necessary or advisable to enable the offer and sale in
such jurisdictions of the securities covered by such Registration
Statement; provided, however, that the Company will not be required to
qualify generally to do business in any jurisdiction where it is not
then so qualified or to take any action which would subject it to
general service of process or to taxation in any such jurisdiction
where it is not then so subject.
(j) The Company shall cooperate with the Holders of securities
to facilitate the timely preparation and delivery of certificates
representing securities to be sold pursuant to any Registration
Statement free of any restrictive legends and in such denominations and
registered in such names as Holders may request prior to sales of
securities pursuant to such Registration Statement.
(k) Upon the occurrence of any event contemplated by paragraph
(c)(2)(iii) above, the Company shall as promptly as practicable prepare
a post-effective amendment to any Registration Statement or an
amendment or supplement to the related Prospectus or file any other
required document so that, as thereafter delivered to purchasers of the
securities included therein, the Prospectus will not include an untrue
statement of a material fact or omit to state any material fact
necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading.
(l) Not later than the effective date of any such Registration
Statement hereunder, the Company shall provide a CUSIP number for the
Securities or New Securities, as the case may be, registered under such
Registration Statement, and provide the trustee with printed
certificates for such Securities or New Securities, in a form eligible
for deposit with The Depository Trust Company.
(m) The Company shall comply with all applicable rules and
regulations of the Commission and shall make generally available to its
security holders as soon as practicable after the effective date of the
applicable Registration Statement an earnings statement satisfying the
provisions of Section 11(a) of the Act.
(n) The Company shall cause the Indenture or the New
Securities Indenture, as the case may be, to be qualified under the
Trust Indenture Act in a timely manner.
(o) The Company may require each Holder of securities to be
sold pursuant to any Shelf Registration Statement to furnish to the
Company such information regarding the Holder and the distribution of
such securities as the Company may from time to time reasonably require
for inclusion in such Registration Statement.
NYDOCS01/565802 2
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11
(p) The Company shall, if requested, as promptly as
practicable incorporate in a Prospectus supplement or post-effective
amendment to a Shelf Registration Statement, such information as the
Managing Underwriters and Majority Holders reasonably determine and
agree should be included therein and shall make all required filings of
such Prospectus supplement or post-effective amendment as soon as
notified of the matters to be incorporated in such Prospectus
supplement or post-effective amendment.
(q) In the case of any Shelf Registration Statement, the
Company shall enter into such agreements (including underwriting
agreements) and take all other appropriate actions in order to expedite
or facilitate the registration or the disposition of the Securities,
and in connection therewith, if an underwriting agreement is entered
into, cause the same to contain indemnification provisions and
procedures no less favorable than those set forth in Section 6 (or such
other provisions and procedures acceptable to the Majority Holders and
the Managing Underwriters, if any), with respect to all parties to be
indemnified pursuant to Section 6 from Holders of Securities to the
Company.
(r) In the case of any Shelf Registration Statement, the
Company shall (i) make reasonably available for inspection by the
Holders of securities to be registered thereunder, any Underwriter
participating in any disposition pursuant to such Registration
Statement, and any attorney, accountant or other agent retained by the
Holders or any such Underwriter all relevant financial and other
records, pertinent corporate documents and properties of the Company
and its subsidiaries; (ii) cause the Company's officers, directors and
employees to supply all relevant information reasonably requested by
the Holders or any such Underwriter, attorney, accountant or agent in
connection with any such Registration Statement as is customary for
similar due diligence examinations; provided, however, that any
information that is designated in writing by the Company, in good
faith, as confidential at the time of delivery of such information
shall be kept confidential by the Holders or any such Underwriter,
attorney, accountant or agent, unless such disclosure is made in
connection with a court proceeding or required by law, or such
information becomes available to the public generally or through a
third party without an accompanying obligation of confidentiality;
(iii) make such representations and warranties to the Holders of
securities registered thereunder and the Underwriters, if any, in form,
substance and scope as are customarily made by issuers to underwriters
in primary underwritten offerings and covering matters including, but
not limited to, those set forth in the Purchase Agreement; (iv) obtain
opinions of counsel to the Company and updates thereof (which counsel
and opinions (in form, scope and substance) shall be reasonably
satisfactory to the Managing Underwriters, if any) addressed to each
selling Holder and the Underwriters, if any, covering such matters as
are customarily covered in opinions
NYDOCS01/565802 2
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12
requested in underwritten offerings and such other matters as may be
reasonably requested by such Holders and Underwriters; (v) obtain "cold
comfort" letters and updates thereof from the independent certified
public accountants of the Company (and, if necessary, any other
independent certified public accountants of any subsidiary of the
Company or of any business acquired by the Company for which financial
statements and financial data are, or are required to be, included in
the Registration Statement), addressed to each selling Holder of
securities registered thereunder and the Underwriters, if any, in
customary form and covering matters of the type customarily covered in
"cold comfort" letters in connection with primary underwritten
offerings; and (vi) deliver such documents and certificates as may be
reasonably requested by the Majority Holders and the Managing
Underwriters, if any, including those to evidence compliance with
Section 4(k) and with any customary conditions contained in the
underwriting agreement or other agreement entered into by the Company.
The foregoing actions set forth in clauses (iii), (iv), (v) and (vi) of
this Section 4(r) shall be performed at (A) the effectiveness of such
Registration Statement and each post-effective amendment thereto and
(B) each closing under any underwriting or similar agreement as and to
the extent required thereunder.
(s) In the case of any Exchange Offer Registration Statement,
the Company shall (i) make reasonably available for inspection by such
Initial Purchaser, and any attorney, accountant or other agent retained
by such Initial Purchaser, all relevant financial and other records,
pertinent corporate documents and properties of the Company and its
subsidiaries; (ii) cause the Company's officers, directors and
employees to supply all relevant information reasonably requested by
such Initial Purchaser or any such attorney, accountant or agent in
connection with any such Registration Statement as is customary for
similar due diligence examinations; provided, however, that any
information that is designated in writing by the Company, in good
faith, as confidential at the time of delivery of such information
shall be kept confidential by such Initial Purchaser or any such
attorney, accountant or agent, unless such disclosure is made in
connection with a court proceeding or required by law, or such
information becomes available to the public generally or through a
third party without an accompanying obligation of confidentiality;
(iii) make such representations and warranties to such Initial
Purchaser, in form, substance and scope as are customarily made by
issuers to underwriters in primary underwritten offerings and covering
matters including, but not limited to, those set forth in the Purchase
Agreement; (iv) obtain opinions of counsel to the Company and updates
thereof (which counsel and opinions (in form, scope and substance)
shall be reasonably satisfactory to such Initial Purchaser and its
counsel), addressed to such Initial Purchaser, covering such matters as
are customarily covered in opinions requested in underwritten offerings
and such other matters as may be reasonably requested by such Initial
Purchaser or its counsel; (v) obtain "cold comfort" letters and updates
thereof from the independent
NYDOCS01/565802 2
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13
certified public accountants of the Company (and, if necessary, any
other independent certified public accountants of any subsidiary of the
Company or of any business acquired by the Company for which financial
statements and financial data are, or are required to be, included in
the Registration Statement), addressed to such Initial Purchaser, in
customary form and covering matters of the type customarily covered in
"cold comfort" letters in connection with primary underwritten
offerings, or if requested by such Initial Purchaser or its counsel in
lieu of a "cold comfort" letter, an agreed-upon procedures letter under
Statement on Auditing Standards No. 35, covering matters requested by
such Initial Purchaser or its counsel; and (vi) deliver such documents
and certificates as may be reasonably requested by such Initial
Purchaser or its counsel, including those to evidence compliance with
Section 4(k) and with conditions customarily contained in underwriting
agreements. The foregoing actions set forth in clauses (iii), (iv),
(v), and (vi) of this Section 4(s) shall be performed at the close of
the Registered Exchange Offer and the effective date of any
post-effective amendment to the Exchange Offer Registration Statement.
5. Registration Expenses. The Company shall bear all expenses
incurred in connection with the performance of its obligations under Sections 2,
3 and 4 hereof and, in the event of any Shelf Registration Statement, will
reimburse the Holders for the reasonable fees and disbursements of one firm or
counsel designated by the Majority Holders to act as counsel for the Holders in
connection therewith, and, in the case of any Exchange Offer Registration
Statement, will reimburse the Initial Purchaser for the reasonable fees and
disbursements of counsel acting in connection therewith.
6. Indemnification and Contribution. (a) In connection with
any Registration Statement, the Company agrees to indemnify and hold harmless
each Holder of securities covered thereby (including the Initial Purchaser and,
with respect to any Prospectus delivery as contemplated in Section 4(h) hereof,
each Exchanging Dealer), the directors, officers, employees and agents of each
such Holder and each person who controls any such Holder within the meaning of
either the Act or the Exchange Act against any and all losses, claims, damages
or liabilities, joint or several, to which they or any of them may become
subject under the Act, the Exchange Act or other Federal or state statutory law
or regulation, at common law or otherwise, insofar as such losses, claims,
damages or liabilities (or actions in respect thereof) arise out of or are based
upon any untrue statement or alleged untrue statement of a material fact
contained in the Registration Statement as originally filed or in any amendment
thereof, or in any preliminary Prospectus or Prospectus, or in any amendment
thereof or supplement thereto, or arise out of or are based upon the omission or
alleged omission to state therein a material fact required to be stated therein
or necessary to make the statements therein not misleading, and agrees to
reimburse each such indemnified party, as incurred, for any legal or other
expenses reasonably incurred by them in connection with investigating or
defending any such loss, claim, damage, liability or action; provided,
NYDOCS01/565802 2
<PAGE>
14
however, that the Company will not be liable in any case to the extent that any
such loss, claim, damage or liability arises out of or is based upon any such
untrue statement or alleged untrue statement or omission or alleged omission
made therein in reliance upon and in conformity with written information
furnished to the Company by or on behalf of any such Holder specifically for
inclusion therein. This indemnity agreement will be in addition to any liability
which the Company may otherwise have.
The Company also agrees to indemnify or contribute to Losses
of, as provided in Section 6(d), any Underwriters of Securities registered under
a Shelf Registration Statement, their officers and directors and each person who
controls such Underwriters on substantially the same basis as that of the
indemnification of the Initial Purchaser and the selling Holders provided in
this Section 6(a) and shall, if requested by any Holder, enter into an
underwriting agreement reflecting such agreement, as provided in Section 4(q)
hereof.
(b) Each Holder of securities covered by a Registration
Statement (including the Initial Purchaser and, with respect to any Prospectus
delivery as contemplated in Section 4(h) hereof, each Exchanging Dealer)
severally agrees to indemnify and hold harmless (i) the Company, (ii) each of
its directors, (iii) each of its officers who signs such Registration Statement
and (iv) each person who controls the Company within the meaning of either the
Act or the Exchange Act to the same extent as the foregoing indemnity from the
Company to each such Holder, but only with reference to written information
relating to such Holder furnished to the Company by or on behalf of such Holder
specifically for inclusion in the documents referred to in the foregoing
indemnity. This indemnity agreement will be in addition to any liability which
any such Holder may otherwise have.
(c) Promptly after receipt by an indemnified party under this
Section 6 or notice of the commencement of any action, such indemnified party
will, if a claim in respect thereof is to be made against the indemnifying party
under this Section 6, notify the indemnifying party in writing of the
commencement thereof; but the failure so to notify the indemnifying party (i)
will not relieve it from liability under paragraph (a) or (b) above unless and
to the extent it did not otherwise learn of such action and such failure results
in the forfeiture by the indemnifying party of substantial rights and defenses
and (ii) will not, in any event, relieve the indemnifying party from any
obligations to any indemnified party other than the indemnification obligation
provided in paragraph (a) or (b) above. The indemnifying party shall be entitled
to appoint counsel of the indemnifying party's choice at the indemnifying
party's expense to represent the indemnified party in any action for which
indemnification is sought (in which case the indemnifying party shall not
thereafter be responsible for the fees and expenses of any separate counsel
retained by the indemnified party or parties except as set forth below);
provided, however, that such counsel shall be satisfactory to the indemnified
party. Notwithstanding the indemnifying party's election to appoint counsel to
represent the indemnified party in an action, the indemnified party shall have
the right to employ separate
NYDOCS01/565802 2
<PAGE>
15
counsel (including local counsel), and the indemnifying party shall bear the
reasonable fees, costs and expenses of such separate counsel (and local counsel)
if (i) the use of counsel chosen by the indemnifying party to represent the
indemnified party would present such counsel with a conflict of interest, (ii)
the actual or potential defendants in, or targets of, any such action include
both the indemnified party and the indemnifying party and the indemnified party
shall have reasonably concluded that there may be legal defenses available to it
and/or other indemnified parties which are different from or additional to those
available to the indemnifying party, (iii) the indemnifying party shall not have
employed counsel satisfactory to the indemnified party to represent the
indemnified party within a reasonable time after notice of the institution of
such action or (iv) the indemnifying party shall authorize the indemnified party
to employ separate counsel at the expense of the indemnifying party. An
indemnifying party will not, without the prior written consent of the
indemnified parties, settle or compromise or consent to the entry of any
judgment with respect to any pending or threatened claim, action, suit or
proceeding in respect of which indemnification or contribution may be sought
hereunder (whether or not the indemnified parties are actual or potential
parties to such claim or action) unless such settlement, compromise or consent
includes an unconditional release of each indemnified party from all liability
arising out of such claim, action, suit or proceeding.
(d) In the event that the indemnity provided in paragraph (a)
or (b) of this Section 6 is unavailable to or insufficient to hold harmless an
indemnified party for any reason, then each applicable indemnifying party, in
lieu of indemnifying such indemnified party, shall have a joint and several
obligation to contribute to the aggregate losses, claims, damages and
liabilities (including legal or other expenses reasonably incurred in connection
with investigating or defending same) (collectively "Losses") to which such
indemnified party may be subject in such proportion as is appropriate to reflect
the relative benefits received by such indemnifying party, on the one hand, and
such indemnified party, on the other hand, from the Initial Placement and the
Registration Statement which resulted in such Losses; provided, however, that in
no case shall the Initial Purchaser or any subsequent Holder of any Security or
New Security be responsible, in the aggregate, for any amount in excess of the
purchase discount or commission applicable to such Security, or in the case of a
New Security, applicable to the Security which was exchangeable into such New
Security, as set forth on the cover page of the Final Memorandum, nor shall any
Underwriter be responsible for any amount in excess of the underwriting discount
or commission applicable to the securities purchased by such Underwriter under
the Registration Statement which resulted in such Losses. If the allocation
provided by the immediately preceding sentence is unavailable for any reason,
the indemnifying party and the indemnified party shall contribute in such
proportion as is appropriate to reflect not only such relative benefits but also
the relative fault of such indemnifying party, on the one hand, and such
indemnified party, on the other hand, in connection with the statements or
omissions which resulted in such Losses as well as any other relevant equitable
considerations. Benefits received by the Company shall be deemed to
NYDOCS01/565802 2
<PAGE>
16
be equal to the sum of (x) the total net proceeds from the Initial Placement
(before deducting expenses) as set forth on the cover page of the Final
Memorandum and (y) the total amount of additional interest which the Company was
not required to pay as a result of registering the securities covered by the
Registration Statement which resulted in such Losses. Benefits received by the
Initial Purchaser shall be deemed to be equal to the total purchase discounts
and commissions as set forth on the cover page of the Final Memorandum, and
benefits received by any other Holders shall be deemed to be equal to the value
of receiving Securities or New Securities, as applicable, registered under the
Act. Benefits received by any Underwriter shall be deemed to be equal to the
total underwriting discounts and commissions, as set forth on the cover page of
the Prospectus forming a part of the Registration Statement which resulted in
such Losses. Relative fault shall be determined by reference to whether any
alleged untrue statement or omission relates to information provided by the
indemnifying party, on the one hand, or by the indemnified party, on the other
hand. The parties agree that it would not be just and equitable if contribution
were determined by pro rata allocation or any other method of allocation which
does not take account of the equitable considerations referred to above.
Notwithstanding the provisions of this paragraph (d), no person guilty of
fraudulent misrepresentation (within the meaning of Section 11(f) of the Act)
shall be entitled to contribution from any person who was not guilty of such
fraudulent misrepresentation. For purposes of this Section 6, each person who
controls a Holder within the meaning of either the Act or the Exchange Act and
each director, officer, employee and agent of such Holder shall have the same
rights to contribution as such Holder, and each person who controls the Company
within the meaning of either the Act or the Exchange Act, each officer of the
Company who shall have signed the Registration Statement and each director of
the Company shall have the same rights to contribution as the Company, subject
in each case to the applicable terms and conditions of this paragraph (d).
(e) The provisions of this Section 6 will remain in full force
and effect, regardless of any investigation made by or on behalf of any Holder
or the Company or any of the officers, directors or controlling persons referred
to in Section 6 hereof, and will survive the sale by a Holder of securities
covered by a Registration Statement.
7. Miscellaneous.
(a) No Inconsistent Agreements. The Company has not, as of the
date hereof, entered into, nor shall it, on or after the date hereof, enter
into, any agreement with respect to its securities that is inconsistent with the
rights granted to the Holders herein or otherwise conflicts with the provisions
hereof.
(b) Amendments and Waivers. The provisions of this Agreement,
including the provisions of this sentence, may not be amended, qualified,
modified or supplemented, and waivers or consents to departures from the
provisions hereof may not be given, unless the
NYDOCS01/565802 2
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17
Company has obtained the written consent of the Holders of at least a majority
of the then outstanding aggregate principal amount of Securities (or, after the
consummation of any Exchange Offer in accordance with Section 2 hereof, of New
Securities); provided that, with respect to any matter that directly or
indirectly affects the rights of the Initial Purchaser hereunder, the Company
shall obtain the written consent of the Initial Purchaser against which such
amendment, qualification, supplement, waiver or consent is to be effective.
Notwithstanding the foregoing (except the foregoing proviso), a waiver or
consent to departure from the provisions hereof with respect to a matter that
relates exclusively to the rights of Holders whose securities are being sold
pursuant to a Registration Statement and that does not directly or indirectly
affect the rights of other Holders may be given by the Majority Holders,
determined on the basis of securities being sold rather than registered under
such Registration Statement.
(c) Notices. All notices and other communications provided for
or permitted hereunder shall be made in writing by hand-delivery, first-class
mail, telex, telecopier, or air courier guaranteeing overnight delivery:
(1) if to a Holder, at the most current address given by such Holder to the
Company in accordance with the provisions of this Section 7(c), which address
initially is, with respect to each Holder, the address of such Holder maintained
by the Registrar under the Indenture, with a copy in like manner to Salomon
Smith Barney Inc.;
(2) if to you, initially at the respective addresses set forth in the
Purchase Agreement; and
(3) if to the Company, initially at its address set forth in the Purchase
Agreement.
All such notices and communications shall be deemed to have
been duly given when received.
The Initial Purchaser or the Company by notice to the other
may designate additional or different addresses for subsequent notices or
communications.
(d) Successors and Assigns. This Agreement shall inure to the
benefit of and be binding upon the successors and assigns of each of the
parties, including, without the need for an express assignment or any consent by
the Company thereto, subsequent Holders of Securities and/or New Securities. The
Company hereby agrees to extend the benefits of this Agreement to any Holder of
Securities and/or New Securities and any such Holder may specifically enforce
the provisions of this Agreement as if an original party hereto.
NYDOCS01/565802 2
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18
(e) Counterparts. This agreement may be executed in any number
of counterparts and by the parties hereto in separate counterparts, each of
which when so executed shall be deemed to be an original and all of which taken
together shall constitute one and the same agreement.
(f) Headings. The headings in this agreement are for
convenience of reference only and shall not limit or otherwise affect the
meaning hereof.
(g) Governing Law. This agreement shall be governed by and
construed in accordance with the internal laws of the State of New York
applicable to agreements made and to be performed in said State.
(h) Severability. In the event that any one or more of the
provisions contained herein, or the application thereof in any circumstances, is
held invalid, illegal or unenforceable in any respect for any reason, the
validity, legality and enforceability of any such provision in every other
respect and of the remaining provisions hereof shall not be in any way impaired
or affected thereby, it being intended that all of the rights and privileges of
the parties shall be enforceable to the fullest extent permitted by law.
(i) Securities Held by the Company, Etc. Whenever the consent
or approval of Holders of a specified percentage of principal amount of
Securities or New Securities is required hereunder, Securities or New
Securities, as applicable, held by the Company or its Affiliates (other than
subsequent Holders of Securities or New Securities if such subsequent Holders
are deemed to be Affiliates solely by reason of their holdings of such
Securities or New Securities) shall not be counted in determining whether such
consent or approval was given by the Holders of such required percentage.
NYDOCS01/565802 2
<PAGE>
19
Please confirm that the foregoing correctly sets forth the
agreement between the Company and you.
Very truly yours,
QWEST COMMUNICATIONS
INTERNATIONAL INC.
By: /s/
Name:
Title:
Accepted in New York, New York
November 4, 1998
SALOMON SMITH BARNEY INC.
By: /s/
Name: D. Scott Miller
Title: Managing Director
NYDOCS01/565802 2
<PAGE>
20
ANNEX A
Each broker-dealer that receives New Securities for its own
account pursuant to the Exchange Offer must acknowledge that it will deliver a
prospectus in connection with any resale of such New Securities. The Letter of
Transmittal states that by so acknowledging and by delivering a prospectus, a
broker-dealer will not be deemed to admit that it is an "underwriter" within the
meaning of the Securities Act. This Prospectus, as it may be amended or
supplemented from time to time, may be used by a broker-dealer in connection
with resales of New Securities received in exchange for Securities where such
New Securities were acquired by such broker-dealer as a result of market-making
activities or other trading activities. The Company has agreed that, starting on
the Expiration Date (as defined herein) and ending on the close of business on
the first anniversary of the Expiration Date, it will make this Prospectus
available to any broker-dealer for use in connection with any such resale. See
"Plan of Distribution" in the Exchange Offer Registration Statement.
NYDOCS01/565802 2
<PAGE>
ANNEX B
Each broker-dealer who holds Securities for its own account
acquired as a result of marketmaking activities or other trading activities and
who receives New Securities pursuant to a Registered Exchange Offer may be
deemed to be an "underwriter" within the meaning of the Securities Act of 1933,
as amended, and must acknowledge that it will deliver a Prospectus meeting the
requirements of the Securities Act in connection with any sale or transfer of
the New Securities covered by the Prospectus or any amendment or supplement
thereto. See "Plan of Distribution" in the Exchange Offer Registration
Statement.
NYDOCS01/565802 2
<PAGE>
ANNEX C
PLAN OF DISTRIBUTION
Each broker-dealer that receives New Securities for its own
account pursuant to the Registered Exchange Offer must acknowledge that it will
deliver a prospectus in connection with any resale of such New Securities. This
Prospectus, as it may be amended or supplemented from time to time, may be used
by a broker-dealer in connection with resales of New Securities received in
exchange for Securities where such Securities were acquired as a result of
market-making activities or other trading activities. The Company has agreed
that, starting on the Expiration Date and ending on the close of business on the
first anniversary of the Expiration Date, it will make this Prospectus, as
amended or supplemented, available to any broker-dealer for use in connection
with any such resale. In addition, until ______, 19__, all dealers effecting
transactions in the New Securities may be required to deliver a prospectus.
The Company will not receive any proceeds from any sale of New
Securities by broker-dealers. New Securities received by broker-dealers for
their own account pursuant to the Exchange Offer may be sold from time to time
in one or more transactions in the over-the-counter market, in negotiated
transactions, through the writing of options on the New Securities or a
combination of such methods of resale, at market prices prevailing at the time
of resale, at prices related to such prevailing market prices or negotiated
prices. Any such resale may be made directly to purchasers or to or through
brokers or dealers who may receive compensation in the form of commissions or
concessions from any such broker-dealer and/or the purchasers of any such New
Securities. Any broker-dealer that resells New Securities that were received by
it for its own account pursuant to the Exchange Offer and any broker or dealer
that participates in a distribution of such New Securities may be deemed to be
an "underwriter" within the meaning of the Securities Act and any profit of any
such resale of New Securities and any commissions or concessions received by any
such persons may be deemed to be underwriting compensation under the Securities
Act. The Letter of Transmittal states that by acknowledging that it will deliver
and by delivering a prospectus, a broker-dealer will not be deemed to admit that
it is an "underwriter" within the meaning of the Securities Act.
For a period of 1 year after the Expiration Date, the Company
will promptly send additional copies of this Prospectus and any amendment or
supplement to this Prospectus to any broker-dealer that requests such documents
in the letter of transmittal. The Company has agreed to pay all expenses
incident to the Exchange Offer (including the expenses of one counsel for the
holders of the Securities) other than commissions or concessions of any brokers
or dealers and will indemnify the Holders of the Securities (including any
broker-dealers) against certain liabilities, including liabilities under the
Securities Act.
NYDOCS01/565802 2
<PAGE>
The Company has not entered into any arrangements or
understandings with any person to distribute the New Securities to be received
in the Exchange Offer.
NYDOCS01/565802 2
<PAGE>
C-2
ANNEX D
Rider A
CHECK HERE IF YOU ARE A BROKER-DEALER AND WISH TO RECEIVE
ADDITIONAL COPIES OF THE PROSPECTUS AND COPIES OF ANY
AMENDMENTS OR SUPPLEMENTS THERETO.
Name:
Address:
Number of copies: __________________________________________
Rider B
If the undersigned is not a broker-dealer, the undersigned
represents that it is not engaged in, and does not intend to engage in, a
distribution of New Securities. If the undersigned is a broker-dealer that will
receive New Securities for its own account in exchange for Securities, it
represents that the Securities to be exchanged for New Securities were acquired
by it as a result of market-making activities or other trading activities and
acknowledges that it will deliver a Prospectus meeting the requirements of the
Securities Act in connection with any resale of such New Securities; however, by
so acknowledging and by delivering a Prospectus, the undersigned will not be
deemed to admit that it is an "underwriter" within the meaning of the Securities
Act.
NYDOCS01/565802 2
Exhibit 4.2(b)
1
EXECUTION COPY
QWEST COMMUNICATIONS INTERNATIONAL INC.
$300,000,000
7.25% Senior Notes Due 2008
REGISTRATION AGREEMENT
Dated: November 27, 1998
NYDOCS01/571257 2
<PAGE>
1
QWEST COMMUNICATIONS INTERNATIONAL INC.
$300,000,000 7.25% SENIOR NOTES DUE 2008
REGISTRATION AGREEMENT
New York, New York
November 27, 1998
Salomon Smith Barney Inc.
Seven World Trade Center
New York, New York 10048
Dear Sirs:
Qwest Communications International Inc., a Delaware
corporation (the "Company"), proposes to issue and sell to Salomon Smith Barney
Inc. (the "Initial Purchaser"), upon the terms set forth in a purchase agreement
dated November 19, 1998 (the "Purchase Agreement"), $300,000,000 of its 7.25%
Senior Notes Due 2008 (the "Securities") (the "Initial Placement"). As an
inducement to the Initial Purchaser to enter into the Purchase Agreement, the
Company agrees with you, (i) for your benefit and (ii) for the benefit of the
holders from time to time of the Securities (including you), as follows:
1. Definitions. Capitalized terms used herein without
definition shall have their respective meanings set forth in the Purchase
Agreement. As used in this Agreement, the following capitalized defined terms
shall have the following meanings:
"Act" means the Securities Act of 1933, as amended, and the
rules and regulations of the Commission promulgated thereunder.
"Affiliate" of any specified person means any other person
which, directly or indirectly, is in control of, is controlled by, or is under
common control with, such specified person. For purposes of this definition,
control of a person means the power, direct or indirect, to direct or cause the
direction of the management and policies of such person whether by contract or
otherwise; and the terms "controlling" and "controlled" have meanings
correlative to the foregoing.
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"Closing Date" has the meaning set forth in the Purchase
Agreement.
"Commission" means the Securities and Exchange Commission.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended, and the rules and regulations of the Commission promulgated thereunder.
"Exchange Offer Registration Period" means the 1-year period
following the consummation of the Registered Exchange Offer, exclusive of any
period during which any stop order shall be in effect suspending the
effectiveness of the Exchange Offer Registration Statement.
"Exchange Offer Registration Statement" means a registration
statement of the Company on an appropriate form under the Act with respect to
the Registered Exchange Offer, all amendments and supplements to such
registration statement, including post-effective amendments, in each case
including the Prospectus contained therein, all exhibits thereto and all
material incorporated by reference therein.
"Exchanging Dealer" means any Holder (which may include the
Initial Purchaser) that is a broker-dealer, electing to exchange Securities
acquired for its own account as a result of market-making activities or other
trading activities, for New Securities.
"Expiration Date" means the date of consummation of the
Registered Exchange Offer which shall be not less than 30 days and not more than
50 days after the date on which notice of the Registered Exchange Offer is
mailed to the Holders pursuant to clause 2(c)(ii) of this Agreement.
"Final Memorandum" has the meaning set forth in the Purchase
Agreement.
"Holder" means a holder from time to time of Securities
(including the Initial Purchaser) or of New Securities.
"Indenture" means the Indenture relating to the Securities
dated as of November 27, 1998, between the Company and Bankers Trust Company, as
trustee, as the same may be amended from time to time in accordance with the
terms thereof.
"Initial Placement" has the meaning set forth in the preamble
hereto.
"Majority Holders" means the Holders of a majority of the
aggregate principal amount of securities registered under a Registration
Statement.
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"Managing Underwriters" means the investment banker or
investment bankers and manager or managers that shall administer an underwritten
offering.
"New Securities" means debt securities of the Company
identical in all material respects to the Securities (except that the New
Securities will not contain terms with respect to registration rights or
transfer restrictions, and interest rate and interest rate step-up provisions
will be modified or eliminated, as appropriate), to be issued under the
Indenture or the New Securities Indenture.
"New Securities Indenture" means an indenture between the
Company and the New Securities Trustee, identical in all material respects with
the Indenture (except that the interest rate and interest rate step-up
provisions and the transfer restrictions will be modified or eliminated, as
appropriate).
"New Securities Trustee" means the Trustee or a bank or trust
company reasonably satisfactory to the Initial Purchaser, as trustee with
respect to the New Securities under the New Securities Indenture.
"Prospectus" means the prospectus included in any Registration
Statement (including, without limitation, a prospectus that discloses
information previously omitted from a prospectus filed as part of an effective
registration statement in reliance upon Rule 430A under the Act), as amended or
supplemented by any prospectus supplement, with respect to the terms of the
offering of any portion of the Securities or the New Securities, covered by such
Registration Statement, and all amendments and supplements to the Prospectus,
including post-effective amendments.
"Registered Exchange Offer" means the proposed offer to the
Holders to issue and deliver to such Holders, in exchange for the Securities, a
like principal amount of the New Securities.
"Registration Statement" means any Exchange Offer Registration
Statement or Shelf Registration Statement that covers any of the Securities or
the New Securities pursuant to the provisions of this Agreement, amendments and
supplements to such registration statement, including post-effective amendments,
in each case including the Prospectus contained therein, all exhibits thereto
and all material incorporated by reference therein.
"Securities" has the meaning set forth in the preamble hereto.
"Shelf Registration" means a registration effected pursuant to
Section 3 hereof.
"Shelf Registration Period" has the meaning set forth in
Section 3(b) hereof.
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"Shelf Registration Statement" means a "shelf" registration
statement of the Company pursuant to the provisions of Section 3 hereof which
covers some or all of the Securities or New Securities, as applicable, on an
appropriate form under Rule 415 under the Act, or any similar rule that may be
adopted by the Commission, amendments and supplements to such registration
statement, including post-effective amendments, in each case including the
Prospectus contained therein, all exhibits thereto and all material incorporated
by reference therein.
"Trustee" means the trustee with respect to the Securities
under the Indenture.
"Underwriter" means any underwriter of securities in
connection with an offering thereof under an Exchange Offer Registration
Statement or a Shelf Registration Statement.
2. Registered Exchange Offer; Resales of New Securities by
Exchanging Dealers; Private Exchange. (a) The Company shall prepare and, within
90 days following the Closing Date, shall file with the Commission the Exchange
Offer Registration Statement with respect to the Registered Exchange Offer. The
Company shall use its best efforts to cause the Exchange Offer Registration
Statement to become effective under the Act within 150 days of the Closing Date.
(b) Upon the effectiveness of the Exchange Offer Registration
Statement, the Company shall promptly commence the Registered Exchange Offer, it
being the objective of such Registered Exchange Offer to enable each Holder
electing to exchange Securities for New Securities (assuming (i) that such
Holder is not an affiliate, as defined in Rule 405 of the Act, of the Company,
(ii) that such Holder is acquiring the New Securities in the ordinary course of
such Holder's business and (iii) that such Holder has no arrangement or
undertaking with any person to participate in the distribution (within the
meaning of the Act) of the New Securities) to trade such New Securities from and
after their receipt without any limitations or restrictions under the Act and
without material restrictions under the securities laws of a substantial
proportion of the several states of the United States.
(c) In connection with the Registered Exchange Offer, the
Company shall:
(i) mail to each Holder a copy of the Prospectus forming part
of the Exchange Offer Registration Statement, together with an
appropriate letter of transmittal (which shall include deemed
representations by the Holders to the effect set forth under (i), (ii)
and (iii) in paragraph (b) above) and related documents;
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(ii) keep the Registered Exchange Offer open for not less than
30 days and not more than 50 days after the date notice thereof is
mailed to the Holders (or longer if required by applicable law);
(iii) utilize the services of a depositary for the Registered
Exchange Offer with an address in the Borough of Manhattan, The City of
New York; and
(iv) comply in all respects with all applicable laws.
(d) As soon as practicable after the close of the Registered
Exchange Offer, the Company shall:
(i) accept for exchange all Securities tendered and not
validly withdrawn pursuant to the Registered Exchange Offer;
(ii) deliver to the Trustee for cancellation all
Securities so accepted for exchange; and
(iii) cause the Trustee or the New Securities Trustee, as the
case may be, promptly to authenticate and deliver to each Holder of
Securities a principal amount of New Securities equal in principal
amount to the Securities of such Holder so accepted for exchange.
(e) The Initial Purchaser and the Company acknowledge that,
pursuant to interpretations by the Commission's staff of Section 5 of the Act,
and in the absence of an applicable exemption therefrom, each Exchanging Dealer
is required to deliver a Prospectus in connection with a sale of any New
Securities received by such Exchanging Dealer pursuant to the Registered
Exchange Offer in exchange for Securities acquired for its own account as a
result of market-making activities or other trading activities. Accordingly, the
Company shall:
(i) include the information set forth in Annex A hereto on the
cover of the Exchange Offer Registration Statement, in Annex B hereto
in the forepart of the Exchange Offer Registration Statement in a
section setting forth details of the Exchange Offer, and in Annex C
hereto in the "Underwriting" or "Plan of Distribution" section of the
Prospectus forming a part of the Exchange Offer Registration Statement,
and include the information set forth in Annex D hereto in the letter
of transmittal delivered pursuant to the Registered Exchange Offer; and
(ii) keep the Exchange Offer Registration Statement
continuously effective under the Act during the Exchange Offer
Registration Period for delivery by
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Exchanging Dealers in connection with sales of New Securities received
pursuant to the Registered Exchange Offer, as contemplated by Section
4(h) below.
(f) In the event that the Initial Purchaser determines that it
is not eligible to participate in the Registered Exchange Offer with respect to
the exchange of Securities constituting any portion of an unsold allotment, at
the request of the Initial Purchaser, the Company shall issue and deliver to the
Initial Purchaser or the party purchasing New Securities registered under a
Shelf Registration Statement as contemplated by Section 3 hereof from the
Initial Purchaser, in exchange for such Securities, a like principal amount of
New Securities. The Company shall seek to cause the CUSIP Service Bureau to
issue the same CUSIP number for such New Securities as for New Securities issued
pursuant to the Registered Exchange Offer.
3. Shelf Registration. If, (i) because of any change in law or
applicable interpretations thereof by the Commission's staff, the Company
determines upon advice of its outside counsel that it is not permitted to effect
the Registered Exchange Offer as contemplated by Section 2 hereof, or (ii) for
any other reason the Registered Exchange Offer is not consummated within 180
days of the date hereof, or (iii)the Initial Purchaser so requests with respect
to Securities held by it following consummation of the Registered Exchange
Offer, or (iv) any Holder (other than the Initial Purchaser) is not eligible to
participate in the Registered Exchange Offer and so notifies the Company as soon
as practicable, but in any event not later than 30 days following consummation
of the Registered Exchange Offer, or (v) in the case of the Initial Purchaser
that participates in the Registered Exchange Offer or acquires New Securities
pursuant to Section 2(f) hereof, such Initial Purchaser does not receive freely
tradeable New Securities in exchange for Securities constituting any portion of
an unsold allotment (it being understood that, for purposes of this Section 3,
(x) the requirement that an Initial Purchaser deliver a Prospectus containing
the information required by Items 507 and/or 508 of Regulation S-K under the Act
in connection with sales of New Securities acquired in exchange for such
Securities shall result in such New Securities being not "freely tradeable" but
(y) the requirement that an Exchanging Dealer deliver a Prospectus in connection
with sales of New Securities acquired in the Registered Exchange Offer in
exchange for Securities acquired as a result of market-making activities or
other trading activities shall not result in such New Securities being not
"freely tradeable"), the following provisions shall apply:
(a) The Company shall, as promptly as practicable (but in no
event more than 30 days after so required or requested pursuant to this
Section 3), file with the Commission, and thereafter shall cause to be
declared effective under the Act, a Shelf Registration Statement
relating to the offer and sale of the Securities or the New Securities,
as applicable, by the Holders from time to time in accordance with the
methods of distribution elected by such Holders and set forth in such
Shelf Registration Statement; provided that, with respect to New
Securities received by the Initial
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Purchaser in exchange for Securities constituting any portion of an
unsold allotment, the Company may, if permitted by current
interpretations by the Commission's staff, file a post-effective
amendment to the Exchange Offer Registration Statement containing the
information required by Regulation S-K Items 507 and/or 508, as
applicable, in satisfaction of its obligations under this paragraph (a)
with respect thereto, and any such Exchange Offer Registration
Statement, as so amended, shall be referred to herein as, and governed
by the provisions herein applicable to, a Shelf Registration Statement.
(b) The Company shall use its best efforts to keep the Shelf
Registration Statement continuously effective in order to permit the
Prospectus forming part thereof to be usable by Holders for a period of
three years from the date the Shelf Registration Statement is declared
effective by the Commission or such shorter period that will terminate
when all the Securities or New Securities, as applicable, covered by
the Shelf Registration Statement have been sold pursuant to the Shelf
Registration Statement (in any such case, such period being called the
"Shelf Registration Period"). The Company shall be deemed not to have
used its best efforts to keep the Shelf Registration Statement
effective during the requisite period if it voluntarily takes any
action that would result in Holders of securities covered thereby not
being able to offer and sell such securities during that period, unless
(i) such action is required by applicable law, or (ii) such action is
taken by the Company in good faith and for valid business reasons (not
including avoidance of the Company's obligations hereunder), including
the acquisition or divestiture of assets, so long as the Company as
promptly as practicable thereafter complies with the requirements of
Section 4(k) hereof, if applicable.
4. Registration Procedures. In connection with any Shelf
Registration Statement and, to the extent applicable, any Exchange Offer
Registration Statement, the following provisions shall apply:
(a) The Company shall furnish to you, prior to the filing
thereof with the Commission, a copy of any Shelf Registration Statement
and any Exchange Offer Registration Statement, and each amendment
thereof and each amendment or supplement, if any, to the Prospectus
included therein, and shall reflect in each such document, when so
filed with the Commission, such comments as you reasonably may propose.
(b) The Company shall ensure that (i) any Registration
Statement and any amendment thereto and any Prospectus forming part
thereof and any amendment or supplement thereto complies in all
material respects with the Act and the rules and regulations
thereunder, (ii) any Registration Statement and any amendment thereto
does
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not, when it becomes effective, contain an untrue statement of a
material fact or omit to state a material fact required to be stated
therein or necessary to make the statements therein not misleading and
(iii) any Prospectus forming part of any Registration Statement, and
any amendment or supplement to such Prospectus, does not include an
untrue statement of a material fact or omit to state a material fact
necessary in order to make the statements, in the light of the
circumstances under which they were made, not misleading.
(c) (1) The Company shall advise you and, in the case of a
Shelf Registration Statement, the Holders of securities covered
thereby, and, if requested by you or any such Holder, confirm such
advice in writing:
(i) when a Registration Statement and any amendment
thereto has been filed with the Commission and when the
Registration Statement or any post-effective amendment thereto
has become effective; and
(ii) of any request by the Commission for amendments
or supplements to the Registration Statement or the Prospectus
included therein or for additional information.
(2) The Company shall advise you and, in the case of a Shelf
Registration Statement, the Holders of securities covered thereby, and,
in the case of an Exchange Offer Registration Statement, any Exchanging
Dealer which has provided in writing to the Company a telephone or
facsimile number and address for notices, and, if requested by you or
any such Holder or Exchanging Dealer, confirm such advice in writing:
(i) of the issuance by the Commission of any stop order suspending the
effectiveness of the Registration Statement or the initiation of any proceedings
for that purpose;
(ii) of the receipt by the Company of any notification with respect to the
suspension of the qualification of the securities included therein for sale in
any jurisdiction or the initiation or threatening of any proceeding for such
purpose; and
(iii) of the happening of any event that requires the making of any changes
in the Registration Statement or the Prospectus so that, as of such date, the
statements therein are not misleading and do not omit to state a material fact
required to be stated therein or necessary to make the statements therein (in
the case of the Prospectus, in light of the circumstances under which they were
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made) not misleading (which advice shall be accompanied by an
instruction to suspend the use of the Prospectus until the
requisite changes have been made).
(d) The Company shall obtain the withdrawal of any order
suspending the effectiveness of any Registration Statement at the
earliest possible time.
(e) The Company shall furnish to each Holder of securities
included within the coverage of any Shelf Registration Statement,
without charge, at least one copy of such Shelf Registration Statement
and any post-effective amendment thereto, including financial
statements and schedules, and, if the Holder so requests in writing,
all exhibits (including those incorporated by reference).
(f) The Company shall, during the Shelf Registration Period,
deliver to each Holder of securities included within the coverage of
any Shelf Registration Statement, without charge, as many copies of the
Prospectus (including each preliminary Prospectus) included in such
Shelf Registration Statement and any amendment or supplement thereto as
such Holder may reasonably request; and the Company consents to the use
of the Prospectus or any amendment or supplement thereto by each of the
selling Holders of securities in connection with the offering and sale
of the securities covered by the Prospectus or any amendment or
supplement thereto.
(g) The Company shall furnish to each Exchanging Dealer which
so requests, without charge, at least one copy of the Exchange Offer
Registration Statement and any post-effective amendment thereto,
including financial statements and schedules, any documents
incorporated by reference therein, and, if the Exchanging Dealer so
requests in writing, all exhibits (including those incorporated by
reference).
(h) The Company shall, during the Exchange Offer Registration
Period, promptly deliver to each Exchanging Dealer, without charge, as
many copies of the Prospectus included in such Exchange Offer
Registration Statement and any amendment or supplement thereto as such
Exchanging Dealer may reasonably request for delivery by such
Exchanging Dealer in connection with a sale of New Securities received
by it pursuant to the Registered Exchange Offer; and the Company
consents to the use of the Prospectus or any amendment or supplement
thereto by any such Exchanging Dealer, as aforesaid.
(i) Prior to the Registered Exchange Offer or any other
offering of securities pursuant to any Registration Statement, the
Company shall use its best efforts to register or qualify or cooperate
with the Holders of securities included therein and their respective
counsel in connection with the registration or qualification of such
securities for offer and sale under the securities or blue sky laws of
such jurisdictions as
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any such Holders reasonably request in writing and do any and all other
acts or things necessary or advisable to enable the offer and sale in
such jurisdictions of the securities covered by such Registration
Statement; provided, however, that the Company will not be required to
qualify generally to do business in any jurisdiction where it is not
then so qualified or to take any action which would subject it to
general service of process or to taxation in any such jurisdiction
where it is not then so subject.
(j) The Company shall cooperate with the Holders of securities
to facilitate the timely preparation and delivery of certificates
representing securities to be sold pursuant to any Registration
Statement free of any restrictive legends and in such denominations and
registered in such names as Holders may request prior to sales of
securities pursuant to such Registration Statement.
(k) Upon the occurrence of any event contemplated by paragraph
(c)(2)(iii) above, the Company shall as promptly as practicable prepare
a post-effective amendment to any Registration Statement or an
amendment or supplement to the related Prospectus or file any other
required document so that, as thereafter delivered to purchasers of the
securities included therein, the Prospectus will not include an untrue
statement of a material fact or omit to state any material fact
necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading.
(l) Not later than the effective date of any such Registration
Statement hereunder, the Company shall provide a CUSIP number for the
Securities or New Securities, as the case may be, registered under such
Registration Statement, and provide the trustee with printed
certificates for such Securities or New Securities, in a form eligible
for deposit with The Depository Trust Company.
(m) The Company shall comply with all applicable rules and
regulations of the Commission and shall make generally available to its
security holders as soon as practicable after the effective date of the
applicable Registration Statement an earnings statement satisfying the
provisions of Section 11(a) of the Act.
(n) The Company shall cause the Indenture or the New
Securities Indenture, as the case may be, to be qualified under the
Trust Indenture Act in a timely manner.
(o) The Company may require each Holder of securities to be
sold pursuant to any Shelf Registration Statement to furnish to the
Company such information regarding the Holder and the distribution of
such securities as the Company may from time to time reasonably require
for inclusion in such Registration Statement.
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(p) The Company shall, if requested, as promptly as
practicable incorporate in a Prospectus supplement or post-effective
amendment to a Shelf Registration Statement, such information as the
Managing Underwriters and Majority Holders reasonably determine and
agree should be included therein and shall make all required filings of
such Prospectus supplement or post-effective amendment as soon as
notified of the matters to be incorporated in such Prospectus
supplement or post-effective amendment.
(q) In the case of any Shelf Registration Statement, the
Company shall enter into such agreements (including underwriting
agreements) and take all other appropriate actions in order to expedite
or facilitate the registration or the disposition of the Securities,
and in connection therewith, if an underwriting agreement is entered
into, cause the same to contain indemnification provisions and
procedures no less favorable than those set forth in Section 6 (or such
other provisions and procedures acceptable to the Majority Holders and
the Managing Underwriters, if any), with respect to all parties to be
indemnified pursuant to Section 6 from Holders of Securities to the
Company.
(r) In the case of any Shelf Registration Statement, the
Company shall (i) make reasonably available for inspection by the
Holders of securities to be registered thereunder, any Underwriter
participating in any disposition pursuant to such Registration
Statement, and any attorney, accountant or other agent retained by the
Holders or any such Underwriter all relevant financial and other
records, pertinent corporate documents and properties of the Company
and its subsidiaries; (ii) cause the Company's officers, directors and
employees to supply all relevant information reasonably requested by
the Holders or any such Underwriter, attorney, accountant or agent in
connection with any such Registration Statement as is customary for
similar due diligence examinations; provided, however, that any
information that is designated in writing by the Company, in good
faith, as confidential at the time of delivery of such information
shall be kept confidential by the Holders or any such Underwriter,
attorney, accountant or agent, unless such disclosure is made in
connection with a court proceeding or required by law, or such
information becomes available to the public generally or through a
third party without an accompanying obligation of confidentiality;
(iii) make such representations and warranties to the Holders of
securities registered thereunder and the Underwriters, if any, in form,
substance and scope as are customarily made by issuers to underwriters
in primary underwritten offerings and covering matters including, but
not limited to, those set forth in the Purchase Agreement; (iv) obtain
opinions of counsel to the Company and updates thereof (which counsel
and opinions (in form, scope and substance) shall be reasonably
satisfactory to the Managing Underwriters, if any) addressed to each
selling Holder and the Underwriters, if any, covering such matters as
are customarily covered in opinions
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requested in underwritten offerings and such other matters as may be
reasonably requested by such Holders and Underwriters; (v) obtain "cold
comfort" letters and updates thereof from the independent certified
public accountants of the Company (and, if necessary, any other
independent certified public accountants of any subsidiary of the
Company or of any business acquired by the Company for which financial
statements and financial data are, or are required to be, included in
the Registration Statement), addressed to each selling Holder of
securities registered thereunder and the Underwriters, if any, in
customary form and covering matters of the type customarily covered in
"cold comfort" letters in connection with primary underwritten
offerings; and (vi) deliver such documents and certificates as may be
reasonably requested by the Majority Holders and the Managing
Underwriters, if any, including those to evidence compliance with
Section 4(k) and with any customary conditions contained in the
underwriting agreement or other agreement entered into by the Company.
The foregoing actions set forth in clauses (iii), (iv), (v) and (vi) of
this Section 4(r) shall be performed at (A) the effectiveness of such
Registration Statement and each post-effective amendment thereto and
(B) each closing under any underwriting or similar agreement as and to
the extent required thereunder.
(s) In the case of any Exchange Offer Registration Statement,
the Company shall (i) make reasonably available for inspection by such
Initial Purchaser, and any attorney, accountant or other agent retained
by such Initial Purchaser, all relevant financial and other records,
pertinent corporate documents and properties of the Company and its
subsidiaries; (ii) cause the Company's officers, directors and
employees to supply all relevant information reasonably requested by
such Initial Purchaser or any such attorney, accountant or agent in
connection with any such Registration Statement as is customary for
similar due diligence examinations; provided, however, that any
information that is designated in writing by the Company, in good
faith, as confidential at the time of delivery of such information
shall be kept confidential by such Initial Purchaser or any such
attorney, accountant or agent, unless such disclosure is made in
connection with a court proceeding or required by law, or such
information becomes available to the public generally or through a
third party without an accompanying obligation of confidentiality;
(iii) make such representations and warranties to such Initial
Purchaser, in form, substance and scope as are customarily made by
issuers to underwriters in primary underwritten offerings and covering
matters including, but not limited to, those set forth in the Purchase
Agreement; (iv) obtain opinions of counsel to the Company and updates
thereof (which counsel and opinions (in form, scope and substance)
shall be reasonably satisfactory to such Initial Purchaser and its
counsel), addressed to such Initial Purchaser, covering such matters as
are customarily covered in opinions requested in underwritten offerings
and such other matters as may be reasonably requested by such Initial
Purchaser or its counsel; (v) obtain "cold comfort" letters and updates
thereof from the independent
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certified public accountants of the Company (and, if necessary, any
other independent certified public accountants of any subsidiary of the
Company or of any business acquired by the Company for which financial
statements and financial data are, or are required to be, included in
the Registration Statement), addressed to such Initial Purchaser, in
customary form and covering matters of the type customarily covered in
"cold comfort" letters in connection with primary underwritten
offerings, or if requested by such Initial Purchaser or its counsel in
lieu of a "cold comfort" letter, an agreed-upon procedures letter under
Statement on Auditing Standards No. 35, covering matters requested by
such Initial Purchaser or its counsel; and (vi) deliver such documents
and certificates as may be reasonably requested by such Initial
Purchaser or its counsel, including those to evidence compliance with
Section 4(k) and with conditions customarily contained in underwriting
agreements. The foregoing actions set forth in clauses (iii), (iv),
(v), and (vi) of this Section 4(s) shall be performed at the close of
the Registered Exchange Offer and the effective date of any
post-effective amendment to the Exchange Offer Registration Statement.
5. Registration Expenses. The Company shall bear all expenses
incurred in connection with the performance of its obligations under Sections 2,
3 and 4 hereof and, in the event of any Shelf Registration Statement, will
reimburse the Holders for the reasonable fees and disbursements of one firm or
counsel designated by the Majority Holders to act as counsel for the Holders in
connection therewith, and, in the case of any Exchange Offer Registration
Statement, will reimburse the Initial Purchaser for the reasonable fees and
disbursements of counsel acting in connection therewith.
6. Indemnification and Contribution. (a) In connection with
any Registration Statement, the Company agrees to indemnify and hold harmless
each Holder of securities covered thereby (including the Initial Purchaser and,
with respect to any Prospectus delivery as contemplated in Section 4(h) hereof,
each Exchanging Dealer), the directors, officers, employees and agents of each
such Holder and each person who controls any such Holder within the meaning of
either the Act or the Exchange Act against any and all losses, claims, damages
or liabilities, joint or several, to which they or any of them may become
subject under the Act, the Exchange Act or other Federal or state statutory law
or regulation, at common law or otherwise, insofar as such losses, claims,
damages or liabilities (or actions in respect thereof) arise out of or are based
upon any untrue statement or alleged untrue statement of a material fact
contained in the Registration Statement as originally filed or in any amendment
thereof, or in any preliminary Prospectus or Prospectus, or in any amendment
thereof or supplement thereto, or arise out of or are based upon the omission or
alleged omission to state therein a material fact required to be stated therein
or necessary to make the statements therein not misleading, and agrees to
reimburse each such indemnified party, as incurred, for any legal or other
expenses reasonably incurred by them in connection with investigating or
defending any such loss, claim, damage, liability or action; provided,
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however, that the Company will not be liable in any case to the extent that any
such loss, claim, damage or liability arises out of or is based upon any such
untrue statement or alleged untrue statement or omission or alleged omission
made therein in reliance upon and in conformity with written information
furnished to the Company by or on behalf of any such Holder specifically for
inclusion therein. This indemnity agreement will be in addition to any liability
which the Company may otherwise have.
The Company also agrees to indemnify or contribute to Losses
of, as provided in Section 6(d), any Underwriters of Securities registered under
a Shelf Registration Statement, their officers and directors and each person who
controls such Underwriters on substantially the same basis as that of the
indemnification of the Initial Purchaser and the selling Holders provided in
this Section 6(a) and shall, if requested by any Holder, enter into an
underwriting agreement reflecting such agreement, as provided in Section 4(q)
hereof.
(b) Each Holder of securities covered by a Registration
Statement (including the Initial Purchaser and, with respect to any Prospectus
delivery as contemplated in Section 4(h) hereof, each Exchanging Dealer)
severally agrees to indemnify and hold harmless (i) the Company, (ii) each of
its directors, (iii) each of its officers who signs such Registration Statement
and (iv) each person who controls the Company within the meaning of either the
Act or the Exchange Act to the same extent as the foregoing indemnity from the
Company to each such Holder, but only with reference to written information
relating to such Holder furnished to the Company by or on behalf of such Holder
specifically for inclusion in the documents referred to in the foregoing
indemnity. This indemnity agreement will be in addition to any liability which
any such Holder may otherwise have.
(c) Promptly after receipt by an indemnified party under this
Section 6 or notice of the commencement of any action, such indemnified party
will, if a claim in respect thereof is to be made against the indemnifying party
under this Section 6, notify the indemnifying party in writing of the
commencement thereof; but the failure so to notify the indemnifying party (i)
will not relieve it from liability under paragraph (a) or (b) above unless and
to the extent it did not otherwise learn of such action and such failure results
in the forfeiture by the indemnifying party of substantial rights and defenses
and (ii) will not, in any event, relieve the indemnifying party from any
obligations to any indemnified party other than the indemnification obligation
provided in paragraph (a) or (b) above. The indemnifying party shall be entitled
to appoint counsel of the indemnifying party's choice at the indemnifying
party's expense to represent the indemnified party in any action for which
indemnification is sought (in which case the indemnifying party shall not
thereafter be responsible for the fees and expenses of any separate counsel
retained by the indemnified party or parties except as set forth below);
provided, however, that such counsel shall be satisfactory to the indemnified
party. Notwithstanding the indemnifying party's election to appoint counsel to
represent the indemnified party in an action, the indemnified party shall have
the right to employ separate
NYDOCS01/571257 2
<PAGE>
15
counsel (including local counsel), and the indemnifying party shall bear the
reasonable fees, costs and expenses of such separate counsel (and local counsel)
if (i) the use of counsel chosen by the indemnifying party to represent the
indemnified party would present such counsel with a conflict of interest, (ii)
the actual or potential defendants in, or targets of, any such action include
both the indemnified party and the indemnifying party and the indemnified party
shall have reasonably concluded that there may be legal defenses available to it
and/or other indemnified parties which are different from or additional to those
available to the indemnifying party, (iii) the indemnifying party shall not have
employed counsel satisfactory to the indemnified party to represent the
indemnified party within a reasonable time after notice of the institution of
such action or (iv) the indemnifying party shall authorize the indemnified party
to employ separate counsel at the expense of the indemnifying party. An
indemnifying party will not, without the prior written consent of the
indemnified parties, settle or compromise or consent to the entry of any
judgment with respect to any pending or threatened claim, action, suit or
proceeding in respect of which indemnification or contribution may be sought
hereunder (whether or not the indemnified parties are actual or potential
parties to such claim or action) unless such settlement, compromise or consent
includes an unconditional release of each indemnified party from all liability
arising out of such claim, action, suit or proceeding.
(d) In the event that the indemnity provided in paragraph (a)
or (b) of this Section 6 is unavailable to or insufficient to hold harmless an
indemnified party for any reason, then each applicable indemnifying party, in
lieu of indemnifying such indemnified party, shall have a joint and several
obligation to contribute to the aggregate losses, claims, damages and
liabilities (including legal or other expenses reasonably incurred in connection
with investigating or defending same) (collectively "Losses") to which such
indemnified party may be subject in such proportion as is appropriate to reflect
the relative benefits received by such indemnifying party, on the one hand, and
such indemnified party, on the other hand, from the Initial Placement and the
Registration Statement which resulted in such Losses; provided, however, that in
no case shall the Initial Purchaser or any subsequent Holder of any Security or
New Security be responsible, in the aggregate, for any amount in excess of the
purchase discount or commission applicable to such Security, or in the case of a
New Security, applicable to the Security which was exchangeable into such New
Security, as set forth on the cover page of the Final Memorandum, nor shall any
Underwriter be responsible for any amount in excess of the underwriting discount
or commission applicable to the securities purchased by such Underwriter under
the Registration Statement which resulted in such Losses. If the allocation
provided by the immediately preceding sentence is unavailable for any reason,
the indemnifying party and the indemnified party shall contribute in such
proportion as is appropriate to reflect not only such relative benefits but also
the relative fault of such indemnifying party, on the one hand, and such
indemnified party, on the other hand, in connection with the statements or
omissions which resulted in such Losses as well as any other relevant equitable
considerations. Benefits received by the Company shall be deemed to
NYDOCS01/571257 2
<PAGE>
16
be equal to the sum of (x) the total net proceeds from the Initial Placement
(before deducting expenses) as set forth on the cover page of the Final
Memorandum and (y) the total amount of additional interest which the Company was
not required to pay as a result of registering the securities covered by the
Registration Statement which resulted in such Losses. Benefits received by the
Initial Purchaser shall be deemed to be equal to the total purchase discounts
and commissions as set forth on the cover page of the Final Memorandum, and
benefits received by any other Holders shall be deemed to be equal to the value
of receiving Securities or New Securities, as applicable, registered under the
Act. Benefits received by any Underwriter shall be deemed to be equal to the
total underwriting discounts and commissions, as set forth on the cover page of
the Prospectus forming a part of the Registration Statement which resulted in
such Losses. Relative fault shall be determined by reference to whether any
alleged untrue statement or omission relates to information provided by the
indemnifying party, on the one hand, or by the indemnified party, on the other
hand. The parties agree that it would not be just and equitable if contribution
were determined by pro rata allocation or any other method of allocation which
does not take account of the equitable considerations referred to above.
Notwithstanding the provisions of this paragraph (d), no person guilty of
fraudulent misrepresentation (within the meaning of Section 11(f) of the Act)
shall be entitled to contribution from any person who was not guilty of such
fraudulent misrepresentation. For purposes of this Section 6, each person who
controls a Holder within the meaning of either the Act or the Exchange Act and
each director, officer, employee and agent of such Holder shall have the same
rights to contribution as such Holder, and each person who controls the Company
within the meaning of either the Act or the Exchange Act, each officer of the
Company who shall have signed the Registration Statement and each director of
the Company shall have the same rights to contribution as the Company, subject
in each case to the applicable terms and conditions of this paragraph (d).
(e) The provisions of this Section 6 will remain in full force
and effect, regardless of any investigation made by or on behalf of any Holder
or the Company or any of the officers, directors or controlling persons referred
to in Section 6 hereof, and will survive the sale by a Holder of securities
covered by a Registration Statement.
7. Miscellaneous.
(a) No Inconsistent Agreements. The Company has not, as of the
date hereof, entered into, nor shall it, on or after the date hereof, enter
into, any agreement with respect to its securities that is inconsistent with the
rights granted to the Holders herein or otherwise conflicts with the provisions
hereof.
(b) Amendments and Waivers. The provisions of this Agreement,
including the provisions of this sentence, may not be amended, qualified,
modified or supplemented, and waivers or consents to departures from the
provisions hereof may not be given, unless the
NYDOCS01/571257 2
<PAGE>
17
Company has obtained the written consent of the Holders of at least a majority
of the then outstanding aggregate principal amount of Securities (or, after the
consummation of any Exchange Offer in accordance with Section 2 hereof, of New
Securities); provided that, with respect to any matter that directly or
indirectly affects the rights of the Initial Purchaser hereunder, the Company
shall obtain the written consent of the Initial Purchaser against which such
amendment, qualification, supplement, waiver or consent is to be effective.
Notwithstanding the foregoing (except the foregoing proviso), a waiver or
consent to departure from the provisions hereof with respect to a matter that
relates exclusively to the rights of Holders whose securities are being sold
pursuant to a Registration Statement and that does not directly or indirectly
affect the rights of other Holders may be given by the Majority Holders,
determined on the basis of securities being sold rather than registered under
such Registration Statement.
(c) Notices. All notices and other communications provided for
or permitted hereunder shall be made in writing by hand-delivery, first-class
mail, telex, telecopier, or air courier guaranteeing overnight delivery:
(1) if to a Holder, at the most current address given by such Holder to the
Company in accordance with the provisions of this Section 7(c), which address
initially is, with respect to each Holder, the address of such Holder maintained
by the Registrar under the Indenture, with a copy in like manner to Salomon
Smith Barney Inc.;
(2) if to you, initially at the respective addresses set forth in the
Purchase Agreement; and
(3) if to the Company, initially at its address set forth in the Purchase
Agreement.
All such notices and communications shall be deemed to have
been duly given when received.
The Initial Purchaser or the Company by notice to the other
may designate additional or different addresses for subsequent notices or
communications.
(d) Successors and Assigns. This Agreement shall inure to the
benefit of and be binding upon the successors and assigns of each of the
parties, including, without the need for an express assignment or any consent by
the Company thereto, subsequent Holders of Securities and/or New Securities. The
Company hereby agrees to extend the benefits of this Agreement to any Holder of
Securities and/or New Securities and any such Holder may specifically enforce
the provisions of this Agreement as if an original party hereto.
NYDOCS01/571257 2
<PAGE>
18
(e) Counterparts. This agreement may be executed in any number
of counterparts and by the parties hereto in separate counterparts, each of
which when so executed shall be deemed to be an original and all of which taken
together shall constitute one and the same agreement.
(f) Headings. The headings in this agreement are for
convenience of reference only and shall not limit or otherwise affect the
meaning hereof.
(g) Governing Law. This agreement shall be governed by and
construed in accordance with the internal laws of the State of New York
applicable to agreements made and to be performed in said State.
(h) Severability. In the event that any one or more of the
provisions contained herein, or the application thereof in any circumstances, is
held invalid, illegal or unenforceable in any respect for any reason, the
validity, legality and enforceability of any such provision in every other
respect and of the remaining provisions hereof shall not be in any way impaired
or affected thereby, it being intended that all of the rights and privileges of
the parties shall be enforceable to the fullest extent permitted by law.
(i) Securities Held by the Company, Etc. Whenever the consent
or approval of Holders of a specified percentage of principal amount of
Securities or New Securities is required hereunder, Securities or New
Securities, as applicable, held by the Company or its Affiliates (other than
subsequent Holders of Securities or New Securities if such subsequent Holders
are deemed to be Affiliates solely by reason of their holdings of such
Securities or New Securities) shall not be counted in determining whether such
consent or approval was given by the Holders of such required percentage.
NYDOCS01/571257 2
<PAGE>
19
Please confirm that the foregoing correctly sets forth the
agreement between the Company and you.
Very truly yours,
QWEST COMMUNICATIONS INTERNATIONAL INC.
By: /s/
Name:
Title:
Accepted in New York, New York
November 27, 1998
SALOMON SMITH BARNEY INC.
By: /s/
Name: D. Scott Miller
Title: Managing Director
NYDOCS01/571257 2
<PAGE>
20
ANNEX A
Each broker-dealer that receives New Securities for its own
account pursuant to the Exchange Offer must acknowledge that it will deliver a
prospectus in connection with any resale of such New Securities. The Letter of
Transmittal states that by so acknowledging and by delivering a prospectus, a
broker-dealer will not be deemed to admit that it is an "underwriter" within the
meaning of the Securities Act. This Prospectus, as it may be amended or
supplemented from time to time, may be used by a broker-dealer in connection
with resales of New Securities received in exchange for Securities where such
New Securities were acquired by such broker-dealer as a result of market-making
activities or other trading activities. The Company has agreed that, starting on
the Expiration Date (as defined herein) and ending on the close of business on
the first anniversary of the Expiration Date, it will make this Prospectus
available to any broker-dealer for use in connection with any such resale. See
"Plan of Distribution" in the Exchange Offer Registration Statement.
NYDOCS01/571257 2
<PAGE>
ANNEX B
Each broker-dealer who holds Securities for its own account
acquired as a result of marketmaking activities or other trading activities and
who receives New Securities pursuant to a Registered Exchange Offer may be
deemed to be an "underwriter" within the meaning of the Securities Act of 1933,
as amended, and must acknowledge that it will deliver a Prospectus meeting the
requirements of the Securities Act in connection with any sale or transfer of
the New Securities covered by the Prospectus or any amendment or supplement
thereto. See "Plan of Distribution" in the Exchange Offer Registration
Statement.
NYDOCS01/571257 2
<PAGE>
ANNEX C
PLAN OF DISTRIBUTION
Each broker-dealer that receives New Securities for its own
account pursuant to the Registered Exchange Offer must acknowledge that it will
deliver a prospectus in connection with any resale of such New Securities. This
Prospectus, as it may be amended or supplemented from time to time, may be used
by a broker-dealer in connection with resales of New Securities received in
exchange for Securities where such Securities were acquired as a result of
market-making activities or other trading activities. The Company has agreed
that, starting on the Expiration Date and ending on the close of business on the
first anniversary of the Expiration Date, it will make this Prospectus, as
amended or supplemented, available to any broker-dealer for use in connection
with any such resale. In addition, until ______, 19__, all dealers effecting
transactions in the New Securities may be required to deliver a prospectus.
The Company will not receive any proceeds from any sale of New
Securities by broker-dealers. New Securities received by broker-dealers for
their own account pursuant to the Exchange Offer may be sold from time to time
in one or more transactions in the over-the-counter market, in negotiated
transactions, through the writing of options on the New Securities or a
combination of such methods of resale, at market prices prevailing at the time
of resale, at prices related to such prevailing market prices or negotiated
prices. Any such resale may be made directly to purchasers or to or through
brokers or dealers who may receive compensation in the form of commissions or
concessions from any such broker-dealer and/or the purchasers of any such New
Securities. Any broker-dealer that resells New Securities that were received by
it for its own account pursuant to the Exchange Offer and any broker or dealer
that participates in a distribution of such New Securities may be deemed to be
an "underwriter" within the meaning of the Securities Act and any profit of any
such resale of New Securities and any commissions or concessions received by any
such persons may be deemed to be underwriting compensation under the Securities
Act. The Letter of Transmittal states that by acknowledging that it will deliver
and by delivering a prospectus, a broker-dealer will not be deemed to admit that
it is an "underwriter" within the meaning of the Securities Act.
For a period of 1 year after the Expiration Date, the Company
will promptly send additional copies of this Prospectus and any amendment or
supplement to this Prospectus to any broker-dealer that requests such documents
in the letter of transmittal. The Company has agreed to pay all expenses
incident to the Exchange Offer (including the expenses of one counsel for the
holders of the Securities) other than commissions or concessions of any brokers
or dealers and will indemnify the Holders of the Securities (including any
broker-dealers) against certain liabilities, including liabilities under the
Securities Act.
NYDOCS01/571257 2
<PAGE>
The Company has not entered into any arrangements or
understandings with any person to distribute the New Securities to be received
in the Exchange Offer.
NYDOCS01/571257 2
<PAGE>
C-2
ANNEX D
Rider A
CHECK HERE IF YOU ARE A BROKER-DEALER AND WISH TO RECEIVE
ADDITIONAL COPIES OF THE PROSPECTUS AND COPIES OF ANY
AMENDMENTS OR SUPPLEMENTS THERETO.
Name:
Address:
Number of copies: __________________________________________
Rider B
If the undersigned is not a broker-dealer, the undersigned
represents that it is not engaged in, and does not intend to engage in, a
distribution of New Securities. If the undersigned is a broker-dealer that will
receive New Securities for its own account in exchange for Securities, it
represents that the Securities to be exchanged for New Securities were acquired
by it as a result of market-making activities or other trading activities and
acknowledges that it will deliver a Prospectus meeting the requirements of the
Securities Act in connection with any resale of such New Securities; however, by
so acknowledging and by delivering a Prospectus, the undersigned will not be
deemed to admit that it is an "underwriter" within the meaning of the Securities
Act.
NYDOCS01/571257 2
Exhibit 5.1
January 29, 1999
Securities and Exchange Commission
Judiciary Plaza
450 Fifth Street, N.W.
Washington, D.C. 20549
Re: Qwest Communications International Inc.
Form S-4 Registration Statement Filed January 29, 1999
Ladies and Gentlemen:
As counsel for Qwest Communications International Inc., a Delaware
corporation (the "Company"), we have examined the above-referenced Registration
Statement on Form S-4 under the Securities Act of 1933, as amended (the
"Registration Statement"), which the Company has filed covering the exchange of
the Company's 7.50% Series B Senior Discount Notes Due 2008(the "Exchange
Notes") for its outstanding 7.50% Senior Discount Notes Due 2008 (the "Old
Notes")
We have examined the Company's Amended and Restated Certificate of
Incorporation, By-Laws and the record of its corporate proceedings and have made
such other investigation as we have deemed necessary in order to express the
opinions set forth below.
Based on such investigation, it is our opinion that the Exchange Notes, when
sold as described in the prospectus included in the Registration Statement, will
be legally issued, fully paid and non-assessable.
We hereby consent to all references to us in the Registration Statement and
all amendments to the Registration Statement. We further consent to the use of
this opinion as an exhibit to the Registration Statement.
HOLME ROBERTS & OWEN LLP
By: /s/ Nick Nimmo
------------------------
Nick Nimmo
5.1-1
EXHIBIT 8.1
January 29, 1999
Qwest Communications International Inc.
555 Seventeenth Street, Suite 1000
Denver, Colorado 80202
Re: 7.50% Series B Notes Due 2008
Form S-4 Registration Statement
Filed January 29, 1999
Ladies and Gentlemen:
This opinion is given in connection with the proposed offering by Qwest
Communications International Inc., a Delaware corporation (the "Company"),
ofSenior Discount Notes Due 2008, as described in the registration statement on
Form S-4 to be filed with the Securities and Exchange Commission on January 29,
1999 (the "Registration Statement"). Capitalized terms used in this letter that
are not otherwise defined herein have the same meanings given to them in the
Registration Statement.
Our opinion is based on the current provisions of the Internal Revenue Code of
1986, as amended (the "Code"), the applicable Treasury regulations
("Regulations"), and public administrative and judicial interpretations of the
Code and Regulations, all of which are subject to change, which changes could be
applied retroactively. Our opinion also is based on the facts set forth in the
Registration Statement, the Note Documents (as that term is defined in the
representation letter, dated January 29, 1999, from you), which we assume set
forth the complete agreement among the parties with respect to the 7.50% Notes,
and on certain representations from you with respect to factual matters, which
representations we have not independently verified. We assume that all Note
Documents have been or will be properly executed and will be valid and binding
when executed.
We have prepared the discussion included in the Registration Statement under the
caption "Certain United States Federal Income Tax Considerations." It is our
opinion that the discussion under that caption describes the material United
States federal income tax consequences expected to result to the Holders,
subject to the conditions and limitations described therein.
The discussion does not cover all aspects of United States federal taxation that
may be relevant to, or the actual tax effect that any of the matters described
therein will have on, any particular Holder, and it does not address foreign,
state, or local tax consequences. The discussion does not cover the tax
consequences that
<PAGE>
might be applicable to Holders that are subject to special rules under the Code
(including insurance companies, tax-exempt organizations, mutual funds,
retirement plans, financial institutions, dealers in securities or foreign
currency, persons that hold the 7.50% Notes as part of a "straddle" or as a
"hedge" against currency risk or in connection with a conversion transaction,
persons that have a functional currency other than the United States dollar,
investors in pass-through entities, traders in securities that elect to mark to
market, and except as expressly addressed therein, Non-U.S. Holders). The
discussion does not address the United States federal income tax consequences
that may result from a modification of the 7.50% Notes.
Our opinion may change if the applicable law changes, if any of the facts with
respect to the 7.50% Notes (as included in the Registration Statement, the Note
Documents, and the representations made by you) are inaccurate, incomplete, or
change, or if the conduct of the parties is materially inconsistent with the
facts reflected in the Registration Statement, the Note Documents, or the
representations.
Our opinion represents only our legal judgment based on current law and the
facts as described above. Our opinion has no binding effect on the Internal
Revenue Service or the courts. The Service may take a position contrary to our
opinion, and if the matter is litigated, a court may reach a decision contrary
to the opinion.
We hereby consent to the filing of this opinion letter with the Securities and
Exchange Commission as an exhibit to the Registration Statement and to the use
of our name therein.
Very truly yours,
HOLME ROBERTS & OWEN LLP
By:/s/Charles B. Bruce, Jr.
-----------------------------
Charles B. Bruce, Jr. Partner
QWEST COMMUNICATIONS INTERNATIONAL INC.
CALCULATION OF RATIO OF EARNINGS TO FIXED CHARGES
(Amounts in millions, except ratios)
(unaudited)
<TABLE>
<CAPTION>
QWEST COMMUNICATIONS INTERNATIONAL INC.
CALCULATION OF RATIO OF EARNINGS TO FIXED CHARGES
(Amounts in millions, except ratios)
(unaudited)
Nine Months Ended Year Ended
Sept. 30, December 31,
---------------------
1998 1997 1997 1996 1995 1994 1993
---- ---- ---- ---- ---- ---- ----
<S> <C> <C> <C> <C> <C> <C> <C>
Income (loss) before income taxes (837.0) 4.5 $23.6 $(10.2) $(38.5) $(10.7) $111.7
Add:
Interest on debt, net of
capitalized interest 62.3 8.9 18.9 7.0 4.3 0.2 3.3
Interest expense portion of
rental expense 5.1 1.4 2.1 1.7 1.5 1.0 1.2
------- ----- ----- ----- ------ ----- ------
Earnings available for fixed $(769.6) $14.8 $44.6 $(1.5) $(32.7) $(9.5) $116.2
charges ======= ===== ===== ===== ====== ===== ======
Fixed charges:
Interest on debt $ 89.3 $20.1 $36.6 $ 9.4 $ 6.2 $ 0.5 $ 3.3
Interest expense portion of 5.1 1.4 2.1 1.7 1.5 1.0 1.2
rental expense
Preferred stock dividend - - - - - - 16.0
------- ----- ----- ----- ------ ----- ------
Total fixed charges . $ 94.4 $21.5 $38.7 $11.1 $ 7.7 $ 1.5 $20.5
======= ===== ===== ===== ====== ===== ======
Ratio of earnings to fixed
charges(1) - - 1.15 - - - 5.67
(1) Earnings were insufficient to cover fixed charges by $864.0 and $6.7 million for the nine-month periods
ended September 30, 1998 and 1997, respectively, and $12.6 million, $40.4 million and $11.0 million for
the years ended December 31, 1996, 1995 and 1994.
</TABLE>
Exhibit 23.1
CONSENT OF INDEPENDENT AUDITORS
The Board of Directors
Qwest Communications International Inc.:
We consent to the use of our report, dated February 24, 1998, except as to
note 22, which is as of March 8, 1998, relating to the consolidated balance
sheets of Qwest Communications International Inc. and subsidiaries as of
December 31, 1997 and 1996, and the related consolidated statements of
operations, stockholders' equity and cash flows for each of the years in the
three-year period ended December 31, 1997, incorporated herein by reference, and
of our report, dated February 24, 1998, pertaining to the related consolidated
financial statement schedule incorporated herein by reference, and to the
reference to our firm under the heading "EXPERTS" in the Registration Statement.
KPMG LLP
Denver, Colorado
January 28, 1999
Exhibit 23.2
CONSENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
We have issued our report dated February 19, 1998, accompanying the
consolidated financial statements of Phoenix Network Inc. and subsidiaries as of
December 31, 1996 and 1997, and for each of the years in the period ended
December 31, 1997, appearing in the Registration Statement. We hereby consent to
the use of our report on the aforementioned consolidated financial statements in
the Registration Statement and to the use of our name as it appears under the
caption "Experts."
GRANT THORNTON LLP
Denver, Colorado
January 28, 1999.
Exhibit 23.3
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the incorporation
by reference in this registration statement of our reports dated February 16,
1998 (except with respect to the matter discussed in Note 15, as to which the
date is March 16, 1998) included in Qwest Communications International Inc.'s
Amendment No. 1 to Form S-4 Registration Statement File No. 333-49915 and to all
references to our Firm included in this registration statement.
ARTHUR ANDERSEN LLP
Columbus, Ohio
January 28, 1999
23.3-1
Exhibit 23.4
Consent of Independent Accountants
We hereby consent to the incorporation by reference in the Prospectus
constituting part of this Registration Statement on Form S-4 of Qwest
Communications International Inc. ("Qwest") of our report dated March 6, 1998,
except as to the acquisition and restatement described in Note 2, which is as of
September 30, 1998, relating to the consolidated financial statements of Icon
CMT Corp., which is incorporated by reference in Qwest's Registration Statement
on Form S-3 (No. 333-58617) dated December 9, 1998 from Qwest's Registration
Statement on Form S-4 (No. 333-65095) dated September 30, 1998 (the "Form S-4").
We also consent to the application of such report to the Financial Statement
Schedule of Icon CMT Corp. for the three years ended December 31, 1997 under
item 21(b) of the Form S-4 when such schedule is read in conjunction with the
consolidated financial statements referred to in our report. The audits referred
to in such report also included this schedule. We also consent to the reference
to us under the heading "Experts" in the Form S-4.
PricewaterhouseCoopers LLP
Stamford, Connecticut
January 28, 1999
23.4-1
Exhibit 23.5
Consent of Independent Auditors
We consent to the reference to our firm under the caption "Experts" in the
Registration Statement (Form S-4 No. _____) of Qwest Communications
International Inc. and to the incorporation by reference therein of our report
dated February 14, 1998, with respect to the financial statements of Frontier
Media Group, Inc. included in Amendment No. 1 to the Registration Statement of
Qwest Communications International, Inc. (Form S-4 No. 333-65095) dated December
10, 1998, filed with the Securities and Exchange Commission.
ERNST & YOUNG LLP
Philadelphia, Pennsylvania
February 1, 1999
23.5-1
Exhibit 23.6
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
We consent to inclusion in the Registration Statement of Qwest Communications
International Inc. on Form S-4 of our report dated September 26, 1997 relating
to the balance sheet of SuperNet, Inc. as of June 30, 1997 and the related
statements of operations, changes in stockholders' equity and cash flows for the
year then ended. We also consent to the reference to us under the heading
"EXPERTS" in such Registration Statement.
Dollinger, Smith & Co.
Englewood, Colorado
January 28, 1999
23.6-1
EXHIBIT 25.1
- -----------------------------------------------------------------------------
- -----------------------------------------------------------------------------
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
--------------------
FORM T-1
STATEMENT OF ELIGIBILITY UNDER THE TRUST INDENTURE ACT OF 1939 OF A CORPORATION
DESIGNATED TO ACT AS TRUSTEE
CHECK IF AN APPLICATION TO DETERMINE ELIGIBILITY OF A TRUSTEE PURSUANT TO
SECTION 305(b)(2) ___________
------------------------------
BANKERS TRUST COMPANY
(Exact name of trustee as specified in its charter)
NEW YORK 13-4941247
(Jurisdiction of Incorporation or (I.R.S. Employer
organization if not a U.S. national bank) Identification no.)
FOUR ALBANY STREET
NEW YORK, NEW YORK 10006
(Address of principal (Zip Code)
executive offices)
Bankers Trust Company
Legal Department
130 Liberty Street, 31st Floor
New York, New York 10006
(212) 250-2201
(Name, address and telephone number of agent for service)
---------------------------------
QWEST COMMUNICATIONS INTERNATIONAL INC.
(Exact name of Registrant as specified in its charter)
DELAWARE 84-1339282
(State or other jurisdiction of (I.R.S. employer identification
Incorporation or organization) no.)
700 Qwest Tower
555 Seventeenth Street
Denver, Colorado 80202
(303) 992-1400
(Address, including zip code, and
telephone number of principal executive offices)
$750,000,000 7.50% Senior Notes due 2008
(Title of the indenture securities)
<PAGE>
Item 1. General Information.
Furnish the following information as to the trustee.
(a) Name and address of each examining or
supervising authority to which it is subject.
Name Address
Federal Reserve Bank (2nd District) New York, NY
Federal Deposit Insurance Corporation Washington, D.C.
New York State Banking Department Albany, NY
(b) Whether it is authorized to exercise corporate trust
powers.
Yes.
Item 2. Affiliations with Obligor.
If the obligor is an affiliate of the Trustee, describe each
such affiliation.
None.
Item 3. -15. Not Applicable
Item 16. List of Exhibits.
Exhibit 1 - Restated Organization Certificate of
Bankers Trust Company dated August 7, 1990,
Certificate of Amendment of the Organization
Certificate of Bankers Trust Company dated
June 21, 1995 - Incorporated herein by
reference to Exhibit 1 filed with Form T-1
Statement, Registration No. 33-65171,
Certificate of Amendment of the Organization
Certificate of Bankers Trust Company dated
March 20, 1996, incorporate by referenced to
Exhibit 1 filed with Form T-1 Statement,
Registration No. 333-25843 and Certificate
of Amendment of the Organization Certificate
of Bankers Trust Company dated June 19,
1997, copy attached.
Exhibit 2 - Certificate of Authority to commence
business - Incorporated herein by reference
to Exhibit 2 filed with Form T-1 Statement,
Registration No. 33-21047.
Exhibit 3 - Authorization of the Trustee to exercise
corporate trust powers Incorporated herein
by reference to Exhibit 2 filed with Form
T-1 Statement, Registration No. 33-21047.
Exhibit 4 - Existing By-Laws of Bankers Trust
Company, as amended on November 18, 1997.
Copy attached.
-2-
<PAGE>
Exhibit 5 - Not applicable.
Exhibit 6 - Consent of Bankers Trust Company
required by Section 321(b) of the Act.
Incorporated herein by reference to Exhibit
4 filed with Form T-1 Statement,
Registration No. 22-18864.
Exhibit 7 - The latest report of condition of
Bankers Trust Company dated as of September
30, 1998. Copy attached.
Exhibit 8 - Not Applicable.
Exhibit 9 - Not Applicable.
-3-
<PAGE>
SIGNATURE
Pursuant to the requirements of the Trust Indenture Act of 1939, as
amended, the trustee, Bankers Trust Company, a corporation organized and
existing under the laws of the State of New York, has duly caused this statement
of eligibility to be signed on its behalf by the undersigned, thereunto duly
authorized, all in The City of New York, and State of New York, on this 29th day
of January, 1999
BANKERS TRUST COMPANY
By: ___________________
Susan Johnson
Assistant Vice President
-4-
<PAGE>
SIGNATURE
Pursuant to the requirements of the Trust Indenture Act of 1939, as
amended, the trustee, Bankers Trust Company, a corporation organized and
existing under the laws of the State of New York, has duly caused this statement
of eligibility to be signed on its behalf by the undersigned, thereunto duly
authorized, all in The City of New York, and State of New York, on this 29th day
of January, 1999.
BANKERS TRUST COMPANY
/s/ Susan Johnson /s/
By: Susan Johnson
Assistant Vice President
-5-
<PAGE>
State of New York,
Banking Department
I, MANUEL KURSKY, Deputy Superintendent of Banks of the State of New
York, DO HEREBY APPROVE the annexed Certificate entitled "CERTIFICATE OF
AMENDMENT OF THE ORGANIZATION CERTIFICATE OF BANKERS TRUST COMPANY Under Section
8005 of the Banking Law," dated June 19, 1997, providing for an increase in
authorized capital stock from $1,601,666,670 consisting of 100,166,667 shares
with a par value of $10 each designated as Common Stock and 600 shares with a
par value of $1,000,000 each designated as Series Preferred Stock to
$2,001,666,670 consisting of 100,166,667 shares with a par value of $10 each
designated as Common Stock and 1,000 shares with a par value of $1,000,000 each
designated as Series Preferred Stock.
Witness, my hand and official seal of the Banking Department at the City of New
York, this 27th day of June in the Year of our Lord one thousand nine hundred
and ninety-seven.
Manuel Kursky
Deputy Superintendent of Banks
<PAGE>
CERTIFICATE OF AMENDMENT
OF THE
ORGANIZATION CERTIFICATE
OF BANKERS TRUST
Under Section 8005 of the Banking Law
-----------------------------
We, James T. Byrne, Jr. and Lea Lahtinen, being respectively a Managing Director
and an Assistant Secretary of Bankers Trust Company, do hereby certify:
1. The name of the corporation is Bankers Trust Company.
2. The organization certificate of said corporation was filed by the
Superintendent of Banks on the 5th of march, 1903.
3. The organization certificate as heretofore amended is hereby amended
to increase the aggregate number of shares which the corporation shall have
authority to issue and to increase the amount of its authorized capital stock in
conformity therewith.
4. Article III of the organization certificate with reference to the
authorized capital stock, the number of shares into which the capital stock
shall be divided, the par value of the shares and the capital stock outstanding,
which reads as follows:
"III. The amount of capital stock which the corporation is hereafter to
have is One Billion, Six Hundred and One Million, Six Hundred Sixty-Six
Thousand, Six Hundred Seventy Dollars ($1,601,666,670), divided into
One Hundred Million, One Hundred Sixty-Six Thousand, Six Hundred
Sixty-Seven (100,166,667) shares with a par value of $10 each
designated as Common Stock and 600 shares with a par value of One
Million Dollars ($1,000,000) each designated as Series Preferred
Stock."
is hereby amended to read as follows:
"III. The amount of capital stock which the corporation is hereafter to
have is Two Billion One Million, Six Hundred Sixty-Six Thousand, Six
Hundred Seventy Dollars ($2,001,666,670), divided into One Hundred
Million, One Hundred Sixty-Six Thousand, Six Hundred Sixty-Seven
(100,166,667) shares with a par value of $10 each designated as Common
Stock and 1000 shares with a par value of One Million Dollars
($1,000,000) each designated as Series Preferred Stock."
<PAGE>
5. The foregoing amendment of the organization certificate was
authorized by unanimous written consent signed by the holder of all outstanding
shares entitled to vote thereon.
IN WITNESS WHEREOF, we have made and subscribed this certificate this
19th day of June, 1997.
James T. Byrne, Jr.
James T. Byrne, Jr.
Managing Director
Lea Lahtinen
Lea Lahtinen
Assistant Secretary
State of New York )
) ss:
County of New York )
Lea Lahtinen, being fully sworn, deposes and says that she is an
Assistant Secretary of Bankers Trust Company, the corporation described in the
foregoing certificate; that she has read the foregoing certificate and knows the
contents thereof, and that the statements herein contained are true.
Lea Lahtinen
Lea Lahtinen
Sworn to before me this 19th day of June, 1997.
Sandra L. West
Notary Public
SANDRA L. WEST
Notary Public State of New York
No. 31-4942101
Qualified in New York County
Commission Expires September 19, 1998
<PAGE>
BY-LAWS
NOVEMBER 18, 1997
Bankers Trust Company
New York
<PAGE>
BY-LAWS
of
Bankers Trust Company
ARTICLE I
MEETINGS OF STOCKHOLDERS
SECTION 1. The annual meeting of the stockholders of this Company shall be held
at the office of the Company in the Borough of Manhattan, City of New York, on
the third Tuesday in January of each year, for the election of directors and
such other business as may properly come before said meeting.
SECTION 2. Special meetings of stockholders other than those regulated by
statute may be called at any time by a majority of the directors. It shall be
the duty of the Chairman of the Board, the Chief Executive Officer or the
President to call such meetings whenever requested in writing to do so by
stockholders owning a majority of the capital stock.
SECTION 3. At all meetings of stockholders, there shall be present, either in
person or by proxy, stockholders owning a majority of the capital stock of the
Company, in order to constitute a quorum, except at special elections of
directors, as provided by law, but less than a quorum shall have power to
adjourn any meeting.
SECTION 4. The Chairman of the Board or, in his absence, the Chief Executive
Officer or, in his absence, the President or, in their absence, the senior
officer present, shall preside at meetings of the stockholders and shall direct
the proceedings and the order of business. The Secretary shall act as secretary
of such meetings and record the proceedings.
ARTICLE II
DIRECTORS
SECTION 1. The affairs of the Company shall be managed and its corporate powers
exercised by a Board of Directors consisting of such number of directors, but
not less than ten nor more than twenty-five, as may from time to time be fixed
by resolution adopted by a majority of the directors then in office, or by the
stockholders. In the event of any increase in the number of directors,
additional directors may be elected within the limitations so fixed, either by
the stockholders or within the limitations imposed by law, by a majority of
directors then in office. One-third of the number of directors, as fixed from
time to time, shall constitute a quorum. Any one or more members of the Board of
Directors or any Committee thereof may participate in a meeting of the Board of
Directors or Committee thereof by means of a conference telephone or similar
communications equipment which allows all persons participating in the meeting
to hear each other at the same time. Participation by such means shall
constitute presence in person at such a meeting.
All directors hereafter elected shall hold office until the next annual meeting
of the stockholders and until their successors are elected and have qualified.
No person who shall have attained age 72 shall be eligible to be elected or
re-elected a director. Such director may, however, remain a director of the
Company until the next annual meeting of the stockholders of Bankers Trust New
York Corporation (the Company's parent) so that such director's retirement will
coincide with the retirement date from Bankers Trust New York Corporation.
No Officer-Director who shall have attained age 65, or earlier relinquishes his
responsibilities and title, shall be eligible to serve as a director.
SECTION 2. Vacancies not exceeding one-third of the whole number of the Board of
Directors may be filled by the affirmative vote of a majority of the directors
then in office, and the directors so elected shall hold office for the balance
of the unexpired term.
SECTION 3. The Chairman of the Board shall preside at meetings of the Board of
Directors. In his absence, the Chief Executive Officer or, in his absence, such
other director as the Board of Directors from time to time may designate shall
preside at such meetings.
SECTION 4. The Board of Directors may adopt such Rules and Regulations for the
conduct of its meetings and the management of the affairs of the Company as it
may deem proper, not inconsistent with the laws of the State of New York, or
these By-Laws, and all officers and employees shall strictly adhere to, and be
bound by, such Rules and Regulations.
SECTION 5. Regular meetings of the Board of Directors shall be held from time to
time on the third Tuesday of the month. If the day appointed for holding such
regular meetings shall be a legal holiday, the regular meeting to be held on
such day shall be held on the next business day thereafter. Special meetings of
the Board of Directors may be called upon at least two day's notice whenever it
may be deemed proper by the Chairman of the Board or, the Chief Executive
Officer or, in their absence, by such other director as the Board of Directors
may have designated pursuant to Section 3 of this Article, and shall be called
upon like notice whenever any three of the directors so request in writing.
SECTION 6. The compensation of directors as such or as members of committees
shall be fixed from time to time by resolution of the Board of Directors.
<PAGE>
ARTICLE III
COMMITTEES
SECTION 1. There shall be an Executive Committee of the Board consisting of not
less than five directors who shall be appointed annually by the Board of
Directors. The Chairman of the Board shall preside at meetings of the Executive
Committee. In his absence, the Chief Executive Officer or, in his absence, such
other member of the Committee as the Committee from time to time may designate
shall preside at such meetings.
The Executive Committee shall possess and exercise to the extent permitted by
law all of the powers of the Board of Directors, except when the latter is in
session, and shall keep minutes of its proceedings, which shall be presented to
the Board of Directors at its next subsequent meeting. All acts done and powers
and authority conferred by the Executive Committee from time to time shall be
and be deemed to be, and may be certified as being, the act and under the
authority of the Board of Directors.
A majority of the Committee shall constitute a quorum, but the Committee may act
only by the concurrent vote of not less than one-third of its members, at least
one of whom must be a director other than an officer. Any one or more directors,
even though not members of the Executive Committee, may attend any meeting of
the Committee, and the member or members of the Committee present, even though
less than a quorum, may designate any one or more of such directors as a
substitute or substitutes for any absent member or members of the Committee, and
each such substitute or substitutes shall be counted for quorum, voting, and all
other purposes as a member or members of the Committee.
SECTION 2. There shall be an Audit Committee appointed annually by resolution
adopted by a majority of the entire Board of Directors which shall consist of
such number of directors, who are not also officers of the Company, as may from
time to time be fixed by resolution adopted by the Board of Directors. The
Chairman shall be designated by the Board of Directors, who shall also from time
to time fix a quorum for meetings of the Committee. Such Committee shall conduct
the annual directors' examinations of the Company as required by the New York
State Banking Law; shall review the reports of all examinations made of the
Company by public authorities and report thereon to the Board of Directors; and
shall report to the Board of Directors such other matters as it deems advisable
with respect to the Company, its various departments and the conduct of its
operations.
In the performance of its duties, the Audit Committee may employ or retain, from
time to time, expert assistants, independent of the officers or personnel of the
Company, to make studies of the Company's assets and liabilities as the
Committee may request and to make an examination of the accounting and auditing
methods of the Company and its system of internal protective controls to the
extent considered necessary or advisable in order to determine that the
operations of the Company, including its fiduciary departments, are being
audited by the General Auditor in such a manner as to provide prudent and
adequate protection. The Committee also may direct the General Auditor to make
such investigation as it deems necessary or advisable with respect to the
Company, its various departments and the conduct of its operations. The
Committee shall hold regular quarterly meetings and during the intervals thereof
shall meet at other times on call of the Chairman.
SECTION 3. The Board of Directors shall have the power to appoint any other
Committees as may seem necessary, and from time to time to suspend or continue
the powers and duties of such Committees. Each Committee appointed pursuant to
this Article shall serve at the pleasure of the Board of Directors.
ARTICLE IV
OFFICERS
SECTION 1. The Board of Directors shall elect from among their number a Chairman
of the Board and a Chief Executive Officer; and shall also elect a President,
and may also elect a Senior Vice Chairman, one or more Vice Chairmen, one or
more Executive Vice Presidents, one or more Senior Managing Directors, one or
more Managing Directors, one or more Senior Vice Presidents, one or more
Principals, one or more Vice Presidents, one or more General Managers, a
Secretary, a Controller, a Treasurer, a General Counsel, one or more Associate
General Counsels, a General Auditor, a General Credit Auditor, and one or more
Deputy Auditors, who need not be directors. The officers of the corporation may
also include such other officers or assistant officers as shall from time to
time be elected or appointed by the Board. The Chairman of the Board or the
Chief Executive Officer or, in their absence, the President, the Senior Vice
Chairman or any Vice Chairman, may from time to time appoint assistant officers.
All officers elected or appointed by the Board of Directors shall hold their
respective offices during the pleasure of the Board of Directors, and all
assistant officers shall hold office at the pleasure of the Board or the
Chairman of the Board or the Chief Executive Officer or, in their absence, the
President, the Senior Vice Chairman or any Vice Chairman. The Board of Directors
may require any and all officers and employees to give security for the faithful
performance of their duties.
SECTION 2. The Board of Directors shall designate the Chief Executive Officer of
the Company who may also hold the additional title of Chairman of the Board,
President, Senior Vice Chairman or Vice Chairman and such person shall have,
subject to the supervision and direction of the Board of Directors or the
Executive Committee, all of the powers vested in such Chief Executive Officer by
law or by these By-Laws, or which usually attach or pertain to such office. The
other officers shall have, subject to the supervision and direction of the Board
of Directors or the Executive Committee or the Chairman of the Board or, the
Chief Executive Officer, the powers vested by law or by these By-Laws in them as
holders of their respective offices and, in addition, shall perform such other
duties as shall be assigned to them by the Board of Directors or the Executive
Committee or the Chairman of the Board or the Chief Executive Officer.
The General Auditor shall be responsible, through the Audit Committee, to the
Board of Directors for the determination of the program of the internal audit
function and the evaluation of the adequacy of the system of internal controls.
Subject to the Board of Directors, the General Auditor shall have and may
exercise all the powers and shall perform all the duties usual to such office
and shall have such other powers as may be prescribed or assigned to him from
time to time by the Board of Directors or vested in him by law or by these
By-Laws. He shall perform such other duties and shall make such investigations,
examinations and reports as may be prescribed or required by the Audit
Committee. The General Auditor shall have unrestricted access to all records and
premises of the Company and shall delegate such authority to his subordinates.
He shall have the duty to report to the Audit Committee on all matters
concerning the internal audit program and the adequacy of the system of internal
controls of the Company which he deems advisable or which the Audit Committee
may request. Additionally, the General Auditor shall have the duty of reporting
independently of all officers of the Company to the Audit Committee at least
quarterly on any matters concerning the internal audit program and the adequacy
of the system of internal controls of the Company that should be brought to the
attention of the directors except those matters responsibility for which has
been vested in the General Credit Auditor. Should the General Auditor deem any
matter to be of special immediate importance, he shall report thereon forthwith
to the Audit Committee. The General Auditor shall report to the Chief Financial
Officer only for administrative purposes.
The General Credit Auditor shall be responsible to the Chief Executive Officer
and, through the Audit Committee, to the Board of Directors for the systems of
internal credit audit, shall perform such other duties as the Chief Executive
Officer may prescribe, and shall make such examinations and reports as may be
required by the Audit Committee. The General Credit Auditor shall have
unrestricted access to all records and may delegate such authority to
subordinates.
SECTION 3. The compensation of all officers shall be fixed under such plan or
plans of position evaluation and salary administration as shall be approved from
time to time by resolution of the Board of Directors.
SECTION 4. The Board of Directors, the Executive Committee, the Chairman of the
Board, the Chief Executive Officer or any person authorized for this purpose by
the Chief Executive Officer, shall appoint or engage all other employees and
agents and fix their compensation. The employment of all such employees and
agents shall continue during the pleasure of the Board of Directors or the
Executive Committee or the Chairman of the Board or the Chief Executive Officer
or any such authorized person; and the Board of Directors, the Executive
Committee, the Chairman of the Board, the Chief Executive Officer or any such
authorized person may discharge any such employees and agents at will.
<PAGE>
ARTICLE V
INDEMNIFICATION OF DIRECTORS, OFFICERS AND OTHERS
SECTION 1. The Company shall, to the fullest extent permitted by Section 7018 of
the New York Banking Law, indemnify any person who is or was made, or threatened
to be made, a party to an action or proceeding, whether civil or criminal,
whether involving any actual or alleged breach of duty, neglect or error, any
accountability, or any actual or alleged misstatement, misleading statement or
other act or omission and whether brought or threatened in any court or
administrative or legislative body or agency, including an action by or in the
right of the Company to procure a judgment in its favor and an action by or in
the right of any other corporation of any type or kind, domestic or foreign, or
any partnership, joint venture, trust, employee benefit plan or other
enterprise, which any director or officer of the Company is servicing or served
in any capacity at the request of the Company by reason of the fact that he, his
testator or intestate, is or was a director or officer of the Company, or is
serving or served such other corporation, partnership, joint venture, trust,
employee benefit plan or other enterprise in any capacity, against judgments,
fines, amounts paid in settlement, and costs, charges and expenses, including
attorneys' fees, or any appeal therein; provided, however, that no
indemnification shall be provided to any such person if a judgment or other
final adjudication adverse to the director or officer establishes that (i) his
acts were committed in bad faith or were the result of active and deliberate
dishonesty and, in either case, were material to the cause of action so
adjudicated, or (ii) he personally gained in fact a financial profit or other
advantage to which he was not legally entitled.
SECTION 2. The Company may indemnify any other person to whom the Company is
permitted to provide indemnification or the advancement of expenses by
applicable law, whether pursuant to rights granted pursuant to, or provided by,
the New York Banking Law or other rights created by (i) a resolution of
stockholders, (ii) a resolution of directors, or (iii) an agreement providing
for such indemnification, it being expressly intended that these By-Laws
authorize the creation of other rights in any such manner.
SECTION 3. The Company shall, from time to time, reimburse or advance to any
person referred to in Section 1 the funds necessary for payment of expenses,
including attorneys' fees, incurred in connection with any action or proceeding
referred to in Section 1, upon receipt of a written undertaking by or on behalf
of such person to repay such amount(s) if a judgment or other final adjudication
adverse to the director or officer establishes that (i) his acts were committed
in bad faith or were the result of active and deliberate dishonesty and, in
either case, were material to the cause of action so adjudicated, or (ii) he
personally gained in fact a financial profit or other advantage to which he was
not legally entitled.
SECTION 4. Any director or officer of the Company serving (i) another
corporation, of which a majority of the shares entitled to vote in the election
of its directors is held by the Company, or (ii) any employee benefit plan of
the Company or any corporation referred to in clause (i) in any capacity shall
be deemed to be doing so at the request of the Company. In all other cases, the
provisions of this Article V will apply (i) only if the person serving another
corporation or any partnership, joint venture, trust, employee benefit plan or
other enterprise so served at the specific request of the Company, evidenced by
a written communication signed by the Chairman of the Board, the Chief Executive
Officer or the President, and (ii) only if and to the extent that, after making
such efforts as the Chairman of the Board, the Chief Executive Officer or the
President shall deem adequate in the circumstances, such person shall be unable
to obtain indemnification from such other enterprise or its insurer.
SECTION 5. Any person entitled to be indemnified or to the reimbursement or
advancement of expenses as a matter of right pursuant to this Article V may
elect to have the right to indemnification (or advancement of expenses)
interpreted on the basis of the applicable law in effect at the time of
occurrence of the event or events giving rise to the action or proceeding, to
the extent permitted by law, or on the basis of the applicable law in effect at
the time indemnification is sought.
SECTION 6. The right to be indemnified or to the reimbursement or advancement of
expense pursuant to this Article V (i) is a contract right pursuant to which the
person entitled thereto may bring suit as if the provisions hereof were set
forth in a separate written contract between the Company and the director or
officer, (ii) is intended to be retroactive and shall be available with respect
to events occurring prior to the adoption hereof, and (iii) shall continue to
exist after the rescission or restrictive modification hereof with respect to
events occurring prior thereto.
SECTION 7. If a request to be indemnified or for the reimbursement or
advancement of expenses pursuant hereto is not paid in full by the Company
within thirty days after a written claim has been received by the Company, the
claimant may at any time thereafter bring suit against the Company to recover
the unpaid amount of the claim and, if successful in whole or in part, the
claimant shall be entitled also to be paid the expenses of prosecuting such
claim. Neither the failure of the Company (including its Board of Directors,
independent legal counsel, or its stockholders) to have made a determination
prior to the commencement of such action that indemnification of or
reimbursement or advancement of expenses to the claimant is proper in the
circumstance, nor an actual determination by the Company (including its Board of
Directors, independent legal counsel, or its stockholders) that the claimant is
not entitled to indemnification or to the reimbursement or advancement of
expenses, shall be a defense to the action or create a presumption that the
claimant is not so entitled.
SECTION 8. A person who has been successful, on the merits or otherwise, in the
defense of a civil or criminal action or proceeding of the character described
in Section 1 shall be entitled to indemnification only as provided in Sections 1
and 3, notwithstanding any provision of the New York Banking Law to the
contrary.
ARTICLE VI
SEAL
SECTION 1. The Board of Directors shall provide a seal for the Company, the
counterpart dies of which shall be in the charge of the Secretary of the Company
and such officers as the Chairman of the Board, the Chief Executive Officer or
the Secretary may from time to time direct in writing, to be affixed to
certificates of stock and other documents in accordance with the directions of
the Board of Directors or the Executive Committee.
SECTION 2. The Board of Directors may provide, in proper cases on a specified
occasion and for a specified transaction or transactions, for the use of a
printed or engraved facsimile seal of the Company.
ARTICLE VII
CAPITAL STOCK
SECTION 1. Registration of transfer of shares shall only be made upon the books
of the Company by the registered holder in person, or by power of attorney, duly
executed, witnessed and filed with the Secretary or other proper officer of the
Company, on the surrender of the certificate or certificates of such shares
properly assigned for transfer.
ARTICLE VIII
CONSTRUCTION
SECTION 1. The masculine gender, when appearing in these By-Laws, shall be
deemed to include the feminine gender.
ARTICLE IX
AMENDMENTS
SECTION 1. These By-Laws may be altered, amended or added to by the Board of
Directors at any meeting, or by the stockholders at any annual or special
meeting, provided notice thereof has been given.
<PAGE>
Legal Title of Bank: Bankers Trust Company Call Date: 09/30/98
Address: 130 Liberty Street Vendor ID: D
City, State ZIP: New York, NY 10006 11
ST-BK: 36-4840 FFIEC 031
CERT: 00623 Page RC-1
FDIC Certificate No.: | 0 | 0 | 6 | 2 | 3
Consolidated Report of Condition for Insured Commercial
and State-Chartered Savings Banks for September 30, 1998
All schedules are to be reported in thousands of dollars. Unless otherwise
indicated, reported the amount outstanding as of the last business day of the
quarter.
SCHEDULE RC - BALANCE SHEET
<TABLE>
<CAPTION>
C400
Dollar Amounts in Thousands RCFD Bil Mil Thou
ASSETS
1. Cash and balances due from depository institutions (from Schedule RC-A):
<S> <C> <C>
a. Noninterest-bearing balances and currency and coin(1)................................. 0081 2,291,000
b. Interest bearing balances(2).......................................................... 0071 2,636,000
2. Securities:
a. Held-to-maturity securities (from Schedule RC-B, column A)............................ 1754 0
b. Available-for-sale securities (from Schedule RC-B, column D).......................... 1773 6,617,000
3. Federal funds sold and securities purchased under agreements to resell..................... 1350 32,734,000
4. Loans and lease financing receivables:
a. Loans and leases, net of unearned income (from Schedule RC-C)......................... 2122 20,227,000
b. LESS: Allowance for loan and lease losses............................................. 3123 619,000
c. LESS: Allocated transfer risk reserve................................................. 3128 0
d. Loans and leases, net of unearned income,
allowance, and reserve (item 4.a minus 4.b and 4.c).................................... 2125 19,608,000
5. Trading assets (from Schedule RC-D)........................................................ 3545 49,545,000
6. Premises and fixed assets (including capitalized leases)................................... 2145 885,000
7. Other real estate owned (from Schedule RC-M)............................................... 2150 115,000
8. Investments in unconsolidated subsidiaries and associated companies (from Schedule
RC-M)...................................................................................... 2130 391,000
9. Customers' liability to this bank on acceptances outstanding............................... 2155 392,000
10. Intangible assets (from Schedule RC-M)..................................................... 2143 266,000
11. Other assets (from Schedule RC-F).......................................................... 2160 5,884,000
12. Total assets (sum of items 1 through 11)................................................... 2170 121,364,000
</TABLE>
- --------------------------
(1) Includes cash items in process of collection and unposted debits.
(2) Includes time certificates of deposit not held for trading.
<PAGE>
Legal Title of Bank: Bankers Trust Company FFIEC 031
Address: 130 Liberty Street Page RC-2
City, State Zip: New York, NY 10006
Call Date: 09/30/98 ST-BK: 36-4840
Vendor ID: D CERT: 00623
FDIC Certificate Number: 00623
SCHEDULE RC -- CONTINUED
<TABLE>
<CAPTION>
Dollar Amounts in Thousands Bil Mil Thou
LIABILITIES
<S> <C> <C> <C>
13. Deposits:
a. In domestic offices (sum of totals of columns A and C from Schedule RC-E, Part I)........... RCON 2200 22,231,000
(1) Noninterest-bearing(1)................................................................... RCON 6631 3,040,000
(2) Interest-bearing......................................................................... RCON 6636 19,191,000
b. In foreign offices, Edge and Agreement subsidiaries, and IBFs (from Schedule RC-E, Part II). RCFN 2200 21,932,000
(1) Noninterest-bearing...................................................................... RCFN 6631 2,423,000
(2) Interest-bearing......................................................................... RCFN 6636 19,509,000
14. Federal funds purchased and securities sold under agreements to repurchase..................... RCFD 2800 14,360,000
15. a. Demand notes issued to the U.S. Treasury.................................................... RCON 2840 0
b. Trading liabilities (from Schedule RC-D).................................................... RCFD 3548 32,890,000
16. Other borrowed money (includes mortgage indebtedness and obligations under capitalized leases):
a. With a remaining maturity of one year or less............................................... RCFD 2332 7,653,000
b. With a remaining maturity of more than one year through three years......................... A547 3,707,000
c. With a remaining maturity of more than three years.......................................... A548 3,034,000
17. Not Applicable.................................................................................
18. Bank's liability on acceptances executed and outstanding....................................... RCFD 2920 392,000
19. Subordinated notes and debentures (2).......................................................... RCFD 3200 1,533,000
20. Other liabilities (from Schedule RC-G)......................................................... RCFD 2930 6,595,000
21. Total liabilities (sum of items 13 through 20)................................................. RCFD 2948 114,327,000
22. Not Applicable.................................................................................
EQUITY CAPITAL
23. Perpetual preferred stock and related surplus.................................. RCFD 3838 1,500,000
24. Common stock................................................................... RCFD 3230 2,002,000
25. Surplus (exclude all surplus related to preferred stock)....................... RCFD 3839 540,000
26. a. Undivided profits and capital reserves...................................... RCFD 3632 3,421,000
b. Net unrealized holding gains (losses) on available-for-sale securities...... RCFD 8434 (46,000)
27. Cumulative foreign currency translation adjustments............................ RCFD3284 (380,000)
28. Total equity capital (sum of items 23 through 27).............................. RCFD3210 5,994,000
29. Total liabilities and equity capital (sum of items 21 and 28).................. RCFD3300 121,364,000
Memorandum
To be reported only with the March Report of Condition.
1. Indicate in the box at the right the number of the statement below that best describes the
most comprehensive level of auditing work performed for the bank by independent external Number
auditors as of any date during 1996 ................................................. RCFD 6724 1
1 = Independent audit of the bank conducted in accordance 4 = Directors' examination of the bank performed by other
with generally accepted auditing standards by a certified external auditors (may be required by state chartering
public accounting firm which submits a report on the bank authority)
2 = Independent audit of the bank's parent holding company 5 = Review of the bank's financial statements by external
conducted in accordance with generally accepted auditing auditors
standards by a certified public accounting firm which 6 = Compilation of the bank's financial statements by external
submits a report on the consolidated holding company auditors
(but not on the bank separately) 7 = Other audit procedures (excluding tax preparation work)
3 = Directors' examination of the bank conducted in 8 = No external audit
work accordance with generally accepted auditing standards by a certified
public accounting firm (may be required by state chartering authority)
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(1) Including total demand deposits and noninterest-bearing time and
savings deposits.
(2) Includes limited-life preferred stock and related surplus.
